Thousands May Lose Rental Vouchers

NEW YORK — Because of a $45 million budget gap, the New York City Housing Authority may have to revoke rental-assistance vouchers from more than 10,000 low-income tenants, a drastic move that could cause families to lose their apartments.

The federal government gave the housing authority less money for the voucher program, known as Section 8, than the authority expected. But the authority made matters worse by continuing to issue new vouchers until December, eight months after the government warned it to stop doing so because the program was likely to run a deficit.

Michael P. Kelly, the authority’s general manager, said that terminating vouchers would be a last resort. The authority has not decided who might lose their vouchers, but if the deficit is not closed, the cuts could begin this summer.

“This is a dire option for us that we’re hoping we’re not going to have to do,” Mr. Kelly said.

The agency is seeking federal and state funding to avert the voucher cuts. But the state is facing a huge deficit. Sandra Henriquez, an assistant secretary of the Department of Housing and Urban Development, said that HUD would review the housing authority’s books, but she added that “they cannot and should not expect that the federal government will cover the shortfall.”

As an alternative, the housing authority is considering reducing the value of each voucher, meaning that landlords, tenants or both would have to absorb the cost.

Under Section 8, residents typically pay 30 percent of their income toward rent, and the voucher covers the balance. In New York City, about 102,000 families now have vouchers, which are administered by the authority and allow families to live in units where private landlords accept Section 8 benefits. An additional 178,000 or so families live in public housing complexes owned by the authority.

After the authority voided 2,600 outstanding vouchers in December, prompting an outcry from affected families, it urged people to apply for public housing, although the waiting list is years long.

HUD provides money for the Section 8 vouchers and tells housing authorities the maximum number they can use. In May, HUD told the New York City Housing Authority it was in danger of exceeding its allotted number.

“What balances you are comfortable with, of course, is a local decision,” a HUD official, Mirza Negron Morales, wrote in a memo to the housing authority. “Our recommendation, based on your current level of funding and the data to date, is to stop issuing vouchers and maintain current leasing and cost levels for the remainder of calendar year 2009.”

The agency continued to issue new vouchers, about 50 a week, generally to emergency cases like homeless families, domestic violence victims and families under the supervision of the city’s child welfare system. “We wanted to help as many people as possible,” said Sheila Stainback, a housing authority spokeswoman. “We only issued vouchers to the most vulnerable.”

Historically, some vouchers that are issued are never redeemed because of the difficulty in finding a suitable apartment and a landlord who will accept vouchers. And every year, some families leave the Section 8 program. But last year, more landlords began to take Section 8 vouchers, and the attrition rate dropped to 3.5 percent from about 6 percent, most likely because of the weak economy.

“Looking at the scale of Nycha’s program,” Mr. Kelly said, using the acronym for the authority, “it was impossible for us to turn on a dime.”

In December, the authority finally stopped issuing new vouchers and voided the 2,600 unused vouchers. But outside of cases of fraud or evictions for breaking other program rules, officials said they could not recall having terminated vouchers already being used.

Judith Goldiner, a supervising lawyer at the Legal Aid Society in New York, said the prospect of terminating so many families’ vouchers was “inconceivable.”

“This is just a disaster,” she said. “We don’t know who could be impacted by it.”

The magnitude of the problem left several housing experts puzzled. New York City has exceeded its voucher cap only once before, by several hundred in 2005, according to Gregory Kern, an agency manager who oversees the Section 8 program.

Linda Couch, the vice president for policy at the National Low Income Housing Coalition, said that given the recession, the drop in attrition rates should not have come as a surprise. In recent years, she added, the act of continuing to issue vouchers to the point at which authorities exceeded their federal cap for Section 8 units has become “a big no-no at HUD.”
Douglas Rice, a senior policy analyst at the Center on Budget and Policy Priorities in Washington, said the housing authority’s data showed that it “leased up very aggressively in the second half of last year.”

He added, “They should have realized they weren’t getting nearly enough renewal funds as they expected.”

Housing authorities across the country began learning in May that they would be receiving less federal money for Section 8 than they had expected. In many cases, the recession made existing vouchers more costly as incomes dropped, leading authorities to make up the difference.

Experts estimated that hundreds of agencies would have to reduce rental assistance or revoke vouchers. In the end, few housing authorities terminated vouchers; one small agency in Oregon cut 50 of them, with 15 of those families taken in by other public assistance programs.

In several places, including Monterey, Calif.; Walla Walla, Wash.; and Bridgeport, Conn., housing authorities began paying a lower percentage of recipients’ rents.

“I literally don’t sleep anymore because every day I’m trying to see who’s attriting from the program to see if I can survive,” said Nicholas Calace, executive director of the Bridgeport Housing Authority.

Mr. Kern and Mr. Kelly said the New York City authority had been trying to cut the number of people with Section 8 vouchers by doing more fraud investigations and weeding out those who underreport their income. The termination rate is 400 to 450 a month, Mr. Kern said, compared with 350 to 400 last summer.

When other housing authorities began considering terminations last year, they contemplated a “last in, first out” policy, in which the most recently issued vouchers would be revoked first.

Among the many families with newer vouchers in New York are Izolda Mandelblat, 77, and her husband, Moisey Frenkel, 85, who live in a one-bedroom apartment in Inwood, in Upper Manhattan. The couple, immigrants from Ukraine, had been on a Section 8 waiting list for 13 years. After their benefits finally started in November, the couple began to blossom, according to their granddaughter, Nera Lerner, 19.

Fresh fruits and vegetables began appearing in their refrigerator, replacing the fatty discount chicken, and the canned and frozen food they had subsisted on for years. Ms. Mandelblat began buying vitamins. The couple could finally afford all of their medications; he has diabetes, and she has skin cancer.

They earn about $1,100 in Social Security income and pay $256 a month toward their $1,019 rent; the voucher covers the rest.

“They’re a lot more hopeful now,” Ms. Lerner said. Asked what she would do if she lost her voucher, Ms. Mandelblat fell into despair.

“Oh no, oh no,” she said through her granddaughter, who interpreted. “I would be homeless. I would die.”