By Eugene T. Lowe
May 10, 2004

When the Department of Housing and Urban Development (HUD) issued a notice on April 22, which essentially changed the way Section 8 Housing Choice Vouchers are paid, there was immediate controversy, criticism and debate, which show no sign of easing in the near future. In general, HUD is now implementing a policy that will not pay public housing authorities for the actual costs of the vouchers they administer, but instead pay the cost of the vouchers under lease as of August 1, 2003, with an adjustment for inflation. According to the National Association of Housing and Redevelopment Officials, the new policy will impact more than 900 of the 2,500 public housing authorities across the nation.

The problem with the HUD policy is that there are increases in voucher costs, which the inflation factor will miss, such as the status of tenants' incomes, health and other reasons, which would keep them from work. With the shortchange to the public authorities, many are now considering a variety of negative measures which would amount to housing fewer families.

In addition, some public housing authorities will lose tax-credit deals because project-based vouchers will not be available for operating costs.

Senator Barbara Mikulski (MD), as reported in the last issue of U.S. Mayor, said of the new HUD policy, "This is unacceptable. HUD must take the necessary steps to ensure that every voucher currently is use stays in use." In a press conference held on May 4, Representative and House Minority Leader Nancy Pelosi (CA) and Representative Barney Frank (MA), who is also the ranking member of the House Financial Services Committee, criticized HUD's Section 8 policy. Pelosi said, "Just over a week ago, in the middle of the fiscal year, the Department of Housing and Urban Development changed the rules and retroactively cut back funds for housing initiatives. Heartlessly, the administration is taking housing money away from the needy families who were promised it." Frank added, "The administration has consistently ... sought to cut the Section 8 program. And we have to put that in context."

HUD argues that Section 8 costs have grown too large and that this policy addresses the problem. Moreover, Section 8 rents are not in line with comparable market rents. Michael Liu, HUD Assistant Secretary for Public and Indian Housing in a telephone press conference on April 26 said, "This program was intended to follow the market, not lead the market." He added, "In many places, Section 8 is considered the market leader." In a letter to HUD Secretary Alphonso Jackson April 29, Senator Christopher S. Bond (MO) also expressed concerned about the costs of Section 8, but requested clarification on HUD's confusing new policy. The senator said, "I remained very concerned about the continuing and growing costs associated with the section 8 voucher program. We need to ensure costs are reasonable while continuing to protect those families, including the elderly and disabled, with the greatest housing needs and, most especially, extremely low-income families."