Low-Rent Program Predicts Losses
Rising Land Values Diminish Appeal of Section 8 Contracts
Tom Hill is a longtime resident of Galen Terrace, a one-time notorious District complex that was renovated after residents formed a tenants association to acquire the property and renewed its Section 8 contract for 20 years.
(By Lois Raimondo -- The Washington Post)
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Monday, July 9, 2007
The Washington region stands to lose about 26,000 affordable housing units over the next five years as a number of property owners opt out of a housing program designed to keep rents low.
Many contracts signed under the project-based Section 8 program are expiring. And with property values having risen dramatically, some owners are selling their buildings or converting them to condominiums or upscale rentals.
The District lost 312 affordable units, or about 13.7 percent of the eligible properties, between 2001 and 2005, according to a recent report by the U.S. Government Accountability Office. Maryland lost 2,036 units, or about 13.3 percent of its total, and Virginia lost 1,827, or 10.5 percent.
And 26,000 additional units in the District, Virginia and Maryland are owned by for-profit landlords whose contracts expire within five years.
Housing officials are concerned, especially because the project-based Section 8 program accounts for 22,000 properties and 1.5 million units nationwide. "We couldn't build them again," said Stephanie Killian of the Montgomery County Department of Housing and Community Affairs. A separate Section 8 voucher program provides rent subsidies for another 1.8 million low-income households.
More than three decades ago, the federal government came up with a novel approach to creating affordable housing: guarantee subsidies to property owners who agreed to keep rents low for 20, 30, even 40 years.
As the Section 8 program dwindles, the need for affordable housing continues to grow. In a newly released report by the U.S. Housing and Urban Development Department, nearly 6 million Americans faced severe difficulties paying rent or lived in substandard housing in 2005, up substantially since 2003.
In the District, there are 58,000 applicants on a waiting list for public housing. Fairfax County has 11,000 families waiting for housing assistance, and Montgomery counts 5,000 on the list for public housing and another 17,000 waiting for rental assistance.
HUD has taken the loss of housing through property owners opting out of Section 8 very seriously, said Charles H. Williams, the department's executive assistant secretary for multi-family housing.
Through incentives that allow landlords to adjust rents to a changing market and improve their properties, the federal agency succeeded in getting 95 percent of the housing units renewed between the years 2001 and 2005. According to HUD, 62 percent of the renewals in fiscal 2006 were for one year, and 31 percent were for one to five years.
"We are using all the programs we have available for preservation," Williams said.
But development pressures continue to worry local housing officials. In Montgomery, officials estimate that more than 700 units are at risk of falling out of the Section 8 program. Adopting a goal to save every federally subsidized property, the county has been working with landlords to keep them in the subsidized program, providing such incentives as administrative assistance with HUD paperwork.
