A federal housing program, known as Section 7, is being applied in different ways in Montgomery and Prince George's counties. In Montgomery the emphasis the Section 8 program will be newly built housing for subsidized tenants. Construction of that housing is now starting throughout Montgomery County. In Prince George's most of the funds are being used to aid families in existing housing units. The following stories look at how the Section 8 program is working in both counties.
A federal program to subsidize rental costs of low- and moderate-income tenants is encouraging a new wave of apartment and townhouse construction in Montgomery County.
Until two years ago, builders displayed no interest in the program, known as Section 7, which requires builders to set aside units to be rented to families who receive rent subsidies.
But then the county government announced it would allocate for Section 8 builders a sizable amount of sewer capacity. The county also located federally financed loans at lower interest rates for builders participating in the lopers applied for permits and sewer capacity.
Today, more than 1,300 apartment units are being rented, constructed or planned under Section 8. Of these, approximately 300 units are for tenants receving rent subsidies. County officials project that by 1982 there will be 4,500 units built with 1,200 of them being for Section 8 tenants.
For apartments dwellers, this new building meant two significant things, according to Eugene Sieminski, housing director in a county where the rents are high and the apartment vacancy rate is low: "Apartments, in general, are getting built. Also, there's Section 8 lower-priced housing."
For the county it meant a break with the notion of subsidized housing concentrated in one place.
"The county's policy is scatteration," said Patrick Maier, a housing office planner who works with developers applying for Section 8 subsidy money and loans. The county Office of Housing must endorse projects before the state approves them for federal subsidy money.
"We want regular market price housing and low-income housing together. For the time being we're trying to avoid large concentrations. County officials are very interested in subsidized housing but they want it done sensibly.
Builders usually make 15 to 20 percent of their apartments or town-houses Section 8 units. In most cases the majority of the units are market-priced units.
Tentative rents on the apartments, yet to be constructed, are high, according to Sieminski, even for Montgomery County - ranging from $300 to $400 for a one bedroom unit. However, if the developers had built without benefit of the lower interest rates, the rents would be about $60 higher, according to Sieminski.
"The key was the County Council providing sewer," said Sieminski. "We wrote letters to builders in March (1976) telling them about the possible program with the sewer," he recalled. "Within three weeks of the letters going out, we had eight applications for 11 projects amounting to 1,800 units."
According to Sieminski, councilwoman Esther Gelman had pointed out the Ginny Mae program for the housing officials to investigate. Then the County Council and the Washington Suburban Sanitary Commission acted quickly to get the sewer program underway. "The council approved the plan on a Tuesday, the WSSC approved it on Wednesday, and we had the sewer allocations on Friday," Sieminski recalled.
Developer Jack Matthews was one of the developers who applied during that month. "They made (building) feasible by giving us sewer," said Matthews, "which we would not have gotten if we hadn't icluded Section 8. Oh, we would have gotten it eventually - in a couple of years." Matthews got his sewer allocation "within a few weeks - just the paperwork time."
For some developers now, two years after the program started, it can take longer - up to several months - to get the official WSSC approval for sewer capacity.
"The fact that you can get sewer at all is the great thing," said Sieminski, pointing out that builders wait years to find out if they get sewer capacity. Most of the capacity has been allotted to other oversubscribed categories of residential building. "A guy walking in off the street can get a (promise of sewer capacity) today if he has a commitment for 25 percent Section 8 units in his development," said Sieminski.
Although the council recently voted 4-to-3 to transfer 8 percent of the sewer capacity which had been allocated for Section 8 builders to single-family home builders, Sieminski said there's still enough to give to all developers who are building Secion 8 housing.
The Section 8 program is named for the part of the federal Housing and Community Development Act tht created the program in 1974.
Under the program tenants, whose incomes make them eligible, pay 25 percent of their incomes - before deductions - in rents, and then, if the rents exceed that amount, HUD pays the difference. The program is used in three forms:
One is for new apartments where builders get a commitment for money from HUD before they build.
Another is for already existing apartments where a tenant arranges with a landlord and the Housing Opportunities Commission (HOC) for HUD to pay the part of the rent the tenant cannot pay.
The third is for apartment buildings being rehabitated!
Only the first two forms of Section 8 are currently being used in Montgomery County. The first 28 new units for the Section 8 program have been open for almost a year at the Northgate apartment complex of some 250 apartment units in Wheaton. Of the 1,800 apartmentunits proposed more than two years ago when the council first started the sewer program and helped builders get lower-priced loans, 1,336 units - including 319 Section 8 units are in some stage of planning, construction or renting. Plans for the rest of the units were dropped by developers. According to Sieminski, 400 apartments will open in the next year and about 100 of those will be Section 8.
But nine more projects proposed in the past two years will include 809 Section 8 apartments and townhouses and 1,142 regularly priced units. But developers for those projects must wait for financing and Section 8 money. Montgomery County's supply of $2.7 million granted during the last funding cycle by HUD has already been doled out, according to Sieminski. More recent projects will have to wait for the next funding cycle, due in August, which should provide subsidies for another 400 proposed Section 8 units, he said!
"We're projecting by the end of 1981," said Sieminski, "31 projects of 7,000 dwelling units. Of those, 2,000 will be Section 8. Maybe 4,500 will be built, and 1,200 will be Section 8."
There will still not be enough Section 8 units to go around,according to Sieminski. "There are 17,000 households inwhich people are paying more than 25 percents of their incomes for housing," said Sieminski, noting that those are the people who generally qualify for Section 8 programs. "Rents are going up faster than incomes, so you'll have more people eligible." Under Section 8 guidelines, a household of four cannot have an income higher than $18,000.
In the county, there are now about 700 apartments under the Section 8 program for existing apartments, where the landlord allows a tenant to come in and rent an apartment with the aid of Section 8 subsidy. There are another 1,500 certified, by income, to join the program if they can find apartments.
"We think we have one of the most successful programs around," said Mike Nail of the Housing Opportunities Commission (HOC), a county agency that administers that segment of the Section 8 program. "We just came out of rent control and landlords are suspicious of anything that smacks of government. But I try to take a United Way approach. I tell the landlords that if they all take their fair share, there won't be any large concentrations of Section 8 housing. Try the program, I say. If you have a bad experience you can come out."
Of new developments with Section 8 units, only the Northgate apartment complex has opened. "I think it's possible people don't know (the Section 8 units) are there," said Maier. "The county has been trying to move for the integration of low- and moderate-income housing. Integration works best when the units are less obvious."
Property owners place the Section 8 units among the market units so that no one in the building knows which units the Section 8. According to Sieminski, a Section 8 unit is usually identical to a comparable market unit. No one who comes to rent a market unit is told Section 8 units are even there unless the person asks.
Bruce Tech, the property manager of Northgate, said his project was "going very well. We're not having any problems. The Section 8 units are spread throughout the project and there's very little impact."
According to a survey of the Section 8 households at Northgate, 20 are female-headed households with one child or two. The incomes range from $3,576 to $11,440. They are young (about 29 years old) and mainly employed as clerical workers of some sort.
In the Section 8 program for existing apartments, 450 of the households (out of about 700) are young families and two-thirds of them are headed by females, according to HOC official Sonia Boin. The remainder are elderly people.
The Section 8 projects have produced little citizen opposition, according to Sieminski. "I know it's going to come," said Sieminski. "From where, I don't know."
Maier said county officials are "holding their breath" to see how newly constructed buildings with a mix of Section 8 and market-priced units work out. But even if the units work out and even if Section 8 funds continue to come into Montgomery County, Sieminski foresees a serious problem which will eventually make the program unfeasible. It cost too much money, he says.
"It's just going to get so huge," Sieminski said."The government won't be able to fund it. Each year, more money for the program will be added, but more people will be eligible. HUD will have to decide if moderate-income people (whose incomes fall just under the ceiling of the Section 8 income cut-offs) can be included. They may just have to fend for themselves."