In an effort to quell an outcry it provoked over the summer, the Department of Housing and Urban Development has decided to postpone publication of two sets of final regulations that could reduce public housing subsidies in some areas, particularly large cities.
HUD Secretary Samuel R. Pierce Jr., in a letter to Sen. Donald W. Riegle Jr. (D-Mich.) last week, said the department will instead send the regulations to the Office of Management and Budget later this month, along with its legislative proposals, "as a comprehensive budget submission."
The department "will reopen consultations with interested parties" early next year, and expects to publish the final rules in March, Pierce said.
One of the proposed regulations would allow HUD to cut subsidies to housing authorities with vacancy rates over 3 percent; the other would alter the formula by which subsidies are calculated and would, most notably, allow the department to recapture money from authorities whose investment and other income exceeds the estimates they give to HUD in their budgets each year.
Public housing groups oppose both sets of rules, but are particularly upset at what they regard as an effort to implement the recapture policy without a formal rule. In a letter to Pierce last month, attorneys for the Council of Large Public Housing Authorities termed this "illegal" and threatened to sue if the policy is not rescinded.
HUD Assistant Secretary for Public Housing Warren T. Lindquist, whose April memo to HUD field offices touched off the recapture controversy, said he expects that "we will have something out in a couple of days" that will resolve the issue. Though one housing representative said "it is almost inconceivable" that the department will overcome the objections, Lindquist contended that the new instructions to the field will be "fair and reasonable."
"I'm doing what I'm doing because it's fair and right" and not because of the threat of a lawsuit, he said. "Getting sued is no big deal."
On the vacancy regulations, Lindquist, who has been meeting with public housing interest groups, said last week that "it was apparent that they had so much trouble with what was in the proposed regulation" that it would be better to fix it now rather than put out a revised regulation later.
He said he believes that combining the regulations and the department's legislative proposals will be better for all concerned. "That way we can wrap the whole thing up in one package. We can thrash out what has to be thrashed out with OMB, and then be able to bring out the whole package" after President Reagan's budget message in January.
Lindquist said he could not discuss the legislative proposals but contended that they and the regulations together "will be recognized as a good and workable package."
The vacancy regulations have renewed suspicions among public housing groups that the department's goal is to get the government out of public housing. Many authorities, particularly those in large older cities, have substantial vacancy rates, and officials of these argue that reducing subsidies will accelerate deterioration.
Lindquist said that the department's legislative and contractual obligations are such that it could not get out of public housing even if it wanted to, and that the goal of the regulations is to "avoid the federal government's paying operating subsidies to support units of housing that are not providing homes for people."
"When these subsidies are being used to carry vacant units for long periods of time, obviously the purpose of the statute is not being served," he said.
He indicated, however, that the final regulations will be changed to deal with housing authority objections.