Some federal housing programs will disappear within the next several years if the Reagan Administration goes ahead with plans to replace programs with housing block grants for states and localities.
The plan would have a significant impact on recipients of federal housing benefits, including low-income tenants and developers who count on aid to tenants to help cover the costs of rental-housing construction. Instead of having to deal with a few somewhat familiar federal housing programs, they may be faced with scores of locally administered and originated efforts that vary radically from state to state or even city to city.
Under one plan being considered by the Department of Housing and Urban Development -- a three-year transition from categorical housing programs to block grants administered by states, counties and cities -- 50 localities may be devising their own programs by as early as 1983.
The new program would emphasize housing rehabilitation and tenant rental vouchers, which entitle low-income recipients to a cash allowance to help pay for moderately priced housing of their choice, according to a draft of the plan. Participating localities would give up some portion of funds they now receive for programs such as Section 8, which provides rental assistance for low-income persons, and Section 312, which provides low-interest housing rehabilitation loans. In return, they would have the "total flexibility" to design their own housing programs.
While the administration is clearly leaning toward developing some form of block grants for housing, it has not yet outlined how such a program might work. A report commissioned by Congress last year -- originally due March 31 -- is still being prepared by HUD.
The draft of the plan lists four possible ways of moving to block grants with varying degrees of federal control.
The approach the administration supports -- and Congress finally agrees to -- could affect the number of newly constructed housing units built with federal funds. For example, if the final block grant program uses one of the draft options, which emphasizes short-term expenditures by localities, there could be "adverse repercussions" on new housing production, the HUD researchers acknowledge.
The uncertainty as to whether block grants may mean less money for new construction is enough to give the jitters to people like National Association of Home Builders President Herman J. Smith.
He criticizes the still-vague proposals as shrouded in a "certain aura of mystery." One of builders' major concerns is that while states and localities may be able to spend money more freely than they do now, they won't have the ability to produce new housing as HUD has.
The states say they are ready for the grants. According to the National Governors Association, more than a third of all new Section 8 housing units are produced by state housing agencies. States would probably be running new construction programs for communities with populations of less than 100,000 to 200,000, the draft study says.
The Working Group for Community development Reform, a Washington-based group that monitors HUD programs, says neighborhood leaders are concerned about who would benefit most from a housing program no longer administered by HUD.
A Working Group survey shows some leaders are worried that local governments may be less interested in making sure programs focus on low- and moderate-income persons than the federal government is.
Jane McGrew, HUD general counsel in the Carter administration, is among the sharpest critics of the block grant proposals. Shifting gears would cost time and money, she says, with uncertain results for both low-income tenants and the housing industry.
McGrew, an attorney with Steptoe & Johnson in Washington, questions the administration's delay in resolving the block grant issue.
"One might wonder whether this laid-back approach is not a signal that the intent is really to cash out the programs entirely and forget the immediate steps," she says. "Indeed, when compared to some alternatives, a block grant program may not be so threatening after all."