For the first time in 45 years, the federal government has no ongoing low-income housing production program.
Until now, the government has been adding hundreds of thousands of low-income families to its assisted-housing rolls each year and has built housing for the poor. But this fiscal year, which began Oct. 1, the number of assisted families has been effectively frozen at last year's level of 3.8 million, and no new building can be approved because Congress has not been able to agree on a housing bill.
Unless Congress acts in its lame-duck session, some $10 billion in assisted housing funds already budgeted could be lost to the programs -- enough to assist between 100,000 and 300,000 families, depending on the amount of subsidy, according to the National Low-Income Housing Coalition.
Even if a housing authorization bill does pass, it will be modest by previous years' standards and will provide only a minimal amount of funds for new production. The federal government's primary building program, costly "Section 8," has little support and appears to be gone for good.
Meanwhile, low-income families not already in subsidized housing will remain on long waiting lists throughout the country. Only a few families will be able to move into subsidized housing, replacing those who leave. Those who already are receiving assistance will not lose it, however.
Local housing officials are looking for new ways to start building low-income housing themselves as federal production programs dry up, but so far have been unable to fashion anything that could house persons at the lowest income levels.
"I think we are in for some pretty tough times for the poor," said Carr Kunze, director of housing for Fairfax County. There probably will be more doubling up and demand for substandard housing because of the lack of building programs, he said.
"I don't know what we are going to do," said Richard Coward, special assistant to the District's housing director, about the end of the federal construction programs. The District, which has a waiting list of more than 7,000 families for public housing, is looking for ways to build rental housing, but is running into the reality of a tight budget. Coward commented, "The cities just can't pick up that much money. . . . It's a monster."
The importance of the federal programs in this area is illustrated by the fact that virtually no rental housing has been built in the pastthree years in the Washington area without some sort of federal subsidy. The number of low-income assisted units in the Washington area was rising by more than 3,000 a year in the late '70s and into the '80s. But in the first full fiscal year of the Reagan administration only 746 units were added here, according to the Metropolitan Washington Council of Governments, which distributes the funds. Without new funding authority, the number will drop to zero.
The administration is shedding no tears over the lack of authorizing legislation for assisted housing. It has been trying for two years to kill virtually all construction programs for low-income housing; Congress' stalemate may accomplished what administration pressure could not.
This year's congressional budget resolution allocated about $10 billion for assisted housing programs for fiscal 1983, rejecting the administration's budget assumption that the Department of Housing and Urban Development could recapture more than enough funds to run its programs in 1983 by canceling previously authorized projects. But both an authorization and an appropriation bill are necessary to put the budgeted funds into the housing programs, and neither has yet made it through Congress.
Even the Republican-controlled Senate Banking Committeee would not go along with cutting all construction of low-income housing and instead approved a bill within the $10 billion limit that included a small production program and at least a modest increase in the number of assisted families. That bill also adopted the administration's main proposal to subsidize housing for poor families through the use of "vouchers" that could be used to help pay for housing anywhere.
The House Banking Committee, on the other hand, passed a housing authorization bill that would cost $28.7 billion, well above the budget level. The panel included Section 8 and public housing construction and soundly rejected the voucher approach. Despite intensive negotiations throughout the summer, the committee members could not come up with a new proposal that fit within the budget limits, and no bill was considered on the House floor.
Hill staffers and lobbyists say the chances for getting a housing bill passed during Congress' lame-duck session appear slim. Nevertheless, proponents of low-income housing say they will push for one.
People who want to build low-income housing and those who represent poor families in need of housing say this situation sets the stage for a crisis this year. The poor will have to rely on existing housing. And there will be no modernization funds to keep older public housing from deteriorating.
"If there is no authorization bill and no new production program, we're in trouble," said Richard Nelson, deputy executive director of the National Association of Housing and Redevelopment Officials (NAHRO). "We think there is a crisis in low-income housing in many cities," he added.
Cushing N. Dolbeare, president of the Low-Income Housing Coalition, calculates the unmet need forhousing assistance at between 7 1/2 million and 15 million families -- several times the 3.8 million now served.
"Most of those who really need [the aid] will go untouched, even with the authorization," she said.
The federal government in 1937 started building public housing for the poor. This was criticized as "warehousing" low-income families in predestined ghettos, so a new method was tried in the early 1970s. Called Section 8, this program provided rental subsidies to low-income persons, both at existing and new apartment buildings. Developers were provided with both low-interest financing as well as the rent subsidies and a guaranteed rent roll when they set aside a portion of the building for qualified poor families.
But this method of building housing ran into major problems, as well. It was costly because of the incentives the federal government used to get developers involved. The incentives proved so great, in fact, that getting approval to build Section 8 housing turned into a political plum, and cases of bribery and political maneuvering occurred. Because of the high level of rents guaranteed and paid by the federal government, developers often were housing the poor in luxury apartment complexes, to the chagrin of middle-class neighbors ineligible to live there.
The Reagan administration proposed ending virtually all construction and replacing it with a "voucher" program by which some poor families would receive a certain amount of money for rent, based on income levels and family size, and would shop for their own housing rather than having to go to particular Section 8 projects. This would be more cost-effective and would give the poor more choices, the administration argues.
Opponents of the idea say it would do nothing to encourage building of low-income housing and that shortages are the main problem in many areas.
The House's Housing Subcommittee Chairman Henry B. Gonzalez (D-Tex.) said in an interview that, just to keep the low-income housing programs alive, he will push hard for a new authorization bill that stays within the budget limits and can pass in the lame-duck session.
"It would be minimal. But I'm talking about the life of these programs," he said.
Gonzalez also said the administration is "sternly against" any kind of authorization bill. Sharing that view are Hill staffers, housing activists and lobbyists who say the administration prefers to save the money that Congress wants to spend on assisted housing.
But Federal Housing Commissioner Philip Abrams disputes that contention. "We would like to get an authorization bill," he said.
While the administration would too expensive and inefficient, a bill along the lines of the Senate committee's version would be signed by the President, Abrams said.
That measure would assist 60,400 more families with the use of vouchers and would fund construction of 15,000 units of elderly housing. (The administration had requested 10,000 new units of elderly housing.)
The bill also would create a new construction and rehabilitation block grant program under which local governments would develop their own methods of building low-income housing. It would earmark $300 million from other grant programs and require that at least 25 percent of the units built with the funds go to low-income households.
If no new authorization bill can be passed quickly, another possibility is simply to approve an appropriations bill that would at least keep existing housing programs funded, even though that's not the way things are supposed to work, congressional staff members said.
While Congress confronts this legislative tangle, local housing officials are looking for new sources of funding for low-income housing. So far, the most common appears to be tax-exempt financing, with local authorities floating bonds to construct multifamily units.
In Montgomery County, where the waiting list for assisted housing is about 6,000 to 10,000 families, a tax on condominium conversions is helping to fund a Section-8-type local building program of interest-rate and rent subsidies. But the poorest persons cannot be subsidized this way because the county simply couldn't afford the cost, said James Welu, head of mortgage finance for the county's Housing Opportunities Commission.
Both Montgomery and Fairfax County are developing a plan to give developers tax-exempt financing for building rental apartments if 20 percent of the units are set aside for low-income families. The lower rents for those families would not be subsidized by the county, however, but by the other 80 percent of the tenants in the building. Their rents would be skewed to make up for the lower rents of the 20 percent.
Fairfax also has started to use its zoning authority in a trade-off with developers: The county will allow a higher density for a particular development in exchange for free land or units that the county can use for low-income housing, housing director Kunze said. In addition, the county can buy buildings slated for condominium conversions to keep them as rental housing.
But Kunze also said that only the upper range of needy families can be helped with the shallow subsidies the county can provide.
"Nothing we are coming up with now can serve the very poor," he said. Without the kind of deep subsidies the federal government can provide, "I'm afraid they lose out."