A housing crisis is looming in Berkeley, especially for people whose rent is subsidized under the federal government’s Section 8 housing plan.
At Tuesday’s Housing Authority meeting the room was packed with people fearing that they could lose their homes and also asking that their input be heard in a proposed five-year plan to set guidelines for future Section 8 housing.
According to Stephen Barton, interim housing director, rents have gone through the roof in the last four years. The median price for a one-bedroom apartment in Berkeley is $1,050 per month, a healthy mortgage payment in most places in the United States.
“This is bananas,” he said, shuffling through papers, as he looked up housing statistics.
“The median price for a one bedroom apartment with rent control, is $664. New one bedrooms on the market are $1,050, meaning there was an increase of around 58 percent over the last four years.”
“In the last year alone, new one-bedroom apartments coming on the market rose from $950 to $1,050.”
It’s the rising market which has prompted landlords to seek the higher prices that the market offers rather than continue to rent to Section 8 recipients, whose rents are capped.
“Landlords can get so much more on the market, that it’s hard to persuade them to keep Section 8 recipients in their rental units,” he said. In fact, many landlords are refusing to take Section 8 vouchers, preferring to rent to people who pay full market rent. So Section 8 renters do not feel secure in their rental units.
Compounding the problem are current re-shufflings in Section 8 payment plans.
According to Barton, the federal government delivered Section 8 - monthly rental assistance - in both “vouchers” and “certificates,” but eventually realized that it was running two separate programs. The two were merged recently, bringing together elements of both programs, but now calling both “vouchers.”
“Unfortunately, ‘certificates’ were more favorable to tenants, and calling the new program ‘vouchers’ created misunderstandings,” Barton said. “People associate the older meaning with the new program.”
In the old certificate system, if a landlord raised rent above the HUD- determined “Fair Market Rent” levels, tenants only had to pay up to 40 percent of their income, leaving landlords high and dry.
Under the old vouchers, landlords would be able to raise rents as high as they wanted to, and the tenant would have to come up with the difference between the fixed value of the certificate and the actual market rate set by the landlord.
“That’s impossible to do for people on a fixed income,” said Councilmember Dona Spring.
The new vouchers however, adopt the older “certificate” procedures, allowing Section 8 recipients to pay a maximum of 40 percent of their total income for rent. The federal government pays the difference.
Paying the rent will no longer be a problem for those receiving Section 8. The larger problem will be finding funds to pay for the program.
To encourage landlords to rent to Section 8 recipients and to protect them, the Berkeley Housing Department has asked HUD to raise the Fair Market Rent values by 20 percent.
“The real danger is that HUD has not increased the FMR sufficiently to keep up with today’s rental market. As a result, landlords are opting out of Section 8 programs to get higher rents available on the market,” says Barton.
But raising FMR rates creates its own dangers. Currently there are 1,400 people on Section 8 rolls. There are long waiting lists, which people wait for years on. And there are people with Section 8 certificates who cannot find a landlord who will rent to them.
Voucher money comes from a fund which the Housing Department receives from HUD. In Berkeley, this amounts to nearly $750,000 a month, or $9 million a year, Barton said.
If the value of a voucher increases by 120 percent, as the city has requested HUD to authorize, without a concomitant increase in funds for the Berkeley Housing Department to dispense to its Section 8 program, there will be fewer vouchers available to existing Section 8 recipients.
“With our current funds, if the FMR goes up, we could only serve 1,000 tenants. Unless HUD gets more money, we have to drop people off the list, which would create further backlogs on the waiting list, which would be terrible.”
All at the council concurred that steps must be taken to preserve what Section 8 housing still remains in Berkeley. Councilmember Linda Maio said, “we are fighting a rear guard action to keep what affordable housing we already have.”
Mayor Shirley Dean suggested that tax write-offs be given to landlords who do accept Section 8 recipients to assuage their loss on the market.
“A tax break from the State of California for landlords who accept Section 8, even though they don’t get full market value, could offset some of the imminent losses in housing,” said Dean.
Members of the public asked why lower income housing options aren’t being looked into if such cuts are imminent.
“Why aren’t shared housing units, like boarding homes, rooming houses and dormitories being considered?” asked Duane de Witt. “We need to maximize our housing options.”
Carroll Huff, a Section 8 resident in Berkeley, said that the poor will be unable to stay here. Vouchers should be good for dorms for low-income co-op housing. It’s unconscionable that we do not allow shared housing to be covered by Section 8.”
The Housing Authority agreed unanimously to add a section about shared housing to the proposed five year plan, and to reconvene Oct. 24, at which time Barton will present a “next steps” proposal, and respond to the public’s input.
“The affordable housing crisis is not just a problem in Berkeley,” Barton said. “It’s happening everywhere.”
According to the mayor of San Jose, nearly half of all venture capital investments in the nation in 1999 were absorbed by the Bay Area, a figure estimated to be in the low billions, more than the total of many Third World GNP’s combined.
“A wave of money like that makes the price of property to skyrocket in a small period of time. With so many people getting money at once, the housing market shot up. That money is percolating throughout the whole market and the folks on Section 8, are unfortunately on the bottom of things,” said Barton.
“It’s a terrible situation.”