Housing Authority Faces Major Cut to Section 8

Friday May 21, 2004

The embattled Berkeley Housing Authority (BHA) took another body blow this week when it learned that it will lose about $200,000 in federal funding, a 12.5 percent cut. 

In a letter received by public housing authorities across the country Tuesday, the U.S. Department of Housing and Urban Development (HUD), revealed that it was reducing the administrative fees it pays to administer Section 8 housing units. 

The news is especially tough for the BHA, which has exhausted its reserves in recent years to stay afloat. Although the housing authority has balanced its books this year, it faces looming deficits of $87,000 in 2006 and $156,000 in 2007. 

“This [cut] is the outer limits of what’s survivable for us,” said Berkeley Housing Director Steve Barton. 

HUD’s new formula would reduce the BHA’s administrative budget for Section 8—the federal government’s largest affordable housing program—from $1.8 million to $1.6 million. With staff costs alone gobbling up 1.4 million, Barton said he would likely have to eliminate two or three positions from the 17-member staff and reorganize the agency to keep it afloat. 

News of the funding cut comes on the heels of a blistering report, commissioned by HUD, that charged the housing authority has mismanaged the Section 8 program in Berkeley and routinely failed to comply with HUD regulations.  

Among other problems, the report found that the agency’s three housing representatives were responsible for overseeing 1,800 housing vouchers, double the average workload. 

Barton said the housing authority has already begun to redeploy employees to implement HUD recommendations, but that layoffs could complicate the reform effort. 

Announcement of HUD’s new formula for administrative fees, which stems from a congressional appropriations bill signed last January that capped fee increases, came as little surprise to several area housing directors. 

“We knew that the language was there and we’ve been staring at it for months” said Ophelia Basgal, director of the Alameda County Housing Authority. She said she had corresponded with directors of housing authorities throughout the state and that every authority reported cuts of at least 10 percent to their Section 8 budgets. 

Under the previous formula, the BHA received a monthly administrative fee of $76 for the first 600 vouchers it rented, and $71.96 for the remaining vouchers up to the agency’s 1,841 voucher limit. Under the new pro-rated plan, the housing authority will only receive $64.01 per voucher. 

In addition to the new administrative fee formula, HUD has also alerted housing authorities that it will not cover increased rents on Section 8 units for the next year. Barton said the new policy doesn’t appear likely to affect Berkeley because rents have been stable. 

However, Berkeley voucher holders remain vulnerable to future cuts. President George W. Bush’s proposed new budget recommends a $1.6 billion cut to the voucher program. In addition, last month, HUD announced that it is basing funding for next year’s voucher program on the total number of vouchers housing authorities had rented by last August. For Berkeley, that means the BHA Section 8 program would be underfunded by nearly 400 vouchers. HUD has given assurances that authorities can appeal for more funding, but whether or not the BHA will receive full funding remains uncertain. 

Should the federal government cut funds, the BHA could be forced to either offer fewer vouchers or force tenants to make sacrifices, including paying a higher percentage of their rent or moving into cheaper apartments.