Cut in HUD Funds a Blow to Poor

The suspension of a federal housing subsidy for about 1,500 low-income families has caused a deep fissure in Los Angeles’ already shaky structure for helping the needy, leaving many families with little hope of finding safe housing and forcing officials and advocates to respond to what one advocate called a “housing catastrophe.”

As officials, including the mayor’s office, appeal to the federal government for help, families cut off from the Section 8 program are in a desperate search for spaces in shelters, motels or in the homes of friends and relatives. Phone lines at social service agencies have been flooded by those seeking help.

There are few signs that help will come soon. In fact, as many as 3,600 additional families that receive assistance from Section 8 may have their housing contracts canceled, leaving them to pay the full rent or lose their homes.

“If HUD does not allow us to use our reserves to fund the contracts supporting these families, then we could be required to cancel Section 8 contracts for up to 3,600 families,” said Steve Renahan, director of the Section 8 program for the Housing Authority of Los Angeles.

Local officials have asked the U.S. Department of Housing and Urban Development to allocate more vouchers, give them more money and determine how much of the housing authority’s reserves can be used to bail out the program.

Larry Bush, a HUD spokesman, said officials in Washington, D.C., are aware of the need.

“This certainly has the attention of the department, as we know it must for the housing authority,” Bush said.

Under Section 8, a federal subsidy program for low-income people, participants pay about a third of their income toward rent and the federal government pays the rest. In the past, receiving a housing voucher, which often takes years, had been viewed as a guarantee of assistance.

But on Feb. 17, for the first time in its history, the housing authority suspended 1,500 vouchers for Los Angeles residents, citing insufficient funds. The suspension affected voucher holders who had not yet entered into rental contracts with landlords. It did not affect Section 8 participants currently in housing.

News of the suspensions and now the possible cancellation of Section 8 contracts has been a hard blow for families and advocates who already were struggling in a tough housing market.

“For many people in this community, that was the way out -- either being on the Section 8 waiting list or in possession of a voucher,” said Pete White, executive director of the Los Angeles Community Action Network, in the skid row area. “But now, unless something drastic changes, we know the impacts. The impacts are more despair, more destitution, more homelessness.”

Across the city, families with vouchers are stuck living in shelters and motels. Those who put down deposits on apartments are unable to move in. Landlords who had agreed to rent to voucher holders, such as 70-year-old Johanne Sandilands, also are in limbo.

Sandilands, who is retired and disabled, had waited five years for a voucher. It would have allowed her to move from the Crenshaw area to an apartment closer to her doctors at UCLA. She put down a deposit, gave notice to her Crenshaw landlord that she was moving out -- then learned that her voucher was useless.

“I just don’t know what to do,” Sandilands said through tears. “I call and they say they just don’t have funds. It’s unfair. I’m really stuck.... I put a deposit down and I don’t know what to do about my rent here.”

Elected officials in Los Angeles are working phones and friendships in an attempt to get HUD to act on behalf of the families. Mayor James K. Hahn wrote a letter to HUD Secretary Alphonso Jackson, appealing for federal officials to “immediately intervene.”

The hope is that “we’re going to be given time to develop a ... plan that would lessen the impact on the Los Angeles community as well as additional resources to deal with this issue,” said Sarah Dusseault, the mayor’s deputy for economic development.

Mercedes Marquez, new head of the city’s Housing Department, said that, with the suspensions, “everyone goes into crisis mode.... You have to turn your attention to something you cannot solve without your federal partners.”

The problem stems from a convergence of events. Each year, the housing authority issues more vouchers than the program can accommodate, with the goal of ensuring that every voucher is used -- a common practice that Marquez said is encouraged by HUD.

In the past, housing authorities were able to use reserve funds or future allocations of vouchers to pay for any vouchers above the number allowed by HUD.

But Congress recently took away the ability to use certain reserves, and no new vouchers have been allocated.

Complying with the new policy is complicated because the law is taking effect at a time when the city’s program is over-leased, and other housing authorities, such as the one run by Los Angeles County, also have hit their limits.

But HUD officials laid much of the blame on local officials, whom they said had been warned to stop over-leasing.

Local housing officials have asked HUD to determine how much of their $31-million reserve fund was received before 2003 and thus usable under the current law.

“It will offer us some relief,” Renahan of the L.A. Housing Authority said, “making it less likely that we’ll have to terminate contracts. We’ll know more when HUD finishes their financial analysis and gets back to us in writing.”

Bush, the HUD spokesman, said an analysis of the reserve accounts is not expected to be completed until mid-March.

Other requests from the city might be harder to grant: “Under congressional law, we cannot provide new vouchers or add new funds to their program,” Bush said.

Local officials, however, say there have been precedents in which HUD, during previous administrations, took extra action to help resolve problems.

“It’s not unusual for the administration to go back to Congress to seek supplemental appropriations and technical corrections to law,” Renahan said. “To my knowledge, this administration has not done that, but prior administrations have done that when it would have helped people.”

Renahan said it appeared that the reserves could be used to keep the 3,600 families housed, but he was “hopeful, but not optimistic” about receiving help for the 1,500 voucher holders.

The problems faced by those people are “just the tip of the iceberg,” said Tanya Tull, at Beyond Shelter.

Her agency has moved hundreds of families from homelessness into permanent housing -- often using vouchers. Those vouchers, provided to about 80 nonprofit organizations, are frozen.

“Now you’ve suddenly got no more Section 8 being issued; you’ve got more and more families becoming homeless every day,” Tull said.

Diana Machado and her three children -- ages 3, 5 and 7 -- are among those affected. They spent seven months living in a van after Machado injured herself at work, lost her job as an apartment manager, then lost the apartment that came with it. Tull’s agency paid for their stay in a motel, Machado said. Then the family moved into a homeless shelter.

Their next step was supposed to be their own place, with the help of a Section 8 voucher and the income Machado receives from disability and Cal-WORKS.

But then the housing authority, Machado said, told her that a mistake had been made. The authority had given her a listing of rentals in the county, but her voucher could be used only in the city. After she finally found a landlord willing to rent in the city, she learned two weeks ago that the voucher had been suspended.

“It feels like I’m being punished for being poor,” said a tearful Machado, who will be forced to leave the shelter in April.

“I’ve been looking, looking, looking and being rejected so many times. There’s so much competition, they only take the best applications.

“I finally find a really nice house, and now they tell me they can’t help me.”

The landlord offered to reduce the rent until some solution was found, but Machado still couldn’t afford it. “That’s why I’m on Section 8,” she said.