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New HUD Policy on Section 8 Voucher Renewals Raises Grave Concerns

Based on a narrow interpretation of language in the FY 2004 omnibus appropriations bill, HUD on April 22 gave notice that it would no longer base funding on actual voucher costs. Instead, it will only pay for the number of vouchers under lease as of Aug. 1, 2003, adjusted for inflation.

Under this new policy, PHAs in areas where housing costs have risen faster than HUD’s inflation adjustment or that have issued vouchers after Aug. 1 will be unable to cover their obligations for this year. As a result, they may be forced to stop issuing vouchers, to raise rents for residents or to reduce rental payments for property owners.

Residents who can’t afford to pay higher rents may have to move and property owners whose rents are significantly reduced could see the financial health of their properties undermined.

Massachusetts estimates that it will lose 2,700 vouchers in FY 2004 if HUD proceeds as planned, and the Sacramento Housing and Redevelopment Authority says it will see a shortfall of $1.6 million-$2.6 million, forcing it to terminate 500 vouchers.

NAHB is also concerned that the new policy over the long term will discourage apartment owners and lenders from participating in the Section 8 voucher program because they can no longer be assured that funding for the program is stable and reliable.

Since the program’s inception, Congress has never reduced funding for Section 8 renewals, and it appropriated enough money to fully fund all authorized vouchers in 2004. HUD, nevertheless, has not backed down from its position, spurring complaints from many members of Congress, who have reiterated that their intent has been to fully fund all authorized vouchers.

NAHB has expressed grave concern about this issue to HUD Secretary Alphonso Jackson and to Deputy Assistant Secretary of Public Housing William Russell. The association is also working closely with Congress to ensure that HUD spends the funds that have been appropriated so that families are not displaced and housing providers and investors continue to participate in what to date has been a highly successful program. 

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