Section 8 Project Could be Jeopardized, Apartment Groups Tell Senate

Washington, D.C.–Tens of thousands of affordable housing residents are at risk of losing their housing unless Congress acts to make changes at the U.S. Department of Housing and Urban Development (HUD), according to the recent testimony provided by National Multi Housing Council (NMHC), National Apartment Association (NAA) and the National

Washington, D.C.–Tens of thousands of affordable housing residents are at risk of losing their housing unless Congress acts to make changes at the U.S. Department of Housing and Urban Development (HUD), according to the recent testimony provided by National Multi Housing Council (NMHC), National Apartment Association (NAA) and the National Leased Housing Association (NLHA) at the Senate Banking Committee.Testifying on behalf of NMHC/NAA and NLHA, Hector Pinero, senior vice president of New York-based Related Management, praised the Section 8 project-based assistance program as “the most effective housing subsidy ever devised by Congress,” but warned lawmakers that the program is experiencing major disruptions that seriously jeopardize the program’s continued success.Pinero explained that the program suffers from widespread funding shortages because of recent changes in contract processing by HUD. These problems are compounded by problems with HUD’s payment process and computer systems, which are compromising Section 8 properties around the country.According to Pinero, late rent subsidy payments to property owners have been a sporadic problem for years, but starting last summer, they became the rule rather than the exception.  HUD’s failure to make timely payments puts owners at risk for defaulting on their mortgages, many of which are insured by HUD. It also forces them to defer the maintenance needed to maintain these properties.Unfortunately, noted Pinero, “the proposed FY 2009 HUD budget perpetuates this problem, which will negatively impact the nation’s affordable housing at a time when turmoil in the single-family housing sector makes the nation’s affordable rental housing stock even more critical.”NMHC, NAA and NLHA called on Congress to take three key steps to address these problems:1. Exercise close oversight over the process HUD uses to calculate its budgetary needs and to make its Section 8 assistance payments. 2. Enact legislation to penalize HUD for late payments and to provide more flexibility to owners with regard to project reserves and notification requirements when payments are more than 30 days late. 3. Ensure sufficient appropriations in HUD’s FY 2009 budget, which as proposed are insufficient in light of the housing affordability issues plaguing this country.