Published: September 5, 2009
Richmond's housing authority is freezing its rent-subsidy program because of a financial jam.
The Richmond Redevelopment and Housing Authority's move means that 130 families who received vouchers for subsidies within the past two months won't be able to get the help.
"We're telling them, unfortunately, we don't have the funding," said Shawn Williams, director of the authority's federally funded rent-subsidy program.
"It just wouldn't be right. Their name would be on the lease. If we didn't have the money to pay the subsidy, the landlord could ask them for the full amount," she said.
But the freeze caught Shellette Williams, who uses a wheelchair, just as she thought she and her four children finally had come to the end of a five-year wait for the rent subsidy that would allow her family to move from her mother's house.
There had been some back and forth over the rent, but she negotiated a reduction and tried for days to get word to the RRHA.
The authority "finally calls me back today . . . and guess what?" Williams said. "I have been packing for over two weeks. . . . Now we have nowhere to go."
The subsidies, often known as Section 8, or the Housing Choice Voucher Program, involve a three-way agreement. Once a low-income family qualifies for the program and finds an apartment, they sign a lease with the landlord and pay 30 percent of their income as rent. The authority then pays the landlord any difference between the family's payment and the actual rent for the apartment.
Because of its new financial squeeze, the authority is asking the city for nearly $420,000 of funding in December.
RRHA needs the money to cover rent subsidies for 84 families, separate from the 130. This group already had found a place to live and, unlike Williams, either have moved or are about to move.
"The mayor didn't hesitate for a minute," said Anthony Scott, RRHA's chief executive officer. "We felt it was wrong to disrupt people's lives by canceling those."
But paying those vouchers will leave the authority walking a financial tightrope for a while -- a tightrope that other housing authorities, including those in Winston-Salem, N.C., Boise, Idaho, and Birmingham, Ala., have managed by stopping subsidy payments to some families who already were receiving them.
"Everybody's being affected," said Virginia Supportive Housing spokeswoman Candice Streett. "In the program, you're supposed to contribute 30 percent of your income towards rent. As people lose their jobs, the amount housing authorities have to subsidize is going up . . . but there's only so many dollars coming out of the federal spigot."
At RRHA, for instance, the monthly cost of rent subsidies has climbed from about $1.4 million or $1.5 million earlier this year to $1.9 million for September, Scott said. The money all comes from the federal government.
Scott is hoping that Congress will approve funding increases for rent subsidies when it considers the issue next month, and that U.S. Housing and Urban Development officials will increase the department's payments to RRHA when they next review the authority's program, in January.
Those payments reflect the amount of use by an authority. In the past, that was a problem for RRHA, which was blasted by federal auditors last year because it managed its waiting list so poorly that nearly 675 families didn't get housing even though funds were available.
Since then, RRHA has ramped up the rent-subsidy program, spending about $1 million a month out of a $7 million surplus that it had built up over years of mismanaging the waiting list.
The result is that it has cut the waiting list from several thousand to 1,200, and that nearly 3,000 Richmond families now receive rent subsidies, up from fewer than 2,500 two years ago.
Now, the authority has to wait for HUD's review to recognize its stepped-up activity.
If HUD does not increase payments to RRHA, the authority could end up with a $6 million deficit by next September. It would have to cut more than 1,000 families from the program to break even financially, according to internal RRHA financial projections.
"This is serious," said Richmond City Councilman E. Martin Jewell, a longtime housing activist. "It sounds like they've gotten into financial trouble again . . . but for many people, RRHA is housing of last resort."
HUD Richmond office spokeswoman Toni Schmiegelow said it is up to agencies such as RRHA to take steps to stay within the budgets HUD sets for them.
"The authority appears to have made an assessment that it needs to manage its program differently in order to control and reduce expenses to otherwise operate within the budget," she said.