Posted on: Monday, February 24, 2003

Bush plan would scrap $50 rent cap

Advertiser Staff and News Services

The Bush administration wants to eliminate the cap limiting rent to $50 a month for tens of thousands of people who receive federal housing assistance.

Instead, the president's 2004 budget proposes making $50 the minimum rent that can be charged for low-income housing assistance recipients, though local housing agencies would have the discretion of setting higher minimums.

Robert Hall, acting executive director of the Housing and Community Development Corporation of Hawaii, said about 200 people in Hawai'i, mostly people on public assistance, qualify for the $50 rent cap.

The HCDC uses a combination of federal money and the rent it collects from its 5,000 low-income housing recipients to meet operating expenses, Hall said.

If the federal government cuts money to the states and the HCDC is unable to pay utility and maintenance bills, the agency will have to find ways to make up the difference. The most likely scenarios, he said, would involve some sort of rent increase.

"I guess that's why they're talking about letting us set our own minimum," he said.

But income generated by increasing the amount of rent paid by Hawai'i residents who qualify for the $50 cap might not be enough to make up for the deficit, he said, so Hawai'i is watching and waiting.

Just more than half of Hawai'i residents who use low-income housing are public assistance recipients or elderly people on fixed incomes. The others are working families. Rent is calculated at about 30 percent of the family's income, Hall said.

Federal housing officials say the proposal would help cash-strapped local authorities, promote work and treat poor families more equitably. For instance, some local officials have complained of residents who lie about their finances and pay far less than they can afford.

But low-income housing advocates contend President Bush's plan places even more of a burden on struggling families and unfairly shifts more of the financial responsibility of supporting public housing from the government to poor residents themselves.

Last month, the Department of Housing and Urban Development announced that shoddy accounting practices in place before the current administration took over left the agency $250 million short.

As a result, federal aid for local housing authorities' operating expenses could be slashed by at least 10 percent this year.

"This seems to me that the Bush administration is effectively saying to the residents of public housing that they should be forced to pay for HUD's mistake," said Tim Kaiser, executive director of the Public Housing Authorities Directors Association.

Seventy percent of the nation's local housing agencies have minimum rent requirements, and nearly half of the agencies set the minimum at the current cap of $50, said Michael Liu, HUD's assistant secretary of public and Indian housing

"This is not a radical departure from the policies already in motion," Liu said. "We believe this is a very progressive policy ... and allows more dollars to go to those housing authorities who need it most."

About 4 million households receive federal assistance for housing — either to live in public complexes or for vouchers that can be used for private rentals. Liu said the change targets the 400,000 homes that are not headed by an elderly person or by someone who is disabled, but who have reported no income.

Budget documents say the new proposal "is intended to promote work and increase equity in the treatment of recipient households with similar needs."