Bush Housing Plan Stirs Anxiety Over New York's Share of Aid
NY Times, New York Region, By David W. Chen, February 20, 2004

In pure numbers, President Bush's 2005 budget proposes to increase spending on the Department of Housing and Urban Development by 3 percent. But in terms of philosophy, many housing experts say, the administration is actually moving strongly to reduce the federal government's role in the kind of subsidized housing that many New Yorkers depend on, applying market principles and the tenets of the welfare overhaul of the 1990's with a renewed eagerness.

The administration, for example, is proposing to shift from the federal to the local level the Section 8 voucher program, the government's primary effort to help the poorest Americans find and pay for their own housing. It wants to loosen the eligibility rules for Section 8, allowing a larger group of families to apply without guaranteeing a portion for the poorest families. And it has proposed giving incentives to housing agencies that shrink the rolls of subsidized tenants.

If enacted, New York City officials estimate, the Bush plan could reduce the number of households receiving vouchers in 2005 by 7,000, or almost 7 percent of the current total. That number could triple by 2009, they say.

The Bush administration says the budget represents the latest incarnation of a flexible but tough-love approach to subsidized housing that began to germinate during the Clinton administration. It also reinforces the original premise that subsidized housing should be a springboard to self-sufficiency, not a permanent entitlement, department officials say.

"It's an evolution which has been accelerated because we have pushed the envelope," said Michael Liu, assistant secretary for public and Indian housing at HUD. "Similar to the concepts which were approved back in the mid-90's regarding welfare reform, we are moving on the same tack."

To some critics, though, the proposals are an exercise in reckless budget-cutting, a sop to suburban homeowners at the expense of urban renters. And the place that could be hurt the most is New York City, which, according to a coming study from New York University, receives as much as $3.5 billion in federal housing aid each year, far more than any other city.

"It has a very strong political underpinning: demonizing folks on welfare and folks in public housing," said City Councilman Bill de Blasio, a Brooklyn Democrat, who was HUD's regional director in New York from 1997-99. "And it puts New York in a very, very difficult spot because we're past the point of any reasonable expectation that a better hand of cards will be dealt."

Many housing groups say they were preparing for major overhauls after the Bush administration tried last year to turn Section 8 into a block grant program for state governments, using a complicated formula to determine aid instead of basing it solely on the number of needy people. The program was called Housing Assistance for Needy Families; the nation's welfare program is called Temporary Assistance for Needy Families.

Congress said no. But in this year's $31.3 billion budget, HUD proposes, under a Flexible Voucher Program, to transfer Section 8 to local agencies instead of to the states, and to relax eligibility criteria.

Currently, 75 percent of all vouchers are reserved for people who earn up to 30 percent of the local median income, or about $15,000 a year in New York. But under the Bush plan, local housing agencies could hand out vouchers to anyone making up to 80 percent of the median income, or about $41,500 in New York.

Public housing would undergo changes, as well, paralleling the ideas that transformed welfare, like time limits and privatization, as well as other concepts, like bonuses for housing authorities based on financial aptitude. Among other experiments, HUD is pushing for a $15 million "voluntary graduation" program to encourage, though not require, residents to leave public housing.

"We come from a basic notion of accountability, and again, from a common sense understanding of what the program should be promoting, which is self-sufficiency," said Mr. Liu of HUD.

The budget has been heralded by conservatives like Howard Husock, a Harvard scholar whose 2003 book, "America's Trillion-Dollar Housing Mistake," has been popular with administration officials. Local governments and housing agencies, meanwhile, have applauded the notion of greater autonomy, but are worried about the amount of money.

Local control could make it easier for the New York City Housing Authority to move people from homeless shelters to housing more quickly, and to inspect buildings and to recertify residents for aid every two or three years, rather than each year.

"N.Y.C.H.A. is interested in many of the concepts contained in the president's budget, and we would encourage that there is a dialogue about those reforms, as long as we get full funding," said Tino Hernandez, the housing authority's commissioner.

But liberal critics, like the National Low Income Housing Coalition and the Center on Budget and Policy Priorities, estimate that the budget falls at least $1 billion short of the amount necessary to finance the program at the current level. That could mean that up to 250,000 households nationwide would lose their vouchers in 2005, and 800,000, or 40 percent of the entire pool, by 2009.

Just as troubling, they warn, the eligibility changes could give landlords justification for choosing higher-income Section 8 tenants, thereby leaving the poorest more vulnerable.

"There are virtually no protections for tenants in this year's proposals," said Barbara Sard, director of housing policy at the Center on Budget and Policy Priorities.

Even some Congressional Republicans say they are skittish that Section 8, which takes more than half of HUD's budget, may suffer a fate common to many other block-grant programs: being capped or cut. "It's a radical policy change,'' said one senior Republican Congressional aide. "Why do we need to rush into this?"

But HUD officials scoff at such suggestions. They say local autonomy, and efforts to streamline bureaucracy, will enable them to serve the same number of people, and eventually to reduce costs. Mr. Liu said anyone who does not appreciate that HUD is "finding and unlocking new financial tools" may be "stuck in the time warp of 10 years ago."

Either way, any changes in HUD's budget, however small the percentages, will be magnified in New York, which has more public housing and vouchers than anywhere else, and the highest percentage of renters among major cities. The coming study by the Furman Center for Real Estate and Urban Policy at the N.Y.U. School of Law says that 400,000 housing units, or almost one-fifth of all rental apartments, receive some federal subsidy.

The plan would also end enhanced vouchers, which help tenants cover the rent in buildings that leave the Section 8 program to test the open market. After one year, those enhanced vouchers would be replaced by conventional Section 8 vouchers that would not necessarily be able to cover a higher, market-based rent on the same unit, a prospect that housing groups say would force out many families.

About 1,200 households in New York now receive enhanced vouchers; 500 more are in the pipeline.

Despite proposed cuts to other programs affecting homelessness, derelict public housing and the redevelopment of brownfields, which are contaminated industrial sites, city officials do not believe that the budget will severely hamper Mayor Michael R. Bloomberg's plan to build or rehabilitate 65,000 housing units.

But Molly Wasow Park, a budget and policy analyst for the city's Independent Budget Office, cautions that because some of the low-income units in the mayor's plan depend on vouchers to cover operating costs, they could be harder to support if the vouchers become harder to obtain.

Regardless of the budget's final shape, two themes may ultimately stand out, said Bruce Katz, director of the Center on Urban and Metropolitan Policy at the Brookings Institution, who was chief of staff to Housing Secretary Henry G. Cisneros under President Bill Clinton.

The first, he said, is that "the message to the New Yorks of the world is, 'You're on your own, because Uncle Sam is going to be reducing our contribution.' '' The second, he said, is that housing policy is driven almost entirely by the budget process, not by a grander vision. It is enough to make him nostalgic for a former nemesis, Jack Kemp, HUD secretary under the first President Bush.

"At least with Kemp, they were putting forward policy reforms, and there was a competition over ideas," he said. "This is really a competition over what the federal government does at the most basic level. It's a very different debate, and housing is just a victim of broader decisions being made.''