Higher than Normal Demand and Lower than Normal Attrition Rates Led to Section 8 Program Budget Gaps at Housing Authorities Nationwide

Mayor Michael R. Bloomberg, Council Speaker Christine C. Quinn, Senator Charles E. Schumer and Governor David A. Paterson today announced a $32 million plan to resolve New York City’s Section 8 rent voucher crisis. In 2009 and 2010, falling tenant contributions occurred simultaneously with lower than normal attrition rates, leading to a budget shortfall in the New York City Housing Authority’s (NYCHA) Section 8 program and at housing authorities nationwide. In New York City, that resulted in rental vouchers withdrawn for roughly 2,500 families – including 750 that then left shelters – and another 4,000 families whose vouchers were put at risk. The plan announced today will restore or save all 6,500 vouchers.

“In recent weeks, city, state and federal officials have devised a solution that will keep thousands of families in their homes, while helping thousands more find one,” said Mayor Bloomberg. “By working together we were able to solve a serious problem.  Many people played an integral role – including Housing Preservation and Development Commissioner Rafael Cestero and Housing Authority Chairman John Rhea – and I particularly want to acknowledge Speaker Quinn, Secretary Shaun Donovan and State Housing Commissioner Brian Lawlor for helping us arrive at this solution.”

“I’m proud of this plan not only because of the collaboration it shows but also that our City’s government truly cares – and will act – on behalf of the most vulnerable New Yorkers,” said City Council Speaker Christine C. Quinn. “I want to thank my colleagues here at the City Council – Public Housing Chair Rosie Mendez, General Welfare Chair Annabel Palma, Housing and Buildings Chair Erik M. Dilan – for acting so quickly once we heard that 2,500 families had gotten their vouchers revoked. We had two hearings, immediately began discussions with NYCHA and HPD, and now have provided $7 million in this plan so that these low-income New Yorkers wouldn’t end up on the street. I want to thank Mayor Michael R. Bloomberg, Housing Preservation and Development Commissioner Rafael Cestero, NYCHA Chairman John Rhea, Secretary Shaun Donovan, and State Housing Commissioner Brian Lawlor for working with the Council and coming to a solution to help these families.”

“This is a creative and correct way to provide desperately needed housing to our most vulnerable residents and solves the dilemma created by oversubscribing the program.  NYCHA, HPD, and DHCR have come together to help the 6,500 families across the city that were at risk of losing their housing and it was the right thing to do,” said Senator Schumer. “The termination of households that hold Section 8 vouchers would have been catastrophic for these families, but thankfully, with some creativity and quick thinking, a human disaster has been diverted. I will continue to work with city, state and federal officials to see that New York families continue to have access to the affordable housing they deserve.”

“This plan will provide peace of mind to thousands of individuals and families whose basic need for housing was threatened by the sudden loss of rental subsidy,” said Governor David A. Paterson. “I commend Commissioners Lawlor and Cestero for developing a plan that uses existing resources to serve families in need, and HUD for allowing it to quickly move forward. This is the kind of collaborative and efficient strategy that is called for in these tough economic times, and it will allow vulnerable New Yorkers to rest easy in their homes.”

The plan announced today will both solve NYCHA’s budget shortfall that had put 4,000 families at risk and provide vouchers for the roughly 2,500 families that saw vouchers withdrawn. NYCHA’s original shortfall of $45 million – which at the time had put as many as 10,000 families at risk – was reduced significantly earlier this year when HUD, with the support of Senator Schumer, committed $24 million to NYCHA and other funds to nearly 600 housing authorities across the country that had seen costs rise in their programs.   In addition, a HUD proration and increased attrition reduced program costs, bringing NYCHA’s budget shortfall to $16 million. To fund the remaining $16 million gap, HUD has agreed to transfer NYCHA Section 8 participants to Housing Preservation and Development’s Section 8 program, allowing HPD to use its budget reserves to relieve NYCHA of the cost of maintaining these vouchers.

The City will take several steps, at a total cost of $16 million, to restore the vouchers for the roughly 2,500 families that saw vouchers withdrawn. Of the 2,500 families, 1,500 will require a voucher in 2010: 750 will receive Section 8 help from HPD, using voucher authority transferred by the New York State Division of Housing and Community Renewal, and 750 will receive a new rental subsidy being created by HPD from its federal HOME program funding. This program will be modeled to mirror Section 8, and families receiving the HOME assistance will eventually be picked up by NYCHA’s Section 8 program when funding becomes available. The City Council has committed to providing HPD with $7 million in capital funds to make up for the loss of federal funds. NYCHA will issue vouchers to the remaining 1,000 families in 2011. The City will allocate vouchers to families in order of need, based on risk factors that include previous shelter history, victims of domestic violence, intimidated witnesses, families awaiting unification with children in foster care pending suitable housing, and families with new lease commitments.

“Mayor Bloomberg has continued to show tremendous leadership in challenging agencies to work together to craft innovative solutions to the increasing demand for housing assistance,” said NYCHA Chairman John B. Rhea. “NYCHA is pleased to be part of a solution that allows a record number of families to receive assistance from New York City’s combined Section 8 programs. I’d like to extend particular thanks to advocates and elected officials who kept the focus on this important issue and to my colleagues at HPD, DHCR, and HUD for the months of work that went into today's announcement.”

“For many families in New York City, Section 8 rental assistance makes the difference between having a stable and secure place to call home and being homeless,” said Housing Preservation and Development Commissioner Cestero. “Crafting a way to back vouchers with available funds by sharing resources has brought what has been an unsettling period for thousands of New Yorkers to a close.  This joint and collaborative Federal, State and City effort has resulted in the restoration of Section 8 rental assistance to those who are most in need and has allowed us to put our available resources to work to their advantage. I would like to thank the Mayor, Speaker Quinn, Chairman Rhea, Commissioner Lawlor and HUD Assistant Secretary Henriquez for their unwavering support of this plan.” 

“This unprecedented and innovative response will provide security and certainty for individuals and families who rely on the Section 8 voucher program for their housing needs,” said Division of Housing and Community Renewal Commissioner Brian Lawlor. “Our plan to rescue the homes of families whose rental subsidies were jeopardized combines the available resources of both agencies and puts them to work in a smart and creative way. DHCR will allocate 750 of its Section 8 vouchers so that HPD can absorb 750 from the New York City Housing Authority to serve at-risk families. I want to thank the U.S. Department of Housing and Urban Development for acting quickly to authorize DHCR and HPD to move forward with this plan. And I thank Rafael Cestero, Commissioner of HPD, and Mayor Bloomberg for their perseverance in addressing the loss of vouchers that put 2,500 families at immediate risk.”

“Through the collective work of government at multiple levels, we will ensure that low-income New Yorkers currently residing in affordable apartments through the Section 8 program will not be at risk of losing their homes or spending more money towards shelter in these tough economic times,” said Council Member Rosie Mendez, Chair of Public Housing Committee. “Additionally, the fact that we will be able to grant vouchers to 1500 of the 2500 homeless families whose vouchers were rescinded in December of 2009 goes a long way to stabilizing those families and their expectations for permanent affordable housing.”

“I am delighted that thousands of low-income NYC families can finally breathe a sigh of relief after months of gut-wrenching worry over losing their Section 8 vouchers,” said Council Member Annabel Palma, Chair of the General Welfare Committee. “I applaud the solution that the Administration, HPD, HUD, NYCHA, and especially Speaker Quinn crafted.  Their hard work results in appropriate housing for some of our most vulnerable residents including homeless individuals and families, domestic violence victims, youth aging out of foster care, families reuniting out of foster care, and intimidated witnesses.”

“This proposed Section 8 solution is another example of what can happen when city, state and federal agencies work together to assist families in their quest to obtain decent and affordable housing,” said Council Member Erik Martin Dilan, Chair of the Council’s Housing and Buildings Committee. “I commend the Speaker for her tireless efforts to help these at-risk families obtain Section 8. I also commend the Administration, NYCHA, HPD, DHCR and HUD for working creatively to solve this problem in a positive manner.”

The Housing Choice Voucher Program (Section 8) is a federally funded rental subsidy program assisting over 125,000 families in New York City. Families pay approximately 30 percent of their income in rent, with the subsidy covering the rest, up to a payment cap.

There are three public housing authorities operating Section 8 programming in New York City: The New York City Housing Authority, the New York City Department of Housing Preservation and Development, and the New York State Division of Housing and Community Renewal, which runs a statewide program. While NYCHA’s program is open to eligible members of the general public, Housing Preservation and Development’s program typically serves families residing in buildings being constructed, renovated, or preserved as part of the City’s New Housing Marketplace Plan.