Section 8 funding crisis escalates: HUD's new Section 8 voucher renewal policy could mean that, for the first time in the 30-year history of the voucher program, assistance will be withdrawn from households already receiving vouchers.

A funding crisis in the federal Section 8 voucher program had escalated significantly as Capitol Beat went to press in early May. Thousands of existing voucher holders could lose their housing subsidies because of the way the U.S. Department of Housing and Urban Development (HUD) has decided to handle voucher renewals this year.

Instead of reimbursing public housing authorities (PHA) for actual voucher costs in FY2004, HUD issued a notice that explains that it will only issue payments based on the number of vouchers under lease on Aug. 1, 2003, adjusted for inflation. In the past, PHAs have been criticized by Congress and others for not using all of the vouchers allocated to them. Under this policy, PHAs that have successfully increased their utilization rate since last August will not have enough funds to support all their existing voucher holders. The same will hold true for areas where resident income has decreased or rents have increased more than HUD's inflationary -adjustment factor.

NAA/NMHC have urged the department to reconsider, noting that our analysis shows that HUD's plans will leave $175 million of the $310 million of the funds Congress appropriated for voucher renewals unspent.

HUD's new voucher renewal policy threatens to create funding shortfalls at hundreds of public housing agencies and could mean that, for the first time in the 30-year history of the voucher program, assistance will be withdrawn from households already receiving vouchers.

As an example of the magnitude of the crisis, the new policy originally created a $3.1 million funding gap in Massachusetts that would have resulted in 3,700 vouchers being rescinded. Alter 2,000 people attended a hearing on the matter on April 17, HUD agreed to allow the state to transfer $2.6 million from other programs to fund the vouchers. The state is still straggling to find the additional $500,000 needed to avoid terminating vouchers.

This scenario has been repeated across the country and threatens to put property owners in the untenable situation of possibly having to evict subsidized families or accept drastically reduced rents.

NAA/NMHC and many other housing "advocates are urging HUD to reconsider. In the meantime, NAA/NMHC have prepared a document with additional information and talking points for Section 8 owners. A copy is available at www.naahq.org/government/government.aspx.

Terrorism Insurance Clarified, Extension Urged

The Coalition to Insure Against Terrorism (CIAT), of which NAMNMHC are members, has successfully secured a clarification from the U.S. Treasury Department that nuclear, biological and chemical (N/B/C) terrorist events are not excluded from the federal terrorism insurance program created by the Terrorism Risk Insurance Act of 2002 (TRIA).

CIAT wrote to the U.S. Department of Treasury in January requesting the clarification after many insurers began erroneously excluding N/B/C related losses from their policies as a result of a persistent myth that TRIA does not cover N/B/C contamination arising from otherwise covered "acts of terrorism."

In a letter dated Mach 24, Treasury officials confirmed that TRIA covers "insured losses resulting from a nuclear reaction, or radiological, biological or chemical release and/or contamination resulting from a certified act of terrorism, if the coverage for those perils is provided in the primary or excess property and casualty policy issued by an insurer." The Treasury Department letter is posted at www. insureagainstterrorism.org/pdf/NBCletter.pdf.

Meanwhile, CIAT is also urging the Bush Administration to extend the TRIA provision that requires insurance companies to make terrorism insurance available on the same terms and conditions as property and casualty insurance.

Although TRIA does not expire until 2005, the "make available" provision expires at the end of 2004 of the Treasury Secretary does not extend it by Sept. 1. Reports indicate that insurance companies are likely to stop offering terrorism insurance if they are not required to by law.

On April 28, a House Financial Services Subcommittee held a hearing on the economic effects of TRIA. Many committee members spoke of the need to extend TRIA for "one or two years" and for the Treasury to decide on the "make available" provision as soon as possible to minimize economic disruption.

While Treasury officials did not indicate their intentions during the hearing, it said the department would publish a letter (in early May), allowing 30 days for public comments an the issue. A decision would be made after reviewing the comments. CIAT will submit comments pointing to specific evidence that the private insurance markets have yet to stabilize and that without the "make available" provision extended, the entire program will essentially end at the end of 2004.

Affordable Housing Public Education Effort Launched

The Campaign for Affordable Housing (TCAII), of which NAA/NMHC are members, has joined forces with the Fannie Mae Foundation to launch a major public education initiative to inform the American public--specifically local, state and federal policy makers--about the country's need for affordable housing.

The effort will also work to confront the stereotypes of affordable housing as shoddy, criminal-ridden housing that causes lower property values. According to TCAH, 14.4 million American families--one in every seven--now spend more than 50 percent of their income on housing. This represents a 65 percent increase in just four years and is a clear sign that the affordable housing shortage is having a pronounced affect on working families.

The campaign's first steps will be to undertake additional public opinion research, raise funds and build a broad coalition from the private and public sectors. TCAH also co-sponsored a symposium on May 5 called "Changing Minds, Building Communities: Advancing Affordable Housing through Communications Campaigns." The event was held in Minneapolis and included a review of the latest research and national campaigns as well as work sessions examining the kinds of challenges developers and advocates face locally every day.

During the session, TCAH released a new Housing Advocacy Catalog (HAC) that assists organizations in replicating the successful public education efforts conducted by other groups. The first edition of the HAC is a compilation of existing campaigns with background and history on how they were organized, how they received funding, and how much it cost to run their campaign. It also has details on what medium was used to reach their audience as well as samples of their advertising. For information, see www.tcah.org.

HUD Works to Reduce Barriers to Affordable Housing

HUD continues to advance its "Regulatory Burdens" initiative. At the end of March, the department announced that its competitive grant program would begin awarding priority points to applicants in communities that have successfully reduced regulatory burdens that prevent the production of "affordable housing.

HUD is specifically targeting such barriers as exclusionary zoning; antiquated building codes; duplicative review and approval processes; and excessive and unwarranted fees, all of which can add tens of thousands of dollars to the cost of housing and force working families to move out of their own communities.

On April 22, the department convened a Research Conference on Regulatory Barriers that included several representatives from NAAJNMHC. The purpose of the event was to identify additional research that could help stimulate production of more affordable housing.

Information compiled by NAA/NMHC Joint Legislative Staff: Senior Vice President for Government Affairs Jim Arbury; Vice President of Finance and Technology David Cardwell; Vice President of Property Management Jeanne Delgado; Vice President of Communications Kim Duty; Vice President of Environment Eileen Lee; Tax Advisor Howard Menell; Vice President of Building Codes Ron Nickson; and Chief Economist Mark Obrinsky.