AARON GORNSTEIN
Would affect development

Housing agencies across the state are scrambling to convince federal officials to delay implementation of changes that will drastically reduce rental assistance to low-income tenants in some communities. Housing advocates worry the changes will leave many low-income renters who rely on rental housing subsidies homeless, while also posing a barrier to future affordable housing development.

The changes affect fair-market rents, which are established by the U.S. Department of Housing and Urban Development and are used to determine the federally funded Section 8 rental subsidies that local housing agencies administer. The fair-market rents, or FMRs, are updated each year based on HUD’s estimates of actual market rents for apartments in marketplaces or metropolitan statistical areas that are supposed to be economically linked.

But this year, HUD is considering redefining the metro areas where the Section 8 vouchers are distributed, which would result in deep rental cuts, according to opponents of the plan.

Some cities near Boston, where rents are generally higher, would see fair-market rent calculations plummet as much as 30 percent to 50 percent, while fair-market rent levels in outlying rural communities will rise by 20 percent to 60 percent, they say.

“It’s not an exaggeration to say that it will make the Section 8 voucher program unusable in many parts of Massachusetts if these changes go through,” said Aaron Gornstein, executive director of the Citizens’ Housing and Planning Association, a research and advocacy group that is planning to send a letter to HUD detailing the harmful effects of the changes.

A HUD spokeswoman who was contacted by Banker & Tradesman with a request for information about why HUD was considering adjusting the metro statistical areas did not respond by press deadline.

Rents and voucher subsidies in the Bay State are currently based on 19 metropolitan and non-metropolitan statistical areas. Under the proposed changes slated to take effect Oct. 1, those areas would be reconfigured to reflect the 10 counties in the state.

As a result, several towns and cities previously linked with the Boston metro area would now be grouped with rural communities where rents are lower and the stock of rental units is smaller.

To illustrate the point, Gornstein pointed out that Cambridge, a city located in Middlesex County where home prices and rents are among the highest in eastern Massachusetts, will be lumped with Ashby, a rural town in north/central Massachusetts where about 90 percent of the housing is owner occupied.

The HUDs fair-market rent for a two-bedroom apartment in Cambridge, which has a much larger supply of rental units than Ashby, would drop about 10 percent, while in Asbhy the fair-market rent figure would jump 59 percent to $1,282.

“It makes no sense,” said Gornstein.

Fair-market voucher levels would be reduced in 167 communities, with Bristol and Essex counties feeling the biggest impact, according to Gornstein. Communities in Bristol County, like Taunton, Mansfield and Norton, now grouped in the Boston/Quincy area, would see fair-market rents for two-bedroom apartments fall from $1,490 to $671.

“You can’t find a two-bedroom apartment for $671 in those communities,” said Gornstein.

A $671 monthly rent for a two-bedroom apartment in Taunton is “absolutely unreasonable,” said Colleen Doherty, executive director of the Taunton Housing Authority.

“We will not be able to lease units in the city of Taunton under these fair-market rents,” said Doherty.

Shaken Confidence

Renters with Section 8 subsidies use up to 30 percent of their monthly incomes to rent apartments in the private market while the federal voucher pays the rest.

With such an extreme shift in rents many low-income renters will be forced to move out of apartments in Taunton unless they can contribute significantly more toward their share of the rent, or a property owner accepts the lower rental rate.

But landlords who currently rent apartments to Section 8 voucher recipients aren’t likely to take such a drastic cut in rents, especially if they can get other tenants to pay the full market rent, according to housing advocates.

Some property owners won’t be able to accept lower rents because they rely on the income to pay mortgages, explained Doherty, and for many tenants contributing more in rent is not an option.

In evaluating the impact of the changes, the Taunton Housing Authority found that one tenant who uses a wheelchair and rents a one-bedroom apartment in Taunton would see his share of the rent rise from $108 to $419 a month. Another resident’s rent share would rise beyond her monthly income.

“We have such a fragile population that we serve. We serve a lot of elderly and disabled, and of course we serve a lot of families,” said Doherty.

Out of the 731 Section 8 vouchers the Taunton Housing Authority administers, 300 go to people who have physical and mental disabilities who receive other types of services from social service agencies in the city.

Doherty said she fears that many of these evicted tenants will end up on the streets or be forced to move out of the city and far away from the services that they’re currently receiving.

Gornstein, of CHAPA, also worries that affordable housing development will suffer. Lenders are likely to “lose confidence” in the rent subsidy program because of the changes and will hesitate to provide financing for affordable housing projects that rely on Section 8 vouchers, he said.

“They [lenders] won’t be willing to finance [projects] if the rent levels are low,” said Gornstein.

HUD has adjusted fair-market rents in the past. In the late 1990s, HUD increased rent voucher levels to reflect the housing market, which was booming. The increases enabled tenants to find more apartments and voucher utilization improved. However, with the rental market softening in the last two to three years, HUD has moderated and slightly lowered rents in some areas.

Now that the rental market has stabilized, the fair-market rents that HUD is proposing don’t reflect current rental rates in most parts of the state, according to critics.

“I’ve been administering this program since 1975 Â… and I’ve certainly seen the market changes,” said Stephen Dubuque, executive director of South Shore Housing Development Corp. “We are seeing a moderation in some rents, but not to the tune of $600 to $700 less.”

South Shore Housing Development Corp., which owns and manages 421 units in 11 locations, administers Section 8 subsidies in Plymouth and Bristol counties. Dubuque said it’s unclear what will happen to current tenants once their lease is up for renewal if the new rent guidelines are implemented.

The proposed changes come after housing authorities and agencies are already facing shortfalls in the voucher program because HUD is reimbursing them based on the program’s average costs instead of its actual costs.

Critics fear that the most recent proposal is part of an effort to gradually dismantle the program.

“One of the ways you can destroy faith and confidence in a program is by constantly changing the program,” said Dubuque.

Officials like Doherty, of the Taunton Housing Authority, feel that the program has helped too many elderly and disabled people, as well as families, to be neglected.

“The voucher program is surely worth putting money into and putting effort into on HUD’s part,” said Doherty.

HUD is collecting comments on the proposed fair-market rent changes through tomorrow.