The Chattanooga Housing Authority board has decided that if the money runs out in its Section 8 housing program, the people on the program the longest will be the first to lose vouchers.
Facing the deepest funding cuts to Section 8 vouchers in the program's 38-year history, the CHA board adopted a plan this month to ration its resources.
"The only time it [the plan for canceling vouchers] would come into play is if we were so significantly underfunded that we couldn't afford to keep all 3,500 families on the program," said Betsy McCright, CHA's executive director.
Board Chairman Eddie Holmes said other housing agencies across the country have run out of money and didn't have policies to decide which people would lose their vouchers to rent housing from private landlords.
"It's a precautionary policy," Holmes said. "If we don't have the money to pay landlords, we need to have a plan to take people off the list rather than arbitrarily remove everybody."
CHA will choose who to terminate from a list of those who have been on the program the longest because those people have had more time to better position themselves than someone just getting onto the program.
Those taken off the program will be put on the Section 8 waiting list and will be the first selected to return when funding is available.
CHA figures show the Department of Housing and Urban Development has steadily reduced funding for Section 8 since 2003. Funding to HUD was cut an additional 5 percent this year because of sequestration. And the funding is prorated, meaning local agencies only get a portion of the authorized funding.
The share of money actually paid for administrative costs dropped from 85 cents per every dollar authorized in 2011 to 69 cents this year, national figures show. Money for rent payments to landlords fell from 100 percent in 2012 to 94 cents per dollar this year, according to the National Association of Housing and Redevelopment Officials.
"They are moving away from taking care of people. They no longer want to sustain other folks," Holmes said.
Section 8 tenant Rosemary Porter says she understands the board's decision, but the 65-year-old grandmother said she is in a worse position now to get off the program than she was six years ago when she started.
Porter lives in the Villages at Alton Park, where she cares for her two great-grandchildren. She's a cancer survivor, legally blind and has lots of aches and pains.
"It's a good plan, but how can I afford housing if I'm already struggling?" said Porter. "Right now I can't afford to buy groceries."
CHA initially thought the program was going to run out of money in September. Agency officials sent nearly 100 Section 8 voucher holders letters stating: "Today the Department of Housing and Urban Development directed the Chattanooga Housing Authority to suspend/withdraw any outstanding vouchers due to funding constraints."
However, McCright said, "What happened was that HUD mistakenly withheld $1 million from us and they didn't realize that. So they said we're going into a shortfall and then they realized that they had underfunded us."
HUD gave CHA the $1 million and it was able to continue payments to its landlords.
Still, McCright said, there is just not enough money to support all of the vouchers out there. The housing authority has 3,500 vouchers this year compared to 1,250 vouchers in December 2000. But CHA reduced its Section 8 staff by four people this year for lack of funding. The agency now uses 14 people to make sure 3,500 families get vouchers. That includes screening for income, criminal background checks and home inspections.
Since 2003, 213, or 9 percent of all public housing agencies administering the voucher program have returned vouchers to HUD or transferred them to another public housing agency because they didn't have enough money to run the program, according to the National Association of Housing and Redevelopment Officials.
CHA's new policy states that the housing agency may terminate a Housing Assistance Payment contract, the rent it pays to landlords, with a 30-day notice to the landlord when it is determined that there is insufficient funding to continue the contract.
Contact staff writer Yolanda Putman at firstname.lastname@example.org or 423-757-6431.