Voucher cuts hit Chattanooga landlords

Voucher cuts hit Chattanooga landlords

December 23rd, 2011 by Yolanda Putman in News

Stan Brown, who owns and manages properties rented and available to Section 8 residents, stands inside a house Brown recently restored and upgraded for potential residents. Chattanooga Housing Authority officials say landlords signing leases in 2012 will receive a 14 percent reduction in rent payments.

Photo by Jenna Walker/Times Free Press.

IF YOU GO

The Chattanooga Housing Authority will meet with current and prospective property owners participating in the Housing Choice Vouchers program.

• What: Housing Choice Vouchers property owner/manager meeting

• When: 6 p.m. Jan. 26

• Where: CHA office, 801 Holtzclaw Ave.


VOUCHER PAYMENTS

Type 2011 2012

Efficiency $577 $504

1 bedroom $610 $533

2 bedroom $718 $628

3 bedroom $884 $773

4 bedroom $1,039 $909

5 bedroom $1,195 $1,045

6 bedroom $1,351 $1,182

7 bedroom $1,507 $1,318

Source: CHA


BY THE NUMBERS

• 1,200: Local property owners in the Housing Choice Vouchers program

• 14 percent: Reduction in 2012 rent payments

• 250: New families expected to need landlords accepting vouchers in 2012

• 3,140: People who currently have vouchers

Source: CHA

Within a few months, the Chattanooga Housing Authority expects to need many more landlords willing to accept hundreds of low-income families whose rent is paid or subsidized by the federal government.

But a looming 14 percent reduction in rental payments combined with a booming private rental market threatens the agency's ability to land new landlords and keep the ones it has.

Stan Brown manages or owns 10 properties that are available to tenants in the Housing Choice Vouchers program, but he says the 14 percent cut will cause him to reconsider his options for maximizing the value of his property.

"The demand for rental property is so great that it merits an increase in rental value rather than a decrease," said Brown, owner of Success Realty.

"A lot of people can't buy because of the economy, but they have jobs, so they are out to rent," he said. "They're paying premium dollar and you don't have to go through the red tape of a Section 8 voucher system."

Section 8 was the previous name of the Housing Choice Vouchers program, a federally funded initiative to house low- to moderate-income residents.

Some property owners like the program because it assures that at least a portion of a tenant's rent is guaranteed.

The cuts will be effective Jan. 1 for owners leasing new units.

For participants remaining in their current units, the decrease in rental payment won't occur until after Jan. 1, 2013.

Brown is among 1,200 current property owners in the local voucher program who provide private housing for more than 3,000 low-income renters.

CHA's executive director, Betsy McCright, said all current voucher holders have been able to find housing, but the agency expects hundreds of families to need landlords who will accept vouchers when Harriet Tubman, the city's second-largest housing site, is vacated in preparation for its sale.

"We're applying for new vouchers for the families at Harriet Tubman," McCright said. "I hope that we'll get new landlords because of that. That's a big lease-up that we're expecting. It's probably going to be 250 to 300 vouchers."

Housing officials will start meeting with Tubman tenants to discuss relocation options after Jan. 1, McCright said.

Affordable shortage

The decrease in rental payments in Chattanooga comes amid a shortage of affordable housing across the country.

According to data from the National Low Income Housing Coalition's American Housing Survey, the number of rental units affordable for very poor families decreased by 600,000, while the population needing those units increased by 700,000.

Between 2007 and 2009, the shortage of rental homes that are both affordable and available for very poor households grew from 5.2 million to 6 million, according to the National Low Income Housing Coalition's website.

Meanwhile, the lagging economy and stiffer mortgage loan requirements by lenders have reversed decades of rising home ownership and turned many prospective buyers into renters.

'Recession-proof'

Despite the looming payment cut to property owners in Chattanooga, CHA board chairman Eddie Holmes said the housing authority is to be commended.

"The housing authority doesn't receive proper credit for what we do," he said at CHA's recent board meeting. "We put back into the community in excess of $20 million in rent supplements. This is money we're paying to property owners for renting their property."

McCright noted that rental payments for the program are guaranteed.

"It's a recession-proof program," she said.

Housing Choice Vouchers tenants pay a third of their income toward rent and the voucher pays the difference. If a tenant loses his job, the voucher will pay the full rental amount.

"So a landlord is always made whole regardless of what the tenant is experiencing," McCright said.

But former housing voucher landlord Robin Byrd said the rent received isn't worth the trouble.

Properties must meet HUD guidelines before owners can receive rental payments. Homes can't have broken, rotten or missing steps on stairs or porches or electrical fixtures that don't work. All bedrooms used for sleeping must have at least one window. CHA inspectors ensure that guidelines are met.

But Byrd said the inspectors are inconsistent. While one CHA inspector allowed a tenant to move into a home with storm doors, another inspector said six months later that the doors had to be removed.

She also said she didn't get paid once because she couldn't get a repair done in time. And when her tenant got a job, she had to collect money from the tenant and the housing authority to get a full rent payment, she said.

"It's a hassle," she said.

She participated in the program for two years before renting to someone without a voucher, but that's not a perfect situation either, she said.

"Neither way is easy," she said.

Without the voucher program, "you have to deal with people not paying rent," she said.

"The difference is that since you are totally the landlord, no one can come and make you do something to the property."

Why the decrease?

Rent subsidies are falling because the U.S. Department of Housing and Urban Development has traced an approximate 14 percent decrease in "fair market rents" for the Chattanooga/Hamilton County area.

Tammie Reeves, voucher program director for CHA, said the housing authority sets rental payments based on HUD's annual tables of fair market rental values.

"This is the first year in several years that there was actually a decrease in fair market rent," said Reeves. "We set our payment standards at 100 percent of the fair market rent and there will be an approximate 14 percent decrease for next year."

CHA board vice chairman Jim Sattler said he worries about the impact of the rent decrease.

"In today's market you'd like to think you could get increases; instead it's going to go the other way," he said.

"It's definitely not going to be received real well, and hopefully it's not going to weed out some of our finer landlords who are providing Section 8 availability."

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