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Section 8 Funding: LeadingAge Adds Voice to the Preservation Working Group

by Published On: Feb 23, 2012Updated On: Mar 19, 2012

LeadingAge and several LeadingAge members including Lutheran Services in America, Mercy Housing, and National Church Residences expressed concern about the 2013 request for renewal funding for Section 8 Project Based Rental Assistance contracts in a letter sponsored by the Preservation Working Group and signed by 33 nonprofit advocacy organizations and housing providers.

Last month, LeadingAge joined 18 other national nonprofit and for-profit housing advocacy and industry groups in a separate letter that raised the same deep concerns about the request for the renewal of Section 8 Project Based Assistance Contracts

The request of $8.7 billion underfunds the 12-month renewal needs by $1.5 billion and that will lead to the shortfunding of more than 2/3 of all Section 8 contracts, and to at least 2 renewal s for each contract to fund one year’s budget.

Both letters outline the concerns as follows:

  • The shortfunding in 2013 does not reduce the federal budget in the long run because amounts not funded in 2013 will have to be made up in future years.

  • The savings proposals intended to cushion the gap in 2013 will provide questionable savings including use of residual receipts for Section 8 increases, raising minimum rents although hardship exemptions remain, increasing the threshold for medical deductions from in excess of 3% of income to amounts in excess of 10% of income, a savings proposal which will impact the poorest seniors with the highest medical expenses, and limiting virtually all renewals to OCAF increases unless a market comparability study is completed.

  • HUD will be required to process at least 2 contract renewals for more than 2/3 of the contracts and all contracts regardless of renewal date will have to be processed and signed anew at the beginning of a fiscal year. The administrative requirements will present a nightmare scenario as it did in 2007 when similar shortfunding occurred.

  • Shortfunding of contracts will present major hurdles in attracting investors and lenders in rehabilitation and preservation and in signing day to day vendor contracts for management and maintenance, adding both costs and risks to all Section 8 properties.

The letters come prior to the start of the 2013 budget and appropriations processes in the U.S. Senate and the U.S. House of Representatives.

 



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