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Street roots
Nov. 23, 2012
BY JAKE THOMAS
Oregon's
affordable
housing on
the edge of
the fiscal cliff
S T A F F W R IT E R
equestration.
It sounds like an invasive medical
S
procedure. In a way it is, and it’s about
to be performed on the entire country
unless Congress acts fast.
In Portland, sequestration — a wonky
term for general cuts in government
spending - could result in less affordable
housing and leave some of the city’s most
vulnerable people struggling to put a roof
over their heads. And the political hiatus in
Washington over the future budget has local
housing agencies hanging in limbo over how
to prepare for the chopping block.
“Almost every resource that we have to
build affordable housing will see cuts,” said
John Miller, executive director of the
Oregon Opportunity Network, of the
looming and deep cuts to the federal budget.
This situation is the result of a squabble
between Congress and the president that
occurred last year over raising the ceiling on
the national debt. After coming close to
defaulting on the nation’s debt, Congress
passed and the president signed the Budget
Control Act. The legislation, in addition to
cutting federal spending, created a
bi-partisan congressional committee that
was tasked with reducing deficits by $1.2
trillion from 2012 through 2021. Under the
act, if the committee couldn’t come up with
a plan, an across-the-board sequestration
would kick in as a back-up. The idea was
that sequestration would be so unpalatable
that the committee would be forced to cut a
deal.
But the committee failed to cut a deal and
unless Congress and the president work out
a new agreement sequestration is slated to
go into effect in January, resulting in an 8.4
percent across the board cut to nearly all
federal spending, with smaller cuts for
defense and Medicare.
Federal housing programs administered
by the U.S. Department of Housing and
Urban Development (HUD) that fund efforts
to build affordable housing and other anti
poverty programs will be affected by the
cuts.
“It’s going to affect our ability to serve
and how we serve families,” said John
Bohm, senior director of congressional
relations for the National Association of
Housing and Redevelopment Officials, a
trade group for professionals working in
housing and community redevelopment.
According to Bohm, public housing has
been chronically under funded for years and
a large back log of upkeep and maintenance
has built up in these facilities. Additionally,
he said that local housing agencies will have
less money for capital and administrative
operations, making it harder for them to
perform basic functions.
One of the cuts that could produce a clear
impact is the reduction in funding to the
HUD housing choice vouchers, said Bohm.
This program subsidizes the rent of very
poor families, disabled individuals and the
elderly. These cuts could increase
homelessness, he said.
“Operationally, it’s hard to think of how to
respond until we know this is going to
happen,” said Bohm.
Here’s what the cuts will mean for
Oregon, according to numbers from the
Center for Budget and Priorities:
■ In 2012, nearly 32,000 families
received assistance from the U.S.
Department of Housing and Urban
Development in the form of housing choices
vouchers, which aid low-income families. If
sequestration
goes into
effect, there will
be 3,000 fewer
families receiving
assistance.
■ In 2012, Oregon
received nearly $25 million
in funding for public housing,
which would drop by about $2
million under sequestration.
■ This year, Oregon received $23
million in funding for homeless
assistance. If sequestration goes into
effect that amount will drop by $2 million.
■ Oregon received $1.5 million in 2012
for housing for people with AIDS.
Sequestration could trim that amount by
nearly $133,000.
■ This year, Oregon received $30 million
in Community Development Block Grants -
which provides funds for affordable housing,
job training and other anti-poverty
programs. Under sequestration, Oregon will
see $2.5 million less.
■ Lastly, Oregon will see the $13 million
in HOME grants it received in 2012
decrease by about a million dollars.
ohn Miller, of the Oregon Opportunity
Network, said that the proposed cuts
come when housing programs are stretched
thin due to increased demand, and Oregon
could see over $8 million in less HUD
money as a result of sequestration. Echoing
Bohm, he said a clear impact of the cuts
could be 2,600 families in becoming
homeless as a consequence of cuts to
HUD’s voucher program.
Other vulnerable demographics, such as
the elderly and disabled, could also face
bleak situations as housing programs are
cut, said Miller. Community development
corporations, often builders of affordable
housing, could have fewer resources to work
with as well, said Miller.
“They’re all bad,” said Miller of the cuts.
“There’s not one that sticks out as worse
than others.”
Martha McLennan is the executive
director of Northwest Housing Alternatives
(NWHA), an organization that provides
affordable housing and other services in the
Portland metro area. McLennan says that if
sequestration goes through, it will mean
some tough choices for organizations like
hers, which operates 645 subsidized
housing units. The cuts would require HUD
to find a way to reduce assistance for this
portfolio by an amount equal to 52 units.
“How they actually do that is anybody’s
guess,” she said.
The cuts could result in tenants, some of
whom have incomes as low as $8,000 a year,
losing some assistance and having to
shoulder more cost, she said. Owners of
subsidized housing could have less money,
but still being required to offer the same
services, resulting in these properties
becoming financially unsustainable, she said.
Another scenario is seeing assistance for
vacant units canceled, she said.
Additionally, NWHA helps connect
J
families experiencing homelessness to
social services. With fewer funds available as
a result of sequestration, it would mean
fewer services NWHA could provide to
families, she said.
McLennan said that cuts to HOME funds,
which she described as “gas money” for
affordable housing, could also be significant.
These funds are distributed to states and
local governments that are used in
partnership with non-profit and for-profit
entities to build affordable housing.
McLennan said that her organization relies
on these funds along with a tax credit to
build affordable housing. Reducing these
funds along with an expected change in the
rate of the tax credit could result in a 35
percent decrease in subsidized housing
being built, she said.
“You’ll have less stock of housing and
fewer households served,” she said of the
cuts, which she added will further reduce
programs that have already seen their
funding decrease for years.
Shelley Marchesi, spokesperson for
Home Forward, the entity that oversees
some HUD programs for the Portland metro
area, said there are many questions
surrounding sequestration and what it will
mean for Portland.
Marchesi said that with so much
uncertainty surrounding the situation,
Home Forward isn’t preparing for
sequestration. She said that the agency is
just starting its budgeting process for the
next fiscal year and is using last year’s
budget as a starting point.
“We knew that we would have a budget
challenge before sequestration,” she said.
According to Home Forward’s most
current budget, which went into effect April
1, 2012 and goes through March 31, 2013,
the agency has an operating loss of
$9 million, despite getting a $1 million
increase to the housing assistance subsidy it
receives from HUD. In total, Home Forward
received nearly $89 million from HUD,
accounting for nearly 82 percent of its
current budget, in the form of public
housing subsidies, grants, vouchers and
other contributions.
he Portland Housing Bureau (PHB),
another local government entity that
T
Street Roots is a proud partner
with Jesuit Volunteer Corps
Northwest and Americorps.
northw est
administers HUD money, also isn’t quite
sure how sequestration would affect local
housing programs.
According to PHB spokesperson Jaymee
Cuti, funding from the federal government
to the bureau will drop by an estimated 8.2
percent if sequestration goes through. The
reduction, said Cuti, will result in $870,000
in cuts to the two big HUD programs the
PHB oversees, the Community
Development Block Grant, which it directs
toward a job-training program, and HOME
funds, which the bureau uses for to
development of affordable rental housing,
home buying and homeowner repair
programs and short-term rent assistance.
The PHB budget has about $13.8 million
in CDBG funds on hand. Approximately $7.8
million is allocated to housing development
activities, $2.1 million to a job training
program, $1.2 million to homeless services,
$1.2 million to homeowner access and
retention, $250,000 for other services and
about $1.25 in bureau support costs. The
PHB also has $2.92 million in HOME funds.
“Strictly speaking, sequestration will
mean less money to serve the most
vulnerable in our community,” said Traci
Manning, director of the PHB. “A reduction
would force us to decide which existing
services to cut and by how much. Short
term rental assistance and affordable rental
housing are two tools proven to end
homelessness. Without them, we’ll see more
people on the street and an increased need
for other public services.”
The PHB isn’t sure what these cuts will
mean to local housing programs, as far as
how many fewer units of affordable there
will be or how many fewer people will be
served.
“We don’t actually think about it in those
terms so we don’t have estimates of how
many fewer houses or how many people
without housing,” Cuti said. “We think of it
in terms of how much less money is
available for affordable housing developers.”
It is possible that the Congress and the
president will cut a deal to modify or soften
the impending budget cuts. President
Barack Obama doesn’t support
sequestration.
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