The Department of Housing and Urban Development HUD said Tuesday that in response to an unsparing audit by its watchdog, it’s urging public housing authorities across the country to kick out tenants who make too much money to qualify for government subsidies.
“It may be legally acceptable, but it is morally unacceptable for people who could pay market-rate rents to be in public housing,” a senior HUD official said of the disclosure that more than 25,000 tenants earn more than the maximum income to get into public housing –almost half of them making $10,000 to $70,000 more.
“We agree there has to be some change,” said the official, who requested anonymity because the agency is “still in discussions about options we have to ensure that we don’t encounter this problem in the future.”
The crackdown represents an about-face from the agency’s response to the audit by Inspector General David Montoya’s office, which found a family of four in New York City taking home a $497,911 salary but paying just $1,574 in rent for a three-bedroom apartment in public housing. The review described this family and other tenants who cross HUD’s low-income threshold but get to stay in cheap apartments “egregious” abuses of the system that are squeezing out truly needy families.
HUD’s deputy assistant secretary for public housing and voucher programs had denounced the report before its release in late July as contradicting HUD policy, which allows “over-income” families to stay because evicting them could destabilize their progress toward self-sufficiency.
But in recent weeks, the agency’s policy has apparently evolved. “You’ve really got to look at, what is the intent of public housing?” the senior official said. “It’s to serve people with limited options.”
But housing advocates are furious with the inspector general’s review, and Tuesday they took their private criticism public.
“It’s the Trump syndrome,” said Saul Ramirez, chief executive officer of the National Association of Housing and Redevelopment Officials, referring to presidential candidate Donald Trump. “It’s, let’s go bang on people who can’t defend themselves and take an issue in the wrong direction.”
Ramirez, a former HUD deputy secretary, said the inspector general’s conclusions are being unjustly manipulated by conservatives.
On Tuesday, Rep. David Jolly (R-Fla.) who sits on the committee that oversees funding for HUD, called for a congressional investigation, telling Secretary Julian Castro in a letter that Americans “deserve to know that their tax dollars are used for those rightfully in need of assistance, and not irresponsibly squandered subsidizing those in the highest income brackets.”
HUD3 Source: HUD Inspector General
Public housing authorities have to balance opposing goals. They want economic diversity in old, often-crumbling projects. And they want to make room for millions of poor people who linger on long waiting lists. Most people in public housing have an average annual income of just over $13,000.
HUD’s leverage to force housing authorities to evict higher-earning tenants is limited by current law: Families can stay as long as they want, no matter how much money they make, as long as they are good tenants. Complicating what HUD can do are structural realities. While the federal government pays the subsidies, states and local governments run the housing authorities day to day.
So the agency is issuing guidance to more than 3,000 housing authorities that “encourages [them] to establish policies to reduce the number of over-income tenants in public housing,” the official said.
Ramirez and other housing advocates say these tenants are positive role models who keep the projects from becoming isolated corners of poverty. Families whose income goes above 30 percent of the average income in their area can be charged higher rents, a decision HUD officials said is up to local housing authorities.
Ramirez called the inspector general’s report “a devolution of this inspector general’s desire to dictate policy to HUD.” He said Montoya “has no jurisdiction whatsoever” over tenants who earn more than they did when they came into public housing, because the law allows it.
“The inspector general looks at waste, fraud and abuse,” Ramirez said. “None of those things are happening here.”
Advocates say housing authorities have been forced by years of federal budget cuts to rely on residents whose incomes rise, raising their rents to help replace shrinking subsidies from Washington.
Even so, before the inspector general’s review, HUD was pushing successfully for changes in Congress that would prod higher-earning tenants to leave public housing on their own. As of this year, housing authorities are required to set flat rents for tenants whose income rise at 80 percent of the fair market rent for the apartment. The new rules are being phased in over three years.
But the inspector general concluded that the policy’s potential to coax tenants from public housing would be “marginal,” because rent increases are limited to no more than 35 percent a year, “and [this] may not prevent the egregious cases illustrated” in the audit.
“The IG is making a mountain out of a molehill,” said Timothy Kaiser, executive director of the Public Housing Authorities Directors Association. Higher-earners represent 2.6 percent of the 1.1 million public housing tenants, the review found.
“It’s a very small population,” Kaiser said. “There’s always been criticism that public housing concentrates the very poor in poor neighborhoods. Now they have role models to show other residents the value of work and allow a better income mix.”
Ian O’Connor, a spokesman for the inspector general’s office, said the audit “speaks for itself.”