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Section 8 v Market Rate
Housing Crunch — Who’s getting crunched?
An interesting conflict of interest is in the process of arising in South Providence, as reported in the Providence Journal in their article by Ms. Davis, Tenants want to maintain homes under Section 8.
The conflict has arisen because the developer wishes to exercise her right to terminate her HUD contract when the 20 year time limit is up. Under these contracts developers were guaranteed favorable financing and they in turn were obligated to provide subsidized housing for 20 years.
The tenants would all be eligible for Section 8 vouchers if the units were converted.
But now that the obligatory 20 years are up the tenants and subsidized housing advocates wish to force the owner to maintain the units as subsidized housing instead of letting her exercise her rights to convert the units to market rates.
Someone even suggested taking the units by Eminent Domain—doesn’t that just make you shudder.
What good is a contract if both parties aren’t obligated to honor said contract?
It reinforces my philosophy of not ever doing business with the government, because it seems that if you do, you forfeit quite a few rights.
The article quoted one tenant, who has lived there for 13 years, who had to use an interpreter to speak to the ProJo reporter, who said that with what Section 8 paid she should live in a penthouse. That’s puzzling to me.
We do have a housing crunch and we do need a solution. But the government also needs to honor its contracts. If the government's side of a contract can be negated, leaving the developer having fulfilled their obligations but without rights, what developer in their right mind would enter into a future, similar program to provide subsidized housing?
I’ve heard people in Mt. Hope express the fervent wish that the units between Doyle and Pleasant Streets would go to market rates since they were probably built under similar circumstances. Their management’s inability to control the crime emanating from there has given the units a bad name. Rest assured there will be a battle royale there if and when that developer wishes to exercise their contract.
The cost of housing versus income in Rhode Island is alarming and growing worse, and still taxes rise, driving up housing costs even more.
John Twomey
Read the Projo article, Tenants want to maintain homes under Section 8,
below.
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Tenants want to maintain homes under Section 8
01:00 AM EST on Friday, January 6, 2006
BY KAREN A. DAVIS
Journal Staff Writer
PROVIDENCE -- After living for 17 years in the federally subsidized Barbara Jordan I apartment development, Sonia N. Rodriguez is afraid that she will have to leave if the landlord opts out of the affordable-housing program and leases the apartments at market rates.
Rodriguez and other members of the Barbara Jordan I Tenants Association are working with a tenants-rights advocacy group to prevent the 193-unit Section 8 apartments from losing the federal subsidies.
At a news conference yesterday, members of the Rhode Island HUD Tenant Project explained that they fear that the Barbara Jordan I Apartments -- which consists of one-, two- and three-family scattered-site housing in South Providence -- could be converted into market-rate housing, said Alex Moore, project coordinator.
If the conversion took place, residents would be eligible to receive Section 8 vouchers, which would enable them to to shop for affordable, private housing. But tenants say that vouchers are not the solution, given the state's housing crisis.
The Barbara Jordan I project was one of many developments nationwide that used mainly public financing to pay for affordable housing in the mid-1970s to mid-1980s. Under 20-year contracts signed by private developers and the U.S. Department of Housing and Urban Development, the developers were obligated to keep the units as Section 8 housing, which requires qualified tenants to pay no more than 30 percent of their income in rent.
After the contract expires, however, the developer is allowed to decide whether to remain in the subsidized program or opt out.
The contract for the Barbara Jordan I Apartments expires in August, Moore said, and tenants have reason to believe that principal owner Katrina Griffin, of SCHS Associates, plans to opt out of the program. She is expected to decide in April.
Griffin -- the daughter of the late Lloyd Griffin, developer of the project -- sent a letter to tenants in August giving them a one-year notice of her intent to terminate her contract with HUD, as is required under federal law.
However, advocates note, Griffin did not the tenants or Rhode Island Housing and Mortgage Financing Corporation a two-year notice of contract termination, which state law requires.
Moore said the state should enforce its law on the two-year notice and consider taking the property by eminent domain or amend the law to require private owners to offer to sell the property to the tenants, Rhode Island Housing or a nonprofit organization.
Tenants and advocates want to lobby politicians and state and federal housing officials to ensure that the development does not abandon its mission to provide affordable housing.
"What I want is . . . for the landlord to sign the contract [with HUD], have a nonprofit buy it and give us the maintenance that we have not had for many years," said Mayra Carrasco, who has lived in the development for more than 13 years. Carrasco spoke to the audience with help from a Spanish interpreter. "We don't want vouchers. . . . With the way things are going, one day [President Bush] is going to take the vouchers away, and we'll be living on the street."
As a mother who raised her children in the development, Carrasco said she has pledged to fight on behalf of other single mothers who need affordable housing.
Furthermore, Carrasco said, "We are living there and the houses are not being taken care of. For the high rent that Section 8 has been paying, we should be living in a penthouse."
City Councilwoman Balbina Young said the Barbara Jordan I Apartments "have been problematic since its inception."
Young was joined behind the podium by Representatives Joseph Almeida and Grace Diaz, both Providence Democrats, and Noreen Shawcross, director of the state Office of Housing and Community Development.
Almeida vowed that legislators would do what they could to ensure that the development remained affordable to low-income residents.
"We've got enough problems on the South Side. . . . Don't take away our homes," he said.
Moore said his group and Almeida planned to meet with officials from the Rhode Island Housing next week.
Chris Barnett, spokesman for Rhode Island Housing, said the development could be saved from going market rate.
He said his agency has been "rescuing apartments like Barbara Jordan."
Under a program called Preservation, the agency has offered favorable financing to owners in exchange for a commitment that the property would be used only for affordable housing for the next 40 years.
"We are confident that the residents will not lose their homes," Barnett said, noting that thousands of units have been rescued statewide in the last few years. Among them are 294 units at Rumford Towers in East Providence.
http://www.projo.com/metro/content/projo_20060106_pjord6.1d2065e7.html
Posted at January 6, 2006 03:01 PM
Point well taken, John. Unfortunately, the portable section 8 vouchers that would be made available to the tenants would be little more than useless since there is already such a shortage of rental units that will accept vouchers. The fact is, the Griffin's have taken advantage of HUD funding for decades while mismanaging their properties and being completely unresponsive to their tenants. They've made a bundle through publicly funded subsidies while failing to provide the safe, quality, and affordable housing that they were obligated to. I understand that this is a seperate issue, but to say that Katrina has no ethical or moral obligation to her tenants is indefensible.
For clarification, Katrina Griffin has not been named in any law suits, and it is unlikely that she will have to. The article states that the tenants group is targting RIHMFC for failing to enforce the two year opt out notice requirement. I believe that the federal one year notice is intended as a minimum notification period, not a maximum.
Also, the point should be made that subsidized housing acts as much more than a safety net for the disabled, elderly, and "working poor". The average rent for a 2 bed apt. in Providence last year was $1066/month. That requires a salary of roughly $42k/year to afford comfortably (by HUD standards. I'm not sure what the current median income is, but in 2000 it was roughly $27k. Based on those numbers, the majority of Providence residents need some kind of housing assistance. I'm not saying that section 8 is necessarily the best answer for this, but I do believe it would be a mistake not to fight to preserve the few affordable units we already have. Katrina has many options that will allow the units to remain affordable. She could sell to a CDC or other non-profit entity capable of managing and maintaing the affordability of the units.
Posted by: Ben at January 23, 2006 09:52 AM
I made a mistake in my post that I corrected: I mentioned the subsidized housing between Cypress and Pleasant when I meant the grey and red trimmed units between Doyle and Pleasant.
I agree of course that we need subsidized housing as a safety net for the disabled, the elderly, and those whom the government calls “the working poor” as well as those incapable of working for whatever reason. I did not mean to advocate getting rid of subsidized housing. But I believe it can be managed better than the units I mentioned are managed.
We have a good deal of subsidized housing in Mt. Hope and most of it is well managed, especially the units run by the Southlawn Corporation. They could be a model of how subsidized housing should be managed: great service for their tenants, quality maintenance of their property, and responsive to the community. A tip of the hat to Bill D., their property manager, for that.
My point was more about the contractual conflict between the tenants and the developer. I’m pro business and know that small business is the backbone of the economy. The government offers these programs as incentives to get developers to produce subsidized housing. If developers have to fight court battles to exercise their contractual rights why bother getting involved in the future? Whether realizing the slimmest of profits or a windfall profit the margin is determined by the market. Most developers are "for profit businesses" and have every right to take their earnings without being called greedy or any other invectives. Subsidized Housing advocates shoot themselves in the foot by trying to block developers from excersizing thier legal, contractural rights.
Katrina Griffin, the property owner in question, is in no way obligated legally, ethicaly, or morally to renew her contract with HUD. Her obligation to notify tenants one year in advance was fulfilled under her federal contract, and federal law trumps state law every time, should she chose to go to court to establish her legal rights. I believe her challenge to the state requirement for a two year notification would persevere. She has fulfuled her obligations under her contract, and she is within her rights to convert the units to market rate units. She owns them as legally as I own the home I live in.
Every tenant in the housing in question would get a Section 8 housing voucher, should the units be converted to market rate units; so no one was suggesting that people would be put out on the street and end up homeless.
It’s understandable that people who have lived in a house for 13 years or so would feel like they have propriety rights to it, even if they were subsidized for so long by government funds (our tax dollars), but that is not the reality. The reality is that the property is owned by the developer, fair and square.
That's my opinion, anyway.
Posted by: John at January 13, 2006 06:22 PM
I am a Mt. Hope resident, and stumbled across this site about a month ago. For my first post, I'd like to correct a few points John made about the section 8 tenants in South Prov.
First, the government is in no way backing out of their contract. It is the tenants organization that is trying to convince Katrina Griffin, the property owner to renew her contract with HUD.
In fact, a close reading of the Projo story reveals that it is the property owner who is not fullfilling her end of the contract. RI state law requires that HUD subsidized tenants be given two years notice when a landlord opts out of a contract. These tenants recieved less than one year's notice. Further, the Barbara Jordan housing complex was largely constructed with tax payer dollars. While it is not illegal for the owner to sell, I think many will agree that windfall profits from a project funded so largely through public funds should somehow be penalized.
As far as section 8 in Mt. Hope: I think that reverting all subsidized units to market rate as a means to subdue crime would be cutting off our nose to spite our face. By decreasing the supply of affordable apartments, we would only be adding to the economic hardships that lead to criminal activity in the first place.
Posted by: Ben Gworek at January 9, 2006 09:34 AM