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Proposed Cuts Could Affect Landlords of Section 8 Housing

Proposed Cuts Could Affect Landlords of Section 8 Housing

Real Estate: Landlords, Low-Income Renters Already Face Tight Market

BY MANDY JACKSON

Apartment owners may be in for a surprise next year if low-income San Diego County tenants lose their rental assistance.

In the 2005 fiscal year, which begins Oct. 1, $1.6 billion may be cut from the Section 8 program administered by the U.S. Department of Housing and Urban Development.

Major cuts to the program would be a big problem for local landlords who rent thousands of apartments to Section 8 recipients, according to Jules Arthur, an apartment investment broker at Hendricks & Partners’ San Diego office.

“Anything that makes housing less affordable in San Diego County is a bad thing,” Arthur said.

He owns 130 apartments in the East County, many of which are rented by tenants with Section 8 vouchers. Thirty percent of their income goes toward their rent. The federal program pays the rest.

California housing agency officials made a trip to Washington, D.C., two weeks ago to talk to the state’s two U.S. senators, representatives, and other key congressional members about the cuts proposed by President Bush.

Elizabeth Morris, CEO of the San Diego Housing Commission, which administers Section 8 vouchers in the city of San Diego, was part of the California delegation.

Morris said local housing agencies stand to lose $24.5 million. Of that, $12.7 million would be cut from the city of San Diego, affecting more than 1,459 renters.

The housing commission assists more than 12,000 families and administers $110 million in Section 8 vouchers annually.

The county’s Department of Housing and Community Development oversees $82 million in rental assistance for 10,000 families in unincorporated areas of the county and 13 cities in the county.

“Last year the Senate was quite clear. Their intention was to fully fund the current level of vouchers, and provide more money if necessary,” Morris said. “If we want to change the program we should all come together and talk about it not just have a pronouncement but talk about ways to change the program.”

To change Section 8, she said the program would have to serve fewer people, provide less assistance per renter, or serve people with higher incomes and less need for assistance.

Morris said landlords participate in Section 8 because tenants only pay what they can afford and the federal program takes care of the rest.

“If the renter has to pay a larger share, owners might not be so inclined (to participate in the program or to rent to those tenants),” Morris said. “We need a stable program that the owners can count on.”

Since vacancy is low , less than 4 percent of local apartments are empty , low-income renters have few options outside of Section 8.

If they can’t afford their rent they’ll move out and they might double up in one apartment with another family, Arthur said.

For landlords, their income is disrupted for a period of time when an apartment is vacant. There is also a significant cost involved in preparing apartments for new tenants.

Arthur said he and other landlords accept Section 8 vouchers because of the stability they provide.

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