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Possible Cuts: HAWS preparing to reduce vouchers
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Published: July 2, 2009
Officials with the Housing Authority of Winston-Salem are working with the federal Department of Housing and Urban Development to avoid drastic cuts in services to make up for a nearly $2.8 million shortfall.
Because of a drop in financing from HUD, HAWS may have to cut as many as 1,800 people from its Section 8 housing voucher program starting in October and cut the amount of all remaining vouchers by 10 percent starting in September.
The agency says it hopes that a recent visit from HUD officials is a sign that those drastic steps will not be necessary.
"We have to plan for the worst, and that's what we're doing," said Larry Woods, the executive director of HAWS.
HUD sent two officials to Winston-Salem this week to go over HAWS' books. They are expected to report back to officials in Washington.
"We are hoping that a resolution is coming," Woods said. "We don't know what the solution is going to be, or how much it's going to be."
Woods said that HUD officials told him at the end of May that HAWS would be getting less money this year and that the cut was retroactive to January — meaning that for five months HAWS had been spending money it did not have.
HUD required HAWS to fill the gap with money it has in a reserve.
The reserve is from years in which HAWS has reached its cap of 4,100 vouchers but still has leftover money.
The problem, Woods said, is that HUD used a combination of databases to figure out how much money HAWS had in the reserve.
HUD calculated that HAWS had about $6 million, when the agency has $3.2 million in the reserve, Woods said.
Woods said that while HUD officials have admitted to him that they made a mistake, they have not fixed it.
Donna White, a spokeswoman for HUD, declined to comment on how the shortfall came about.
"To get a more clear picture of the situation in Winston-Salem, HUD now has two people on site to review the Housing Choice Voucher Program, and HUD is continuing its effort to minimize the situation's impact on families," White said. ""The meeting (with HAWS) was very productive."
Winston-Salem is not the only city to be affected by HUD cuts, Mayor Allen Joines said.
"I know mayors and housing authorities across the country are banding together and telling HUD that this is unacceptable," Joines said. "I believe it's got to get HUD's attention, and certainly the attention of legislators."
"You don't want to be putting more people out on the street," in a difficult economy, he said.
The housing-choice voucher, commonly known as Section 8, is a subsidy meant to fill the gap between the market rate for a house or apartment and what a low-income person can afford.
The program is meant to let people choose their neighborhood and allows them to take the voucher with them if they move.
Generally, the voucher program requires the holder to pay 30 percent of their income toward housing, after certain deductions. The typical voucher amount in Winston-Salem is about $425, Woods said.
If that voucher is cut by 10 percent, it would be up to the tenant to make up the missing $42.50.
If people have to be cut from the program, HAWS officials have not yet decided how to make those cuts, Woods said.
One possibility discussed is to drop those who have been on Section 8 the longest, since the program has always been intended to be temporary assistance.
HAWS officials said that they will make sure certain vulnerable groups are not cut, such as anyone 62 or older, or households in which the voucher holder or a spouse has a disability.
Joines, Deputy City Manager Derwick Paige and other city officials are meeting with HAWS officials this afternoon to learn more about the problem and to look for local resources to help those affected.
"We still don't have a real good feel for the overall issue," Paige said.
"But if it does in fact come to fruition, it could have a significant impact."
He said that city staff will likely talk with the city council this month and weigh what options the city has, such as grants it might apply for to fill the shortfall.
■ Dan Galindo can be reached at 727-7377 or at dgalindo@wsjournal.com.
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