GOOD TIMES FOR MANY DON'T END HARD TIMES FOR LOW INCOME RENTERS

Despite Economic Boom, HUD Finds Affordable Housing Crisis Deepening

WASHINGTON - Despite America's continued economic expansion, a new report to Congress issued today finds that a record 5.4 million low-income families need housing assistance due to a shrinking number of affordable rental units.

"These findings make a clear and compelling case for greater federal attention to our nations housing needs," said Secretary Cuomo. "With worst case housing needs at record levels, there is an urgent need to strengthen federal efforts to assure adequate supplies of decent, safe and affordable housing for America's lowest income families."

Cuomo said the HUD report to Congress documents the need for a series of initiatives that President Clinton has requested in his proposed 2001 budget to increase the supply of affordable housing, including: $690 million for 120,000 new rental assistance vouchers; $1.2 billion in funding for homeless grants; and $1.65 billion for HOME program grants.

Cuomo made the announcement today at a press conference where he was joined by Robert Greenstein, executive director of the Center for Budget and Policy Priorities.

Cuomo said that a recent analysis place the value of FHA insurance fund at more than $5 billion above previous projections. President Clinton directed other agencies to develop recommendations on how best to use these funds to strengthen federal housing programs and enhance comprehensive affordable housing opportunities. HUD's recommendations will reflect the worst case needs reflected in this report, said Cuomo.

The report, Rental Housing Assistance- The Worsening Crisis, lists six major findings:

• At least 5.4 million unassisted very-low-income families pay over half their income for housing or live in severely distressed housing, an increase of 12% since the economic recovery began in 1991.

• Families with worst case housing needs are working harder than ever. Between 1991 and 1997, despite a robust economic recovery, worst case housing needs increased more than three times as quickly for households with full time earners than for all other very low-income renters.

• The housing stock affordable to the lowest income Americans continues to shrink, with rental units affordable to families with incomes below 30% of area median income down by 5 percent between 1991 and 1997, a decline of over 370,000 units.

• Between 1991 and 1997, worst case needs became more concentrated among households with incomes below 30% of the area median income; and 77% of those with worst case needs - 4.2 million - have extremely low income.

• Worst case housing needs among minority household increased dramatically during the 1990s, while needs of non-Hispanic whites were stable. Increases were particularly high among Hispanic households - up 45% between 1991 and 1997 - and working minority families with children.

• Both very low renters and extremely low renters remain more likely to have worst case problems in the suburbs than elsewhere. Whereas nationally 37% of very-low-income renters have worst case problems, over 40% of very low income renters and 69% of extremely-low income renters living in the suburbs have worst case housing needs.

OTHER MAJOR FINDINGS

• WORST CASE NEEDS CONTINUE TO BE A PERSISTENT PROBLEM FOR ALL DEMOGRAPHIC GROUPS
• HOUSING SHORTAGES ARE WORST IN THE WEST
• VERY LOW INCOME RENTERS ARE PAYING MORE THAN HALF THEIR INCOME ON RENT

Very-low-income renter households with severe rent burdens rose by 500,000 families between 1995 and 1997. In 1997, 6.4 million very-low-income renters had a severe rent burden, a sharp increase from 5.9 million in 1995.

On a national average, extremely low incomes are defined as less than $13,590 for a family of four and $10,872 for a family of two. Almost 70 percent of such households that are not receiving HUD assistance pay more than half their income for rent or live in severely inadequate housing.

POLICY IMPLICATIONS

The HUD report says its findings have significant implications for federal housing policy:

• "Rental assistance is a critical and flexible tool that provides access to decent and affordable housing for low-income families of all backgrounds including the elderly, working The Federal Government must continue to expand rental assistance," the report says, adding that the President's Budget for Fiscal Year 2001, which includes funding for 120,000 incremental Section 8 vouchers, will be an important step towards closing this affordable housing gap.

• Federal rental assistance is critical for working families with worst case needs, whose incomes are increasingly consumed by rent, leaving them less able to spend on food, medical care, education, or other necessities.

• Other Federal programs that help provide permanent affordable housing including the Housing for People with AIDS and Shelter Plus Care, Section 202, and the Section 811 Supportive Housing for Persons With Disabilities Program should also be expanded.

WAYS TO INCREASE THE SUPPLY OF AFFORDABLE HOUSING

President Clinton's proposed 2001 budget seeks $690 million in funds for 120,000 rental housing vouchers to reduce worst case housing needs.

HUD's FY 2000 budget includes 60,000 new rental assistance vouchers, following the approval of 50,000 vouchers last year after four years of no new vouchers.

A total of 32,000 new vouchers would be provided through a $183 million welfare-to-work initiative to provide stable housing to families moving off the welfare rolls to join the workforce.

Also as part of the President's budget proposal to create new rental assistance vouchers, 18,000 vouchers would be provided at a cost of $105 million for homeless people moving from shelter care into permanent homes.

In addition, the 2001 budget asks for $58 million to provide an additional 10,000 vouchers as part of HUD's housing production program. Because the vouchers will be limited to no more than 25 percent of the units in any new development, the program will encourage the construction of at least 40,000 units of mixed-income housing.

ADDITIONAL AFFORDABLE HOUSING INITIATIVES

Other programs in the President's proposed 2001 budget that would enable HUD to help more poor people get affordable housing include:

• Elderly Housing Production at $779 million, a $19 million increase, to create housing tailored to the needs of senior citizens.

• The Continuum of Care Homeless Assistance grant program at $1.2 billion, a $180 million increase, to fund community-designed solutions to help homeless people get housing and become self-sufficient.

• $50 million of additional HOME grants for a total of $1.65 billion in resources to provide 92,000 units of affordable housing for owners and renters through construction, rehabilitation and acquisition activities.

• $86 million in increased funding to finance capital improvements in public housing, boosting total capital improvement funding to $2.955 billion. Capital funds may be used to upgrade viable housing units, demolish obsolete units, provide continued assistance to displaced families, or build replacement units. In addition, funding for the HOPE VI program, which demolishes and replaces severely deteriorated public housing, would increase by $50 million to a total of $625 million.

• $28 million in additional funds for the Housing Opportunities for Persons with AIDS program, for a total of $260 million - a 12 percent increase. The program helps people with AIDS who need housing assistance because of the high costs of treating their disease or because they have been unable to work due to their illness. The funding would provide assistance for about 48,000 housing units and would provide related services to about 60,000 people.