McLean County Housing Crisis Averted; HUD to Restore $299,000 to Keep 64 Families in Voucher Program

After advocates and Illinois’s congressional delegation campaigned to prevent 64 families from losing their housing in Bloomington-Normal, the U.S. Department of Housing and Urban Development (HUD) announced in midmonth that it would return the $299,000 in unspent reserve funds to the McLean Housing Authority. This should fund each family’s Housing Choice Section 8 Voucher for 2005.

For the past several weeks, the McLean Housing Authority, U.S. Sen. Richard Durbin, U.S. Rep. Tim Johnson, the National Housing Law Project, the Center on Budget and Policy Priorities, the Statewide Housing Action Coalition, and the Sargent Shriver National Center on Poverty Law had been advocating that HUD fully fund all 220 vouchers administered by McLean since 2004.

McLean had been forced to cut funding for 64 families because HUD underfunded McLean’s voucher program for 2005 by $360,000. HUD did not adjust costs when Congress intended it to do so in accord with the 2005 Consolidated Appropriations Act, Public Law No. 108-477.

Before December 2003, McLean administered only 22 vouchers. In late 2003, however, Lancaster Heights, a 198-unit multifamily housing complex subsidized under the Section 236 program, was sold, and the owner prepaid the federally subsidized mortgage. By law HUD was required to issue 198 “tenant protection” vouchers (also known as “enhanced vouchers”) in replacement. HUD asked and McLean agreed to administer the 198 new tenant protection vouchers. On December 15 HUD notified McLean about the funding for these vouchers. McLean’s total voucher level rose to 220 units.

About 120 of the 198 tenant protection vouchers were used by Lancaster residents to remain at Lancaster. With HUD’s approval, the remaining 78 vouchers were issued to very low-income families from the housing authority’s waiting list. By August 2004 McLean had leased all 220 vouchers.

The 2005 Consolidated Appropriations Act directs HUD to renew voucher funding for housing authorities for 2005 based on their leasing and cost data averages for May, June, and July 2004. The Act also directs HUD to adjust, as needed, the costs associated with first-time renewals of tenant protection vouchers. Congress recognized that such vouchers could not be leased and in use by the mandated May–July 2004 “snapshot” period for HUD to determine renewal funding.

McLean’s efforts to lease all of the new vouchers in 2004 were not honored by HUD when HUD determined McLean’s voucher funding for 2005. HUD used only the three-month snapshot formula with no adjustment to renew funding for all the new tenant protection vouchers that McLean leased in 2004. HUD funded only 165 vouchers at a low per-unit cost based on McLean’s leasing data from May–July 2004. McLean requested that HUD adjust the funds to include all the new tenant protection vouchers that McLean leased in 2004. HUD denied McLean’s request. McLean received $30,000 less per month from HUD than McLean needed for the housing assistance payments committed for the families. When McLean asked HUD what to do about the shortfall, HUD told McLean to terminate vouchers.

Nearly ten years ago, Congress established the Enhanced Voucher Program to protect tenants who lose their subsidized housing through no fault of their own and to keep the same number of subsidized housing units in the community. Until advocates intervened, HUD made a sham of tenant protection vouchers, leaving McLean no option but to terminate assistance for the families and expose them to homelessness.

McLean’s funding crisis differed from the funding struggles of other housing authorities across the country. The crisis in McLean came about because HUD refused to adjust funding to account for the tenant protection vouchers that McLean leased for the first time in 2004. HUD subverted Congress’ intent that funding be adjusted for vouchers not taken into account in the May–July snapshot renewal formula.

If McLean leases all of its vouchers in May, June, and July 2005, it should have sufficient funding for all 220 vouchers in 2006.

For more information, contact Kate Walz at 312.263.3830 ext. 232.