Cuts at HUD: a Welcome Reform Or a Threat to the Urban Poor?

IN granite-gray federal Washington, the Clinton administration proposes to reinvent public housing with an infusion of market forces and a huge shift toward local control.

But in the brick apartment blocks of Boston, home to one of the nation's largest concentrations of federally subsidized housing, local officials and activists are wary of what the move will mean for poor families.

Housing and Urban Development (HUD) Secretary Henry Cisneros, trying to rescue his $28 billion-a-year department from budget-cutters in the new Congress, is promoting what he calls a ''massive devolution'' of power to the local level.

Instead of doling out money under 60 different programs and a labyrinth of complex regulations, HUD would collapse these programs into three block grants for local housing authorities to spend as they will, so long as they meet HUD's standards.

Eventually HUD's money would go directly to poor tenants as housing vouchers, providing a market incentive for developers and project managers to keep up housing projects better, since residents could take their money elsewhere.

''The goal here is to put some market pressure on the housing managers and owners,'' says Mr. Cisneros. Now many feel little pressure to improve maintenance because HUD will send them money regardless, not wanting to punish tenants for the failures of local management.

But activists in Boston -- which in 1938 became the first US city to build public housing -- see a delicate system that thousands of families rely on for affordable housing in the city's expensive rental market.

''There are plenty of things wrong with HUD,'' says Bob Wadsworth, program director for the Boston Foundation, ''but there is plenty right with it too.'' In a place like Boston, where the housing authority is the largest provider of affordable housing, ''the HUD proposal risks throwing the baby out with the bathwater.''

The greater use of block grants could undo some of the progress in some community projects over the past 15 years, say some local activists, especially if it means less money overall.

''The constituency groups end up fighting each other over a much smaller pie,'' says Michael Kane, executive director of the National HUD Tenants Alliance, and of the Boston chapter. ''Local government gets control of the pie, but it's smaller for everybody.''

For Barbara Burnham, executive director of the Fenway Community Development Corporation, which has provided housing for 21 years in Boston, the issue is the vagaries of local politics versus the ''muscle'' of a consistent federal policy to provide affordable housing to those in need. Last year $4 million, a third of the Fenway CDC budget, came from HUD in subsidies or development money for preserving almost 450 affordable-housing units.

''Some people feel the block- grant idea could work if it truly goes to the grass-roots community-based organizations,'' says Ms. Burnham. ''But a fair housing monitoring system is critical to assuring housing for people with mental illness, AIDS, or other special needs.''

Aaron Gornstein, executive director of Citizens Housing and Planning in Boston, says: ''There are thousands of low-income housing units in Massachusetts, and we are concerned that they will be placed in jeopardy if the proposals go through so quickly.''

In the HUD proposal, local governments would be required to file a comprehensive housing plan and HUD would monitor local performance.

By 1998, housing subsidies would shift completely to vouchers for tenants, which they could carry virtually anywhere in the country.

Eventually the 3,400 housing authorities in the US would be deregulated, but 100 of the troubled authorities would be put on probation, and the worst 10 or 15, including some in Washington D.C., would go into receivership or be torn down.

Under a complex Title II program, eight Massachusetts low-income housing developers received $93 million in the past three years for agreeing to maintain the units as subsidized housing. But HUD investigators say only $14.5 million was allocated for repairs, raising questions about the huge profits developers are realizing from the program. Cisneros agrees with Rep. Barney Frank (D) of Massachusetts that Title II, originally designed to discourage conversion of low-income housing to private use, is bein g misused and should be reformed.

In an expensive rental market like Boston, many low-income units are financed by bonds tied to the rental subsidies, not the vouchers.

Lenders refer to this arrangement as a ''subsidy stream,'' which, under the best management conditions, brings stability not only to a housing unit but also to the immediate community.

''The reason why the nonprofit housing industry is here,'' says Mossick Hacobian, executive director of Urban Edge Housing Corporation in Roxbury, ''is because the marketplace doesn't take care of the neediest. And not everybody wants to leave these neighborhoods that are being stabilized. There are networks, friendships; it's their neighborhood.''