Thousands in US Could Be Evicted
LOW-INCOME HOUSING CRISIS
MUCH of America's stock of low-income housing was developed in the flush and socially active 1960s and '70s. How to keep it going in the lean-and-mean '80s is a thorny problem. Two federal housing programs that encouraged private owners to develop low-income housing by providing various subsidies are due to expire in the next few years, affecting nearly 800,000 units.
Marc Draisen, executive director of the Citizen's Housing and Planning Association in Boston, calls it a ``time bomb of a disaster.''
In the mid-'60s, the office of Housing and Urban Development started a program that gave property owners tax breaks, low-interest loans, and federal mortgage insurance. In return, they charged low rents. It was a 20-year deal after which the owners were free to prepay the remainder of the mortgage and do as they liked with the buildings.
Many of the neighborhoods have since become desirable places to live, and owners are being tempted by the siren call of real estate killings. By 1986, there had been prepayments in Dallas, Chicago, and Alameda County, Calif.
But what may be worse, say housing experts, is the coming expiration of another program, known as Section 8, that provides rental subsidies to the owners of 465,000 units. That 15-year program will be up for renewal in 1991.
Concerned by the prospect of thousands of displaced people, Congress passed the Emergency Low-Income Housing Preservation Act in 1987. It restricted prepayments for two years. That period expires in February, and a House bill would extend it for another two years. In addition, Congress is moving toward renewing the Section 8 program.
In 15 states, laws have been enacted requiring notice to tenants before selling.
Massachusetts is in a unique position; it has its own rent-subsidy program, and 95 percent of its low-income housing owners have signed a pledge not to displace any tenants before the mortgage is paid off.
They also have pledged that a minimum of 60 percent of the units will be available to low-income tenants.
Maryland's Assisted Housing Preservation Act, enacted this month, requires an owner who intends to prepay his mortgage or discontinue federal housing assistance to provide one-to-two years' written notice to the state, the local government, local public housing authorities, tenants, and tenant groups.
Owners also must offer the right of first purchase to those groups and provide relocation assistance of between $475 and $950.
The Maryland law requires owners to grant three-year lease extensions for 20 percent of units that house children or disabled.
The state worked with developers on this bill, and in the end, says Kris Hughes, executive assistant to the secretary of Maryland's housing and community development, ``all the big guys with most of the units agreed with the final form of the bill.''
But some owners feel this isn't fair. They stuck by their end of the bargain, they argue, and the government should hold up its end.
``There was a contract and the federal government is trying to change the terms of contract,'' says William Kargman, president of First Realty Management Corporation in Boston, which manages 4,000 units of assisted housing, and a member of a national task force on housing. ``The investors are the ones who are going to suffer; many of them are schoolteachers and accountants as well as lawyers who were working then and are now retired.''
Larry Yeats, director of the Anti-Displacement Project of the Low-Income Housing Information Service, says: ``One argument is that the owners have made the profit they anticipated making. The residual profit is a major windfall, and the government can't afford that.''
But housing groups don't want to alienate owners; they need them to continue supplying low-income housing. All say incentives are needed for developers.
``The problem is that developers have been holding equity for a long time and can't get at their capital,'' says Mr. Hughes. ``They're not trying to cash out and retire. They're trying to use their money to leverage projects of all kinds.''
The federal government, he says, needs to develop a mechanism to enable owners to get access to their capital without removing the housing from use by low-income tenants.
But some wonder how vast sums to continue running these programs will be appropriated in an era not amenable to expensive government programs.
In the heyday of Section 8, the government spent $30 billion a year; today it spends $7 billion.
``For us there is an overriding reality,'' says Mr. Keats. ``These are people who have no place to go.
``They're doubling up, some are spending 70 to 80 percent of their income on rent. The overriding concern has to be making sure those people are protected.''
And some tenant groups are starting to buy the buildings they've been living in as renters in order to have them remain low-income housing.