HUD has reportedly never paid its August Section 8 subsidy for 7,004 apartments in New York State, including almost 4,000 city apartments in 43 buildings in all five boroughs. The agency wouldn’t say how much money it withheld, but HUD reportedly faces a shortfall of $1 billion to $3 billion.

Today, U.S. Senator Charles E. Schumer revealed that the Department of Housing and Urban Development (HUD) has been financially starving New York State housing providers of reimbursement checks for weeks and will be unable to fully fund them through the rest of 2007. As of September 5th, 49 separate buildings across Upstate NY covering 2816 individual units had not received their monthly checks for August, which they are supposed to receive on August 1 as of September 5. The withheld funds, which help pay for mortgage payments, staffing, utilities, routine maintenance, and insurance, have jeopardized living conditions for thousands of the state’s seniors and low-income citizens living under HUD’s Section 8 project-based rental assistance program. The program is designed to enable low-income seniors and families to live in safe, secure housing they could not otherwise afford.

“It’s unconscionable that HUD would be so haphazard in its operations to jeopardize the living conditions of thousands of New York’s most vulnerable residents,” said Senator Schumer. “Today, I’m calling on HUD to immediately release the withheld funds so housing units across the state will no longer be starved and can provide their tenants with top-notch accommodations.”

Already, HUD has shortchanged New York State’s senior and low-income housing providers. In August, only 48%, or 613 out of 1,271 of bills were paid on-time to housing suppliers, leaving section 8 buildings to wait weeks before receiving their reimbursements. Furthermore, 8 percent of housing suppliers had still not received their checks by the conclusion of August. This spiked from 4% in July when 47 bills had gone unpaid.

In total, HUD is currently behind on payments for 49 buildings across Upstate New York covering 2816 units. Including:

9 buildings in the Capital Region with 526 units. 
4 buildings in Central New York with 478 units. 
3 building in Rochester-Finger Lakes with 264 units. 
14 buildings in the Hudson Valley with 827 units. 
1 building in the North Country with 50 units. 
6 buildings in the Southern Tier with 189 units. 
12 buildings in Western New York with 482 units.

HUD’s Section 8 project-based rental assistance program enables low-income tenants, many of whom are seniors, to live in safe and affordable housing. By contract with HUD under the Section 8 program, housing providers receive monthly payments from HUD that allows them to meet operational costs such as: mortgage payments, staffing, utilities, routine maintenance, and insurance. Under the terms of the Section 8 contract, the rental subsidy does not permit eligible housing providers to amass a large financial reserve to cover these costs over an extended period. Therefore, non-profit housing providers operate on very tight budgets and have minimal resources to cover their obligations.

However, HUD this year underestimated its yearly funding needs for the Section 8 program, leaving senior and low-income housing communities to experience either late payments or no monthly payments at all. Schumer today revealed that HUD has been unable to fully fund Section 8 Housing Assistance Payments (HAP) contracts with anniversary dates in the last quarter of FY07.

Schumer today warned that that the non-payment of subsidies is a disincentive for property owners to continue to participate in the Section 8 program, which provides stable housing to low-income families throughout NYS. Schumer also expressed concern that the problem will continue throughout the year and could grow worse due to HUD woefully underestimating its annual funding for the program.

“It’s absurd that New York residents should suffer due to HUD’s lack of foresight and miscalculations when it comes making sure these buildings receive the proper funding they need to make sure their tenants live in comfort,” added Schumer.

In a letter to HUD Secretary Alphonso Jackson, Schumer and other Democrats on the Banking Committee called on the federal agency to reverse course and find a way to fulfill its financial obligations under the program and to preserve the viability of supportive senior housing and low-income communities across New York State.

Schumer urged HUD to take immediate action to fund all property owners under their HAP contracts, and to let Congress know as soon as possible if the agency does not have sufficient funds to make these payments.  In addition, he called on HUD to provide to the Committee the following: (1) the dollar amount necessary to fully fund (12 months) all expiring contracts in FY08; (2) the dollar amount necessary to fund all contracts through FY08; and (3) the amount of the shortfall for FY07.

Schumer wrote: “Such funding disruptions are a serious breach of the commitment to honor the contracts between the federal government and the owners of these properties.  More importantly, the intended beneficiaries – low-income elderly and families living in these properties– are at risk of losing their homes.”

(Source: Chuck Schumer office)