Cuomo Says Approval of Bill Solves Section 8 Crisis by Preserving Affordable Housing and Saving Taxpayers Billions

WASHINGTON -- Housing and Urban Development Secretary Andrew Cuomo today welcomed House passage of legislation averting an affordable housing crisis that could have threatened up to 4.4 million Americans with homelessness. Senate passage was expected this afternoon.

Cuomo said final passage of the legislation, which was based on HUD's proposals, will be "an historic achievement -- the first major housing legislation passed in six years, and a product of bipartisan compromise and cooperation. It will complete the work of solving the Section 8 crisis -- a goal I set as my top priority when I became Secretary of Housing and Urban Development."

Two measures, contained in HUD's appropriations bill that was approved by the House on Wednesday and was expected to pass the Senate today, would:

1. Increase funding for Section 8 renewals by $4.6 billion this year to enable HUD to renew all expiring Section 8 contracts. The Section 8 program, under which contracts for 1.8 million affordable apartments housing 4.4 million people would expire this fiscal year, subsidizes housing for low-income people -- primarily disabled, elderly and families that work.

   "Renewing these contracts will prevent many families from being put out on the street, averting an unprecedented explosion of homelessness nationwide," Cuomo said.

2. End excessive rental subsidies to private landlords under the project-based Section 8 program. By cutting subsidies so that landlords receive rents from HUD at market rates, the measure will save taxpayers $562 million this year, nearly $1.6 billion over five years, and billions of dollars more in the years ahead -- while preserving affordable housing for 850,000 people.

   "This bill will knock some common sense into out-of-whack rents," Cuomo said.

   "By lowering HUD rental subsidies on project-based Section 8 apartments to the same level as rents in the private market, HUD will stop wasting taxpayer dollars on ridiculously high subsidies," Cuomo said. "We will allow landlords to collect common-sense rents and still make a fair profit for housing families in need."

HUD subsidies to landlords housing 850,000 poor people in project-based Section 8 units now often exceed market rents -- bringing landlords far higher rents than they could otherwise get.

For example, in New York City, the HUD-approved average rent for a subsidized apartment is $1,178 -- compared with a rent of $831 for the same type of apartment on the private market. In Detroit, the comparable figures are $716 for a subsidized apartment and $499 for an apartment on the private market. The estimated yearly savings to taxpayers by lowering HUD-approved rents to market levels in the two cities amounts to $124.8 million in New York City and $2.6 million in Detroit.(MORE EXAMPLES ATTACHED).

Tenants pay 30 percent of their income toward the rent, with HUD subsidies making up the difference.

The high rental subsidies were originally established to encourage construction of affordable housing. Over the past 20 years, the subsidies escalated with inflation to far exceed rents for comparable apartments on the private market.

Despite the cuts in subsidies to landlords, the bill allows landlords to continue earning a profit by restructuring about $12.5 billion of their debt. The restructuring -- which will enable landlords to refinance part of their mortgage balances at lower interest rates -- will allow landlords to continue providing affordable housing even after HUD's Section 8 subsidies are cut.

In the attached list of examples:

• The first column of numbers lists the number of developments receiving excessive project-based Section 8 subsidies in the city.

• The second column lists the number of individual apartment units in the above projects.

• The third column lists the amount of mortgage debt on the apartments insured by HUD's Federal Housing Administration.

• The fourth column is the average rent for a HUD-subsidized apartment in the city.

• The fifth column lists the fair market rent for a comparable apartment on the open market.

• The last column lists the estimated yearly savings by lowering HUD subsidies to fair market rent levels in the city.

Potential Savings
for Top 100 Cities with Above Market Rents

State	City	Projects	Units	FHA-Insured DEBT	Average Subsidized Rent	Fair Market Rent	Est. Yearly Savings
AL	BIRMINGHAM	15	1,120	$ 21,986,000	$ 539	$ 465	$ 1,000,224
AZ	PHOENIX	12	1,150	$ 34,903,590	$ 674	$ 475	$ 2,740,968
CA	FRESNO	9	912	$ 20,096,457	$ 568	$ 468	$ 1,088,832
CA	LOS ANGELES	71	4,231	$ 188,920,054	$ 927	$ 750	$ 8,989,008
CA	OAKLAND	10	917	$ 29,370,764	$ 836	$ 594	$ 2,661,612
CA	SACRAMENTO	16	1,122	$ 27,057,134	$ 635	$ 538	$ 1,304,592
CA	SAN DIEGO	6	621	$ 27,381,360	$ 672	$ 590	$ 612,900
CA	SAN FRANCISCO	18	1,851	$ 76,291,434	$ 1,061	$ 794	$ 5,926,356
CA	SAN JOSE	6	667	$ 33,045,680	$ 939	$ 873	$ 528,324
CO	DENVER	35	2,294	$ 73,107,005	$ 633	$ 504	$ 3,560,244
CT	HARTFORD	10	733	$ 19,951,470	$ 861	$ 652	$ 1,841,511
CT	WATERBURY	4	673	$ 29,060,027	$ 986	$ 638	$ 2,810,160
DC	WASHINGTON	36	4,526	$ 171,454,811	$ 943	$ 764	$ 9,729,739
FL	GAINESVILLE	6	856	$ 11,709,503	$ 717	$ 530	$ 1,923,636
FL	JACKSONVILLE	22	2,159	$ 30,341,642	$ 658	$ 553	$ 2,717,376
FL	MIAMI	10	1,237	$ 48,990,086	$ 717	$ 599	$ 1,743,708
FL	TAMPA	6	658	$ 10,098,968	$ 591	$ 535	$ 438,264
GA	ATLANTA	11	1,084	$ 37,244,770	$ 703	$ 602	$ 1,321,776
GA	MACON	6	548	$ 15,366,975	$ 601	$ 464	$ 900,552
GA	SAVANNAH	8	681	$ 17,597,158	$ 623	$ 517	$ 869,376
HI	HONOLULU	6	581	$ 26,028,499	$ 1,055	$ 864	$ 1,335,972
IL	CHICAGO	78	8,959	$ 414,293,208	$ 972	$ 706	$ 28,542,117
IL	ROCK ISLAND	14	1,450	$ 40,824,239	$ 661	$ 433	$ 3,977,556
IN	EVANSVILLE	8	820	$ 19,239,317	$ 563	$ 363	$ 1,975,524
IN	FORT WAYNE	6	967	$ 19,528,186	$ 560	$ 429	$ 1,519,116
IN	GARY	8	1,268	$ 37,814,341	$ 716	$ 534	$ 2,770,404
IN	INDIANAPOLIS	15	1,253	$ 42,551,392	$ 546	$ 481	$ 981,120
IN	SOUTH BEND	4	694	$ 16,526,453	$ 569	$ 459	$ 917,772
KS	WICHITA	8	691	$ 19,051,662	$ 509	$ 381	$ 1,059,828
KY	BOWLING GREEN	7	506	$ 13,385,651	$ 526	$ 386	$ 850,464
KY	LEXINGTON-FAYETTE	9	874	$ 19,494,808	$ 514	$ 470	$ 460,104
KY	LOUISVILLE	26	1,725	$ 48,148,202	$ 573	$ 432	$ 2,919,996
KY	OWENSBORO	7	586	$ 10,211,134	$ 476	$ 353	$ 868,404
LA	NEW ORLEANS	4	525	$ 14,052,922	$ 634	$ 476	$ 995,532
LA	SHREVEPORT	8	754	$ 17,210,146	$ 546	$ 426	$ 1,083,948
MA	BOSTON	60	7,987	$ 419,367,982	$ 1,038	$ 776	$ 25,079,542
MA	SPRINGFIELD	7	629	$ 20,278,665	$ 888	$ 593	$ 2,224,236
MD	BALTIMORE	32	3,342	$ 119,133,668	$ 761	$ 559	$ 8,102,604
MI	DETROIT	8	1,001	$ 44,038,677	$ 716	$ 499	$ 2,605,956
MI	GRAND RAPIDS	10	1,010	$ 41,531,722	$ 616	$ 473	$ 1,734,540
MI	PONTIAC	5	686	$ 21,758,141	$ 627	$ 512	$ 946,632
MN	MINNEAPOLIS	9	1,770	$ 53,709,324	$ 598	$ 530	$ 1,444,128
MO	INDEPENDENCE	5	681	$ 10,891,161	$ 557	$ 505	$ 425,292
MO	KANSAS CITY	26	2,151	$ 47,935,029	$ 542	$ 449	$ 2,403,300
MO	SPRINGFIELD	11	625	$ 12,930,023	$ 482	$ 374	$ 809,916
MO	ST. LOUIS	50	4,230	$ 128,252,535	$ 581	$ 412	$ 8,574,945
MS	CLARKSDALE	6	569	$ 10,382,534	$ 559	$ 425	$ 913,524
MS	JACKSON	8	612	$ 13,834,726	$ 553	$ 425	$ 945,840
NC	CHARLOTTE	9	658	$ 13,319,692	$ 557	$ 522	$ 273,828
NC	GREENSBORO	10	673	$ 12,452,396	$ 544	$ 488	$ 450,576
NC	WINSTON-SALEM	10	558	$ 12,537,741	$ 532	$ 475	$ 377,520
NE	OMAHA	11	773	$ 16,819,272	$ 585	$ 500	$ 794,522
NJ	HOBOKEN	8	539	$ 20,280,724	$ 996	$ 772	$ 1,453,008
NJ	JERSEY CITY	12	1,378	$ 53,154,709	$ 1,047	$ 742	$ 5,036,136
NJ	NEWARK	28	2,723	$ 98,204,914	$ 1,032	$ 784	$ 8,103,132
NJ	NORTH BERGEN	5	793	$ 20,179,895	$ 925	$ 740	$ 1,760,712
NY	ALBANY	8	909	$ 24,651,145	$ 696	$ 509	$ 2,047,068
NY	BUFFALO	13	1,643	$ 43,994,068	$ 728	$ 497	$ 4,563,816
NY	HEMPSTEAD	4	921	$ 17,697,932	$ 1,014	$ 887	$ 1,412,964
NY	NEW YORK, NY	253	29,960	$1,467,292,026	$ 1,178	$ 831	$124,800,710
NY	ROCHESTER	8	593	$ 20,128,272	$ 644	$ 494	$ 1,071,276
NY	TROY	6	521	$ 14,120,327	$ 731	$ 502	$ 1,433,868
NY	UTICA	7	515	$ 18,356,379	$ 829	$ 403	$ 2,634,396
OH	AKRON	11	1,119	$ 31,932,921	$ 649	$ 455	$ 2,598,396
OH	CANTON	13	991	$ 12,749,623	$ 513	$ 401	$ 1,325,868
OH	CINCINNATI	80	4,590	$ 95,359,053	$ 602	$ 441	$ 8,841,866
OH	CLEVELAND	47	6,158	$ 141,112,013	$ 620	$ 487	$ 9,819,670
OH	COLUMBUS	40	3,827	$ 94,430,342	$ 610	$ 472	$ 6,361,835
OH	DAYTON	17	1,520	$ 45,394,550	$ 612	$ 441	$ 3,120,168
OH	LIMA	6	573	$ 14,425,410	$ 602	$ 395	$ 1,417,908
OH	TOLEDO	29	2,928	$ 84,799,072	$ 658	$ 493	$ 5,765,100
OK	TULSA	6	666	$ 16,527,479	$ 545	$ 432	$ 901,056
PA	PHILADELPHIA	34	3,803	$ 119,859,748	$ 917	$ 631	$ 13,071,084
PA	PITTSBURGH	43	3,872	$ 102,851,671	$ 667	$ 438	$ 10,639,471
PA	SCRANTON	6	587	$ 15,829,759	$ 661	$ 406	$ 1,798,394
PA	WEST MIFFLIN	2	527	$ 7,030,093	$ 768	$ 492	$ 1,747,284
PA	WILKES-BARRE	5	901	$ 17,245,671	$ 540	$ 393	$ 1,591,248
PR	BAYAMON	8	1,432	$ 42,890,988	$ 551	$ 475	$ 1,292,628
PR	CAGUAS	8	697	$ 21,605,025	$ 578	$ 411	$ 1,395,408
PR	PONCE	8	860	$ 24,832,556	$ 530	$ 368	$ 1,673,700
PR	RIO PIEDRAS	4	669	$ 18,083,545	$ 546	$ 496	$ 397,920
PR	SAN JUAN	10	1,363	$ 40,668,813	$ 556	$ 470	$ 1,395,744
RI	PROVIDENCE	17	1,536	$ 43,556,203	$ 956	$ 625	$ 6,114,792
SC	COLUMBIA	7	524	$ 19,394,636	$ 648	$ 515	$ 840,552
SC	GREENVILLE	41	2,914	$ 61,087,608	$ 516	$ 451	$ 2,302,176
TN	KNOXVILLE	8	1,180	$ 23,212,709	$ 536	$ 425	$ 1,571,748
TN	MEMPHIS	15	1,698	$ 37,351,994	$ 508	$ 425	$ 1,686,768
TN	NASHVILLE-DAVIDSON	6	919	$ 9,077,391	$ 564	$ 473	$ 1,007,976
TX	HOUSTON	4	764	$ 11,743,355	$ 657	$ 555	$ 932,071
TX	PORT ARTHUR	9	1,248	$ 35,894,308	$ 476	$ 405	$ 1,065,600
TX	SAN ANTONIO	9	708	$ 15,394,435	$ 471	$ 421	$ 420,624
TX	THE WOODLANDS	6	752	$ 2,133,003	$ 626	$ 471	$ 1,390,668
TX	WACO	3	500	$ 5,749,594	$ 569	$ 516	$ 321,072
UT	OGDEN	15	599	$ 13,881,533	$ 618	$ 450	$ 1,207,752
VA	NEWPORT NEWS	4	714	$ 13,545,160	$ 548	$ 503	$ 388,308
WA	SEATTLE	17	940	$ 21,878,693	$ 711	$ 558	$ 1,731,744
WI	MILWAUKEE	48	4,129	$ 71,551,852	$ 601	$ 511	$ 4,468,932
WV	BECKLEY	6	584	$ 19,038,723	$ 588	$ 334	$ 1,778,568
WV	CHARLESTON	5	797	$ 18,695,906	$ 566	$ 406	$ 1,536,516
WV	HUNTINGTON	7	784	$ 19,224,805	$ 594	$ 399	$ 1,833,996

* Fair Market Rents(FMRs) are HUD-established average rents for metro and rural
areas as of September 1997. Actual market rents vary by project.
* Data based on cities with 500 or more units having rents above FMR.