City's housing voucher surplus about to be depleted

A year ago, the Richmond Redevelopment and Housing Authority wasn't spending enough of its money on housing vouchers for needy families. Now, the authority is spending more than it can afford.

It is paying the price for having too much money in the bank for a program that was supposed to provide vouchers for more than 3,100 families.

The $7 million surplus in the voucher program's reserve account at the beginning of the year is expected to turn into deficits of more than $600,000 by the end of December and $1.4 million by the end of next year.

The reversal of fortune is forcing the authority to look for help from Congress and the city of Richmond, and to scale back an ambitious plan to greatly expand the use of Section 8 housing vouchers available to help poor families pay the rent.

"We were trying to rebuild the program and get it to where it needs to be," said Anthony Scott, CEO of the authority. "We had a full-court press."

Scott asked Mayor Dwight C. Jones' administration for help last week in case Congress doesn't provide emergency aid to close the widening gap in funding for the program.

The sudden shortfall already has cost 163 families the opportunity to use the vouchers they have been waiting to use for housing they otherwise cannot afford. It also has blocked the authority from its goal of using 98 percent of available vouchers by the end of the year, compared with just 76 percent when the year began.

Tammy D. Hawley, the mayor's press secretary, said last week that the administration does not have a detailed response to a letter delivered in draft form Tuesday night requesting loans to close the deficits.

"I don't think there's anything in the letter that we didn't already anticipate," Hawley said. "We're still on the same track of being supportive. We don't know how the support is going to manifest itself."

RRHA officials also are hoping for help from Congress, which is negotiating differences in a spending plan for the Department of Housing and Urban Development in the fiscal year that began yesterday. The proposals include about $200 million from the new budget that could be used to cover shortfalls in voucher programs this year.

Richmond's authority is not alone in feeling the pinch of reduced federal spending on the voucher program under the appropriations bill approved by Congress in March. Housing authorities across the country learned in May exactly how much money they would be receiving for the program for the rest of the year. The result for Richmond was a cut from $1.4 million in May to $1.1 million in June and less than $900,000 in the next three months. The remainder of the year, RRHA will receive $1.1 million a month.

The authority already was under orders from HUD to spend $2.7 million from its reserve fund to replace federal funding for the program, and it budgeted an additional $2.5 million from the reserve to raise the level of participation in the program.

So, instead of ending the year with more than $1.6 million in reserve and using 98 percent of the vouchers available in December, RRHA expects a deficit of about $635,000 and a utilization rate of 90 percent for the month.

The housing authority came under pressure from HUD to issue more vouchers after a federal audit last year determined that 674 families were not housed despite a surplus of more than $7 million in the program's reserve account.

The surplus hurt RRHA when it asked for help from HUD under a $100 million federal assistance program this summer. The program wasn't eligible because the surplus wasn't projected to run out until the next fiscal year, Scott said.

Scaling back its plan to increase voucher use this year also is going to contribute to the pinch in next year's budget because the government bases next year's payments on last year's performance.

RRHA officials expect the program to break even again at the beginning of 2011.

Contact Michael Martz at (804) 649-6964 or mmartz@timesdispatch.com.