Project Based Section-8s Threatened

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All low-income Chicagoans will have less housing to choose from if a coalition of Section 8 tenants, lawmakers, grassroots organizations and activists is not able to save thousands of subsidized housing units by 2005.

The Chicago Rehab Network, Tenants United for Housing and the National Housing Law project held a briefing March 16 on the “State of Project Based Section 8” at the Palmer House Hotel in downtown Chicago.

The event’s speakers included activists and people in the forefront of a desperate struggle to save the only homes they know. The speakers also included state Senators Barack Obama (D-Chicago) and William Peterson (R- Long Grove) and Cook County Commissioner Bobbie Steele and city Housing Commissioner Jack Markowski.

An immigrant to this country, Olga Kipnis explained that she left the former Soviet Union after enduring the constant threat of violence due to anti-Semitism, and other hardships, including the Chernobyl nuclear plant explosion.

“We had to save the lives of our children and grandchildren,” Kipnis said. “America gave us a new home, a new life and means for a decent living. We are&thankful to this country. We repeat every day ‘God Bless America.'”

Kipnis now lives in the Rienzi Plaza, a Lincoln Park building with 140 Section 8 units. Rienzi Plaza is a Project-Based Section 8 building, which means the building owner has a contract with the government to provide low-income housing in exchange for low-cost loans. The length of the contracts usually was approximately 20 years. Many of the contracts are expiring now and others will expire within the next five years.

Kipnis is worried she will have to move if the owners of Rienzi Plaza don’t renew the Project-Based Section 8 contract. “But the housing problem is not solved,” Kipnis said. “We are not sure where we will live in a year. The owners of our building would not have built it at all but for the Section 8 subsidies and federally insured mortgages. When the owners needed us and got their money from the government to build here, we were valuable for them. Now they don’t need us.

“The owner has never answered our letters&refuses to meet with us.&We have not received any answers to our questions. In the article in Crain’s newspaper, the owner says that he cannot predict the future of the building. He says, ‘If I am a nice guy and keep the tenants, me and my partners will lose $10 million.”

“The owner wants more money, so we ask the government to give programs that will benefit both the owners and the tenants,” Kipnis said.

“My family was in a similar situation several years ago when we lived at 4827 north Sheridan. The contract expired so we moved to (Rienzi Plaza). (At the time) nobody warned us about the expiration of the contract. And now we have a surprise letter about the end of the contract in September 2001.

“We are human beings and we should not be tossed out of our apartments. We ask you to contact the owners and influence them to keep us here.

“We need long term financial assistance from the government. There is a $5.6 billion surplus in the FHA (Federal Housing Administration) fund. If this fund is used for affordable housing, $80 million would come to Chicago. Please take leadership in the Senate. Make that the money goes directly for Chicago’s affordable housing…before it’s too late.”

Another tenant activist, Andrea Daniels of Monterey Apartments on the North Side, also made an impassioned plea to the powers that be: “After receiving the notice of intent, the tenants’ initial reaction was, ‘Are we going to have to move?’ ‘Will anyone provide us with assistance to relocate?’ ‘Why must we be forced out of our homes?'”

She next said, “The elementary school adjacent to our homes will be affected by the solutions to this crisis.

“The stability of the families and their community is at stake. We know that decisions are being made, but are the families involved taken under full consideration? We are in a contractual agreement with the owners. We are people with rights. We are people with wants. We want to exhaust all possible alternatives before resorting to the option for owners to opt-out. As the options are being explored for solutions, we would like to be involved in the decision-making (process). For it is the families under consideration that will be greatly affected.”

National Housing Law Project spokesperson Jim Grow from Oakland, California, spoke about the progress being made at every level to preserve Project-Based Section 8 units around the country.

Grow began his talk by referring to the “tremendous achievement for Section 8 to gain a renewal of its contract in a time of intense budget conflict.

“The way the situation stands now is: Those landlords who choose to opt out of the program yet decide to accept enhanced vouchers from anyone must continue to do so as long as the tenant wishes it to be renewed. So, at the present time, we have been successful in getting some protection for tenants, as far as enhanced vouchers are concerned, though some loop-holes continue to exist on the side of the owners.

“Already there have been over 100,000 residential units lost.

“Furthermore, the continuation of the enhanced voucher usage is not at all guaranteed. Every year, the Section 8 contract we have with the present stipulations and added benefits must be renewed at the federal level. Another loophole is that the owners still have the option of either accepting or rejecting the enhanced vouchers from the tenants. Other guidelines to be followed before the complete use of the enhanced vouchers can be successfully accomplished are as follows: The living space must be re-certified as habitable. Tenant and landlord need to agree on the higher rent.

“There is also underway a proposition or proposal that should allow Section 8 tenants to purchase their units if the owner decides to go condo.

“This could possibly happen under the Section 8 Home Ownership Program.”

Later, we were to hear from Senators Obama and Peterson. Obama spoke on the Illinois Affordable Housing Tax Credits: “Donation tax credits exist but not enough. The state needs to provide increased subsidies.”

Both Petersen and Obama addressed the need for Senate Bill #1135 to pass. Peterson said the Bill was needed not just for the inner city but to provide assistance in suburban areas also. Peterson is a Republican from Long Grove.

The legislators said the tax credits would be a tool for generating more resources for affordable housing. Altogether, the tax credits would allow for $26 million to be utilized for affordable housing. This would be the first legislation of its kind for affordable housing and the first state response for affordable housing since the 1980s. Customarily, the state has not been in the practice of allocating specific budget dollars for affordable housing.

After the conference, the bill was passed by the State Senate and sent on to the House. In the House, the Bill is identified as HB #1979. Peterson said Mayor Richard M. Daley and the Chicago delegation are actively pushing for the passage of these bills in the House and the Senate.

Daley, tenants and other groups are also behind a property tax relief program in the works at the county level to change the way affordable housing is taxed. At the briefing, this issue was addressed by Daniel Burke from the City Clerk’s Office and Cook County Commissioner Bobbie Steele.

Steele explained: “The purpose of the Property Tax Relief Program is to provide an incentive attractive enough to Section 8 landlords for them to consider maintaining their Project Based Section 8 status rather than opting out.”

Who is being affected?
Joyce Probst, a spokesperson for the Chicago Rehab Network, said approximately 30,000 Project-Based Section 8 units will expire across Illinois by 2005. In Chicago, 21,000 units are at risk. Of the 21,000, Probst said several thousand units are not likely to opt out of the program because the developments are owned or not-for-profit organizations or have other incentives to stay in the program. Many of these developments are in neighborhoods with many low-income tenants.

“They’re in communities where there’s little incentive to opt out. This is guaranteed income,” Probst said. “Some people, for a lot of different reasons, are renewing.”

5,000 units are the most threatened because they are located in Lincoln Park, Lakeview, Hyde Park or other high-rent neighborhoods.

“These will be impossible to replace,” Probst said.

If neighborhoods experience a lot of new wealthy people moving in, Probst said the landlord might easily decide to opt out of the Project-Based Section 8 program.

“We’ve lost the stability of the housing,” Probst said. “We haven’t lost the housing yet.”

According to a 1999 UIC Regional Rental Market Analysis, most Section 8 units are occupied by minorities in minority communities. 84 percent of Section 8 tenants are minorities (72 percent African Americans, 8 percent Hispanics and 4 percent Asian American). Additionally, the local communities that surround the buildings are 78 percent minority. 73 percent of units have female heads of households. 27 percent of the units are headed by a single parent with at least one child. The average length of stay for Section 8 tenants is over five years.

The tenants at the briefing stressed that the units are valuable to the tenants and their communities. Potential opt-outs and vouchering out of project-based buildings will hurt tenants and their communities through the loss of stable housing stock.

Many suburban communities are already struggling to meet the demand for scarce rental apartments, according to the Chicago Rehab Network’s Probst. The loss of valuable Section 8 units will only make matters worse.

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