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CES In The News

Los Angeles City Beat
November 25, 2004
City joins the battle to save federally subsidized low-income housing

by Idan Ivri


When a low-income family can’t pay the rent, there are four common results, explains Los Angeles housing activist Larry Gross: They have to double-up with another family, live out of their cars, leave town altogether, or, worst, end up sleeping on the street.


Poor choices. Unfortunately, the federally subsidized housing that helps thousands of L.A. families avoid those nightmares is in deep trouble. Landlords are battling for their right to abandon these subsidies and the control they exert over apartment prices. That struggle has reached its boiling point, and it seems that the owners are winning. In August, a judge ruled that the city’s two year-old attempt to force building owners to rent cheap subsidized units is illegal.


“This is a tremendous threat. We could see as many as 67,000 people being forced from their apartments,” said Gross, director of the Coalition for Economic Survival. The city council agreed; about three weeks ago, the City of Los Angeles appealed the August decision.


The program in question is called Section 8, and the story begins in 2002.


Section 8 makes deals with apartment owners: They agree to keep prices reasonable, and in exchange the government pays a large chunk of the rent on behalf of the low-income tenants in the building. That means more affordable housing for tenants and a guaranteed income for owners who do business in low-income neighborhoods.


By 2002, however, L.A. was facing a massive owner exodus from the Section 8 program. “In fact, [in 2001] there were about 5,000 Section 8 contracts terminated,” said Gross. Essentially, the difference between what the federal government agreed to pay and what the booming real estate market would allow grew so wide that the owners began to lose big money, and they began to revolt. It was better to take risks on customers who would agree to pay high prices than to have guaranteed low-income tenants.


“A lot of this is based on the fact that the L.A. city housing market is skyrocketing,” added Gross. “Owners think they can get much higher rent. They don’t want to deal with the bureaucracy of the housing department.”


Some of the most striking examples of that phenomenon happened in Venice Beach in 2002, where rapid gentrification landed swanky multimillion-dollar houses next door to Section 8 apartments built decades earlier. As many owners decided to grab the cash and up the rents on their properties, many of their low-income tenants lost their apartments. Gross and other housing activists went into action, convincing the L.A. City Council to pass an ordinance which said that any owner who terminated or failed to renew a Section 8 contract could only rent the apartment for a price equal to the portion of the rent that the subsidized tenant had been paying.


In other words, if the tenant was only paying $300 out of a $1000 per month rent (with the government covering the $700 difference), an owner who terminated his Section 8 deal could still only charge the tenant $300 per month. In essence, the ordinance made it financially insane to leave the program. The only way to get out of the contract, then, was for the tenant to leave on his own accord.


Apartment owners were enraged, arguing that the city could not simply add a new rule to their contracts after the fact, especially a rule that makes it essentially impossible for a landlord to ever quit Section 8.


“We represent 27,000 apartment owners in the County of Los Angeles and 22 percent of them use Section 8,” said Kevin Singer, government relations director for the Apartment Association of Greater L.A. (AAGLA). “When they entered the contract, it said that if [owners] wanted to get out, they could give a 90-day notice and get out.”


AAGLA sued, claiming that the city was illegally using its police powers to deprive property owners of their rights, and in August they won. A Superior Court judge in L.A. ruled that landlords simply have to give a 90-day notice of canceling Section 8 to their tenants (which is an existing state law). On August 31, an injunction invalidated the 2002 ordinance.


Housing advocates were unsure if the city would appeal. But on October 29, the last day before the appeal deadline, the City of Los Angeles decided to challenge the ruling. Still, for now, the law remains invalid.


“We have every reason to be concerned about people opting out of their contracts on affordable housing,” said Jan Breidenbach, executive director of the Southern California Association for Nonprofit Housing (SCANPH). “It means a higher homeless population, a higher overcrowding population, and a higher overpayment population.”


Advocates like Gross and Breidenbach also worry about landlords using the threat of opting out as leverage against tenants who complain, go to the housing authorities over mismanagement, or organize tenants’ rights groups.


Kevin Singer doesn’t buy it: “The majority of owners who use Section 8 are dependent on that program because they can get higher rents through it.” He says it’s not likely they would opt out of the program anyway. “The reason why it’s been such a successful program is because it’s been a voluntary program,” said Singer. “If you want to create incentives for more owners to start using the program, then you’ve got to give them the freedom to be let out.”


Singer said the best protection for tenants is making Section 8 even more popular, so they have more choices of where to live in the first place.


None of this is happening in a vacuum. The Bush administration has been steadily cutting Section 8 money, reducing it by billions of dollars in the 2004 budget. Section 8 comes in two forms – project-based, which is organized by landlords; and individual-based, which is given to renters in the form of vouchers. The Bush budget severely reduced the vouchers programs, which is often the fallback for renters who can’t find a Section 8 building, thus putting more power in the hands of landlords.


Groups like the Coalition for Economic Survival and SCANPH are organizing tenants to work on rent control and utilities issues, especially important in the upcoming mayoral race.


In the meantime, the Housing Authority of the City of Los Angeles (HACLA) just two weeks ago began collecting statistics on landlords who’ve opted out of Section 8 since the August injunction. That number is two. But they’ve only begun counting two weeks ago, and maybe landlords are holding off making any real changes until the appeal is settled. Unsurprisingly, AAGLA’s Singer says he has heard no complaints from the HACLA about any sort of exodus from the program.

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