State overhauls public housing, imposes five-year limit

Tegan Hanlon

The disabled and elderly in public housing will receive notices on Monday about changes in their rent and utility costs as state officials implement a plan to encourage able-bodied renters to work and eventually move out of their subsidized apartments.

With the waiting time for public housing extending for decades for some kinds of apartments, officials hope the new policies, in the works since 2008, will lead to a greater turnover of units.

For the elderly and disabled, who are not going to be pressured into getting work, the notices will inform them that their rent will decline, from 30 percent of their income to 28½ percent. Their utility bills, however, will become their responsibility.

Everyone else will have five years to phase out of public housing. During the first year, their rent will also decline to 28½ percent of income. Then their monthly bill will shift to a payment based on a percentage of the market-value rent for their unit. State officials said the income-based system was discouraging renters from becoming self-sufficient because the more they earned at work, the more they had to pay for their apartments.

"Sometimes there's not a lot of motivation to make more money because you feel like you're just going to pay more money in rent," said Cathy Stone, director of public housing with Alaska Housing Finance Corp. "So why would you work more when you would just pay the same if you don't work?"

Bryan Butcher, chief executive director of AHFC, said that in 2003 the average family stayed in public housing for three years. Now it's about eight. For every one unit of housing, there's four other families waiting for assistance. In Anchorage, the estimated wait for a one-bedroom unit is more than 40 years according to AHFC.

"We've got thousands of needy families sitting on our waiting list that we're unable to accommodate because we have a finite number of vouchers and units," Butcher said. "In the near term, these families don't have a lot of chance of getting help from Alaska Housing because there hasn't been the kind of work through in units that we used to see in the past."

The rent reform initiative is part of the federal demonstration housing program, Moving to Work, that Alaska joined in 2008.

Stone said it took the agency five years to overhaul the rent policy because it first focused on "really simple, easy fixes."

"We changed the inspection schedule, we streamlined some things and we did some more easy Moving to Work activities that weren't as enormous as this one," she said.

Then the state met with a consultant about two years ago to put together the rent program, analyze housing data and conduct outreach efforts at public housing facilities across the state, Stone said. AHFC operates in 16 communities.

Step program

The result was the "Step" program and it is being implemented with the two kinds of public housing: traditional housing projects owned by the government, and privately owned apartments for which low-income renters receive government vouchers covering a portion of the rent.

Across Alaska, households with members who can work will no longer be able to stay indefinitely in public housing. The five-year clock starts ticking when case workers sit down with the individuals at their annual income meeting in 2014, Stone said.

"We wanted a time limit, but we also wanted enough time that we could work with them," Butcher said. "The goal is to get them working, and it's not just to move the next person in. It should be win, win."

Starting the second year, payments will be based on a percentage of the market rent, not the tenant's income. The percentage will increase annually as part of the state's new Step program. At first, households will pay 40 percent of market rent and receive a 60 percent subsidy. By year five, households will pay 70 percent of rent and the government will pay 30.

For instance, a household with an adult and child in the voucher program could receive a $923 coupon for an apartment. If their monthly gross income was $1,017, in the first year of the Step program, the family would pay rent of about $290, or 28½ percent of income, and receive a $620 subsidy. During year two, it would pay $369, or 40 percent of the rent. The household would pay $646 by year five and the full $923 by year six.

To ease the rent transition, tenants will be required to complete a course in financial literacy offered by the agency during the first year.

Stone said AHFC will also expand its Family Self-Sufficiency program beyond Juneau and Anchorage. The program teaches computer courses and resume and job application assistance.

Currently, there are only about 200 people in Anchorage signed up for the program but Elaine Hollier, AHFC southcentral regional manager, hopes to see that number jump with the rent change.

"Before there wasn't really any incentive," Hollier said.

Now a household's status in the Family Self-Sufficiency program will be looked at if it cannot pay rent.

Stone said households that cannot afford monthly rent, because of things like unexpected medical bills, can apply for hardship consideration and receive temporary state assistance.

"It's really case-by-case," Stone said.

Long Waits, Limited Funds

In Anchorage alone, there are nearly 3,000 households with subsidized rent and more than double that number on the waiting list.

There are 693 public housing units available in Anchorage and about 2,075 units for housing vouchers, according to spokeswoman Stacy Schubert.

The rent for public housing units is based on average market rent costs. In the other program, the vouchers act like a coupon.

For instance, for a two-bedroom apartment in Anchorage, a person who qualified for housing would be able to go to the private market and find an apartment that costs a maximum $1,203 a month -- the average market price. A person or family enters into a contract with the landlord and contributes a portion of the rent.

AHFC uses federal funds for the remaining costs. In 2013 it had $48 million from Washington.

In Anchorage, 1,744 households are on the voucher waiting list, which closed more than two years ago. It reopened for one month in October 2012. The agency said it received 1,900 applications before it closed the waiting list again.

Stone said an average of 54 households leave the voucher program each month in Anchorage. But the program is at a standstill. After federal budget cuts, known as sequestration, the agency saw its budget shrink by 9 percent. On March 1, it stopped reissuing vouchers to cut costs. As people drop out of the program, no new families are brought in. Stone does not expect vouchers to be reissued until late next year.

People can still apply to get on the public housing waiting list. To qualify, a household must earn 50 percent or less of the area median income. For a four-person family in Anchorage, that's $43,900 or less.

But don't expect placement anytime soon.

There are 4,838 names on the public housing waiting list. For a one-bedroom, 1,116 households are waiting for a spot in 32 one-bedroom units. The turnover is only about eight each year, translating to a wait of more than 40 years, Schubert said.

The shortest wait for housing is a decade and that's for a three-bedroom unit. AHFC owns 134 such units, and 441 households are seeking one.

"You can imagine, just by looking at what we're dealing with, that if you didn't do this right now, how many difficulties you'd create for people," Butcher said about the rent-reform program.