SECTION 8 DISSECTED: FREE-MARKET FRENZY THREATENS TENANTS

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As many as 1 million subsidized apartments nationwide could potentially go free-market in the next five years as federal rent subsidy contracts expire, the federal department of Housing and Urban Development reported Thursday. That leaves tenants in 81,000 apartments in New York State in the dark about if and when rent hikes will force them to move, as their landlords consider opting out of the Section 8 system and into free-market rents.

Under Section 8, tenants pay only 30 percent of their income in rent. The federal government pays the private landlord the difference between that amount and what HUD calculates to be the “market” rent.

But now, as these contracts come due, building owners may be able to make much more money by ditching the subsidy for the free market: Data from the National Housing Trust suggests rents go up an average of 44 percent in buildings that opt out. The landlords with the biggest incentive to get out of the Section 8 program are the ones with buildings in fashionable neighborhoods–where rents go up the fastest, and where affordable housing is hardest to find.

“What it boils down to is that these 171 tenants–unless we win the Lotto–are not going to be able to afford to live here,” said Marie Christopher, who lives in Pablo Nuevo houses on Stanton Street in the Lower East Side. Her landlord says he plans to opt out when his Section 8 contract expires in five years. Supposedly, HUD will give vouchers to tenants in these buildings to help them find a place to live, but Christopher worries that the vouchers may not be worth enough to pay most rents. She said that while subsidized rents in her building are currently around $1,700 for a three-bedroom apartment, rents for one-bedrooms around the corner run $1,500.

“If I was him I’d opt out too,” she said. “Why should he get less money when everybody else’s rent is sky-high?”

Since the fall of 1997, 17 buildings with nearly 2,000 units in New York State have skipped out on Section 8 program, the majority in Manhattan. And for good reason: At Malcolm X Apartments on West 146th Street, for example, rents went up 75 percent when the building’s owner opted out last September.

And according to estimates from the housing group New York State Tenants and Neighbors, landlords for another 43 buildings in New York City are likely to opt out when their contracts expire, because their subsidies are somewhat less than the true market rate. “The fact that [HUD Secretary Andrew] Cuomo came out with this report is good,” said Joe Heaphy, NYSTNC’s director. “They’re recognizing the problem, that there could be a disaster in a few years.”

Congress is trying to fix the problem with two voucher-bolstering bills. One would authorize more money for the states to hand over for affordable housing and Section 8; another, written by Long Island Representative Rick Lazio, would boost the number of special “enhanced” vouchers that would help elderly and disabled people afford to stay in their buildings even after the owners opt out. Lazio’s bill is slated for a hearing Tuesday.