Feds spend $104 million yearly to house families who earn too much

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WASHINGTON (MEDIA GENERAL) – More than 25,000 American families squat in heavily subsidized and often scarce low-income housing, despite earning too much money to live there.

And taxpayers foot the subsidy bill – all $104 million of it.

Thousands wait for HUD housing nationwide. (Courtesy: HUD)
Thousands wait for HUD housing nationwide. (Courtesy: HUD OIG)

A recent inspector general (IG) report within the Department of Housing and Urban Development (HUD) found that some families, described as “over-income,” make more than $500,000 per year and still occupy facilities intended for the elderly, disabled and financially distressed.

“One person in Nebraska [had] $1.6 million in assets,” fumed Rep. Daily Jolly (R-Fla.), a members of the House Appropriations Committee.

Inspectors found that HUD not only knew of the problem, but allowed over-income tenants to permanently plant themselves in apartments – sometimes paying only $300 per month.

These are families that once qualified as low-income, but no longer fall into that category. The IG report found some residents passed the income threshold 20 years ago.

Meanwhile, more than 500,000 legitimately qualified families sit on application lists, waiting for vacancies.

Now members of Congress are demanding HUD close the gaping loophole.

Rep. Jolly, a Florida Republican running to fill Marco Rubio’s Senate seat, took the most dramatic action, threatening to strip HUD of $104 million in funding, the same amount the agency spends on over-income families, if it didn’t submit a plan to transition out such tenants.

Initially, HUD argued that over-income families add diversity to low-income housing communities, saying, “There are positive social benefits from having families with varying income levels residing in the same property.”

HUD over-income families span the economic spectrum. (Credit: HUD OIG)
HUD over-income families span the economic spectrum. (Credit: HUD OIG)

HUD also pushed back on other points, contending that local housing authorities are empowered to transition out over-income families, rent-raising policies encourage such transitions, and a dearth of over-income families would lead to even higher subsidies for more needy families taking their place.

Jolly didn’t buy it, responding, “HUD has suggested local housing authorities have the authority [to evict over-income residents], but many housing authorities I speak to say they don’t believe they do.”

Congressman David Price (D-N.C.), a member of the Appropriations Housing Subcommittee, opposes widespread eviction, arguing in part, “There are already hundreds of thousands of qualified low-income families on Section 8 housing waiting lists, often facing decades-long backlogs, and eliminating tens of millions of dollars in HUD funding will further limit the ability of housing authorities to assist them.”

Furthermore, many Appropriations Committee members say the issue actually belongs with the House Financial Services Committee, where over-income family policies are already being addressed. Using its rulemaking role, Financial Services wrote a new provision (Section 103) into a forthcoming bill directing HUD to create policies leading to the eviction of over-income families. That bill is predicted to pass in the coming months.

Since the original IG report, HUD has begun softening its tone on over-income families, potentially signaling a substantial policy shift.

When contacted about this story, HUD Deputy General Assistant Secretary Jereon Brown said (emphasis added):

HUD completely agrees with the Office of Inspector General Over Income audit. As you can see by the attached regulation, state housing authorities have had the flexibility to evict over income residents since 2004. More recently, we’ve sent out a letter reminding all housing authorities that they have the ability to evict. We’ve also reached out to each of the housing authorities that the OIG identified with egregious over income residents. We’re contemplating additional guidance to assist housing authorities with the eviction grossly over income residents. The bottom line is HUD wholeheartedly agrees with the principle that over income families should be transitioned out of public housing to give an opportunity to others on the waiting lists. Our role is to provide housing for families in need, not those who choose to reside in affordable housing after achieving a sustainable level of self-sufficiency.

Rep. Jolly says he’s encouraged by HUD’s change of tone, but skeptically added, “Now we need to see where the proof is.”

The conservative Senate candidate is pushing HUD to implement a 90 to 180 day transition period for over-income families to find new housing.

If a detailed transition plan is not presented to Congress by the end of February, Jolly says he’s confident House members will take “swift and strict” action to remedy the current program.

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