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When 'Affordable Housing' Is Not Affordable

by Lynda Carson

The so-called affordable housing built by many nonprofits developers is priced far out of the reach of low-income renters.



Darlene Maney stands next to a mural at the Hugh Taylor House holding a protest sign that says: "Save Affordable Housing." Maney, who used to work for the East Bay Asian Local Development Corporation (EBALDC), says, "My message to the nonprofits is that they have a commitment to the applicants to get them into their housing in a timely manner. It shouldn't take six months to a year to get into low-income housing, especially if the units are prepared and sitting there vacant."

In recent months, Section 8 vouchers have come under attack by the Bush Administration, as can be seen in Alameda and Marin County. When HUD terminated project-based Section 8 vouchers at 30 affordable housing developments in Marin County, those projects no longer seemed so affordable to those that would try to find housing there in the near future.

There is no doubt that affordable housing sounds great and that the term "nonprofit" takes the edge off raw capitalism. But what do those terms really mean? In this era of soaring rents and rising poverty, the need for low-income and affordable housing seems imperative, and may explain why nonprofit housing organizations are big business nowadays.

To the multitude of poor and homeless people that never seem able to meet the criteria that would allow them to move into affordable housing, the terms "low-income" or "affordable" housing seem to be quite meaningless or hollow. If anything, they are a bitter reminder of what has been priced beyond their reach.

With the recent Section 8 funding shortfalls taking place across the nation, and as HUD Secretary Alphonso Jackson relentlessly tries to convince the world that less is better when it comes to the housing needs of the poor, people across the nation have been forced to take a closer look at what is happening in the world of affordable housing and Section 8 vouchers.

Some recently leaked documents from EBALDC, an Oakland-based nonprofit housing organization, reveal that rents being charged in identical units at some of their properties are higher by as much as $300 a month and more if the tenant moves into a project-based Section 8 unit or has a Section 8 voucher.

The Hugh Taylor House, located on Seminary Avenue in East Oakland, is owned and operated by EBALDC, and has 43 rental units, with 25 set aside for Section 8 project-based tenants; the remaining units go to regular renters that can qualify to move in.
In June 2004, there were five Section 8 renters in one-bedroom units being charged rents of $928 a month. At the same time, seven non-Section 8 renters in one-bedroom units were charged only $392 per month. Thus, Section 8 tenants were charged $536 more a month than regular tenants in identical units.

It is common for nonprofit agencies to charge more to Section 8 renters; it allows them to charge less to regular customers, while still being able to pay the bills. Both Section 8 tenants and non-Section 8 tenants end up paying around 30 percent of their income in rent, if all goes well.

Of course, if vacancy rates are high in the building and units are vacant for long periods, it forces rents up on everyone, no matter what kind of financing the developer utilized. There were five vacancies in the month of June at the Hugh Taylor House; and, on average, rental units remain vacant there for at least six months or more before the vacancy is filled.
Even though I assumed that EBALDC was charging the average minimum rents, $928 a month for a one-bedroom unit in a low-income area on Seminary Avenue seemed a bit high, so I checked the average rent statistics for that part of town. Some of the locals call it Cemetery Avenue because of so many shootings.

According to available statistics from Home Finders for that area located below MacArthur Boulevard, average minimal rents charged for one-bedroom units by for-profit owners are only $650 a month.

EBALDC, a nonprofit agency, is charging an astounding $278 more a month at the Hugh Taylor House for one-bedroom units than the for-profit landlords are charging in that same area.

The Hugh Taylor House also has 30 SRO units (single room occupancy), that are without a kitchen and have only a communal shower located down the hall. On average, Section 8 renters in SRO units are charged $687 a month, and non-Section 8 renters in identical rooms are charged $365 a month on average. Therefore, Section 8 renters are charged $322 more a month than non-Section 8 tenants in identical SRO units.

Checking the going rate for rooms in local for-profit SRO hotels, I found the following. The Ridge Hotel charges $475 a month for an SRO room; the Old Oakland Hotel charges $480 to $520 a month for an SRO; the Sutter Hotel charges $560 for an SRO. The Lake Hurst Hotel offers SRO rooms for as much as $675 per month; but along with the room, they offer renters two free meals a day, five days a week, in their dining room.

As it turned out, at rents of $687 a month charged to Section 8 tenants at the Hugh Taylor House, EBALDC charges more for their SRO rooms than all of the above-mentioned, for-profit SRO hotels do, including the Lake Hurst Hotel which offers free meals with their rooms.

At one of EBALDC's other buildings, Effie's House, recent records show that Section 8 renters are being charged hundreds of dollars more a month than many of the regular tenants that reside there.

As an example, during the month of June, one tenant in a one-bedroom unit was charged $550 per month, while a Section 8 tenant in an identical unit was charged $806 a month. The Section 8 tenant is being charged $256 more a month than the non-Section 8 tenant.
On August 18, I contacted EBALDC Executive Director Lynette Lee and asked for an interview. Lee agreed to the interview, and wanted to schedule a time for it to take place -until she realized that the story was about EBALDC, affordable housing and the Section 8 crisis. Lee suddenly claimed that it was a conflict of interest for me to cover the story because I am one of the renters in her empire of more than 600 rental units.

After doing some research to compare EBALDC with other local nonprofits, I found figures for Resources for Community Development (RCD), a Berkeley-based nonprofit housing developer founded in 1984. In 2002, RCD had a portfolio of 970 affordable housing units and emergency shelter beds located in Alameda, Contra Costa, and Solano Counties. RCD had another 12 projects, totaling 613 units, in predevelopment and/or construction.

Founded in 1975, EBALDC has developed more than 600 rental units of affordable housing, as well as 190,000 square feet of retail and office space in Oakland and Emeryville.

In fiscal year 2002, RCD had assets of $21,412,751; while during the same year, EBALDC had assets of $23,876,277. After subtracting liabilities from assets, RCD had a fund balance of $2,965,312 in 2002. In that same year, EBALDC had a fund balance of $17,749,264, after subtracting their liabilities from assets.

The financials appear to reveal that through the years, RCD continued to use its funds to develop more housing and shelter beds, while EBALDC used its funds to pay off their properties and shifted into developing retail and office space, rather than focusing solely on affordable housing.

Fair Market Rents (FMR) are a cap placed on Section 8 programs. Landlords can ask for as much as they want, so long as it does not go beyond the established Fair Market Rents in any given area.

In many areas of Oakland, the FMR is actually set higher in low-income or affordable housing than the rents charged by for-profit landlords. The result is that Section 8 programs are being gouged, because Section 8 renters are often charged far more than their non-Section 8 neighbors, and it's all perfectly legal.

Oakland tenant Vivian Hain said, "I think it's a train robbery going on, and I think it's immoral for the nonprofits to set up so-called affordable housing in low-income areas to fleece the government. My family tried to rent housing from the John Stewart Company and Affordable Housing Associates, and because we were on the Cal-Works program that only offered us a subsidy of $679 per month, we could never keep up with what the nonprofits could get from the Section 8 program, and we remained homeless."

Executive Director Dwight Dickerson of Oakland Community Housing, Inc., bluntly stated, "For project-based Section 8 housing, I think that you have to charge market-rate rents to be able to pay off the mortgage for any given location."

According to John Stewart of the John Stewart Company, which owns or operates more than 22,000 rental units in California, "It's a systemic problem. The cost of building and operating rental housing in California has become so costly, that even the nonprofits have not managed to offer housing that is available to the homeless and very low-income families. For many, the cost of housing is beyond their reach no matter what we do."

Lynda Carson may be reached at tenantsrule@yahoo.com or (510) 763-1085.


Stealing From the Poor - Related Story by Lynda Carson


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