Nonprofits Struggle to Finance Affordable Housing

Nonprofits Struggle to Finance Affordable Housing

By ELIZABETH GANGA THE JOURNAL NEWS July 6, 2004

Local nonprofit agencies trying to build affordable housing say funding changes to the Section 8 housing voucher program are already hurting their ability to finance new projects.

Without Section 8 subsidizing the rents, the projects will generate less revenue because the non-profits generally base the rent on tenants' income. Someone with a very low income may be able to pay only $400 a month, said Rose Noonan, executive director of the Housing Action Council in Tarrytown, which helps other nonprofits structure financing for new developments.

"It's a small number compared to what we need either to finance debt or run a project," she said.

Section 8 voucher holders generally pay 30 percent of their income toward rent. The voucher pays for the rest, up to a local rent cap.

Even without cuts to Section 8 funding, development of affordable housing in the region and especially Westchester is a particular challenge. High land costs, limited funding sources and community opposition derail many projects. Recently, Westchester County released a study saying that without government help, the county would fall more than 10,000 units short of the demand for affordable housing by 2015.

The federal Department of Housing and Urban Development recently announced that instead of funding Section 8 vouchers based on agencies' current costs, it would pay based on each agency's costs in August 2003, plus an inflation adjustment. Many agencies expect that the new formula will not cover their costs.

A-Home, a nonprofit based in Mount Kisco, recently tried to put together financing to buy land in the village for an 18-unit project. Joan Arnold, the executive director, said she initially expected half the units would have Section 8 subsidies. But she had to reduce that to 10 percent or 20 percent, cutting the expected revenue from the project by several hundred dollars a month for each unit. A-Home lost the land when it was outbid.

"We couldn't go higher because we knew the rental income wouldn't be enough," Arnold said.

Norma Drummond, Westchester County's deputy commissioner of planning, said smaller projects should be able to find other funding to make up for the lost Section 8 funds. But projects counting on dozens or hundreds of vouchers could be affected, including some by for-profit developers, she said. The county has 200 vouchers to devote to specific projects.

The Croton Housing Network is planning an 11-unit building and also had expected some Section 8 money.

"We don't really feel confident we can plan for that now," said Nance Shatzkin, the president of the organization.

Shatzkin said she gets calls regularly from people who need affordable apartments. She heard recently from Laura Fallon, a 42-year-old mother of two girls who is moving her family into a studio because she can't find a big enough place at a low enough price.

Fallon said she doesn't want to yank her two children out of their Croton schools, but a recent divorce and an accident that left her unable to work mean she can no longer count on a professional income. She had worked under contract as a recruiter in the pharmaceutical industry.

"It is a solution that I can afford," she said, "and it is keeping me together with my family here."

Source: Journal News

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Last Updated on 07/26/04 webmaster@namiscc.org

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