The biggest health-care spending cuts in U.S. history rightly dominated discussion of President Donald Trump’s giant tax and spending bill signed into law last month.
While 10 million Medicaid patients begin losing coverage late next year, Congress is debating the next immediate step in cruel Trump austerity: a proposed $27 billion cut in U.S. Housing and Urban Development (HUD) that pulls the rug from under low-income rental assistance programs.
The cutback would kneecap affordable-housing developers by eliminating Section 8 subsidies they depend on to cover operating expenses, debts and bank loans. The projected 44 percent cut in HUD’s budget would help pay for Trump’s One Big Beautiful Bill Act tax cuts for the wealthy.
In addition to hobbling the affordable housing industry, sharp reductions in Section 8 vouchers would immediately leave landlords in the five boroughs in the lurch, as legions of tenants would no longer have the means to pay rent. The proposed HUD cuts would also scramble New York City’s low-income housing market by placing a two-year limit on Section 8 vouchers for “able-bodied recipients.” The cap compares to a statewide average household use of vouchers for 15 years. New York City Housing Authority (NYCHA) residents have an average tenure of more than 25 years.
The cuts represent a dramatic policy shift, long supported by rightwing conservatives, toward incentives for housing affordability instead of affordable housing. In significantly reducing housing vouchers for the poor, they want the emphasis on “workforce housing” for middle-income families, like teachers, healthcare workers and retail employees. Five HUD low-income housing programs would be converted into smaller “block grants,” leaving the states to decide how to distribute the diminished pot of federal housing dollars for the poor and elderly.
Already, the impending HUD cuts are stalling new affordable-housing projects nationwide and causing some lenders to pull back from deals, according to the Wall Street Journal. It may even undercut the private management initiative by NYCHA to refurbish tens of thousands of apartments.
HUD project-based rental assistance is one of the federal government’s most powerful tools to encourage low-income housing. Withdrawing long-term commitments of Section 8 revenues would make most affordable-housing developments financially unworkable. For instance, New York City developer Jeff Fox told the Wall Street Journal he recently paused plans for a senior complex in Queens after HUD reneged on his rental assistance contract.
Amid the chaos, HUD Secretary Scott Turner – the only African American in Trump’s cabinet – is doing the president’s dirty work, gleefully slashing budgets and laying off staff. The former Texas state representative and ex-professional football player is cut from the same cloth as Dr. Ben Carson, HUD secretary and lone Black cabinet secretary during Trump’s first term. They were given the job because they were willing to be the initiator of devastating cuts to the HUD budget that will result in public housing falling into disrepair, low-income residents being displaced and long-standing communities declining.
More than 1 million renters in New York state rely on vouchers to pay at least part of their rent. In New York City, 520,808 people live in HUD-assisted buildings, including public housing, project-based subsidies and dwellings for the elderly and disabled.
The city’s Housing Preservation and Development department relies more on federal funds than any other city agency — with 58 percent of its $1.2 billion budget now at risk that funds vouchers, housing inspections and affordable-housing construction, an Independent Budget Office analysis found.
New York state currently provides minimal financial support for NYCHA, which depends on the federal government for almost 70 percent of its operating funds. The current state budget includes $255 million for NYCHA capital improvements, and $75 million for public housing authorities outside New York City.
Conservatives in Congress argue changes to the Low-Income Housing Tax Credit (LIHTC) and other policies will create a million new units in the next decade in low-income communities. But those units, affordable compared to market rate dwellings, target households with incomes 80 percent to 120 percent of their area median income (AMI). Section 8 tenants earn at or below 50 percent of AMI.
But developers of low-income housing say that without HUD rental assistance, there is simply not enough revenue to cover operating expenses and financing. That makes Section 8 vouchers the linchpin in New York’s low-income housing market. A New York Housing Conference analysis found large-scale HUD spending reductions would put at risk $50 billion in multifamily loans. These loans, backed by HUD and purchased by Fannie Mae and Freddie Mac, may default if rental vouchers disappear, potentially destabilizing the entire housing finance system.
New York already faces a severe shortage of affordable housing. Without NYCHA repairs and stable federal rent subsidies, more projects like developer Jeff Fox’s in Queens will stall. Countless existing high-rise and small landlords may default. Homelessness is sure to spike.
And countless New York low-income renters could soon be left with tragically fewer options.
David R. Jones, Esq., is President and CEO of the Community Service Society of New York (CSS), the leading voice on behalf of low-income New Yorkers for more than 175 years. The views expressed in this column are solely those of the writer. The Urban Agenda is available on CSS’s website: www.cssny.org.