Groups Slam HUD for Cutting Housing Program

The Bush administration is ending financial support for a 10-year-old housing program that it says is plagued with inefficiencies and poor planning.

Administration officials acknowledge that the Hope VI program, which provides funding to tear down old public housing units and refurbish homes in mixed-income communities, has done some good things, but they say it has only finished about one quarter of the 200,000 units it has touched despite years on the books.

"It's time to reassess," said Michael Liu, assistant secretary of public and Indian housing for the Department of Housing and Urban Development. "There's a lot of work still out there and we feel it's an appropriate time to finish the jobs that need to be done."

Democrats and some local housing officials, however, say they don't know where the money will come from to pay for the revitalization projects. Hope VI is supposed to attract other government and private sources to compound the effects of the $5 billion already spent.

Supporters say such projects encourage economic development in poor neighborhoods. 

"HOPE VI was the only game in town. Now there's no game in town," said Bill McGonagle, deputy administrator for the Boston Housing Authority. "Unless HUD or the federal government comes up with some other mechanism to update these housing systems, they are just going to wither on the vine."

Liu said there is still $2.5 billion appropriated in previous years for projects that haven't started yet. But the administration included no money in the 2004 budget, in part because Congress established the program in 1992 to last for only 10 years. In 2002, Hope VI received $574 million.

A month before the president proposed his $2.23 trillion budget this week, HUD acknowledged that bad accounting has left the department $250 million in debt and it was likely going to have to slash funding to housing authorities by 10 percent.

However, the administration said that it is offering up other parts of the HUD budget to pay for repairs and loan guarantees for housing authorities that borrow from private lenders. 

For instance, it is also boosting from $113 million to $2.2 billion the block grant program funds that let local agencies decide how to spend the money on affordable housing.

Still, Rep. Barney Frank, D-Mass., ranking member of the House Financial Services Committee, which oversees HUD, said HOPE VI offered a variety of service options to residents displaced by demolition or renovation projects.

The "consequences of eliminating it are [a] severe blow to public housing," he said.

HOPE VI gave residents the option of moving back to previous homes as long as the residents were employed and willing to have the home inspected; go to a different public housing development; take government vouchers that can be applied to private rentals; or leave public housing entirely. 

The president's housing assistance programs offer to transfer to states a voucher program that lets people rent privately owned apartments, improving the chance that the $1 billion in unused vouchers that are currently returned to the federal government see their way to needy families.   

The Associated Press contributed to this report.