A glitch at the federal Department of Housing and Urban Development will mean that the county's Department of Housing and Community Development will receive $300,000 less in federal subsidies at a time when costs are going up.
"Because of what has been referred to as an accounting snafu at HUD, a $250 million hole opened up in the HUD budget," said Conrad Egan, chairman of the Fairfax County Redevelopment and Housing Authority. "It has something to do with past practice when HUD borrowed forward into future years."
Donna White, a HUD spokesperson, said the mistake arose in the late 1990s when the agency changed its funding formula to better help smaller public housing agencies in the country. The shift created an "accounting system error," she said. As a short-term remedy, the agency borrowed money from future years to cover the requested subsidies of local housing authorities. But when the Bush Administration came into office, it stopped that policy and demanded that HUD clean up its fiscal management practices.
As a result, Fairfax County public housing officials will get 70 percent of their subsidy request this year but White said that HUD was hopeful that it would be able to fund up to 90 percent of the county's request. Congress recently approved HUD's $36.3 billion budget, White said, and the agency is now waiting to receive subsidy requests from housing authorities nationwide to determine how much money it will be able to allocate to each. She said she did not know when the additional federal money would trickle down to the local authorities.
THE SUBSIDY CUTS could affect the county's public housing program which depends on HUD subsidies for 16 percent of its funding. The program is geared towards county residents who work more than 30 hours a week or who are disabled or elderly. The average family in the program pays $290 in rent to the housing department which owns and maintains the units. Fairfax County contributes under 2 percent of the cost but provides services such as trash pickup.
As a result, about three quarters of the program's funding comes from rental income, which makes it difficult for the county's housing authority to raise more revenue, said Michael Finkle, director of housing management for the housing department.
"There aren't a lot of ways for housing authorities to make up those funds. We can't just raise rents," he said. "That's why housing authorities are dependent on this subsidy."
To cover the cuts, the housing department may have to reduce or eliminate janitorial positions in the program, said Penny Xu, fiscal administrator in the finance division at the Department of Housing and Community Development.
"Both of these will impact our customer service levels," she told the Housing Authority at a March 6 meeting. "If we delay the repair maintenance now, we may be faced with higher costs in the future."
Egan said HUD could have asked Congress for a supplemental appropriation once it discovered the shortfall.
"They declined to do that and instead are passing the gap back to the public housing authorities," he said. "The effects will be rolling over into subsequent fiscal years for sure."
One possible effect might be a lower score from HUD itself. The agency rates public housing authorities using surveys it sends public housing residents to fill out. Last year, Fairfax County's public housing program was rated a "high performer" thanks in part to positive reviews from residents. But the county's high score may be jeopardized by HUD's subsidy cuts. As a result, fewer HUD dollars could lead HUD to give the county's program a lower score.
"The residents will notice some degradation," said Finkle which they might note on the resident satisfaction surveys.
But, he added, "You want to inflict the least amount of pain on people."