2012 HUD ANNUAL ACTION PLAN

The city will move forward into “uncharted territory” with its proposal to remove more than 1,000 Section 8 vouchers over the course of five years.

A 142-page proposal, which was released Tuesday, outlines the city’s case to remove the vouchers over five years through attrition — meaning vouchers will not be recirculated as people come off the program.

“This is uncharted territory,” said Doug Adkins, Community Revitalization director. “I’m unaware of anyone trying to do something of this magnitude.”

The plan was developed in response to the U.S. Department of Housing and Urban Development’s request for a corrective action plan as the city is below the minimum required number of vouchers that need to be issued, which is 95 percent, or 1,579. As of August, only 1,424 vouchers are issued.

Council during its Middletown Public Housing Agency Board meeting Tuesday voted 6-1 in support of the proposal. Councilman A.J. Smith opposed the proposal.

“I thought the loss outweighed the gain,” Smith said explaining his vote.

Smith said the city could lose upwards of $2.3 million in potential HUD-based funding — such as community development block grants, the Neighborhood Stabilization Program, and the HOME Investment Partnerships Program —in addition to the economy of the program.

Adkins said it could be a year or two before the threat of any funding cuts would be considered, and by that time, he said, council could then decide the fight is too monumental.

The city has about 500 Section 8 landlords with about 1,400 Section 8 properties, and Adkins said the goals of the Section 8 program aren’t being achieved.

But council is not without concern.

Vice Mayor Dan Picard, like Smith, said he was concerned with HUD deciding to take away funding.

Adkins said any decision must include a detailed explanation why and at any time council can drop the issue. But if the city feels HUD’s reasoning isn’t supported by statutory regulations, Middletown can take HUD to federal court.

“That concerns me,” Picard said. “I’m an attorney, and we’re talking about serious dollars if we talk about getting in one of those matches with HUD.”

Adkins said having no subsidized housing is not beneficial to a city, but too much can harm a city’s progress.

There are more than 2,500 Section 8 voucher families living in housing within Butler County, according to the adopted plan. The city has 66.4 percent of those vouchers. In the 12 other Butler County communities with Section 8 housing, Middletown has nearly double of the rest of the county combined.

Adkins said 1,662 Section 8 vouchers — which is 49.8 percent of all subsidized housing in Middletown and 14.3 percent of all available housing in the city — does not allow the city to succeed. The 654 Section 8 vouchers would reduce all subsidize housing to 10 percent of all available housing in the city.

“It is not the root of our problems, but simply one area that needs our attention at this time,” said Adkins.

Other subsidized housing includes programs offered by the Butler Metro Public Housing Agency, HUD directly and the Low-Income Housing Tax Credit.

Adkins said the city can only control the city’s allotment of Section 8 vouchers, which grew from 774 from 1999 to 1,662 by 2005. About 200 vouchers are turned over annually for various reasons, he said, but any voucher holder will retain it so long they remain compliant with program regulations.

Exceeding the proposed 10 percent threshold of the total available housing would “cause more problems than benefits to the city,” according to the report.

An example within the report contends that within a 1,000-foot an area with few subsidized housing units, home sale prices increased. However, if there is a concentrated amount of subsidized housing, home sales prices dropped within a 2,000-foot radius.

The report also contends more affluent residents pay the bulk of local taxes, property values in concentrated subsidized housing areas are assessed $35,500 lower than in other areas of the city, and Section 8 housing has cost the city an annual loss of $111,324 in property tax revenues — which according to the city’s 2012 proposed budget could fund a fully equipped police officer or firefighter.

Landlord Jeff Faulkner, who owns Section 8 and non-Section 8 properties in three area counties, including in Middletown, said reducing 1,008 vouchers is too much, and believes it won’t happen. He said if there are people staying at the Hope House, a homeless shelter, then there’s a need in the city.

“If they take the vouchers and return them, I would expect HUD to step in and pursue avenues to make sure people have housing,” Faulkner said.

Adkins anticipates some type of action by HUD — likely a “strong response” — but he is confident the city is not violating any HUD regulations.

Vouchers issued to the city by HUD

The city currently has 1,662 Section 8 vouchers, but are are far below the 95 percent compliance rate as mandated by the U.S. Department of Housing and Urban Development. In 1999, the city of Middletown had 774 Section 8 vouchers issued by HUD. Here’s how they have increased since then:

Year | New vouchers added | Total number of vouchers

Dec. 1, 1999 | 75 | 849

May 1, 2000 | 50 | 899

Sept. 1, 2000 | 55 | 954

Nov. 1, 2000 | 200| 1154

Oct. 1, 2001 | 200 | 1354

Jan. 1, 2003 | 200 | 1554

Oct. 1, 2005 | 108 | 1662

Source: city of Middletown