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Rent rise for some in public housing: not unreasonable, but lousy politics

So Mayor Mike Bloomberg wants to raise the rents for a segment of people living in public housing. It's a not unreasonable (if partly skewed) policy, given that a portion of those in public housing have a relatively good deal, but it's terrible politics, given that the mayor hasn't moved swiftly to reform a subsidy program that has fueled massive construction of market-rate housing. And that allows a housing advocate like Bertha Lewis of ACORN to criticize the plan without acknowledging that, even after the changes, public housing tenants would be better off than had they been placed in typical affordable housing.

A Daily News article, headlined Mike likes public housing hike, quoted Bloomberg as saying that only 27% of nearly 175,000 public-housing households would be affected, and that the increases would range from $300 to $1,524 a year (or up to $127 a month).
"It's a huge hit," said Bertha Lewis, executive director of the nonprofit New York ACORN community organization. "We can give tax breaks and subsidies to millionaires and billionaires to build luxury condos, but we can't help working families?" Lewis fumed.

Lewis is right that reform of the subsidy program is long overdue. But unmentioned is that a lot of public housing tenants pay far less of their income in rent than those in affordable housing. For example, the affordable housing plan ACORN negotiated with Forest City Ratner for the Atlantic Yards project caps rents at 30 percent of household income--which is the standard in the definition of affordable housing. As Bloomberg said, according to WNYC, "We are proposing to raise the rent for people who pay less then 10% of their income in rent. It's a small percentage. Someone has to pay for it."

That's not true, since the calculations below show that some people facing increases now pay 20% of their income in rent. Still, the relatively best-off public housing tenants are facing less of a hit than some of the others facing increases.

Cutting a deficit

There hasn't been a rent hike for 17 years, since 1989, and the Housing Authority has a $168 million deficit. The New York Post reported, in an article headlined PUBLIC HOU$E HIKE:
[Housing Authority Chairman Tino] Hernandez stressed that the proposed rent increases - which have to be approved by the federal government - would impact only the 27 percent of 179,315 households that have the highest incomes of $29,119 or more.
Rents for the remaining 73 percent, which have an average income of $11,587, would be frozen.
The increases would be based on income. Those at the top end, a family of four earning $67,367 a year or more, would face the biggest hit of 20 percent hikes in each of two years.
That would boost the rent on a two-bedroom apartment from $530 to $763.

For a family earning $67,367 a year, a monthly rent of $530 equals an annual rent of $6360, or 9.4% of income. A monthly rent of $763 would equal an annual rent of $9156, or 13.6% of income. It's a much better deal than that faced by those earning $20,000 to $40,000, as noted below.

The Times reported, in a 4/21/06 article headlined 27% of Public Housing Tenants Face More Rent Under City Plan:
Victor Bach, a senior housing policy analyst for the Community Service Society, a nonprofit group that works against poverty, said in an interview: "There is clearly a reason to increase the ceiling rents since they haven't been increased in 20 years, at a time when maintenance and operating costs have gone up. The question is whether they're being increased to reasonable levels, whether they will cause any undue hardship for tenants."
...Households making less than 60 percent of the area's median income, or an average of $29,119, would see their rents rise by 10 percent to $557 from $505. Those making between 60 and 80 percent of the median, or an average of $41,137, would see theirs rise to $624 from $515.
Authority administrators say the highest-income households currently spend as little as 10 percent of their income on rent. That percentage would increase to 15 percent — well below the percentage paid by poorer tenants. While the higher-income tenants' rents have remained capped since 1989, rents in rent-stabilized apartments in the city have risen more than 50 percent, officials said.

For a family earning $29,119 a year, a monthly rent of $505 equals an annual rent of $6060, or 20.8% of income. A monthly rent of $557 would equal an annual rent of $6684, or 23% of income. For a family earning $41,137 a year, a monthly rent of $515 equals an annual rent of $6180, or 15% of income. A monthly rent of $624 would equal an annual rent of $7488, or 18.2% of income. It's still a better deal than paying 30% of their incomes, but those in these groups would still pay a higher percentage of their incomes in rent than those earning over $67,367.

The rent increases still must be approved by the federal Department of Housing and Urban Development, comes on top of increased tenant fees for things like owning a washing machine to getting a broken door fixed, the Times noted. If the mayoral administration is serious about recovering revenue from the city's working poor, it should reform the market-rate subsidies with even greater gusto.