Here's Some Real Pork

Thursday, November 02, 2006
Los Angeles is trying to recover a little loose change "misdirected" by housing officials. The theft of $70 million is really no big deal. It's not like being condemned to death by malpractice for showing up at King/Drew with a medical problem.

The real pork isn't in the $70 million that appears to have wandered off. The real pork is described in this paragraph:
The city's Housing Authority was formed in 1938 to provide low-cost housing to the poor. It is one of the largest public housing agencies in the nation, with 20,000 people living in 8,000 units. The authority also provides financial assistance to about 100,000 residents through the Section 8 program. The authority has an annual budget of about $810 million, 90% of which comes from the federal Department of Housing and Urban Development.
It is unreasonable for the general public to expect innumerate reporters to do simple math and cross checking with Census Data but as a matter of curiosity and using the 2.5 people per unit that the LA Housing Authority calculates in their service provided numbers simple division derives a monthly household incurred expense of over $1,400. That in a city where the median rent is $672. Knocking off 20% for mismanagement services still leaves an expense of $1,120 per month per household. That puts the assistance receiving houshold above the 80th percentile in terms of housing expense.

Another way of looking at that is that the city is providing "help" at a cost which exceeds that paid by 80% of the renters in Los Angeles. Using the 20% mismanagement fee and the median rent number a fair "market" rate for government managed housing would be $840 per month. The difference amounts to over $326 million per year. Every year. Public housing is a true "bridge to nowhere" - and they build one every year in LA without any murmurs concerning the "evils of pork".

UPDATE: A casual perusal of the HUD Budget Summary turned up this gem:
While the estimated improper rental housing assistance payments in FY 2004 were substantially reduced from prior year estimates, they still represented 5.6 percent of total program payments. Through continuous corrective actions, HUD’s goal is to reduce that improper payment rate to 3 percent of total payments during FY 2007."
The budget lines pertaining to housing assistance payments total over $20 billion so "improper" payments would come to more than $1 billion.

2 comments:

Morgan said...

That's incredible. 120,000 people, $810 million a year.

I think the waste is worse than you've estimated. The calculated monthly housing expense doesn't include any contributions the housees themselves make.

Wikipedia says that tenants in Section 8 housing pay 30% of their income toward the housing as well, and this says that average household income for section 8 families in LA is $11,000. That's another $275 per month in housing expense.

$1,681 per month including the wasted overhead. But I doubt the tenants are living in $1,400 housing units, so I suspect the overhead is more like 40-50%.

Rick Ballard said...

Morgan,

They pay 30% of reported income. It's one of those neat traps that keep the poor locked in the projects and working half time jobs plus cash jobs on the side.

It's not actually all overhead loss either. Owners of Section 8 housing have contracts calling for HUD to pay supplemental maintenance contracts in addition to rent. There is a chunk of dough going to rather unique forms of maintenance in a multitude of different manners. A good slumlord owns non-Section 8 units in addition to his government funded units. I've known a couple and they are very inventive about awarding maintenance contracts.

It's an area that just screams for vouchers.