More than 25,000 higher-income families are living off the taxpayers’ dime even as hundreds of thousands of poor people languish on public housing wait lists, according to a recent government watchdog report.

The report by the Department of Urban Development’s Office of the Inspector General indicates that the policy will result in $104.4 million over the coming year for families who would not qualify under current thresholds. It recommends the federal government encourage local housing agencies to push ineligible families out in favor of more deserving applicants.

But federal housing officials argue it is desirable to keep a small number of higher-income residents in public housing in order to promote the deconcentration of poverty. HUD authorities also argue that a recent change in the rent structure for public housing will greatly reduce the number of over-income families getting taxpayer-subsidized housing.

Congressional critics blasted the Obama administration’s stance. Rep. Phil Roe, a Tennessee Republican who asked for an investigation after seeing a local news report on the issue, said the policy is misguided.

“It seems to me that we should focus limited taxpayer resources on those with the most need,” said Rep. Phil Roe.

“It seems to me that we should focus limited taxpayer resources on those with the most need, so I was concerned by the audit’s findings,” he said in an emailed statement to LifeZette. “My staff and I are reviewing the report’s conclusions to determine what changes need to be made.”

Sen. Rand Paul, R-Ky., noted that the phenomenon is not the result of cheating by recipients but the policy choices of government.

“Oddly, this is not the result of a scam or a loophole,” he said in a prepared statement.

Millionaire Pays $350 Per Month
The inspector general report says that 25,226 families as of July 2014 had incomes that exceeded eligibility limits. New York, Puerto Rico and Texas accounted for more than half of that total, but the inspector general report found recipients with higher incomes in all 50 states and the District of Columbia.

In some cases, incomes were substantially greater. Almost half of those families, 11,838, had incomes more than 10 percent higher than the eligibility line. That threshold varies form location to location based on the local cost of housing.

Some 1,373 recipients earn more than $50,000 more than the cutoff point.

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The report highlighted four egregious examples:

  • In New York City, one family admitted to the program in 1988 had income above the threshold since 2009. The family of four had an annual income of $497,911; the threshold is $67,100. In addition, the head of household had real estate holdings that produced $790,534 in rental income between 2009 and 2013.
  • A five-member Los Angeles family accepted into public housing in 1974 has had income over the threshold since at least May 2011, with a 2014 income of $204,784. The family paid a flat rent of $1,091 for a four-bedroom unit.
  • A New Bedford, Massachusetts, family that had been living in public housing since 2003 had been over income since at least August 2010, with an annual income as of November 2013 of $212,845. As of July 2014, the three-member family was paying a flat $525 monthly rent for its housing.
  • A tenant in Oxford, Nebraska, who had been living in public housing since 2005 had been earning more than the eligibility cutoff since at least October 2010. The annual income as of April 2014, $65,007, was nearly twice the eligibility line of $33,500. In addition, the tenant — who was paying $300 a month — had assets valued at almost $1.6 million. That included stocks, real estate and a checking account of $123,445.

In each case, the local housing agency was aware that the recipient earned substantially more money than the eligibility threshold but chose not to evict. Since December 2004, housing authorities have had discretion to allow public housing tenants to remain even after their income has risen.

“There are good intentions trying to have more mixed income (tenants) so you don’t have these islands of poverty,” said Annie Kim, a spokeswoman for the Housing Authority of Los Angeles.

Representatives from the other three housing authorities offered similar rationale to investigators from the inspector general’s office. HUD officials also told investigators higher-income residents can serve as “role models” to their low-income neighbors.

The idea of breaking up high concentrations of poverty has been a central tenet of Obama’s housing policies. The administration has pushed states to build affordable housing in wealthier neighborhoods and suburban areas.

Jerry Brown, a spokesman for the Department of Housing and Urban Development, said the number of people with relatively high incomes in public housing — a list of more than 25,000 families — is a small fraction of the 1.1 million households and 2.6 million people in the program.

Brown said more than half have incomes only slightly over the threshold. The average annual income for most public housing residents is a little more than $13,000.

Jim Carnes, the policy director for the anti-poverty Arise Citizens’ Policy Project in Alabama, said many people who make slightly more than the threshold for public housing still cannot afford market-price housing.

“It’s tricky for a lot of programs because you get a lot of churn. … People get off a program and have a hardship that puts them right back on,” he said.

Alabama had 811 “over-income” families living in public housing, according to the inspector general report, among the highest in the country.

Federal Policy Defended
Brown said HUD recently introduced a new rule imposing flat rents rather than rents based on a percentage of the fair market value. That will result in higher rents for higher-income recipients, which  should result in a decrease in over-income families over the next three years.

The inspector general’s report concluded the policy’s immediate impact would be “marginal” and might not prevent “egregious” cases.

Brown said the department likes to see people in public housing improve their economic circumstances.

“However, we don’t want a family to move on immediately,” he said. “We want them to be stabilized.”

The inspector general report notes, however, that 70 percent of the 25,226 over-income families have been earning more than the threshold for longer than a year.

“We do not expect HUD and the housing authorities to develop policies that would eliminate all overincome families from public housing,” the report states. “However, creating limits to avoid egregious cases seems reasonable.”

It is unclear how many poor people are waiting for public housing. Each housing agency keeps its own statistics, and HUD does not compile them. But a sample by the inspector general’s office showed that 15 public housing agencies had 579,890 families on waiting lists.

Streeter, a domestic policy adviser specializing in housing issues in the White House of George W. Bush, said it was that administration’s policy to get people out of public housing soon after they were financially able. The Obama administration reversed that policy, he said.

“I think the OIG report shines a lot on the classic problem with Washington bureaucrats,” said Ryan Streeter, director of the Center for Politics and Governance at the University of Texas at Austin. “It’s just really inexcusable that that many families have been receiving incentives for over a year.”

Carnes, the Alabama anti-poverty advocate, said a key problem is a lack of affordable housing. He put that shortage at tens of thousands in Alabama, alone. He said Congress created a trust fund to build low-income housing but has not funded it.

“I would hope that any attempt to address this issue … would be accompanied by an effort to improve the affordable housing shortage,” he said.

Streeter, who was a domestic policy adviser specializing in housing issues in the White House of George W. Bush, said it was that administration’s policy to get people out of public housing soon after they were financially able. The Obama administration reversed that policy, he said.

Streeter said the issue highlights the “difference and sometimes conflicting polices” across the federal government aimed at fighting poverty. Some programs have hard rules limiting eligibility based on income. Some have work requirements. Others do not.

The idea of disbursing poverty has some merit, Streeter said. The HOPE VI program in the 1990s, which resulted in the demolition of notorious high-rise public housing complexes like Cabrini-Green Homes in Chicago, scattered poor people. He said some of those efforts worked better than others, but added that most experts agree that it is better than the system it replaced.

But Streeter said it makes little sense to allow families with substantial resources to occupy public housing when so many poor people are on waiting lists. He noted that the inspector general report estimates the total for the coming year to be more than $100 million.

“That’s support that should be going to people who actually need it. … It’s a limited pool of resources,” he said.

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