Assistance provided under HUD programs falls into three categories: public housing, tenant-based and privately owned, project-based.
In public housing, local housing agencies receive allocations of HUD funding to build, operate or make improvements to housing. The housing is owned by the local agencies. Public housing is a form of project-based subsidy because households may receive assistance only if they agree to live at a particular public housing project.
Tenant-based assistance is the most prevalent form of housing assistance provided. Historically, tenant based assistance began with the Section 8 certificate and voucher programs, which were created in 1974 and 1983, respectively. These programs were replaced by the Housing Choice Voucher program, under legislation enacted in 1998. Tenant-based programs allow participants to find and lease housing in the private market. Local public housing agencies (PHAs) and some state agencies serving as PHAs enter into contracts with HUD to administer the programs. The PHAs then enter into contracts with private landlords. The housing must meet housing quality standards and other program requirements. The subsidies are used to supplement the rent paid by low-income households. Under tenant-based programs, assisted households may move and take their subsidy with them. The primary difference between certificates and vouchers is that under certificates, there was a maximum rent which the unit may not exceed. By contrast, vouchers have no specific maximum rent; the low-income household must pay any excess over the payment standard, an amount that is determined locally and that is based on the Fair Market Rent. HUD calculates the Fair Market Rent based on the 40th percentile of the gross rents paid by recent movers for non-luxury units meeting certain quality standards.
Rental assistance is a collection of programs generally referred to as multifamily assisted, or, privately-owned, project-based housing. These types of housing assistance fall under a collection of programs created during the last four decades. What these programs have in common is that they provide rental housing that is owned by private landlords who enter into contracts with HUD in order to receive housing subsidies. The subsidies pay the difference between tenant rent and total rental costs. The subsidy arrangement is termed project-based because the assisted household may not take the subsidy and move to another location. The single largest project-based program was the Section 8 program, which was created in 1974. This program allowed for new construction and substantial rehabilitation that was delivered through a wide variety of financing mechanisms. An important variant of project-based Section 8 was the Loan Management Set Aside (LMSA) program, which was provided in projects financed under Federal Housing Administration (FHA) programs that were not originally intended to provide deep subsidy rental assistance. Projects receiving these LMSA “piggyback” subsidies were developed under the Section 236 program, the Section 221(d)(3) Below Market Interest Rate (BMIR) program, and others that were unassisted when originally developed.
Section 42 Housing
Section 42 is an affordable rental housing program, referred to as either the “low-income housing tax credit program” or the “rental housing tax credit program.” This is because Section 42 is an affordable housing program established by the federal tax code that allows developers of affordable housing to receive a federal tax credit. In exchange, the developer agrees to keep the housing income restricted, rent restricted, and in safe, decent and sanitary condition. The Indiana Housing & Community Development Authority (IHCDA) awards Section 42 tax credits for the State of Indiana. In addition, IHCDA conducts file audits, physical property inspections, and annual reviews of all active Section 42 properties in the state to ensure program compliance.
Karen Mitseff knows how to stretch a dollar. She has to.
"If I make a pot of soup, I know I’m going to get six to seven meals out of it," said Karen Mitseff, 69.
Often she and friends Patty Vande Velde and Michelle Labus share meals. The Valparaiso residents do it out of friendship and necessity.
All three have hit hard times and struggle with paying bills, especially their rent.
They are among the thousands in Northwest Indiana who live in subsidized housing.
Affordable housing is at the center of a debate in Valparaiso, but it is not only a local problem, but a regional and national one as well. Agencies and officials work to find solutions, but the demand for quality housing at an affordable price far outweighs the supply.
Northwest Indiana households experience a higher rate of housing cost burden, particularly in Lake, Porter and Starke counties, said Melissa Bohacek, director of communications for Northwest Indiana Community Action in Crown Point.
NWICA assists residents seeking subsidized housing and are involved in projects to provide affordable housing to residents. They serve Lake, Porter, LaPorte, Jasper, Newton, Starke and Pulaski County residents not already served by housing authorities.
Bohacek said when the waiting list is opened to apply for the federal choice voucher program, they can have 100 to 200 people on at a time.
According to the Joint Center for Housing Studies of Harvard University's annual State of the Nation's Housing report for 2018, 47.5 percent of the nation's renters are cost burdened, spending more than 30 percent of their income on housing.
A Times examination of federal and state housing subsidies in Northwest Indiana found an uneven distribution of subsidized housing units within local communities. Valparaiso had the most in Porter County, while Gary, Hammond and East Chicago had the greatest number in Lake County. Some more affluent communities such as Winfield, St. John and Dyer have none, according to data from HUD and the Indiana Housing and Community Development Authority.
Karen, Patty and Michelle
"My husband had three transplants," said Mitseff, including a liver transplant in 2003, followed by liver and kidney transplants in 2008.
Both times, Mitseff said, they filed bankruptcy and lost their half of a duplex to foreclosure.
"One medical thing, and your life is flipped upside down. You’re done," said Vande Velde, 64. "I had a carotid artery and three stents put in without insurance."
Vande Velde is on medication to prevent a heart attack, which would cost $385 a month had her doctor not provided enough free samples to get by.
In a few months, when Vande Velde turns 65, she will lose her long-term disability pay of $484 per month. That will leave her with just her $984 Social Security income unless she finds other assistance. Her monthly rent, because it’s subsidized through an Indiana Housing and Community Development Authority program, is $617.
Mitseff said her income is just under $1,500 a month. Her rent is $633.
Even worse off is Labus, 50, whose income is just $850 a month. Her rent is $613, which includes water and trash pick-up, but not NIPSCO.
Labus doesn’t own a car, relying on siblings for rides.
Her divorce was finalized on Valentine’s Day 2018, after 16 years of marriage.
Vande Velde said she and her husband had open heart surgery six months apart.
Vande Velde went first to The Caring Place for 40 days, then Housing Opportunities gave her an apartment at its complex just north of Vale Park Road on Calumet Avenue. The agency’s fresh start program at The Masters Apartments allowed her to rent an apartment for $350 per month for a year to get on her feet again.
The women often cook for each other.
"Going out to eat is not something that is in the budget," Mitseff said.
Neither is driving to Indianapolis to see her grandchildren. It’s a joy when they visit, she said.
A tale of two Lake County communities
Munster Town Manager Dustin Anderson said the town’s zoning codes allow for apartments in certain places, but those apartments charge market rent.
He hasn’t heard of anyone in the town talking about a need for affordable housing, he said.
According to HUD data, Munster is home to two federally subsidized housing units.
North Township Trustee Frank Mrvan, however, said his office’s clients seeking help with housing aren’t limited to East Chicago and Hammond.
"I think you’d be pleasantly surprised how many landlords accept Section 8 housing in Munster," Mrvan said.
In the Great Recession of 2008 to 2009, the township saw many residents seeking help with housing.
"We had a lot of clients from Highland and Munster who were lawyers and engineers," Mrvan said.
The township worked to help them retain their homes or get affordable housing.
With the unemployment rate lower now, Mrvan’s office is working to help veterans.
Mrvan said Lake County has shelters for men, and for women and children, but there aren’t any family shelters for people who need them.
Later this month, the "bunker" his office has been working on in East Chicago will host a ribbon cutting, with a veteran’s family moving in by mid-October.
The township partnered with the East Chicago Housing Authority, labor unions, Regional Mental Health and the federal Department of Veterans Affairs to remodel a home to serve as transitional housing. Financial literacy and job training, along with other care, will be provided.
"The whole goal is to help lift up a family that is on the verge of homelessness for those 24 months," Mrvan said.
At the end of two years, Mrvan said, he hopes the veteran’s family will move into a Habitat for Humanity home, leaving the "bunker" available to help the next family.
Affordable housing battles homelessness
Many people believe being homeless means sleeping under a bridge or in a park, packing possessions in a shopping cart. More likely, a person in the Region considered homeless is "couch surfing," staying with a friend or relative, moving from one accommodation to another.
"Affordable housing is probably one of the best options we can have to address homelessness," said Jordan Stanfill, CEO of Housing Opportunities, which serves Porter and LaPorte counties. The organization has 187 units, the majority of which are in Valparaiso. They aim to provide housing for 50 percent or less of a person's income.
"We offer affordable housing options in Portage, Valpo, Michigan City and LaPorte," Stanfill said.
Typical clients have limited incomes or are deep in debt. The first time something happens to their car or their health, they’re in trouble. The dollar can’t stretch far enough to give them shelter.
"The first thing to not get paid is their rent, and it starts that cycle all over again," Stanfill said.
Housing Opportunities offers financial counseling to help clients manage their money, although there are fewer options for spending cuts when income is low, Stanfill said. The agency also helps clients improve their job skills as a way to increase their income.
"It’s really hard to have a car and pay your rent" when your income is low, Standfill said. "That’s why Valpo is such a great focus for affordable housing, because of the bus transportation in the city."
Valparaiso offers both the V-Line, an intracity bus service, and the ChicaGo Dash, which transports commuters to Chicago and back.
Because it is the county seat, Valparaiso also has a Social Security office and other government offices people need to access.
Portage, on the other hand, doesn’t have a bus service, so getting to the Social Security office and some other places can be a logistical challenge, Stanfill said.
Through a partnership with the building trades class at Chesterton High School this summer, Housing Opportunities put a new modular home on a lot where a decrepit home once stood in Michigan City. The home will be sold to a new owner. Students will build another home next year.
"We’re always looking for options," Stanfill said.
Barriers to affordable housing
According to the Harvard University study, rising construction costs, land prices and regulatory barriers are making providing affordable housing more and more difficult.
That's combined with several other factors, including an uptick in seniors aging in place instead of moving or downsizing, causing a decline in affordable housing stock.
Millennials, many facing large student loan debt, also are facing issues entering the housing market, according to the report.
Local efforts to provide housing
East Chicago and Gary are beneficiaries of two recently announced housing developments that could ease the need for affordable housing in their communities.
More than a year ago, East Chicago was selected to be the home to new affordable housing with the help of state tax credits through Indiana's Moving Forward 3.0 program. The city was selected because it was grappling with the lead contamination crisis at the USS Lead Superfund site and the tear-down of the West Calumet Housing Complex.
Earlier this summer the Indiana Housing and Community Development Authority was expected to authorize $22 million in bonds to help pay for East Chicago's senior housing development in the North Harbor section. The Carson Manor project is a partnership between a developer and the East Chicago Housing Authority.
Gary has been selected as a second site through the state project to construct a mixed use housing project at Seventh Avenue and Broadway. Construction is expected to begin next year.
According to the U.S. Census Bureau, nearly 36 percent of Gary residents are in poverty. The average household income there is less than $29,000, nearly half of the national average.
"We have seen countless times how our citizens have benefited from housing that has been provided by federal housing programs," Gary Mayor Karen Freeman-Wilson said last month.
Portage also may be looking at redeveloping property to allow for "quality starter homes," city redevelopment administrator Colin Highlands said.
The city is looking to expand its tax increment finance district to include the vacant Garyton Elementary School. Highlands said there has been discussion where the city would purchase the building, demolish it and offer the parcel of land for redevelopment for affordable homes.
In mid-August, U.S. Sen. Todd Young, R-Ind., said he is calling for a federal task force to examine the impact of a shortage of affordable housing in Northwest Indiana.
Young, along with eight other senators, introduced legislation to study the problem and its effect on life outcomes for U.S. residents, including education, employment, income level, health, nutrition, access to transportation and poverty level in the neighborhood.
"As I travel throughout Indiana, I consistently hear about the need for more affordable housing," Young said.