Iola Housing Authority stands to lose $151,000 in reserve funds, now being reduced as lower monthly rent subsidies from the Department of Housing and Urban Development.
The only opportunity to recoup the money, Executive Director Carol Ross told Allen County commissioners Tuesday morning, is to join a class action lawsuit against HUD. To do so she must come up with $2,000 by Monday to pay Iola’s share of lawsuit expenses.
Commissioners agreed to provide $1,000, if another entity, such as Iola, paid the remainder. Iola council members turned down Ross’ request Monday night. If Iola Housing Authority doesn’t participate in the lawsuit, it has no chance of recovering the money.
Ross has money in reserve that could be used for lawsuit participation — if it were legal. Federal dollars may not be used to pay for a lawsuit against the government.
The lawsuit will be filed by National Association of Housing and Redevelopment Officials and Public Housing Authorities Directors Association. The decision to recover money from local housing authorities by reducing reserve funds affects all public housing groups drawing HUD support.
Ross said she was being judicious in watching her budget which led to a healthy reserve fund.
“We’ve done things ahead of time to save money and have found good buys anytime we could,” she said.
To help its budget, HUD reduced allowable reserves of housing authorities’ budgets from 10 months of their operating budgets to six months — meaning reserve funds may be no more than 50 percent of projected annual operating expenses.
That required Iola and others across the nation to return part of their reserves, built up over years, to HUD. The upshot is that Iola may have no more than $324,000 — half its operations budget of $648,000 — in the bank on March 31, the end of the federal fiscal year.
Beginning in January, the housing authority’s monthly subsidy payments were reduced from $29,500 to just less than $17,000.
HUD subsidies are figured by taking into consideration utility costs — that’s the biggest component — occupancy rates, and allowable maintenance expenses.
“The rate changes from year to year,” and next year’s is questionable depending on what Congress does, Ross said.
THE HOUSING authority has 158 housing units, including 55 in the Townhouse, 217 N. Washington, which was built in 1971.
To categorize the Townhouse, or any units, as only for the elderly would be a misnomer, Ross pointed out. “They’re for families, and none is designated for the elderly.”
HUD subsidies kick in when rent exceeds a family’s ability to pay, based on its income with deductions for recognized living expenses.
“Rent is 30 percent of adjusted income,” Ross said.
