Knoxville Affordable Housing Shortage

Between 8 a.m. and 3 p.m. on the second Wednesday of every month, Debbie Taylor-Allen takes applications for Section 8 housing vouchers.

With those vouchers, originally part of a government program that began in 1974 to fight the segregation of the poor into “ghettos,” if people can find a landlord who participates in the Section 8 Housing Choice Voucher Program, the government will pay the landlord to make up the difference between what the unit rents for and what the tenant can afford. That’s because the U.S. Office of Housing and Urban Development defines “affordable housing” as costing not more than one-third of a family’s income.

In times past, there have been more applicants than vouchers available. That’s not the case now, said Taylor-Allen, who is Section 8 Housing Director for the Knoxville Community Development Corporation. She has “plenty of vouchers” for people who apply.

The problem now, she said, is that they can’t find anywhere to use them.

In the past year, Knox County has lost more than 400 Section 8 apartments. Residents who get the vouchers have 60 days initially to use them and can apply for up to two 30-day extensions.

Nearly all are applying for the full 120 days, Taylor-Allen said – and even then, she estimates only 40 percent are finding a Section 8 unit to move into.

“It’s even harder if you’re single,” she said. “One-bedrooms and efficiencies (taking Section 8), you cannot find in Knoxville.”

Section 8 shortage

The Section 8 shortage Knox County is seeing is happening all over the country. A study last year out of New York University’s Furman Center indicated the U.S. is losing around 125,000 affordable housing units a year. Landlords either don’t renew their contracts, or the units are demolished and replaced with something other than Section 8 housing.

Knoxville has seen both happen. More than a third of the total renter-occupied units in Knoxville were built before 1980. And since March 2016, the city lost more than 400 units because a 15-year Section 8 contract many landlords had is expiring, and they’re choosing not to renew, Taylor-Allen said. The old contract came with a substantial tax credit as incentive; new tax credits aren’t as lucrative, she said.

“Once those contracts have expired, those owners are not required to rent to low-income families anymore,” she said.

Those contracts affected many complexes that had a mix of Section 8 and open-market housing.

The former Prestwick Ridge complex, off Sutherland Avenue, had 136 units. But it was bought by a Nashville-based company, which renamed it “Mountain Brook” and decided to cease taking Section 8 vouchers when the contract expired, the property manager said.

The 101-unit Southwood Apartments complex, on Sevier Avenue in an area of South Knoxville being gentrified with the waterfront redevelopment, has been renovated and renamed “The Adelade” – and no longer accepts Section 8.

West Knoxville’s Briarcliff at West Hills and Sutter’s Mill apartments, with 377 and 225 units respectively, did not renew their Section 8 contracts, nor did Meadowood Apartments or Norwood Manor in Northwest Knoxville. The most recent loss was the former West Vista Ridge Apartments, which had 96 units; now renamed “The Vue at Ridge Way,” it has open-market units starting at $750 a month, but the rents are higher than Section 8 can approve, so Section 8 tenants are being asked to move as their leases expire, Taylor-Allen said.

Each year, HUD calculates “fair market rent” for housing in the Knoxville metropolitan area, in part to determine Section 8 subsidies. For 2017, Knoxville’s monthly fair market rent was $520 for an efficiency; $669 for a one-bedroom; $811 for a two-bedroom; $1,057 for a three-bedroom, and $1,374 for a four-bedroom. But RentJungle.com, which tracks market-rate rents, found Knoxville apartments last month averaged $751 monthly for a one-bedroom and $892 monthly for a two-bedroom — an average monthly increase of $33 over the past six months.

That average includes apartments and houses in outlying areas where public transportation is not available to those without a car. It does not include rent-by-the-week hotels or motels, RVs or movable housing, or campgrounds, none of which qualifies as “permanent” housing by government standards. It also doesn’t include utilities, taxes and other housing costs beyond rent.

And without subsidies, it’s still out of reach for a lot of working people. At minimum wage, a Tennessean would need to work 65 hours a week to afford a one-bedroom apartment, according to the National Low Income Housing Coalition. Annual starting salary for a Knoxville city public service worker in 2016 was $22,572; one-third would be $677. Of a police officer’s starting salary of $40,337, HUD says no more than $1,201 a month should go toward housing, including rent and utilities; for a firefighter, starting at $36,744, it would be $1,102. And a bachelor’s degree-level teacher this year, starting at $37,501, would be able to afford $937 a month for housing by HUD’s standards. More than half of city residents — 43,817, or 55 percent — now rent, according to the 2015 American Community Survey.

Paying more than one-third of their income toward rent isn’t feasible for many people, said Linda Rust, Community Development Administrator for the city’s Department of Community Development – especially senior citizens on a fixed income, recent college graduates with student loan debt, or people who have children.

“I’ve seen the affordable housing crisis up front,” said Rust. “I hope that people can understand that this is impacting people that we know. This could be impacting us.”

More demand than funds

Though Section 8 is the primary source of financial assistance for those seeking to rent, there are other programs – though funding is in short supply.

Through its Homeward Bound program to prevent homelessness, the Knoxville-Knox County Community Action Committee applied for, and received, a $100,000 grant from the Tennessee Housing Development Agency last July. But all that rehousing money was gone in the first three months, said CAC program manager Misty Goodwin. And even though “we exceeded our goals of the number of people we were going to help” with that grant money, she said, it will be six months before they can reapply for the grant.

Meanwhile, at least a couple of people a day come into CAC offices seeking help getting into housing, not counting those referred from homeless shelters like Knox Area Rescue Ministries, Goodwin said. Right now, she has four families living in their cars who can’t afford to move into an apartment. Family Promise, the only homeless services program that would let them stay together, has a waiting list.

“Up until this point, we’ve been one of the only agencies, besides Helen Ross McNabb Center, with money” to help with deposits or first and last months’ rent for those who aren’t able to save enough to move in, Goodwin said. Though they’ve had a little local funding to help, it, too, goes quickly, and federal grants have increased very little over the past 25 years – not enough to keep up with rising housing costs.

CAC also has two full-time workers who do “street outreach” to homeless people living outdoors, trying to help them secure permanent housing. But even when CAC has money to help with deposits and rent, they don’t have extra for household items many people lack: sheets, towels, pots and pans, dishes and cleaning supplies.

“That’s a huge need right now that we’re all struggling with, and we’re not allowed to buy those things out of our grant money,” Goodwin said.

She gingerly suggests some organizations who regularly take items to the street homeless under downtown bridges might consider redirecting their efforts toward furnishing such supplies. The city has said maintenance workers spend the first two hours of each shift cleaning up “debris” downtown – including items given to the homeless that they can’t or don’t carry with them or take into the shelters, where they’re given limited space for possessions.

Public housing changes

In addition to Section 8 contracts, Knoxville has a number of low-income public housing developments – 3,515 units, total — but wait times can be years. The Passport development at 901 Broadway has a wait time of more than a year for a two-bedroom unit, more than two years for three- or four-bedroom units. Five Points Family multiplexes, which are replacing Walter P. Taylor Homes, have a two-year wait. Even at larger and less-popular developments – Austin Homes, Montgomery Village, Taylor Homes and Western Heights – waits for one-bedroom apartments start at 4-5 months.

At sites designated for the elderly and disabled – Northgate Terrace, the Verandas at Flenniken, Five Points Duplexes, the Residences at Eastport, Cagle Terrace, Isabella Towers and Love Towers – waits for one-room studios, where available, stretch from three months to a year; waits for one-bedrooms are up to five years at some locations.

Wait time is affected by whether an applicant is disabled, elderly or has children, said Kara Davis, Regulatory and Housing Compliance Director for KCDC. A family wanting a two-bedroom apartment could get one in 9 months to three years, she said; units with more bedrooms are “harder to come by,” though Montgomery Village has some.

“The average wait for a single, nondisabled, nonelderly person is a long time,” Davis said. “It can be five-plus years.”

KCDC will have 878 fewer units to lease in coming months as it renovates the Vista at Summit Hill, Northridge Crossing (formerly Christenberry Heights), Lonsdale Homes and Lee Williams Senior Complex in Five Points. In addition, Green Hills, a non-KDCD low-income housing development east of downtown, is renovating all 199 units, which will be unavailable until at least mid-summer.

Current residents won’t be moved out of KCDC’s complexes, Davis said, though they might be moved into renovated apartments so theirs can be renovated.

“As properties stop leasing, we’re sending mass updates” to people on the waiting list, she said, telling them “their place on the waiting list is safe, but they should not expect to lease at those particular properties.”

As of Feb. 1, KCDC had converted five of its low-income public housing to Rental Assistance Demonstration Project-Based Rental Assistance. It plans to convert all but the high-rise towers and Western Heights to RAD/PBRA within the next two years.

HUD began offering the voluntary RAD/PBRA program, which is similar to Section 8, to housing authorities when it became clear that the federal funds subsidizing low-income public housing were unstable, with no extra money for improvements.

RAD/PBRA removes some of the administrative burden associated with low-income public housing management and turns rent into defederalized money, removing some restrictions – similar to a traditional landlord-tenant contract. In theory, this allows housing authorities to find money HUD isn’t offering to rehab aging developments, and it frees them up to seek their own financing. The RAD/PBRA program includes a financial plan and long-range operations plan.

While it will alter some of the ways KCDC manages properties, residents will see little change, other than the renovations, Davis said.

“Basically, we are being handed a tool we can use for modernization of our properties, but since many PHAs are taking advantage of this tool, we are bound to see an increase in the homeless population nationally while these modernizations are under way,” she said. “Many of the larger housing authorities are taking advantage of it.”

Few new landlords

The city is also hoping to attract developers willing to build low-income housing. At the Jan. 9 meeting of the Mayor’s Roundtable on Homelessness, Becky Wade, the city’s community development director, noted two developers are interested in building a total of around 200 units, though they haven’t yet secured the land. HomeSource, formerly Knox Housing Partnership, also is building some duplex units that will take Section 8, Taylor-Allen said.

Meanwhile, Taylor-Allen said the need for landlords willing to accept Section 8 just gets more dire. In an effort to attract property owners to the program, the government has decreased some of the paperwork, she said – for example, moving to routine inspections every other year instead of yearly. (Complaints are still investigated.) A recent change no longer holds landlords solely responsible for paying for bedbug extermination, a big program in some low-income housing developments, she said; HUD has decided the inspector can put the burden of pest control on the tenant if the tenant caused the infestation.

CAC offers free weatherization through the Knoxville Extreme Energy Makeover program to landlords who agree to accept Section 8 for at least two years after it’s complete. So far, 95 units have been renovated, but they all were already Section 8, Taylor-Allen said; the program, set to end next year, hasn’t motivated new landlords to begin accepting Section 8.

Knox County’s waiting list for Section 8 housing right now is open to displaced, homeless or disabled residents. About 1,400 are on it. Taylor-Allen said there are a few Section 8 units open and a few vacancies at Western Heights — but not nearly enough.

“We need landlords,” Taylor-Allen said. “There are just not enough units in Knoxville for our tenants, and I fear the homeless cycle is going to just get worse.”

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David Dorfman , Internet Consultant, Licensed New Jersey and Florida Real Estate Agent, Investor in Real Estate and Real Estate Technology.
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