HUD Section 8 Wealth Redistribution Enriches Bureaucrats and Landlords but Fails American Taxpayers

by | Jul 14, 2017 | Bureaucracy | 0 comments

The Department of Housing and Urban Development’s (HUD) Section 8 housing projects enrich bureaucrats and landlords, but the benefits to the poor are negligible, and they send hard-working Americans’ tax dollars down a rabbit hole.

Section 8

     The Department of Housing and Urban Development was founded in 1965 as part of the “Great Society” program of President Lyndon Johnson. Johnson declared war on poverty and HUD was put on the frontline to battle the forces that deny people affordable housing. HUD has spent over five decades and hundreds of billions of tax dollars for naught. The department has failed in all of its misguided endeavors to the point that its sole mission appears to be wealth redistribution without any real purpose unless you think job security for bureaucrats who dream up regulatory stratagems and filtering tax dollars to slumlords to be worthy pursuits.

     This year’s budget for HUD is $50 billion spread out across various programs designed to do everything and nothing at the same time. The following are programs that routinely appear in HUD budgets:

  • Family Self-Sufficiency Program – “Link HUD-assisted households with job training, child care, transportation, financial literacy, and other supportive services, and help them build assets through interest-bearing escrow accounts.”
  • Support Local Efforts to Improve Housing Affordability and Economic Opportunity – “The budget proposes $300 million in mandatory funds for a new local housing policy grants program. These funds will support a range of transformative activities in communities across the nation that reduce barriers to housing development, increase housing supply elasticity and affordability, and demonstrate strong connections between housing, transportation, and workforce planning.”
  • Improve Mobility through the Housing Choice Voucher Program – “The budget provides $2.1 billion in Public Housing Authority (PHA) administrative fees using the new evidence-based formula that not only more accurately reflects the actual cost of running the program, but ensures that PHAs have sufficient resources to provide low-income families greater access to opportunity areas” (Section 8 housing in middle-class neighborhoods).

     How are these massive, expensive programs faring thus far? Unfortunately, all HUD programs are riddled with what the federal government refers to as fraud, waste, and abuse, but the bureaucrats are undeterred by the nefarious activities that infect their bureaucratic stratagems.

     The Office of Inspector General (OIG) recently completed the following audits: 

Beverly Place Apartments, Groves, Texas

     The criminal activity related to the rent vouchers Beverly Place Apartments (BPA) received from HUD is usually what the OIG uncovers when it audits a contractor. Between January 2013 and December 2015, HUD redistributed $1.8 million to the owner of BPA for rent subsidies.The OIG discovered that BPA received rent subsidy payments for “nonexistent, unqualified, and questionable” tenants. The following are the salient parts of the report:

  • HUD distributed $574,930 to BPA for nonexistent tenants.
  • BPA falsified income verification documents and received $150,082 from HUD.
  • HUD disbursed $77,621 in rent subsidies for tenants with unconfirmed income.
  • BPA employees and a local law enforcement officer stole more than $230,000 HUD allocated to 176 tenants for utility bills.

People who favor big government argue that a situation like the one at BPA is an anomaly and you cannot hold HUD employees in Washington, D.C. responsible for bad actors in Groves, Texas; BPA is not an anomaly, and HUD is responsible for the situation.

New Horizons, Kansas City, Missouri

     Agape Properties, LLC owns five multifamily properties in Kansas City, Missouri collectively referred to as New Horizons. In 2009, Agape purchased New Horizons and assumed the existing Section 8 housing assistance payments contract with HUD. Agape obtained a HUD-insured loan for $1.2 million and an additional $274,400 loan available under the National Housing Act; taxpayers provided the loans and assumed the risks associated with the loans. Agape used federal tax dollars to purchase five homes split into thirty units (rooms for rent) to reap the financial gains that come from being party to a HUD housing contract. Although the housing contract associated with New Horizons is lucrative, $1,200 per room, it wasn’t enough for Agape.

     An audit by the OIG revealed that from June 2013 to July 2016, Agape took advantage of HUD’s incompetence and indifference to bilk taxpayers for $881,000. Agape defrauded taxpayers by:

  • Not accurately verifying tenant eligibility
  • Requesting subsidies for ineligible tenants and tenants not living in units.
  • Failing to collect and deposit rents correctly.
  • Having unreported tenants living in the units.

Section 8 housing payments are capable of transforming crowded, dilapidated properties like those of New Horizons into cash cows for slumlords. Unfortunately, for taxpayers, the slumlord’s gain is their loss; bureaucrats are unaffected.

     The Department of Housing and Urban Development receives tens of billions of dollars each year to redistribute as part of programs created based on the false premise that government administrators possess special knowledge that allows them to solve the world’s problems. The war on poverty is over, and the federal government lost, but bureaucrats refuse to lay down their weapons because their high-paying “jobs,” medical, dental, vision coverage, and guaranteed pensions depend on the war for their existence, and “private” sector businesses want to continue to battle because the welfare programs the Great Society produced allow them to survive. The people drinking from the public trough are not interested in helping the poor, but they are highly motivated to maintain the poverty industry because the benefits are numerous for them.

Thomas Jefferson Quote

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