How project-based Section 8 boosts affordable housing for the poorest of the poor

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March 1, 2004 // UPDATED 9:22 am - April 25, 2007
By: Scott Russell
Scott Russell

The city of Minneapolis' affordable housing initiatives focus on providing one-time money to build new projects, but that is only half the solution.

The other half is paying the ongoing costs of utilities, insurance and maintenance. City policies do not allow city money to pay for such operating costs, yet the rents poor tenants can pay can't cover the actual costs.

Lydia Apartments, 1920 LaSalle Ave., is a prime example of the crucial role a federal program called project-based Section 8 plays in jumpstarting and sustaining affordable and supportive housing.

The Plymouth Church Neighborhood Foundation opened Lydia Apartments last fall. Executive Director Lee Blons said without the Section 8 guarantee, the project never would have happened.

The foundation bought the building outright with various grants and aid. The rents do not have to cover any debt payments, just the operating costs, approximately $288,000 annually, or $600 a month per unit, Blons said.

(That is not counting the $300,000 it pays annually for support services, a 24-hour front desk and 2.5 case managers.)

Some Lydia Apartment residents work, others get disability payments and some are unemployed, Blons said. They have an average income of $4,177 a year, or $348 a month. By Section 8 standards, they pay 30 percent of income on rent, or $100 a month.

That leaves a $500 per month per unit gap, or $240,000 annually. Section 8 covers that gap.

"It would not have been possible to serve who we wanted to serve without project-based Section 8," Blons said. "When we talk about housing policy, we often talk about serving people at 30 percent of median income -- or 50 percent. Supportive housing often hits closer to 10 percent of median income. We are talking about the most impoverished people in our society."