Norfolk dips into savings for housing programs

By Meghan Hoyer

The Virginian-Pilot

NORFOLK

For the first time in recent years, the city's housing authority will dip significantly into its rainy-day funds to make ends meet.

Major reductions in federal funding, coupled with a slowing housing market and rising utility costs, left the authority with little choice but to raid its savings to pay for housing programs and maintenance at its apartment complexes, leaders said.

The Redevelopment and Housing Authority's Board of Commissioners will meet Monday to vote on its 2008- 09 budget. The proposed $96.7 million budget calls for using more than $4 million in reserves despite cuts in overall spending.

"It's a real problem," Board Chairman W. Sheppard Miller III said. "We'd prefer not to, but the alternative is to stop doing the work we do.

"Unfortunately, we can't do it forever. We need to be concerned about what we're going to do in the future."

That means continuing a review of efficiencies and programs, executive director Shurl Montgomery said. Authority officials are reviewing everything from energy efficiency to the viability of maintaining gym s to work-force training and other outreach. Officials expect further federal funding cuts in the future.

"We are looking at ways to reduce our budget reasonably," he said, adding that he and others are having to justify programs and spending "to a level we've never had."

"We've got to be self-sufficient," Montgomery said. "We need to be as cost-effective as we can."

The authority manages 13 public housing complexes and owns four privately managed apartment communities. It serves thousands of other families through programs on home u2011ownership, rental assistance and renovation. It is the city's main redevelopment arm, purchasing blighted property and managing large-scale renewal projects such as in the Broad Creek and East Ocean View neighborhoods.

It receives income from the federal Housing and Urban Development department, tenants' rent payments, the sale of publicly owned property, and city and federal grants.

The authority's budget, which will go into effect Tuesday, calls for spending 7 percent, or $7.6 million, less than last year.

It includes nearly $67 million for the authority's housing communities and rental subsidy programs such as Section 8, and $27.5 million for development projects such as blight removal and redevelopment across the city. The development spending plan represents a $5 million reduction from this year's budget.

The authority's housing programs, which include operating the city's public housing complexes and its Section 8 and work-force development programs, will require more than $4 million from reserves to make up for shortfalls.

The federal government calculates how much each city's housing program should cost to run, but this year will provide only 83 percent of that money. Over the past two years, Norfolk's housing authority has seen an $11.5 million drop in federal funding.

"We really haven't had to hit the reserves up until now," chief financial officer Clara Graves said.

The authority has about $11 million in its housing reserves, money it has socked away over the years when tenants' rent payments and federal funding exceeded the cost of running the programs.

"We're really fortunate the agency has built up these reserves," Montgomery said. "But it's like going into your savings account. Reserves don't last forever unless you replenish them."

Meghan Hoyer, (757) 446-2293, meghan.hoyer@pilotonline.com