DATE: Sunday, July 6, 1997                  TAG: 9707060066

SECTION: LOCAL                   PAGE: B1   EDITION: FINAL 

SOURCE: BY MATTHEW DOLAN, STAFF WRITER 

DATELINE: CHESAPEAKE                        LENGTH:   61 lines

RENT ERROR RESULTS IN $110,000 SHORTFALL

The city's Redevelopment and Housing Authority has discovered a major accounting error that resulted in a deficit for the agency and led to raised rents this month for residents of some of the city's poorest neighborhoods.

For 1996, the authority had budgeted $230 a month in expected average rent from its 450 housing units. But the agency received only half that, an average of $118.

More than half of all public housing residents were paying no rent at all.

The miscalculation resulted in a deficit of about $110,000, authority officials said.

The authority's new executive director, Douglas Falkner, thinks he has found one reason why the agency budgeted for more than it received:

A federal law, effective January 1996, requires that all public housing tenants pay at least $25 in rent, regardless of income. The Chesapeake authority passed the appropriate change in its regulations, effective May 1996. But someone forgot to increase the rent.

The city's public housing expenses totaled $1.6 million last year, and the federal Department of Housing and Urban Development chipped in $835,000 in subsidies, according to budget documents. But the rents collected amounted to $675,000, leaving the authority about $110,000 short.

Falkner said this week that it would be illegal to try to collect the back rent now.

``When we make the mistake, we eat it,'' he said.

After housing subsidies for child care and utility bills, 230 very low-income households were getting money from the authority and paying no rent. While tenants are supposed to pay about 30 percent of their income in rent, Falkner said, even those with little or no income should have been paying at least $25 since May 1996.

``The city has about 450 public housing units. And for 230 of them, they were paying no rent or we were sending them checks, an average of $45.''

Now, about 100 residents in the city's 13 public housing communities will have to write a rent check, rather than receive a payment in the mail.

After HUD began the minimum rent policy, local housing authorities and tenants groups complained that the destitute could not afford any minimum rent. So HUD's Frank Clower in the Richmond office said housing authorities were given the option of setting a minimum rent anywhere from $0 to $50 a month starting in September 1996.

But Falkner said Chesapeake's minimum rent of $25 is still on the books, albeit unenforced.

Even though authority Chairman Roland L. Thornton expressed reservations about a rent minimum at a recent meeting, no change in the rent requirement was made.

``We cannot manage the property unless tenants pay these rents,'' Falkner said.

To make up the deficit in public housing revenues from tenants, Falkner said, the authority used to transfer reserve funds from other programs to pay for public housing. Last year's public housing budget gap was plugged that way. But federal subsidies, he said, are drying up.

``This authority has been bombarded with negative publicity, and it is a situation that really reflects badly on the authority,'' Falkner said. ``But we are far from being efficient. Though I sympathize and empathize with our residents, public housing should support itself.'' KEYWORDS: CHESAPEAKE REDEVELOPMENT AND HOUSING AUTHORITY

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