The cost of living in public housing in Orleans Parish will more than double and in some cases more than triple for some new tenants under new rental rates adopted Tuesday by the Housing Authority of New Orleans’ one-man board.
The minimum rates for some existing tenants also will rise, though less steeply. Some will see a 35 percent jump in their rent.
Most current tenants, however, do not pay a flat rent and instead dedicate 30 percent of their income to housing and utilities, which in many cases is less expensive than paying the flat rate. Tenants are allowed to choose between the two payment methods.
The higher minimum rates are necessary to comply with a new federal regulation that defines the flat rate for public housing as 80 percent of an area’s fair market rent for their units, officials said.
The rule change was mandated in January as part of the 2014 federal fiscal appropriations bill. It required that public housing agencies nationwide set new fees by June 1.
HANO housing residents currently pay much less than fair market rent for their units, said Marilyn O’Sullivan, the HUD staffer serving as HANO’s executive director.
According to the agency, the current flat rent for a one-bedroom unit in HANO’s public housing program is $254. Under the new rent guidelines, the same one-bedroom unit will rent for $612, or 80 percent of its $765 fair market rent.
The fair market rent is based on the rent charged for “comparable units” in the private rental market, according to a HANO memo explaining the change.
“It is also equal to the estimated rent for which a housing authority could promptly lease the public housing unit after preparation for occupancy,” the memo says.
When the rule change goes into effect, the flat rate for a two-bedroom property will increase from $299 per month to $758, a three-bedroom unit from $373 to $952, a four-bedroom unit from $418 to $1,440 and a five-bedroom unit from $481 to $1,656.
The new rates will apply only to families new to public housing after June 1, O’Sullivan said.
Existing public housing residents also will pay higher rates at some point. But the rent for those residents cannot increase by more than 35 percent in any year, according to the new HUD regulation. That means a family currently renting a one-bedroom will see its rent rise from $254 to $342 later this year.
The increases for existing residents are not scheduled to go into effect until HUD provides guidance on how to implement them, O’Sullivan said. That could take from 60 to 90 days.
O’Sullivan said she expects the change will not affect the majority of HANO residents, who have agreed to dedicate 30 percent of their income to housing and utilities. According to HANO, just 17 percent of public housing tenants are on flat-rate rents.
“What I imagine is as those flat rents go up over time, more and more folks here that are currently on flat rents will go back to a percent of their income,” O’Sullivan said.
In other action, the housing authority approved a resolution to contract for on-call legal services with six firms: Rodney & Etter; Burglass & Tankersley; Stone Pigman, Walther, Wittmann LLC; DeCuir, Clark & Adams LLP; Law Office of Alexandra Mora APLC; and LeBlanc Butler LLC.
The agency will pay no more than $700,000 a year for those services under a two-year contract that carries an option for a third year.
The new contract amounts to a savings of $600,000 a year when compared with HANO’s previous contract for legal services, which included nine firms at $1.3 million a year.