The U.S. Department of Housing and Urban Development has decided against offering a third alternative to the Ypsilanti Housing Commission that would have enabled the commission to keep its Section 8 voucher program.

HUD now is urging the commission to voluntarily transfer the entire program to the Michigan State Housing Development Authority.

Paradise Manor

Courtesy photo

The decision comes nearly three weeks after the housing commission received a notice July 23 from HUD that said its Section 8 voucher program is facing a “significant and unrecoverable” $228,407 shortfall in funding.

The YHC operates 218 public housing units and the commission has 271 Section 8 vouchers — not including the 68 that have yet to be made available for people seeking to live at Hamilton Crossing, the former Parkview Apartments at South Hamilton and Harriet.

In its financial management review and shortfall letter, HUD said the YHC is over-committed and there are no funds available to cover the additional expenses for the 68 project-based voucher units at Hamilton Crossing.

Director Walter Norris retired Aug. 4 amid the troubles, and Eric Temple, the commission’s administrative specialist, was appointed interim director.

Monday morning, Mayor Paul Schreiber had a conference call with HUD Assistant Secretary Sandra Henriquez and she confirmed the decision.

Schreiber wrote in an email to council members late Monday night that Henriquez was "very clear" that HUD has decided against offering a third alternative for the YHC Section 8 program.

Schreiber also had a conference call Monday afternoon with Director of the Office of Public Housing Willie Garrett and his HUD Detroit staff that reiterated the YHC should voluntarily transfer their entire Section 8 program to the Michigan State Housing Development Authority immediately.

"They told me at the time they thought it was in the best interest of the residents that the program be transferred," Schreiber told AnnArbor.com.

Schreiber said he informed Temple and YHC Commissioner Deborah Strong and the YHC Board passed a resolution Monday night requesting the transfer.

The transfer would ensure funding for all YHC Section 8 recipients with no payment increases and ensure financing for the 68 project-based voucher units at Hamilton Crossing.

"The residents are not affected by this," Schreiber said. "It does not affect Hamilton Crossing, it does not affect rent. The only change is the MSHDA will be administering the program."

Monday's resolution drafted by Strong and signed by three commissioners, including YHC Board Chair Ma’ Cheryl Jones, states the YHC rejects the option given by HUD that would have drastically reduced the Housing Assistance Payment expenses and implemented other cost saving measures. In the resolution, the commission said that choice would have "put the burden" of the shortfall on families they have "faithfully tried to protect."

The YHC has authorized Temple to transfer the program to MSHDA.

Schreiber said because of the transfer, the YHC will have less revenue coming in.

"They'll have to make some adjustments and expenditure cuts in order to be solvent," Schreiber said. "I would expect Mr. Temple to be figuring that out right now."

Schreiber said he is "disappointed" the program won't be managed locally.

"I was hoping that the housing commission would be able to keep the voucher program because it would be more local knowledge of the area. I'm disappointed it won't be local but it's really HUD's decision."

City Council is holding a special 5:30 p.m. meeting today to discuss the YHC at City Hall and Schreiber said council might consider a resolution to approve a recovery plan drafted by HUD and the YHC last year. Representatives from the YHC are expected to be at the meeting.

Katrease Stafford covers Ypsilanti for AnnArbor.com. Reach her at 734-623-2548 or KatreaseStafford@annarbor.com. You can also follow her on Twitter @KatreaseS.