Utility deposits

Cliff Williams / The Outlook Alexander City Housing Authority executive director Donna Gabel speaks to the Alexander City City Council about how a new utility deposit requirement affects potential Section 8 tenants.

The Alexander City Housing Authority (ACHA) houses about 10% of the population of Alexander City.

Tenants in public housing have no utility deposits as utilities are covered by the housing authority but those in Section 8 currently have to follow the same regulations as other Alexander City residents. ACHA executive director Donna Gabel believes recent changes to Alexander City’s utility deposit structure could have adverse effects on potential Section 8 tenants, possibly leading to homelessness.

“With the voucher holders, they actually have a lease with another landlord, then that triangle of our agreement with the landlord and the landlord’s lease with the tenant and the tenant getting additional subsidy from us through HUD (U.S. Department of Housing and Urban Development), we have a great concern that the program is going to be negatively impacted with the high utility deposits we have.”

Recently the Alexander City Council approved changes to the utility deposit system for the city’s four utilities to help cover the growing issue of unpaid utility balances. If someone is said to be in the lowest of three credit categories and needing electric, gas, water and sewer service, the deposit now totals $600. Gabel said that is an issue for some Section 8 voucher holders.

“We had a tenant who tried to get her utilities on and her credit was bad,” Gabel said. “We understand that those who are low-income families, that it sometimes is an issue for them. Maybe it was self created, maybe it was induced, we don’t know. We don’t ask those questions. That individual ended up paying nearly $1,200 just to get into a unit. It would have been the highest rate that the city has incorporated for the deposit plus one month’s deposit to the landlord plus the first month’s rent.”

Gabel said the Section 8 vouchers can be used countywide with approved rental units and about 80% of the ACHA’s 265 housing vouchers are used in Alexander City.

Gabel told the Alexander City City Council that ACHA has a consistent waiting list to get into public housing and only about 25 of the vouchers come available each year.

“In this program, we are required by law to provide housing to at least 80% of those who make 30% or less of the median income,” Gabel said. “In our community there is not a lot of housing that is affordable, that is decent, that is safe that people can live in.”

Gabel said the Section 8 vouchers require the tenant to have utilities and without utilities the tenant cannot use the voucher to subsidize the tenant’s rent. Section 8 vouchers also cannot be used for deposits.

Gabel is afraid the new deposit system will cause lower usage of the Section 8 vouchers, lowering the funding ACHA gets from HUD.

“This will impact our ability to use the vouchers for those who need the housing the most,” Gabel said. “This creates several problems. It can create homelessness because individuals cannot find housing.”

Councilmembers were sympathetic but said the city has always been left covering the costs on many things. Some councilmembers said landlords should help out with the deposits as they benefit the most from the program with guaranteed rent.

Gabel said she has contacted several public housing authorities across the state to find possible solutions. She said Cullman did something similar to Alexander City but worked out a program for those with Section 8 vouchers. Gabel said Cullman cut the deposit for utilities in half for Section 8 voucher holders but if the utilities were ever cut off, tenants had to pay the full deposit before services were restored.

The council said it would look into the matter and councilmembers inquired about the legality of an idea such as Cullman’s since the voucher doesn’t provide for a deposit.

“How can we treat them differently?” councilmember Eric Brown said. “I’m all for helping out but we had to put this in place to keep from continuously losing money. How do we do this?”

Some Section 8 housing is not on Alexander City utilities. Councilmember Bobby Tapley asked Gabel if she has been to Alabama Power and other utilities to see of the providers would also slice by 50% deposits for tenants in Section 8 housing.

“I haven’t yet,” Gabel said. “I came to you first.”

The council said it would have to study the matter to see what it could and couldn’t do to be fair to all residents.

Cliff Williams is a staff writer for Tallapoosa Publishers.