More than $22 billion dollars in federal money is being diverted to "homeland security" and $2 billion of that amount will come from the Housing and Urban Development budget.

Locally, said Warsaw Housing Authority director Pam Kennedy, the HUD cuts mean a $75,505 reduction in rental vouchers to the agency's 175 clients.

"HUD's rules and regulations date back to the 1930's," Kennedy said to WHA's board of commissioners Monday. "The government took a look at the antiquated program and are taking steps to modernize it."

WHA provided the number of clients it served in August 2003 - 169. Funding is now based on that figure for the 2005 budget. Instead of WHA providing a budget to HUD one has been given to them showing $687,950.64 in funds beginning Nov. 1 instead of the anticipated $763,455 to serve WHA's current number of clients - 175.

HUD determines the Fair Market Rent rates for Kosciusko County. The figure includes utility expenses. WHA has typically provided up to 110 percent of that amount so rentals are affordable to low income families.

Individuals or families must pay 30 percent of their income toward rent and utilities. As their financial circumstances improve, they pay more.

Kennedy said in the past audits have been sparse. This year a Rental Integrity Monitoring audit will be done at the state level and each and every file will be examined. An up-front income verification will be conducted for each client.

Then Federal Reserve agents will arrive in January and go over every thing again.

Each applicant will have an extensive background check completed through the Indiana State Police, called a SWIKA check. The investigation includes state and out-of-state checks. No one convicted of a felony or with drug charges is allowed on HUD's Section 8 program.

Kennedy said each credit report will cost $3 each and each background check costs $27.

"HUD doesn't know where their money is going and these checks and balances make sense," Kennedy said. "In a couple of years we'll have a return. They want to know where their money is going and how it's being spent."

Board member Joel Curry suggested WHA "break even" with the HUD budget reducing rent vouchers from 110 percent rate to 102 percent, which was unanimously approved.

Kennedy said she would contact the landlords and see if they will "split the difference."

The board presented Teri Smith, a HUD Family-Self-Sufficiency program graduate, with a check for $8,039.38.

She plans to use the money as a down payment for her own house.

Smith arrived at the meeting with her son Nicholas, both dressed in taikwondo whites, because they are taking a class together.

As Smith was able to pay more of her rent over the last five years, WHA matched the difference with funds which were put into an escrow account.

She has graduated from college, got rid of all "bad" debts, is gainfully employed and plans to become a homeowner through Warsaw's "Home Of Your Own" program.

The board also:

• Reviewed financial statements regarding owner-occupied grants.

• Heard the mobile home rehabilitation program is over with the next MHR grand application due July 2004.

• Heard the closing on Gilliam Drive for the senior housing project was June 25.

Commission members are president Bob Kline, Page Himes, Pat Ellis, Joel Curry, Stephanie Hood and Steve Austin. Austin was absent. [[In-content Ad]]