WASHINGTON, DC—U.S. Rep. Elton Gallegly (R-Ventura & Santa Barbara Counties) introduced a bill today to close a loophole in current law that allows some Section 8 housing recipients to receive lower rent as a reward for committing welfare fraud.

“People who defraud the government should not be rewarded for their crimes,” Gallegly said. “My bill will ensure an equal penalty for Section 8 recipients who commit fraud or do not comply with the requirements of their benefits.

“It’s a matter of fairness. If you lived in Section 8 housing and your neighbor was convicted of welfare fraud, yet their share of the monthly rent was reduced, what kind of message does that send to the honest tenant who is still required to pay a greater share of their monthly rent? This is not right, we must correct this situation.”

Section 8 housing subsidies are based on a family’s net income. The lower the income, the higher the subsidy and the lower the rent for the family. If a person commits welfare fraud or refuses to participate in a self sufficiency program, they are ordered to repay the government, thereby lowering their monthly net income.

A 1999 law prohibits public housing authorities from lowering the rent for those who commit welfare fraud or who refuse to participate in a self sufficiency program. However, privately owned Section 8 units were left out of the provision. As a result, privately owned Section 8 housing companies are required—by law—to reduce the household’s share of rent during their repayment period.

“Section 8 housing is designed for those who need help to get their feet back on the ground,” said Doug Tapking, executive director of the Ventura County Area Housing Authority. “Those who violate the rules or who commit fraud should be penalized equally regardless of whether the housing subsidy is administered by a governmental or private agency.”

Gallegly’s bill, the Removing Reward for Section 8 Housing Fraud Act of 2009, would put privately owned Section 8 housing units on equal footing with public housing authorities by closing the loophole.

It would amend current statute so that privately owned Section 8 properties must not lower the share of their rent for any household whose (1) welfare benefits are reduced because the welfare agency has determined and verified that a family has committed welfare fraud; and (2) the family’s welfare benefits are reduced because the welfare agency has determined and verified in writing that an enforced sanction is a result of noncompliance with a requirement to participate in an economic self sufficiency program.