An employee in the city's low-income rental assistance program is facing criminal allegations that he lived illegally in a state affordable housing project.

Jerome Wallace, 78, is a community services specialist in the city's Section 8 housing assistance program, where he helps local residents transition out of low-income housing.

But for nearly eight years, Wallace lived in a state public housing project near Chinatown where he paid below-market rents because he listed himself as unemployed.

Last month, an O'ahu grand jury indicted Wallace on first-degree theft charges, saying he defrauded the state's public housing program of more than $20,000 between December 1999 and 2007.

Wallace pleaded not guilty and referred questions to his attorney, David Hayakawa, who would not comment.

"I'm not allowed to speak to anyone," Wallace said.

A city employee since 1998, Wallace works in the city Department of Community Services' Family Self Sufficiency Program. He's been with the program since 2002.

According to the city's Web site, the Family Self Sufficiency Program's mission is to help Section 8 residents "transition from government subsidies to a status of being economically independent, self-reliant and free of government subsidies."

The Section 8 program provides rental vouchers to low-income households, which they can use to choose privately owned rental housing.

City spokesman Bill Brennan said city officials were not aware of Wallace's indictment on theft charges.

Brennan didn't release Wallace's actual pay but said it is in a range of $3,511 to $5,202 a month.

Affordable housing advocates said Wallace's unit could be better used by people who need it.

"People wait years to get into these kinds of programs," said Drew Astolfi, executive director of Faith Action for Community Equity, a local faith-based community organization that represents low-income residents.

"That could have been the difference between homelessness and housing for a family."

Wallace's arrest records show he lives at 1220 'A'ala St., the address of the 151-unit Kalanihuia apartments. The high-rise project for seniors is operated by the Hawaii Public Housing Authority.

State officials say there are about 9,000 people on the waiting list to get into state low-income housing projects.