Section 8 Housing Choice Voucher Overview

Program Overview

The Housing Choice Voucher Program under Section 8 of the 1937 Act as amended by the Quality Housing and Work Responsibility Act (QHWRA), commonly referred to as Section 8, is the largest U.S. housing subsidy program funded by the, Department of Housing and Urban Development (HUD). The program serves approximately 1 .53 million households nationwide. For fiscal year 2001, the federal government will spend $13.9 billion for Section 8. For fiscal year 2002, approximately $15 billion will be needed to serve approximately 1.55 million households.

The Section 8 program is funded by HUD and administered by local housing agencies (LHAs). These agencies have annual contracts with HUD to operate the program. The program’s primary purpose is to provide rental assistance to low-income families for affordable decent, safe, and sanitary housing. Recipients of this assistance receive a voucher and use it to rent homes in the private market. Eligibility for the voucher is based on a family’s household income. LHAs may also establish local preferences or priorities for families receiving vouchers. For example, an LHA may give preference to a family with at least one adult who is working full-time. Seventy-five percent of new vouchers issued must be made available to families earning less than 30 percent of the area median income (AMI). The voucher covers a portion of the rent and the tenant is expected to pay the balance. The tenant’s share of rent is an affordable percentage of their income, which is generally between 30 to 40 percent of their monthly adjusted gross income for rent and utilities.

Roles and Responsibilities

HUD

Congress allocates funding and passes laws for all housing programs. HUD’s role in the Section 8 program is to allocate money to the housing agencies and to develop policy, regulations, and other guidance that interprets housing legislation.

Landlord

Landlords participating in the program operate in the same way as a landlord in the private rental market. The owner must sign a lease with the Section S recipient. The landlord agrees to provide decent, safe, and sanitary housing as confirmed by regular LHA inspections. The principle benefit to the landlord for participating in the program is that the federal government guarantees a portion of the rent.

Tenant

The tenants must provide the LHA income and family information necessary for determining their eligibility to the program and the portion of the rent they can pay The tenant must find his/her housing much like any unassisted family. A tenant must pay his/her portion of the rent, adhere to the lease and HUD’S Lease Addendum requirements, and cooperate with the LHA in its annual inspections and recertification exams. The tenant-based rental assistance programs ensure that families are not forced to spend an unreasonable portion of their monthly income on shelter. The family does not have to stop paying the rent in order to meet unavoidable or emergency expenses and can live without constant fear of eviction.

HUD’S 1999 “Picture of Subsidized Households” shows that households have been in the program for an average of six years, and recent arrivals had been on waiting lists for an average of 21 months before receiving subsidies.

Local Housing Agency (LHA)

The LHA must determine the family’s program eligibility; conduct annual reexaminations of family income and annual inspections of the unit; determine the amount of the HAP and the family portion of rent to owner; approve rental units and tenancies; make HAPs to Section 8 owners; and monitor program performance and compliance according to HUD rules and regulations.

Section 8 Agency Size

Size of LHA by Number Number of Agencies Percent of Agencies Percent of Units

of Section 8 Units Managed Nationwide Nationwide Nationwide

1-99 units 885 34.0 3.1

100-299 units 807 31.0 10.5

300-499 units 317 12.2 8.8

500-999 units 301 11.6 15.1

1000-2999 units 214 8.2 25.0

3000-4999 units 40 1.5 11.0

5000-9999 units 31 1.2 15.1

10000-29999 units 5 .2 4.4

30000 or more units 2 .1 7.0

Total 2,602 100.0 100.0

Of the LHAs throughout the United States, 1,300 of them administer the Section 8 housing program, without administering any public housing units.

Other Uses of the Section 8 Program

Because the Section 8 voucher program has been so successful in recent years, it is now used to supplement other federal and local programs to help very low-income families who need both supportive services and housing. For example, Section 8 vouchers have provided critical housing support to: 1) assist families who volunteer to strive to become economically independent from government services within a five- to seven-year period, 2) help families make the transition from welfare to work, 3) enable families currently residing in high poverty census tracts to move to housing located in low poverty census tracts, 4) help families struggling to stay together and avoid placement of children in foster homes, 5) help veterans suffering from chronic mental illness live independently, when combined with intensive case-management and other services.

Issues Affecting the Section 8 Program

Successful implementation of the Section 8 program is complicated by the many factors that affect utilization of the vouchers. The Section 8 program is a market-driven program. This portion of the brochure seeks to provide the reader with a summary of the principle issues that impact the program. Any one of these issues, or a combination of issues, can impact a recipient’s ability to use their voucher

Local Market

Both the cost and availability of units are the two principal factors that have the biggest impact on the Section 8 program. Between 199T and 1999, the number of units with rents affordable to households with incomes below 50 percent of AMI dropped by 1.1 million units, a loss of seven percent in the affordable housing stock. HUD’S “A Report On Worst Case Housing Needs iii 1999” found that 4.9 million households endure worst case housing needs, including 10.9 million people, among them 3.6 million children, 1.4 million elderly, and some 1.3 million disabled adults. Over three-fourths of renters with worst case housing needs had a severe rent burden of 50 percent or more, as their only housing problem. In addition, waiting lists for housing assistance are longer than ever before.

The national call for a new production program geared toward providing new units for those below 50 percent of median income indicates that there is a significant need for housing units for our nation’s poor. Available housing resources for those earning less than 50 percent of median income are dwindling throughout the country. When private market rental units are available, families are spending more than 50 percent of their income for rents due to the cost of the unit.

Landlord Information

Landlord participation determines the number of units that are available for voucher holders. When the economy is good, landlords often choose not to participate in the program. They can charge higher rents to unassisted households, without worry about paperwork or compliance with program regulations.

Housing Agency Management

Much has been said about the ability of housing agencies to administer the Section 8 program. According to HUD, 92 percent of current vouchers are being used in communities. To put this in perspective, if our school systems were graduating students with a grade point average equal to the utilization rate of Section 8, education reform would be unneeded. Clearly, we must find a way to more successfully use the remaining 8 percent of vouchers. Where management failures are the problem, HUD should exercise its authority to address them. The few management failures that exist do not warrant a wholesale change in the administration of the program. Housing agencies are in the best position to administer this program. They have a track record of working with landlords, know their local markets and spend a great deal of time counseling voucher holders in helping secure housing. There are many factors, outside an agency’s control, that affect its ability to assist families in finding housing.

Local zoning policies determine the type and location of housing in communities. These policies, controlled by the local government, dictate where certain types of housing can be built, whether they are multi-family or single family dwelling units. This impacts where families may look for units, the costs of those units and the availability of units as well. Family decisions also affect where vouchers are used. Proximity to family, work, church, etc., also factor into the search for housing and is not a reflection of mismanagement.

CONGRESSIONAL AND HUD ACTIONS TO IMPROVE THE PROGRAM

Fair Market Rents

Fair market rents (FMR) are estimates of rent plus the cost of utilities. They are market-wide estimates of the rent subsidy that should he provided to families to allow them to rent standard quality housing throughout the geographic area’s competitive market. In spite of the rental assistance program’s overall success, NAHRO believes there is a need to increase the FMR to the 50th percentile for all communities to help alleviate the increasing concern of underutilized vouchers. NAHRO completed a survey in 2000 that demonstrated that increasing the FMR would help families find housing. HUD recognized the increasingly difficult task of finding sufficient numbers of units at a lower percentile and authorized increases in a limited number of jurisdictions. While the increase will cost the federal government more money, the reality is that the increase will guarantee that more voucher holders will he successful in their search for housing. One criticism of the Section 8 program is that the vouchers and certificates are underutilized in some markets. Increasing the FMR provides recipients of this assistance greater housing choices to utilize the vouchers they have been given. HUD took the appropriate first step when it raised the FMR to the 50th percentile in FY 2001 fur a limited number of communities. There must be increases in resources to extend this increased FMR to all communities.

40 Percent Cap

In 1998, statutory changes limited the family’s contribution on any newly executed Section 8 contract (regardless of whether the family is new to the Section 8 program or just moving to a different Section 8 unit) to 40 percent of the family’s adjusted income. There are no exceptions to this limit. NAHRO believes participants in the program should have the flexibility to pay more than 40 percent of their income to pay for the initial rent to secure an apartment. Many NAHRO members have raised concerns that participants must turn down units because they are prevented from paying more than 40 percent of their income to secure the apartment. We agree with the concern that families should not pay an excessive amount of their income on rent, however, if a family is willing to exceed the 40 percent cap, they should have the option to do so if that is necessary to secure an apartment of their choice. If they are paying 42 to 45 percent of their income for a Section 8 unit, it is still less than they are paying in the open market. One solution is to allow housing agencies to base the 40 percent cap on gross income versus adjusted income.

Flexible Use of Housing Assistance Payment (HAP)

The HAP is the portion of assistance that is paid to the landlord. The tenant is responsible for the balance of the rent amount. Because some voucher holders are unable to find units, many housing agencies believe they should have greater flexibility in using the HAP for purposes that will assist participants in securing housing. This could include assisting with security deposits. addressing credit problems, moving expenses, etc. If housing authorities have greater flexibility in using the HAE it allows more ability to provide housing opportunities for low-income families.

Income Targeting

Another requirement borne by housing agencies that directly increases cost and affects utilization is income targeting. Housing agencies must ensure that 75 percent of all new vouchers must be reserved for those earning less than 30 percent of median income. While well-intended, there are two consequences to this provision. First, the cost of the program increases. Simply put, the poorer the family being served, the greater the assistance needed for that family. As a result, in order to serve the same number of families, housing agencies must use reserve funds to cover the costs of vouchers. Second, the national targeting requirement does not reflect local need.