Hearing on "Proposals to Improve the Housing Voucher Program."

Good afternoon, my name is Ophelia Basgal. I am the executive director of the housing authorities of the County of Alameda and the City of Dublin in California. I am testifying on behalf of the National Association of Housing and Redevelopment Officials (NAHRO). NAHRO is the nation’s oldest and largest organization that represents the interests of housing and community development agencies seeking adequate and affordable housing and strong communities. Today we are focused on our local housing agency (LHAs) members that administer approximately 93 percent of the nation’s Section 8 tenant-based housing choice vouchers.

I would like to express my gratitude to Chairman Paul Sarbanes, Ranking Minority Member Phil Gramm, and the other distinguished members of the Senate Committee on Banking, Housing and Urban Affairs for inviting me to testify today, on proposals to improve the Section 8 Housing Choice Voucher Program.

The Housing Choice Voucher Program provides housing assistance to over 1.7 million low-income families in privately owned rental units. Over the last 27 years, the program has been an effective in providing decent quality units at affordable rents to very low-income families in communities across the country. The "mobility" aspect of Section 8 assistance (the Section 8 voucher travels with the family as opposed to being tied to a unit) has given low-income families the opportunity to gain access to better jobs, better schools and safer neighborhoods.

Although the program has been quite successful overall, there are areas of concern. Full utilization of funding and appropriated units is one concern that has moved to the forefront. Currently the average program budget utilization rate stands at a 94 percent and we understand this Committee's concern in finding ways to increase that rate. NAHRO believes that the utilization rate and program effectiveness can be increased through some small and large changes. These changes would all be aimed at serving the maximum number of families possible, providing broad housing choices to low-income families and yielding more economic development opportunities for the participating families.

NAHRO would like to comment specifically on the proposals that are outlined in the Housing Choice Voucher Improvement Act of 2002.

Thrifty Production Vouchers (TPV)

Supports

NAHRO supports the creation of additional affordable housing production tools that encourage local involvement and decision making, which the Thrifty Production Voucher (TPV) proposal would do. While we have yet to see the financial models of the unit operating cost formulas and, therefore, are unable to assess the specific market conditions affecting the program's feasibility, the proposal makes conceptual sense. NAHRO would support a limited demonstration of the TPV proposal, so long as it is voluntary, is carried out with additional funding, and does not divert funds from HUD's existing assisted housing programs.

NAHRO also supports the proposed program's recognition of the importance of decision-making at the local level. Community revitalization, for example, may be a desirable goal in some low-income communities. The opportunity to use of the TPV funds in qualified census tracts based upon these local determinations of need is a positive option.

Recommendations

1. NAHRO recommends further review of the tenant-selection process for TPV local housing agencies' owner waiting lists. Presumably, the wait list process would comply with the Project-Based Assistance (PBA) guidelines regarding a separate waiting list for the TPV projects. The initial PBA guidance requires full notification of every applicant on an LHA's existing waiting list, which could number in the thousands. TPV projects are likely to have a small number of units. Notification of the full wait list would be administratively inefficient and costly for LHAs. It would be more logical to notify a smaller number of applicants, reflecting the size of the project. If the project has twenty units, for example, perhaps notification of forty or sixty applicants would be sufficient.
   
   
2. The bill proposes that families who are denied a unit by an owner be entitled to an informal review by the LHA. This could potentially create confusion for both the owner and tenant as to who controls tenant selection, which is a critical property management task. Tenant selection decisions should properly remain under the purview of the owner. The owner should have clearly defined tenant selection criteria, perhaps approved in advance by the LHA. If the tenant believes criteria have been improperly applied, there are other remedies that can be pursued. If the LHA finds a pattern of noncompliance by an owner, it should have the authority to deny the owner participation in the TPV program.
   
   
3. The bill requires that the LHA have an agreement with the agency that will administer the funds for the construction or rehabilitation of the TPV housing that will allow the prospective developer to submit a single application. While the language is intended to ease the application burden for a prospective developer, it is written in a way that could preclude a developer from using a private lender. It is unlikely that that a private lender will want to enter an agreement with the LHA and conform its underwriting application to TPV proposal requirements and vice versa.
   

Housing Search Assistance and Voucher Success Fund

Supports

Under the current fee structure, LHAs receive no payment for any administrative time devoted to voucher applicants that cannot find housing. While the administrative fee anticipates some of the cost of housing search assistance, a difficult rental market can require the extensive type of counseling and assistance that is necessary to assist extremely low-income families effectively locate and secure private rental housing. This is especially true in low-poverty neighborhoods.

This type of assistance simply cannot be supported with the current fee structure. In the past, voucher administrators were provided special fees to offset initial lease-up costs. Those fees have been eliminated, forcing some LHAs to scale back their outreach and counseling efforts. NAHRO supports the bill's proposal to allow use of unutilized housing assistance funds to assist families in their housing searches.

Recommendations

1. The LHA eligibility criteria, which states that the agency "serves an area in which a large share of the voucher holders live in a small percentage of census tracts," should be further defined to match specificity given to the success rate criteria, i.e. 85 percent.
   
   
2. LHAs who used administrative fees in the previous year to support housing-related activities should not be penalized in the determination of funding eligibility. Rather, the bill should make clear that the funds must be used for a maintenance effort and additional services and activities.
   
   
3. NAHRO also recommends authorization for use of a small percentage of Annual Contribution Contract project reserves for housing search assistance for LHAs that have the following a characteristics:
   • a success rate in excess of 85%
   • a unit utilization rate of less than 95% and
   • a budget authority utilization rate at or in excess of 100%.

Expanding Housing Opportunities

Supports

NAHRO supports the bill's proposal to allow LHAs the discretion to raise their voucher payment standards to 120 percent, without HUD approval, so long as they have been at the 110 percent payment standard for six months and provide an initial housing search period of at least 90 days or as a reasonable accommodation for a person with disabilities.

Recommendations

1. NAHRO recommends that the success rate eligibility criteria be reduced from 85 percent to 75 percent in order to maintain consistency with HUD's current standards for "success rate" payment standards, which currently requires a HUD waiver.

Consolidated Planning

Supports

NAHRO supports the proposed requirement to consult and the comments of agencies or boards administering programs under Title IV of the Social Security Act and the Workforce Investment Act. NAHRO presumes that this is a plan requirement only and not a project-by-project requirement.

Recommendations

1. The draft bill would require community development agencies to specifically address voucher utilization in the consolidated plan. This would be redundant with a number of current consolidated planning requirements, including consultation with local housing authorities and the housing market analysis , which requires an assessment of the rental housing market and how that market will influence the use of funds made available for rental assistance. Further, it would mandate that community development departments assess a program over which they have no jurisdiction or control.
   
   
2. The draft bill's section on consultation with social service agencies is also redundant with current consultation requirement , as well as the requirement that agencies specifically look at the housing needs of "families who are participating in an organized program to achieve economic independence and self-sufficiency." This section basically repeats the citizen participation requirement that instructs that all public comments be provided along with the agency's response

Access to Home and LIHTC Developments

Supports

NAHRO supports the bill's language. LHAs will be able to access information on these rental units and use it in their housing search assistance programs. Currently there is no easy place to find this information and housing choice voucher holders miss opportunities to rent in these developments.

Reallocation of Chronically Underutilized Vouchers

Supports

NAHRO supports the reallocation of chronically underutilized vouchers. Long-term underutilization of appropriated units and funding because of market conditions or unsatisfactory program management hurts the communities and families that should be assisted. NAHRO agrees that the reallocation of unused budget authority should occur first within the same Metropolitan Statistical Area (MSA) from which funds were de-reserved and then within the State of the agency whose voucher allocation has been reduced.

Recommendations

Before making recommendations on the proposals it would be useful to consider why LHAs have specified jurisdictions and how regionalizing the administration of the reallocated units will possibly impact the Section 8 program. Almost all the state-enabling public housing authority legislation was created before there were any rental assistance programs. The initial focus was on construction and operation of actual units, which were place-based. Consequently the LHA's area of operation was usually defined as the boundaries of the jurisdiction that established it.

HUD has historically assumed that jurisdictional limitations apply to Section 8 program administration as well. To start a Section 8 program in a community, an LHA must establish, to HUD's satisfaction, its operational area based on the state-enabling legislation and a legal opinion as to that fact. The very existence of portability in the Section 8 program further underscores HUD's acceptance of jurisdictional limits. It should also be noted that elected officials of the jurisdiction that created the agency often appoint boards governing LHAs. In some cases the elected officials themselves serve as the governing body.

For metropolitan areas, this bill proposes that a regional administrator will be appointed for the entire MSA where vouchers will be reallocated. In non-metropolitan areas, a State agency or public housing agency or other entity that serves a "large" non-metropolitan areas will be appointed to serve the same area where the vouchers will be reallocated. While the Quality Housing and Work Responsibility Act of 1998 (QHWRA) certainly gives HUD the authority to preempt local administration in instances of non-performance and appoint a new administrator, the question certainly arises whether this is the best way to handle the problem of chronically underutilized vouchers. In addition, the legislative proposal before us preempts the local administration only for the reallocated vouchers. The original LHA with the underutilized vouchers will continue to be the prime administrator of the units in that jurisdiction.

Imagine the confusion among landlords and tenants who could be dealing with two different administrators providing Section 8 assistance in the same building. These two administrators could easily have established different voucher payment standards, arrive at different "reasonable rents," use different utility allowances, etc. This kind of variance cannot possibly help the families or encourage landlord participation.

Furthermore, if a citizen wants to complain about a Section 8 problem unit that is administered by the regional administrator, instead of going to the board that is appointed or elected by residents of his/her jurisdiction, he/she would go to a board appointed or elected in another community. That situation would hardly seem to engender community support for the program. It should also be noted that past surveys of Section 8 owners show that they tend to be small local landlords who reside in the community where they own units. These owners may prefer working with a local agency that understands the local rental market and is also locally accountable for its decisions, rather than a regional entity that is removed from the community.

Therefore, NAHRO recommends a focus on solutions to chronic underutilization, while giving due consideration to the administrative complexities and community support issues that are involved.

Recommendations

1. LHAs should be allowed to first, arrive at voluntary reallocation arrangements with other LHAs or alternate administrators in surrounding jurisdictions within the MSA. A minimum level of performance standards should be required for any alternate administrators. It is expected that a preference for applicants on the original LHA's waiting list the reallocated vouchers will be a product of such a voluntary agreement. In addition, the governing bodies of the two jurisdictions can reach agreement on administrative arrangements that will insure that the vouchers are used in a way that is mutually acceptable to both communities.
   
   
2. If the LHA is unable to reach a voluntary arrangement with another LHA or alternate administrator, then HUD should appoint an administrator for those particular vouchers only. They can be used in the alternate LHA's jurisdiction and the original LHA's jurisdiction unless the families choose to exercise portability under the existing portability regulations.
   
   
3. The proposed legislation requires appointment of a regional administrator for vouchers for an entire MSA. This means that the regional administrator would operate not only in the jurisdiction of the LHA with the reallocated vouchers but could also operate in the jurisdiction of any LHA in the MSA regardless of their performance. In short this proposal would preempt jurisdictional boundaries of LHAs that have no performance problems. If this is permitted, which it should not be, it would require extensive coordination among all the LHAs to address the types of operational differences mentioned briefly above.
   
   
4. In addition, the proposal requires that the designated regional administrator receive all the vouchers in the region. For MSAs that cover large geographic areas, it is quite possible that no single entity will want to administer all the reallocated vouchers. Given the potential geographic distances, the coordination that will be required and the additional administrative requirements, e.g. preferences for families in the original jurisdiction, etc., it may not be administratively cost-effective. Therefore, LHAs interested in applying for the reallocated vouchers should be allowed to apply for as few or as many reallocated vouchers as they are interested in administering. In addition, QHWRA allows for consortia of LHAs and they should also be allowed to apply for the reallocated vouchers.
   
   
5. As to the selection criteria proposed for administrators of reallocated vouchers, the criteria should follow those used in the "fair share" NOFA process without the need determination since this was already addressed in the original allocation to the MSA. There is nothing special about these reallocated vouchers that requires a different selection criteria.
   
   
6. Finally, any reallocation system should provide some mechanism to "return" the vouchers to the original community if and when they are able to demonstrate the market conditions or administrative capability that will result in full utilization.

Self-Sufficiency

Supports

NAHRO supports expanding authorization of existing self-sufficiency housing programs to other forms of assisted housing, including privately owned project-based assisted families. NAHRO also supports the proposal to allow use of Resident Opportunities and Self-Sufficiency (ROSS) funds to serve Section 8 families and disregards of payments made for purpose of offsetting increases in rents resulting from increases in family earned income.

Recommendations

1. More than twice as many families with children live in Section 8-assisted housing than public housing. NAHRO recommends that the ROSS appropriation be increased so that services to public housing families are not reduced because of services provided to Section 8 families.
   
   
2. NAHRO also recommends that funds for the authorized income disregards for Section 8 participants be appropriated.

Section 8 Inspections

Supports

NAHRO supports all the proposed improvements to the Section 8 inspection requirements

Recommendations

1. NAHRO recommends discontinuing the 100 percent rent abatement requirement in cases where a HQS violation exists that does not effect the entire unit. NAHRO believes that LHAs should have the discretion to abate partial payment since the unit is livable aside from the HQS deficiency. This is a simple measure that could help agencies encourage landlord retention by eliminating inflexible bureaucratic requirements that do not end up achieving the intended objective.

Home | Menu | Links | Info | Chairman's Page