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

Chairman Sarbanes and members of the Committee, I am very honored to be asked to testify today on proposals to improve the voucher program. I appreciate the chance to join the other witnesses on this panel to discuss a subject that is very important to our nation’s housing policy.

My name is Ann O’Hara and I am the Associate Director of the Technical Assistance Collaborative (TAC), a national organization that provides information, capacity building, and technical expertise to organizations and policymakers in the areas of mental health, substance abuse, human services, and affordable housing. I have experience with the development and administration of rental assistance programs at the local, state and national levels. Prior to joining TAC, I directed Massachusetts’s rental assistance program.

I am here today on behalf of the National Low Income Housing Coalition, representing its members nationwide who share the goal of ending the affordable housing crisis. My fellow members of the Coalition include non-profit housing providers, homeless service providers, fair housing organizations, state and local housing coalitions, public housing agencies, housing researchers, private property owners and developers, state and local government agencies, faith-based organizations, residents of public and assisted housing, and other people concerned about low income housing.

As the Committee is aware, housing affordability and availability are serious problems. According to HUD, 3.8 million unassisted, extremely low income families faced worst case housing needs in 1999. These families, with incomes of less than 30% of area median income (AMI), spend more that half of their income on rent or lived in substandard housing. These families are forced to pay too much or live in poor quality housing because there are two million fewer affordable units than there are extremely low income families, while a substantial proportion of the units that are affordable to extremely low income people are occupied by families in higher income ranges. As tenant-based subsidies that provide assistance in the payment of rent for units already in the market that would otherwise be unaffordable, vouchers are vital in addressing these affordability and availability problems.

Currently, 1.5 million low income families are served by vouchers. Choice and mobility are important attributes of vouchers, as tenants can choose where to use their vouchers, and can take the vouchers with them if they move. Such mobility gives families with vouchers the opportunity to move to neighborhoods where poverty is less concentrated and where they may find improved economic and education opportunities for themselves and their children.

But if families with vouchers are finding it overly difficult to use their vouchers, then the full benefits of the voucher program are not being realized. A study recently released by HUD found that the national success rate for vouchers was 69% in 2000 for large metropolitan public housing agencies (PHAs). This means that 31% of all families issued vouchers were not able to use those vouchers. Since 1993, there has been marked decline in voucher holders’ success in large metropolitan PHAs, as the 1993 success rate was 81%. Given the length of time a family receiving a voucher may have waited on the PHA’s waiting list for that voucher, this substantial problem with success turns cruel in the life of an individual family hoping for a real housing opportunity.

If the voucher program is to make good on its promise of a mobile and flexible subsidy to help poor families pay for housing, then the success rate of those families in using the vouchers issued to them needs to increase. The National Low Income Housing Coalition believes that the policy changes in the proposed Housing Voucher Improvement Act of 2002 would allow more families to find success with their vouchers.

One way to improve voucher success is to allow PHAs with voucher success problems to use resources they already have, if available, or provide them with additional resources to aid voucher holders in their search for housing. The recent HUD study on voucher success found that PHAs can intervene in ways that increase success, such as providing one-on-one briefings to voucher holders on the search process and reaching out to prospective landlords. We are pleased that the Housing Voucher Improvement Act of 2002 proposes two useful ways to make funds available for search assistance activities.

First, the bill would allow the use of unutilized Section 8 funds to assist families in finding housing. A PHA with voucher success rates of 85% or lower or with a concentration of voucher holders in certain areas (leading to a presumption that voucher holders are having difficulty using their vouchers throughout the PHA’s jurisdiction) would be able to use funds that it does not anticipate using for rental subsidies for a variety of activities to help families secure housing. The PHA could not use more than two percent of its funds for this purpose. Alternatively, for PHAs that have utilized a high percentage of their budget authority but still have voucher success rates of 85% or less or have geographic concentration of voucher holders, the bill would establish a voucher success fund, subject to appropriations.

In the case of both initiatives, the eligible activities include housing and mobility counseling, assistance in paying a security deposit and credit check and application fees, and landlord outreach and education. The PHA would need to show progress in the overall utilization of its voucher funds, increased voucher success or decreased geographical concentration of voucher holders to continue to use or receive funds in subsequent years, until its utilization, success or deconcentration levels improve to the point that the PHA is no longer eligible. A PHA participating in either of these programs would also need to include information in the PHA’s plan about the efforts being taken to increase voucher utilization and success and how the PHA plans to use the funds available.

Another policy change that would be authorized by the Housing Voucher Improvement Act relates to the inspection of units. Units rented by voucher holders must meet the federal Housing Quality Standard, but voucher holders may lose the chance to rent units while waiting for the PHA inspection to give the green light for the unit. While it is important that federal resources are spent on housing that meets a standard of habitability, the requirements regarding the timing of that inspection can be changed to make sure that a housing opportunity is not lost to the voucher holder. The bill would allow a building owner to begin receiving payment for the unit prior to an inspection if the PHA has inspected the building and a reasonable number of units without finding major problems within the prior six months. The PHA then must inspect the unit within 30 days and the owner must have already agreed to make repairs within 30 days after the inspection.

NLIHC has also advocated for PHAs to have more flexibility in increasing the payment standard for vouchers. HUD’s 2000 study determined that 39% of voucher holders were unsuccessful in tight rental markets and that successful voucher holders needed 93 days on average to find a unit in tight markets. If rents tend to be higher in tighter markets, then PHAs would need greater flexibility to increase what they pay – the payment standard – to make vouchers work. Currently, PHAs can increase their payment standard to 110% of the HUD-determined Fair Market Rent (FMR) without HUD’s approval.

The bill would allow PHAs to increase payment standards up to 120% of FMR, subject to certain conditions. The payment standard must have been at 110% or above for the prior year, and the PHA’s voucher success rate is 80%, or a significant number of voucher holders have been given at least 90 days to search for a unit, or vouchers have been concentrated in high poverty neighborhoods. All of these conditions would indicate that voucher holders have had trouble taking advantage of their vouchers. The National Low Income Housing Coalition recommends, however, that the voucher success rate criterion for increasing the payment standard to 120% of FMR should be 85% or below (rather than 80%). This would provide consistency with the success rate of 85% that serves as the threshold for taking advantage of the Voucher Success Fund and using unutilized funds to improve voucher utilization, success and deconcentration elsewhere in the bill.

The bill would also give PHAs the authority to increase the payment standard for properties in lower poverty areas that were developed with federal resources through the Low Income Housing Tax Credit or the HOME program. It makes no sense that properties developed with federal resources with the goal of providing low income housing should be inaccessible to people holding a federal rent subsidy intended to give them mobility and choices; the bill would correct this predicament.

My own work has made me acutely aware of the additional challenges faced by people with disabilities. Accessible units tend to be located in newer properties, which are in better condition and more expensive to rent. As a result, some people with disabilities may find it more difficult than other voucher holders to successfully use their vouchers if the payment standard is insufficient. The bill would allow PHAs to set the payment standard at up to 120% of FMR without HUD approval as a reasonable accommodation to people with disabilities. This new authority would restore a policy in effect before the prior Section 8 certificate and voucher programs merged to become the Housing Choice Voucher program.

The need for improvements in the voucher program is illustrated by the experience of Matthew, a young man in his late 20s who was injured in a swimming accident and is now a quadriplegic. Matthew moved to Florida to obtain treatment from the Spinal Cord Injury Center in Miami. After obtaining a voucher from the Section 8 Mainstream program for people with disabilities, Matthew was unable to locate an accessible unit. Finally, with the help of disability advocates, Matthew obtained a list of tax credit properties from the state allocating agency and was able to find a vacant unit built in the 1980s with some – but not all – of the accessible features he needed. The owner initially refused to accept the Section 8 voucher, and once again, disability advocates were required to intervene to inform the owner of his obligations under the tax credit rules.

Matthew's problems were still not over, however. The PHA that issued the voucher initially declined to grant a rent exception, which was needed because the tax credit rent exceeded the PHA's Section 8 payment standard. Fortunately, disability advocates again intervened – this time with the PHA – and an exception rent was finally granted. Just one example shows how several provisions in the bill would have made Matthew’s search for a place to live with his voucher less onerous.

Local policy makers are required to evaluate and plan for their housing needs and involve tenants and concerned community members in the planning process. Vouchers are an important housing resource and should be part of this planning. We are pleased that the bill would require PHAs using funds to improve voucher success report on voucher issues in their PHA plans. Under the bill, communities’ consolidated plans also would need to describe the barriers to better voucher utilization and strategies for overcoming those barriers. The proximity between a community’s job opportunities and housing opportunities for people receiving welfare assistance would be included in the plan. The community’s development of its housing strategies would require consultation between welfare and housing agencies.

The recent HUD study verified that voucher holders are more successful in areas where discrimination is illegal. While a few jurisdictions around the country have prohibited landlords from discriminating against voucher holders as prospective tenants, that is the exception rather than the rule, so other tools are necessary to assist tenants in effectively using their vouchers. Owners of properties developed with funds from the Low Income Housing Tax Credit or HOME, regardless of location, are not allowed to discriminate against tenants because their source of income. But what good is this policy if voucher holders do not know where these properties are located? The bill would require the HUD Secretary to provide PHAs with an updated list of these properties in the area on an ongoing basis. The PHAs, in turn, have to provide the list to families receiving a voucher from the PHA.

While there are a variety of factors affecting voucher utilization, the end result of low voucher utilization is the same: fewer families are assisted than could be, given the resources available. In an effort to address this situation, HUD issued a notice in the Federal Register in November 2001 that it would take unutilized vouchers from areas where utilization is low and permit reallocation to other areas. Were HUD certain that low utilization only reflected a lack of need, then this policy would make sense. But in many cases, low utilization means that markets are tight, PHAs are having difficulties, and low income people need more help, not less.

Under the Housing Voucher Improvement Act, PHAs having low utilization are at risk of losing their unutilized vouchers, but reallocation would favor agencies that would serve the same geographic areas as the original PHA. If a PHA fails to utilize 90 percent of its tenant-based subsidies or budget authority during the fiscal year, the PHA would receive a notice to that effect. If, after another 16 months, the PHA has not yet achieved 95 percent utilization of vouchers or budget authority, the PHA’s unutilized vouchers can be reallocated. The HUD Secretary would reallocate the vouchers to a regional administrator, with a preference for an agency that already has the authority to serve the area that had been served by the PHA whose voucher allocation is being reduced. Should the Secretary determine that the primary cause of underutilization is a lack of eligible families in the geographic area, the Secretary can establish a process for reallocating vouchers outside the geographic area, but with priority for reallocation given to a regional administrator or public housing agency in the same state.

Given the other tools that would be provided by the legislation to improve voucher utilization and success rates, it seems reasonable to reallocate vouchers when a PHA is unable or unwilling to make improvements after receiving notice of a problem, since vouchers not utilized means families not served. The National Low Income Housing Coalition supports the balanced approach suggested by this legislation, but recommends a broader public notice when PHAs are first alerted to its inadequate utilization rate under the legislation. It would be valuable for tenant organizations and other concerned members of the community to know when their PHAs have been put on notice, so that they can try to work with the PHAs to improve utilization, rather than having the vouchers moved to a possibly unknown agency abruptly. Community members and tenant organizations may have developed relationships with officials at the local PHAs and prefer the opportunity help the existing PHAs improve utilization.

Debate about the reauthorization of the 1996 welfare law is now in full swing. The housing circumstances of current and former recipients of Temporary Assistance to Needy Families can affect those families ability to make a successful transition off welfare. Inadequate, unstable housing makes it hard to achieve stable work for parents and stable schooling for children.

The eligibility for programs that provide services to HUD tenants with the goal of improving their economic well-being could be expanded. HUD’s Family Self-Sufficiency (FSS) program provides subsidized savings and case management for public housing and voucher tenants seeking better employment opportunities, while the Resident Opportunities and Self-Sufficiency (ROSS) program is a funding competition that provides grants to PHAs, tribal authorities and tenant groups for projects that would help tenants improve their economic situation. The bill would permit voucher holders to participate in the ROSS program. Currently, the program is limited to public housing tenants.

Under FSS, tenants participate in case management with the goal of achieving better employment. As the participants’ earnings rise, PHAs take the value of the reduction in the PHAs’ portion of the tenants’ rent – which is reduced because the tenants can cover more of the rent themselves – and put it into escrow accounts for the tenants. The funds in the accounts are available after five years to participants who successfully complete the program. But all PHAs are limited by law to one full-time service coordinator for the FSS program, regardless of the size of the program; the Housing Voucher Improvement Act would allow for the more than one coordinator, if the funds were available.

Project-based Section 8 tenants, who live in privately-owned, publicly subsidized properties, cannot participate in the FSS program currently. The Housing Voucher Improvement Act would extend the reach of this program to project-based tenants. The program could be administered by the owners of the project-based property, if they choose, or interested project-based tenants whose landlords do not set up the FSS program at the building could participate in the local PHAs’ programs.

In general, assisted tenants may not experience the benefits of increased earnings or other new resources because, as long as they remain eligible for assisted housing, they pay 30% of their income in rent. But some public housing, voucher and project-based tenants are authorized to receive a disregard of increased earnings, if that family participated in a self-sufficiency program, or if an unemployed member of the household finds a job, or if the family receives or has received TANF in the prior six months. Unfortunately, there has not been sufficient funding appropriated to support the earned income disregard for voucher holders or project-based tenants, which is not an issue for this Committee but rather for the appropriators. This Committee can, however, authorize a disregard of any employment incentives a family receives from another source – such as a state, other public entity, or private entity – specifically to offset an increase in rent. The bill includes such an authorization, which also applies when the incentives are paid to a parent or spouse who has more recently joined the family in assisted housing, to avoid discouraging the reunification of a family on financial grounds. The bill provides that if a PHA or owner of assisted housing receives funds from a state or local agency to provide employment incentives to tenants, those funds should not count as revenue for the PHA or owner.

The flexibility and mobility provided by vouchers ideally allow voucher holders to live near jobs or transportation to jobs. Vouchers can provide a particularly valuable support to current or former recipients of TANF as they move from welfare to work. The Housing Voucher Improvement Act would authorize "Welfare to Work" vouchers. These vouchers would be available to PHAs through competition and would be limited to PHAs that operate FSS programs. The PHAs would issue the vouchers to families who receive TANF or had received TANF in the prior two years and who need the voucher to find a place to live closer to jobs or transportation, to keep an existing job or increase hours, or to participate in a program to overcome barriers to work.

Housing policy would not improve if new ideas were never tested. The Thrifty Production Vouchers (TPVs) that would be authorized by the Housing Voucher Improvement Act present an opportunity to learn whether we can subsidize more units with fewer resources if the right incentives are built into the program. The TPVs would provide an operating subsidy to support units for extremely low income tenants, where those units have received full capital funding. With some exceptions, the units subsidized by TPVs would constitute only one-quarter of a project’s total units. Rents for the TPV units would be based on operating costs. The mix of subsidized and unsubsidized tenants at the property would help keep overall operating costs down, and consequently, TPV rents down.

The TPV projects could have a site-based waiting list or a waiting list with the PHA. The building owner would enter into a contract of up to 15 years, with extensions required at least until the 40th year (subject to appropriations). The TPV tenants would have the same mobility as tenants in units with regular vouchers that have been project-based.

Though we have some concerns around the waiting list procedures, the National Low Income Housing Coalition supports TPVs. We also urge the extension of the TPV policy permitting an owner list – as an alternative to a list with the PHA – to properties where regular vouchers are project-based by the PHA under the project-based voucher legislation passed in 2000. This would improve the access of homeless people and people with special needs to housing opportunities, because they may find it daunting to navigate the PHA’s waiting list. Currently, lists for regular project-based vouchers are kept only by the PHA.

An issue remains about notice, regardless of whether waiting lists are kept by the owner or the PHA. Under the Housing Voucher Improvement Act, when new TPV units become available and a waiting list is established, whether there is an owner list or a PHA list, the PHA provides notice to tenants of the opening of the list similar to the opening of the waiting list for tenant-based assistance and notifies extremely low income families that are newly applying for assistance. The PHA will monitor that an owner maintaining a site-based list gives preference to families on the PHA’s tenant-based list and cooperates otherwise.

But the National Low Income Housing Coalition has some concerns that the method for managing waiting lists for TPVs may fail to alert adequately eligible people on the existing tenant-based list of a new opportunity. At the same time, a requirement to alert the entire existing list – that may, in some cases, include thousands of prospective voucher tenants – about the availability of only a few new TPV units could be a waste of resources. We hope that a compromise might be developed as the bill moves forward that would make TPV units better known and available to people on the PHA’s existing waiting list, without undue burden on the PHA.

The National Low Income Housing Coalition has had an ongoing concern about the displacement of tenants as the result of the termination of project-based housing assistance, either through the prepayment of a HUD-subsidized mortgage or an opt-out from a Section 8 contract, or both. Tenants whose buildings undergo such a conversion are entitled to "enhanced" vouchers, with a payment standard that will cover a new and higher rent at the property following the conversion, subject to a rent reasonableness evaluation by the PHA.

The point of providing enhanced vouchers is to prevent displacement, but not all property owners appreciate that tenants have the right to remain in their units following the conversion. PHAs can also cause displacement when they insist on re-screening enhanced voucher tenants for eligibility for tenant-based assistance, even though the tenants were presumably suitably eligible for assistance as project-based tenants and the opportunity for re-screening is available only because of the conversion. This re-screening should not be permitted.

In addition, enhanced voucher tenants – often elderly – may find themselves "over-housed" at the point of conversion, in a unit that was once the right size but is no longer because family members have moved away or died. If there is no appropriately sized unit in the property, an over-housed tenant must make a good faith effort to find a unit elsewhere. A tenant who cannot find a unit elsewhere may stay in the existing unit for a year and pay rent as if on an appropriately sized unit. But after a year, the tenant’s portion of the rent will increase to reflect the larger unit and the tenant may need to move from the property and will receive a voucher at the PHA’s regular payment standard, rather than an enhanced voucher. Over-housed tenants should not be forced to move until an appropriately sized unit becomes available at the property, especially as these tenants are likely to be older and more frail.

As the bill moves forward, we hope that the Committee will consider improving upon the enhanced voucher protections for assisted tenants facing a conversion action. Enhanced vouchers are meant to prevent displacement, not provide an opportunity for displacement simply because the administration of the subsidy shifts from project-based administration by the property owner and the local HUD office or contract administrator to tenant-based administration by the local PHA. The shortcomings of the notice issued by HUD late last year on its enhanced voucher policies make it clear that legislation is necessary.

The Housing Voucher Improvement Act of 2002 proposes a number of policy changes that would increase voucher success and utilization. Vouchers are an important piece in our nation’s housing puzzle. We waste resources, diminish confidence in the program and dash people’s hopes for housing stability if PHAs hand out vouchers and recipients are unable to use them. The provisions in the bill make it more likely that these hopes will be realized in the future.

Thank you again for the opportunity to discuss these issues with you today.

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