Rental Assistance and Public Housing
HUD provides rental assistance to over 4 millions families through two key programs:
- Section 8 rental assistance, also known as housing vouchers, covers the gap between the rent that low-income families can afford and the local rent in the private market. There are two types of vouchers: tenant-based Housing Choice Vouchers (roughly 2.1 million) that can be used in any eligible apartment of the family’s choosing, and project-based Section 8 (approximately 1.2 million) that are tied to specific developments.
- HUD’s public housing program provides homes to roughly 1.1 million low-income families in properties owned and managed by HUD.
The last major rental assistance legislation was the Quality Housing and Work Responsibility Act of 1998. Since then, the low-income housing landscape has changed considerably. Affordable housing needs have grown dramatically, with over 11 million low-income renter households nationwide now paying more than half of their income in rent. Only one in four renters eligible for rental assistance actually receives it, creating a vast gap between the number of renters in need of affordable housing and the amount of affordable housing and housing assistance available.
Meanwhile, many of HUD’s housing assistance programs have experienced budget cuts in recent years. The public housing agencies (PHAs) that administer these programs are increasingly required to do more with less, but are limited in the changes they can make to cut program costs or bring in outside funds. As HUD’s resources have dwindled, the Low-Income Housing Tax Credit (Housing Credit) and the private dollars that it leverages have become increasingly critical in the development and preservation of affordable housing. While the Housing Credit can be combined with some HUD programs, existing program rules prevent PHAs from fully utilizing the Housing Credit.
Faced with these challenges, consensus has emerged among PHAs and affordable housing advocates around numerous changes to rental assistance programs that would streamline operations, modernize them considerably, and allow them to work better together and to leverage outside funds. While some of these changes have been enacted piecemeal through appropriations legislation, many are awaiting congressional action.
Legislative Priorities and Current Policy State
The Rental Assistance Demonstration
HUD’s Rental Assistance Demonstration (RAD) is a relatively new and critically important initiative that provides increased flexibility to preserve public housing. Funding for public housing capital repairs has experienced a dramatic decline, with a 25 percent reduction just in the past 5 years. As a result, HUD is unable to make the repairs needed to preserve its again public housing stock, and has lost 10,000 – 15,000 public housing apartments have each year to obsolescence or decay. RAD allows PHAs to convert public housing to project-based assistance, which is more stable and flexible, so that they can leverage outside sources of funds (like the Housing Credit) to make needed repairs. Initially authorized in 2011 for up to 60,000 public housing apartments, it has since been expanded to allow 185,000 apartments to convert. However, applications have now been submitted for more than 185,000 apartments, with many more likely over the coming years. The RAD cap will once again need to be lifted or eliminated entirely in order to preserve all of these at-risk apartments.
The Housing Opportunity Through Modernization Act
In 2015, Housing and Insurance Subcommittee Chairman Blaine Luetkemeyer (R-Mo.) introduced bipartisan rental assistance reform legislation, the Housing Opportunity Through Modernization Act of 2015 (H.R. 3700), which includes many reforms that would significantly ease the administrative burden on PHAs and property owners, deliver fairer and more efficient assistance to low-income households and provide flexibility to leverage private capital for affordable housing development and preservation.
For example, project-based Section 8 provides long-term, stable funding that serves as an important financing source in many developments. But there are limits on how and where project-based funding can be used, which would be made more flexible – and better positioned to leverage other sources of funding – through the Housing Opportunity Through Modernization Act. These reforms include:
- Extending the length of project-based contracts to provide a longer stream of stable funding
- Increasing the share of apartments in a development that can use project-based assistance to make many developments more financially feasible
- Allowing agencies to project-base a larger share of their overall Section 8 funds to support more high-priority developments
- Facilitating project-basing in more difficult-to-develop areas, like rural, suburban and low-poverty areas
The legislation passed the House with unanimous bipartisan support in February 2016, and is now awaiting action by the Senate. Enterprise and many of our partners have called on the Senate to pass this bill in its current form without delay.
Point of contact: Emily Cadik, Director, Public Policy