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Proposals to Force Consolidations of Local HAs

There Are Better Solutions to Further Address Voucher Program Goals

Certain organizations have proposed consolidating local housing authorities (HAs) based on the assumption that there are too many HAs administering rental voucher programs and claiming this impedes low-income households’ access to neighborhoods of opportunity. They contend that having smaller agencies operate the program increases administrative costs, and makes it more difficult for HUD to oversee the program.

Part of their argument is based on HUD’s flawed proposal for ZIP code-based rents that would increase per-voucher subsidy costs. In reality, these proposals would increase out-of-pocket costs for low-income households, displace many from their neighborhoods, serve fewer families, or substantially increase appropriations if Congress chooses to pay these higher costs.

Information regarding misplaced arguments in favor of forced consolidation of local HAs as well as better solutions to further address voucher program goals is provided below. PHADA has and will continue to discuss and present its member-driven reform proposals regarding voucher programs. To help put this topic in perspective, PHADA represents approximately 1,900 Housing Authorities of all voucher sizes including small, medium and large, in all geographies including city, county, regional and State, and in all rental housing markets including urban, suburban and rural.

PHADA Issue Briefs

  • Link to PHADA’s Issue Brief titled, “Forced Consolidations Would Damage Housing Choice Voucher Program – Theory is Untested, Unproven, and Costly”

Housing Authorities are encouraged to provide their elected U.S. Representatives and Senators with this issue brief, to demonstrate the negative impacts proposed consolidations would have on HA’s communities and the constituents they serve. If you have any questions or would like additional information on these topics, please contact Policy Analyst, Jonathan Zimmerman, at: 202-546-5445, or via email: jzimmerman@phada.org.

Related Hearings, Testimony, Reports, and Position Papers

Consolidation Proponents’ Related Research and Proposals

Hypothesis of consolidation is untested, unproven and costly. After reading consolidation and regionalization arguments as well as papers from others arguing different reasons for poverty concentration and voucher holders’ access to available and affordable rental housing, independent and qualified academic jurors concluded that they were not convinced that their proposal to regionalize local HAs will address the causes of concentrated poverty. Independent jurors went on to state that assessing the validity of these arguments will require much work before their hypotheses are translated into overly deterministic “solutions” for the complex, multifaceted problems of spatial concentration of poverty and limited access to affordable housing across metro areas.

PHADA’s Related Comment Letters, Analyses & Recommendations

  • PHADA’s Analysis of HUD’s Erratic and Inaccurate SAFMRs & FMRs
    • Consolidation advocates also favor a flawed HUD proposal for ZIP code-based rents. These Small Area Fair Market Rents (SAFMRs) represent federal micromanagement of local rent and subsidy levels run amok. HUD and the advocates’ core hypothesis is that SAFMRs, like consolidation, will expand the ability of voucher holders to access housing in high-opportunity neighborhoods. PHADA supports deconcentration and mobility in balance with all of the voucher program’s goals. However, our analysis of SAFMRs and the Fair Market Rents on which they are based show they are highly erratic and inaccurate, ultimately contradicting how local rental housing values trend historically.
    • Proponents of consolidation would drive up the costs of the HCV program. Some estimates indicate that, under HUD’s proposed SAFMR rule, 435,000 current voucher-assisted households could experience reduced payment standards and a reduction in rental assistance. In order to maintain cost neutrality under SAFMRS, many voucher participants, including the elderly, disabled, and households with children, would have to pay more or be displaced from their dwelling units or neighbor- hoods as a direct result of HUD’s proposed expansion of SAFMRs. Advocates have argued these families be held harmless and not have to pay more. However, holding these families harmless, while others move to communities of opportunity, would cost hundreds of millions of dollars more – funds that Congress simply does not have under current budget caps.
    • When HUD’s SAFMR demonstration study is published, it will provide valuable information about costs, benefits and the unintended consequences.
  • HUD’s Proposed Housing Mobility Demonstration
  • Portability
    • Under “portability” families have the right to take their voucher to any area administered by an HA. Voucher holders have a number of important portability rights to exercise under HUD’s existing regulations (PIH 2016-09).
    • HUD should make improvements its systems to facilitate its HAP payments to HAs with ported vouchers. To its credit, HUD already eliminated inter-agency billings for administrative fees attributed to ports. PHADA recommended that HUD also improve its current Information Technology and HAP payment systems in order to eliminate inter-agency billings between HAs under port-billing arrangements. In fact, PHA Industry Groups and some low-income tenant advocacy groups made similar recommendations to HUD regarding portability reform. Nevertheless, some proponents conflate issues with HUD’s portability regulations and processes which need to be further reformed, with portability problems that it improperly attributes to local HAs’ service areas. Congress established a HAP set-aside fund to help reimburse HAs with portability that has been in place for many years. A HUD HAP set-aside fund could be used to streamline the administration and reconciliation of portability HAP expenses. The scope of HUD completing the remaining IT improvements to streamline financial transactions related to portability are modest and achievable.
    • HUD Clarifies Its Portability and Mobility Rule In Response to PHADA’s Request
      Receiving HAs May Rescreen Port-In Households
  • Voluntary Consortia
    • Currently, local housing authorities can voluntarily form local consortia to administer vouchers. HUD’s proposed consortia rule should be improved and finalized based on PHADA’s recommendations. In addition, many local HAs have intergovernmental agreements to administer voucher program functions, which can be expanded voluntarily by more HAs.
  • Collaborating on Waiting Lists While Retaining Each HA’s Admission Preferences
  • Economic Self-Sufficiency
  • Fair Housing

HUD’s Proposed HCV Administrative Fee Formula

  • In many instances, HUD’s study found that small HAs should be paid substantially greater administrative fees than the existing formula provided to them for decades. HUD PD&R’s study also found that there is a not a minimum feasible size below which an HA cannot operate a well-run and efficient voucher program. Despite HUD PD&R’s study findings, HUD PIH’s notice poses questions about whether or not it should incentivize agencies of different sizes and geographies, including small HAs, to merge with other HAs through consolidation or other means in order to “expand housing opportunities.” Sadly, this an example of what appears to be HUD’s policy agenda of directly or indirectly consolidating small HAs with other agencies. This is also another example of how the Department improperly conflates one action, in this case possible additional incentives outside of its study formula fee rates, with regulatory reforms of the voucher program that are long overdue.

Enacted Legislation

Pending Legislation

Regulatory & Administrative Reforms

Other Related Research

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