The Voucher Crisis:
Tools for PHADA members

Each PHADA member faces the problem of communicating the current and future condition of the Housing Choice Voucher Program to the program's stakeholders. Agencies that face serious reductions in funds available to pay Housing Assistance Payments must constrain costs immediately. Even agencies that do not face difficulties paying current HAP obligations face problems with payments to landlords in the next fiscal year, and face questions stimulated by the extensive media coverage of this budget problem. Landlords may contact HAs to inquire concerning the fiscal health of the local program, or may even choose to opt out of the program in fear that the local program may face some funding distress. Participants may contact HAs as they become increasingly anxious over the stability of their housing assistance. Applicants may express concern over additional delays in offering them housing assistance. Members of governing boards face inquiries from diverse communities concerning the program's stability and future, and elected officials and appointed administrators make these inquiries of commissioners and HA directors.

At the request of the PHADA Housing Committee, the association has prepared the following bullet list of issues and answers concerning the Housing Choice Voucher Program and the funding crisis that the program faces in the current fiscal year (through December 2004) and the program's more dire position in the next fiscal year (starting in January 2005). PHADA has developed the following points with HAs' landlords as the intended audience, but these points may also be tailored to the concerns of participants, applicants, commissioners, elected officials (including members of Congress) and appointed administrators. These points may also form the core of HAs' communication with local media outlets.

It is critical to the success of a local information effort that HAs make sure that their points are applicable to the local circumstances. Although many HAs are experiencing HAP payment difficulties, all are not, and although many HAs report depleted project reserve accounts, some report healthy project reserve balances. The points that follow will be helpful to HAs only to the extent that each agency customizes its approach to a public information effort.

These points may be used for letters, newsletters or fliers, briefing papers and public presentations. PHADA suggests that HAs prepare public information to:

1. Most importantly, inform elected policy makers (state and federal legislators) of the status and prospects of the local voucher program. Help keep legislators informed of the most current status of a very complex situation. This will counter the misinformation and disinformation that HUD is distributing in its efforts to avoid responsibility for the turmoil in the voucher program.

2. Inform participating landlords of the realistic local impacts of the current funding problems. Underfunded HAP renewal amounts could affect subsidy payments and could require taking steps to reduce those payments. Underfunded administrative fee could affect the service levels to which landlords have grown accustomed. These fees pay the costs of contract rent reviews, lease reviews, inspections, rent determinations and redeterminations, among other things. These processes may take more time to complete in the future.

3. Inform participants and applicants of what they can realistically expect. Are current participants' subsidies at risk, might they need to pay increasing proportions of the rent, or might they face searching for less expensive and possibly smaller housing? How will this situation affect the waiting period for applicants? An agency's best estimate of the impacts on participants and applicants can reduce their anxiety and give them as much time as possible to prepare for possible next steps.

4. Inform local individuals and businesses with whom you partner or collaborate concerning the local voucher situation. If your HA has used voucher to support affordable housing development, the developers, mortgage lenders, program providers and others will be very concerned with immediate and longer term affects of the program's fiscal distress. Make sure these partners know the facts concerning your local operation. Are you overleased or not? If so, what steps are you taking to control the problem and what impact will that have on your program's stability? How do you manage payment standards and rent reasonableness determinations? Demonstrate that you have managed these program elements responsibly. Discuss the implications of the voucher program situation with suppliers and contractors as appropriate, and consider encouraging them to communicate concerns they may have to their business associations and to local, state and federal policymakers.

5. Inform commissioners. Members of HA boards may be receiving questions concerning the voucher program daily, and they are an authoritative resource for the community to use in answering questions or concerns. Well informed commissioners may be one most valuable resource in getting the message out concerning what may happen next with Housing Vouchers.

6. Inform local elected officials and appointed administrators proactively concerning the program's status. Assure them that the HA is doing what it can to moderate adverse impacts on landlords, participants and applicants, and to manage the voucher program responsibly. These officials will hear from landlords, participants and applicants, and they can help a great deal by having accurate timely information to distribute, including whom to contact at the HA.

7. Inform the public directly through newsletters, public briefings or presentations, and indirectly through local media outlets. Keep the general public, as well as all of the special audiences already discussed, informed of prospects for the voucher program. Other regional and national media outlets are publishing information concerning the voucher program difficulties, and local outlets will request information on impacts in the local community.

1. Nationally, voucher costs have risen substantially.
   1. Congress required us to target vouchers to the poorest households.
      1. We did.
   1. Congress asked us to make every effort to use every voucher we can.
      1. We did.
   1. Congress asked us to make housing in more middle income neighborhoods available to voucher holders.
      1. We did.
   1. Congress is surprised that costs rose nationally when participants were the poorest eligible households.
      1. We aren't.
   1. Congress is surprised that costs rose nationally when the number of vouchers in use rose by hundreds of thousands.
      1. We aren't.
   1. Congress is surprised that costs rose nationally when voucher holders could choose to live in less impoverished communities.
      1. We aren't.

2. HUD and Congress have chosen to constrain voucher costs retroactively.
   1. The federal budget was approved five months after the start of the FFY 2004.
   2. HUD announced its procedures for the new budget seven months after the start of the budget year.
   3. At the end of April, HUD announced procedures that are retroactive to January 1, 2004.
   4. The local voucher budget must now absorb cost controls that start as of January 1, 2004 over the final eight months of 2004, at best.
   5. Local programs with budget years that end earlier than December 31, 2004 have even less time to absorb funding cuts.

3. We are doing our best to avoid unnecessary hardships for landlords and for voucher holders.
   1. Everyone has worked hard to make the voucher program as effective as it is today.
   2. Each of us has an interest in protecting the program, program participants, participating landlords, and housing authorities from as much trouble as possible.
   3. We must try to constrain program costs or shrink its size thoughtfully and prudently, although the current situation works against thoughtful or prudent solutions.

What do some officials claim to be the sources of the problems?

1. Some HUD officials have blamed the problem on some authorities that are "overleased" (have more vouchers under contract than the number authorized in Annual Contributions Contracts).
   1. Approximately 2 percent of underfunded voucher sponsors, or 30 authorities, have more vouchers under contract than authorized.

2. In media reports, administration officials have claimed that some authorities have set overly generous payment standards.
   1. These payment standards are within the discretion provided by law.
   2. Higher payment standards helped to meet Congress' demand that voucher holders move to less impoverished neighborhoods.
   3. Higher payment standards helped to meet Congress' demand that all authorized vouchers be used.
      1. Utilization rates rose in 2003 to approximately 97 percent of all authorized vouchers.
      2. Utilization is now declining.

3. Some officials have blamed the problem on unreasonably high contract rents.
   1. Rent reasonableness has been assessed for new contracts.
   2. National program turnover of approximately 10 percent per year is too small to constrain costs quickly by using rent reasonableness tests on new contracts.
   3. Rent reductions based on rent reasonableness in the middle of contract or lease terms are contractually problematic.

1. Some in the administration have blamed the problem on authorities that fail to determine participant income and rent accurately.
   1. HUD found that authorities have reduced erroneous rent determinations by 35 percent last year.
   2. HUD has yet to make promised tools available to assist in discovering participant fraud in reporting income.

2. Some HUD officials blame the problem on Congress and the language in the 2004 appropriations statute.
   1. Congress is divided on whether HUD's practices are what Congress intended.
   2. HUD failed to chose alternative approaches that could reduce the damage being done to landlords, participants, applicants, authorities and communities.

What may we have to do?

1. The authority may need to reduce the number of voucher holders.
   1. We can cancel vouchers that were issued but that are not yet under lease.
   2. We can freeze program turnover. If a voucher holder leaves the program, we may not issue a new voucher to an applicant.
   3. The HAP contract permits the authority to refuse to renew contracts if we do not have adequate funding.
   4. The HAP contract allows us to terminate current contracts if we do not have adequate funding.

2. The authority may need to take steps to constrain costs quickly.
   1. We can reduce our payment standards.
      1. New standards would take immediate effect for new leases and contracts.
      2. They would only affect existing leases and contracts at the participant's second annual recertification.
      3. We might insist on executing new leases and new contracts at renewal time in order for new payment standards to take effect quickly.
   2. We can change our occupancy standards.
      1. New standards could require households to find smaller, less expensive housing (4 people may need to live in 2 bedroom housing, rather than 3 or even 4 bedroom housing).
   3. The HAP contract allows us to review the reasonableness of rents.
      1. If contract rents are no longer reasonable for neighborhoods, we may lower those rents immediately.

What can landlords do to help?

1. Contact U.S. Senators and Representatives concerning the impact of these new policies on you, your business, and your tenants.
2. Consider accepting less rent per month for your housing in which voucher holders now live.
3. Consider permitting voucher holders to move to smaller, less expensive housing.

What can anyone do to help?

1. Remain involved in professional or civic organizations, and let them know of how these national changes in policy affect you and this community.
2. Let elected state and national policymakers know how these changes are affecting you and the community.

How can we contact members of Congress?

1. Letters to Senators' and Representatives' Washington, D.C. offices must be screened by the postal service for hazards and can take many weeks to be delivered.
2. Letters to district of state offices are delivered much more easily.
3. Most Representatives will only accept emails from residents of their district, and many only accept email that is sent through a "Write your Representative" site at http://www.house.gov/writerep/.
4. Most Representatives' Washington D.C. addresses and telephone numbers are published on a directory web site at http://clerk.house.gov/members/index.html.
5. Most Representatives' district office addresses and telephone numbers are published on their individual web sites which can be found from a directory web site at http://www.house.gov/house/MemberWWW.html.
6. Most Senators' email addresses are listed and linked on the "Senators of the 108th Congress" site at http://www.senate.gov/general/contact_information/senators_cfm.cfm.
7. That site also provides links to Senators' websites where Washington D.C. and state office addresses and telephone numbers are usually published.
8. The Capital switchboard can also connect you directly to a Representative's or Senator's Washington D.C. office. The switchboard number is (202) 225-3121.

PHADA FRONT