- Upcoming debates on supplemental emergency rental housing assistance will feature key questions of how much should be appropriated, and how that assistance should be delivered.
- Pros and Cons of the HCV Program as a mechanism to deliver emergency rental housing assistance.
- Possible congressional action timeframes and parameters of action in 2020.
- New strategies are needed post-COVID.
- Looking ahead to the new Congress in 2021.
In his groundbreaking, Pulitzer-Prize winning book, Evicted: Poverty and Profit in the American City, Matthew Desmond posits expanding Section 8 Voucher Assistance to all extremely low-income households. That was in March of 2016. In arguing that we could afford this expansion, he cites a 2013 Bipartisan Policy Center estimate that it would cost an additional $22 billion annually. He compared this amount favorably to a multitude of other expenses and tax provisions, including the home mortgage interest deduction, that cost us all much more.
In her testimony before Congress on February 5, and in her presentation on the Urban Land Institute’s Webinar on Covid-19 and Multifamily Housing on April 7, Dr. Megan Sandel, MD, MPH, of Boston Medical Center and Children’s Health Watch clearly demonstrates the direct link between housing and health. This link has been increasingly recognized in recent years and is amplified exponentially by the COVID-19 Pandemic.
Today, considering the COVID-19 pandemic, the need for substantial investments in housing and support for tenants and landlords where tenants suddenly cannot pay is widely accepted. There are many reasons for this. The public health need to house people in sanitary conditions to stop the spread; the human need to have housing so that people can do what we all do – go to work, raise our children, participate in our communities; the economic need to make sure that all those landlords, and owners, and operations that employ as well as house people do not go away. A variety of initiatives have been and will be funded.
Two primary questions will be discussed and debated in Washington in the coming weeks and months.
- How much should be appropriated for housing assistance? The National Low-Income Housing Coalition (NLIHC) and the House Financial Service Committee (HFSC) under Chair Maxine Waters (D-CA) and member Danny Heck (D-WA) are calling for $100 Billion in Emergency Rental Housing Assistance. On April 7 Mary K. Cunningham posted on the Urban Institute Blog a proposal to make Section 8 universal to all who were eligible (very-low income households), estimating a cost of $62 billion based on pre-covid data. That same day, Oriya Cohen’s Housing Matters article discussed the many strategies we will need to employ to address housing needs. While noting that Vouchers are not a panacea, the article calls for extending Section 8 to all income-eligible households. A March 24 article in Shelterforce (https://bit.ly/2Kgz4JS) called for universal voucher eligibility or a renter’s tax credit, or other solutions. Jill Khaduri of Abt Associates reiterates the argument to make HCV an entitlement in a Shelterforce article on April 6. Neither the NLIHC nor the HFSC define HOW that assistance should be delivered, not specifying it for the Section 8 voucher program. Which leads to the second question:
- How should the assistance be delivered? In a March 25 Urban Wire article about why we need to protect renters, there is good discussion of some options, and of detailed questions that will need to be answered. Who is covered? What is the form of the program – is it delivered to tenants, or owners? What are the coverage limits? At the Congressional level, this question will go further – should the assistance be delivered to individuals via income supports rather than assistance for specific needs? In other words, if we provide cash payments, tax credits, expanded unemployment, and job protections via assistance to businesses and other organizations how much does that reduce the need for direct housing assistance payments?
Unfortunately, because this is all moving so quickly, we don’t have much data to work with. Legislators and administrators and policy makers will be wanting to see rent receipt numbers as soon as possible. The National Multifamily Housing Council is reporting that over 30 percent of renters were late on April rent, but unemployment payments have not yet started for many. May numbers for April and May rent payments may be key in gauging the need.
Some Pros and Cons of Housing Choice Vouchers for Delivering Emergency Rental Assistance
Is making the HCV Program an entitlement and expanding the program to four times its current size a viable and effective mechanism under current legal and regulatory regimes? Recent research has demonstrated the great potential of Housing Choice Vouchers to allow low income households to have choice in where they live and the impacts this can have on long term individual and family outcomes. That same research, however, also highlights the ways in which the current program fails to provide that choice and opportunity. PHADA strongly supports expansion of the Housing Choice Voucher Program, but also believes a mix of rental assistance mechanisms supporting both tenants and units is needed long term. Some pros and cons of making Section 8 Housing Choice Vouchers universally available to all who qualify:
- The program exists, infrastructure is in place, no need to invent and create a program.
- Program can improve housing choices for low-income households, improving health and economic outcomes.
- Tenants are protected from increases in rent or decreases in income because rent is set based on 30 percent of income (Brooke Rent).
- Landlords are guaranteed payment of the government’s portion of the rent.
- Rent levels are set (theoretically) based on the market.
- Historically Section 8 funding has bipartisan support.
- The cost seems high – say $75 billion annually (2020 appropriations were about $24 billion).
- Realities of housing choice vary tremendously based on location and many other factors.
- Ongoing challenge of overcoming disincentives to work, increasing income, and reporting all working family members which can be a by-product of assistance based on percentage of income; and the related intrusion of forcing families to disclose and document personal and private information about their household and their income every year.
- Lack of adequate Administrative Fee Funding inhibits effective and efficient operation of the program by local agencies.
- Many landlords will not participate in the program and will fight (both openly and surreptitiously) attempts to force them to do so.
- The rent setting process, including the determination of Reasonable Rent, Fair Market Rents and Small Area Fair Market Rents are fraught with challenges, inaccuracies and anomalies that are difficult to navigate in ensuring fair treatment, cost reasonableness, and preventing abuse.
- Even the Section 8 Housing Choice Voucher Program has struggled with funding issues for decades. In 2003 the program stopped guaranteeing funding to support all authorized vouchers (current vouchers are authorized at 2.2 million,) and instead made the authorized number a cap, and the actual number of vouchers supported now depends on funding levels and local costs (as of December 2019, HUD estimated active leasing and available budget authority can support just over 2 million vouchers. From HCV Dashboard).
When considering vouchers as an emergency response, existing protocols are time-consuming and may not be able to deliver the needed rent relief in a timely manner. As individuals, advocates, public servants, and as members of the many organizations to which we belong, we will be asked to take positions on this and many related issues.
What Lies Ahead in 2020 – (A) More Relief, and (B) Stimulus
There are likely to be at least two more phases of legislative action related to COVID-19 ahead of us, with the timing very unclear at this point. The next phase (A) will be additional emergency and relief actions to alleviate short term impacts and preserve operations through the pandemic crises. The subsequent phase (B) will be more of a “Stimulus” package to help restart the economy and possibly address some longer-term issues.
- (A) Emergency and Relief Actions. Supplemental appropriations and program adjustments to expand and improve the Small Business Administration (SBA) programs to help businesses survive appears highest on the list, but some are pushing to include more unemployment insurance, state and local government funding, and a few other niche items into that next action. Additional relief such as emergency rental assistance could follow soon after if Congress returns as scheduled on May 4th and depending upon broader developments of the pandemic and its fallout. While a big number for short term emergency rental assistance is possible, the current congress is unlikely to approve anything that will imply or suggest ongoing funding.
There will be specific and short-term limitations, and the concern about future obligations may lead the Senate and others to specifically not distribute these funds via existing Section 8 protocols. Some advocates will push hard to utilize the existing program because it is known and there are reporting and accountability protocols. Emergency Shelter Grants (ESG) are also a likely mechanism for emergency rental assistance as those rules and requirements are already designed for emergency response. Some advocates will also push to include as soon as possible provisions to support the development of more affordable housing, such as expansion of the Low-Income Housing Tax Credit Program (LIHTC). It seems likely that these supply expansion measures, which do not help with the immediate crisis, will get pushed to the later ‘Stimulus’ package.
- (B) Stimulus. This later, subsequent package will likely be actions and appropriations designed to get the economy going again and to develop more capacity to address the underlying needs that contributed to the pandemic, including development of more housing in general and more affordable housing in particular. Proposals in these areas, in addition to making the Housing Choice Voucher Program an entitlement, include at least $70 Billion to address the public housing capital needs backlog; new funding for new Section 202 and 811 projects for the elderly and disabled; expansion of the allocation and tax expenditure for the LIHTC program; repeal of the Faircloth Amendment limiting the number of public housing units permitted (and in some cases, such as Congressman Earl Blumenauer’s report, Locked Out: Reversing Federal Housing Failures and Unlocking Opportunity, supporting the development of new and additional public housing). There could also be attempts to include some of the Yes In My Backyard (YIMBY) Act provisions around local zoning to incentivize local pro-affordable-housing zoning and related policies.
All of these strategies have merit, and all have weaknesses. In distilling the benefits and risks, including potential unintended consequences, acknowledgment of the weaknesses as well as championing the strengths of the various programs is essential in order to come to an informed decision on the strategies that should be funded and how that funding will be distributed and administered.
Acknowledgment of the weaknesses as well as championing the strengths of the various programs is essential in order to come to an informed decision on the strategies that should be funded and how that funding will be distributed and administered.
In the current congress, even a Stimulus bill is unlikely to include substantial funding for all of these programs, and the debate will overlap with debates on the 2021 budget. Unfortunately, as of this writing, it is impossible to see what September and October will look like. Come January and the next Congress, these debates are likely to intensify. PHADA will continue to advocate for simplification and expansion of all of these programs, but some difficult choices face us as we attempt to prioritize our strategies. Member feedback and participation in advocacy will be needed as much or more than ever.
New Strategies for a New Market?
Matthew Desmond observed that the rental market had fundamentally changed over the last 20–40 years. Earlier, rental units tended to be owned by prosperous local citizens and neighbors renting to family, extended family, and others. That had changed, and housing had become an ‘industry’. He also pointed out that the smaller landlords in this industry, over-represented among lower-cost rentals, have limited capital resources and are more at risk when rental payments are missed.
These points are reinforced by the Harvard Joint Center for Housing Studies’ America’s Rental Housing 2020 (https://bit.ly/2ylHBZx), released early this year. The opening highlighted paragraph of the report states: “These conditions reflect fundamental market changes since the recession.” Included in the findings are that Large Multifamily Properties accounted for most of the growth in rentals in the last decade, there is a continued decline since 2001 of individual owners of rental properties, and “Investors in multi-family properties have access to record levels of capital…. As of 2018, government agencies were by far the largest source of capital.” These conditions suggest a likely acceleration of consolidation of rental housing towards more corporate and investor-driven ownership and management who have little incentive to develop, own, or operate unsubsidized affordable rentals. During the Fannie Mae IN:House conversation February 25 on Income, Equity, and Housing, Whitney Airgood-Obrycki, primary author of the 2020 Rental Housing report said “The housing market system we have built is not sustainable. A healthy market in this system is generally good for landlords and developers but does not serve most renters well.”
Even before COVID-19, it has been increasingly clear, we have hit some breaking point in the housing market, and something significant would have to change. The COVID 19 pandemic greatly accelerates those trends. Once we have addressed the immediate crisis, we will quickly need to find new ways to alleviate the longer-term, underlying housing issues.
Looking to the Next Congress and 2021
In the preface of his book, Matthew Desmond points out that the growing number of people who are not able to afford a roof over their head, “Is among the most urgent and pressing issues facing America today, and acknowledging the breadth and depth of the problem changes the way we look at poverty…. We have failed to fully appreciate how deeply housing is implicated in the creation of poverty.”
As COVID-19 forces us to acknowledge the breadth and depth of our housing problem, it may also change the way we look at housing, housing assistance and housing development. Witney Airgood-Obrycki said the market we built is broken. The rules and guidelines, structures and acceptable parameters of housing programs that have dominated for the last 10, 20, 30, 40+ years may not serve us well in a post-pandemic world. What is included in the phase (B) Stimulus package, and in the 2021 budget, will be the first steps towards rebuilding the housing market system and will have tremendous impact on what that new housing market looks like. In considering what those actions should be, we cannot be constrained by past practices and existing programs. Come the Congressional Session of 2021-2022, who knows what will be possible.