Local Factors, Inadequate Funding and Government Policies Sometimes Impede Our Best Efforts
PHADA President Mark Gillett.
If your agency administers a Housing Choice Voucher (HCV) program, you may have received recent messages from HUD about the need to maximize the usage of Section 8 funding. Similarly, the Department has been communicating with HAs about boosting their public housing occupancy rates. PHADA agrees with the Department’s well-intentioned objectives in both programs, and housing professionals have worked diligently to improve their overall rates despite the many challenges we face in this post-pandemic period.
I wanted to use this forum to elaborate on some of these issues.
In late June correspondence to housing agencies, HUD noted that it has raised Fair Market Rents (FMRs) by about 10 percent on average, while also making it easier for HAs to raise their payment standards. HUD also noted that agencies can now use their administrative fees to help families pay their security deposits and cover other leasing-related costs, such as paying bonuses to new landlords. The Department is strongly encouraging HAs to use these tools to lift up their utilization.
Ideally, HAs would reach 100 percent utilization of their Section 8 funding each year. According to HUD data, agencies were using about 92.7 percent earlier this year. As a result of the tools HUD mentioned, and through the diligence of housing professionals, we have seen some recent success. As of this writing, for example, utilization is at roughly 96 percent for the non-Moving to Work HAs that have voucher programs.
While the goal is 100 percent, the ideal is not always achievable in many communities because of certain factors and realities. In many locales, there simply is not enough supply of affordable housing that meets voucher program eligibility. Many HAs also rightly worry about exhausting their funds at a time when Congress is debating large cuts in federal spending starting in the new fiscal year that begins in less than 90 days.
In addition, many owners have exited the HCV program, expressing frustration with federal regulations and funding delays caused by government shutdowns and continuing resolutions that cause uncertainty. Most notably, the Department’s own data points out that HUD has lost more than 5,000 owners in the voucher program each year over the last ten years. The Department’s policy extending the covid era 30-day notice of evictions related to non-payment of rent will further exacerbate the utilization problem with more owners leaving the program because of that rule.
Increases in FMRs have no doubt helped some HAs house more people but many agencies have noted that inflation is still outpacing skyrocketing rents. This is borne out by the fact that it will cost the federal government about $1.5 billion more in funding this year just to renew all existing vouchers.
HUD and the industry have worked collaboratively with Congress to raise administrative fee appropriations so that HAs can enhance their utilization. As of now, the admin fee proration is better but still not fully funded, standing at 97 percent in the current quarter. Because of this and prior shortfalls, many HAs still do not have sufficient staff and resources to help raise utilization despite their best efforts.
Also, as much as they might like to, is not feasible for HAs to use their inadequate admin fees for security deposits and landlord bonuses as the Department suggests.
Public Housing Occupancy
The Department has set a goal of 95.5 percent occupancy for the year. As of now, we are almost there with non-MTW agencies at 94.79 percent. Again, given all the post-pandemic issues HAs have had to deal with, we think this latest data is positive.
The HUD Inspector General recently testified before the House of Representatives that a lack of adequate funding has resulted in a large backlog of unmet needs and a considerable loss of units. Please see the related article on that topic in this edition.
There is no question that inadequate funding can drive down occupancy. In addition, many HAs have been having a tough time in this job market of finding or retaining staff, especially maintenance staff. This, too, impacts the ability of HA to turn over units and make them available.
Other HAs in some parts of the U.S. find they receive few construction bids or, because of spiraling inflation, the bids they do receive far out-cost their ability to pay. Indeed, this is one of the major reasons PHADA has pushed so hard to get more waivers for HAs under the Build America, Buy America (BABA) requirements. We are seriously concerned BABA will drive-up capital fund costs and cause delays because of the unavailability of American-made projects.
Inadequate funding also drives down occupancy. Many HAs are facing shortfalls because of insufficient appropriations and high tenant account receivables (TARs) that deplete our reserves and hurt our staffing and performance. See PHADA’s related TARs letter to Congress here.
Like HUD, PHADA encourages HAs to do all they can to boost their HCV utilization and their public housing occupancy rates. The current trends and data are positive and HAs deserve credit for them.
At the same time, we will continue to remind the Department and Congress of the aforementioned factors that affect our ability to maximize resources. In addition, they should recognize that some of the government’s own policies and procedures (the 30-day notice and periodic government shutdowns) give pause to owners and can drive down overall occupancy in the two programs. PHADA encourages Washington policymakers to be mindful of this too.