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Jenny Werwa
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jwerwa@clpha.org
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CLPHA Opposes Administration Proposal to Increase Rent Burden on Lowest-Income Residents
WASHINGTON (May 14, 2018) - The Council of Large Public Housing Authorities (CLPHA) strongly opposes the Department of Housing and Urban Development’s (HUD) recently announced proposal to increase rent burdens on low-income residents residing in public housing and assisted housing.
The core of HUD’s rent reform proposal is to shift the burden of chronic federal underfunding of assisted housing to low-income residents who can least afford it. While there are advantages to a proposal that simplifies rent calculations and reduces administrative burdens for public housing authorities (PHAs), this proposal requires that PHAs raise rents in order to benefit from common sense rent simplification. Even with the benefit of housing assistance, many public housing residents are already spending more than 30% of their income on rent. A 2017 HUD study reported that the average Housing Choice Voucher recipient had a rent burden of 37% in 2015. Nationally, we represent PHAs serving residents in the most expensive housing markets in the country, where voucher holders are especially likely to have to incur high rent burdens to gain access to higher opportunity neighborhoods of their choice.
Given existing rent burdens, this proposal raises serious concerns about the negative impact the proposed rent calculations would have on residents. Through changes to 35% of unadjusted income for families and 30% of unadjusted income for the elderly and disabled, many assisted households would see significant rent increases. For example, the Housing Authority of the City of Los Angeles (HACLA) estimates that public housing residents would see an average 36% rent increase while Housing Choice Voucher households would experience an average 23% rent increase. With an average annual household income of $21,000 for public housing residents and $16,000 for voucher holders served by HACLA, these increases represent substantial burdens that may interfere with a household’s ability to afford other necessities.
Beyond concerns regarding the fairness of further cost-burdening residents, there is some evidence to suggest that increased rents do not financially benefit PHAs and may have the opposite effect. When the New York City Housing Authority (NYCHA) implemented a HUD-mandated flat rent increase in 2014, impacted residents experienced an average rent increase of 46%. NYCHA saw their rent collection rate decrease among those impacted by the increase. NYCHA’s experience reflects the reality that increased rent payments only exacerbates affordability issues and puts more residents at risk of delinquency and eviction, resulting in more challenges for PHAs and less predictable revenue.
In addition to our concerns about the impacts of the proposed rent calculations, we note that the timing of these proposed changes are problematic for two reasons. First, some components of the proposal contradict important changes to housing assistance made through the recent federally enacted Housing Opportunity Through Modernization Act (HOTMA) in 2016 by unanimous vote of the House and Senate. HUD has yet to publish implementation regulations for some of the key provisions in the bill. For example, HOTMA increased the deduction of medical expenses for elderly and disabled families and tied the deduction to inflation, while HUD’s proposal eliminates these deductions entirely. A significant number of elderly and disabled households currently use medical deductions, many of whom have substantial medical costs. We question the elimination of this deduction particularly when it is already undergoing a very different set of changes through congressionally-mandated HOTMA.
We also question the timing of these proposed changes given the fact that in 2012, HUD commissioned a four-site demonstration from MDRC to study several rent reform elements included in the proposal, including triennial recertification, elimination of income deductions, and ignorable asset limits. One of the research questions the demonstration is explicitly testing is whether these reforms reduce work disincentives and increase family self-sufficiency among families receiving vouchers. With results expected in 2019, HUD should use insights from the study to inform design of a rent reform model that most effectively promotes self-sufficiency.
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About the Council of Large Public Housing Authorities
CLPHA, headquartered in Washington, D.C., is a non-profit organization working to preserve and improve public and affordable housing through advocacy, research, policy analysis and public education. It represents most of the nation’s largest public housing authorities.
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For Immediate Release
Wednesday, September 19, 2018
HUD’s Rental Assistance Demonstration Program is a Proven Means of Securing the Future of the Nation’s Public Housing Stock
Washington, D.C. – Today, U.S. Department of Housing and Urban Development Secretary Ben Carson and Federal Housing Commissioner Brian Montgomery joined the Housing Authority of the City of Austin, its development partners Atlantic | Pacific Communities and Madhouse Development Services, and the Austin community to celebrate the groundbreaking of HACA’s most recent redevelopment of one of its public housing properties, Goodrich Place, which also represents the 100,000th public housing unit being converted through HUD’s Rental Assistance Demonstration program.
In recognition of this important milestone, Sunia Zaterman, Executive Director of the Council of Large Public Housing Authorities and Patrick Costigan, Strategic Advisor to the RAD Collaborative, issued the following statement:
Today we are celebrating an important milestone addressing the critical need for affordable housing by enabling housing authorities to convert public housing to more stable long-term Section 8 based contracts that will serve PHAs and residents for years to come.
Through the Rental Assistance Demonstration program, agencies across the country can leverage private financing to complete capital improvements needed to preserve and improve the public housing stock, without giving up control of the asset. RAD engenders creative local partnerships, stimulates ongoing economic activity, and leads to improved housing quality for low-income seniors and families.
As we celebrate the 100,000th RAD unit, it’s clear that we have proof of concept. To give PHAs greater certainty, HUD’s program should be permanent with unlimited opportunity for conversions to agencies meeting the requirements.
Congratulations to HUD at this significant juncture, and to HACA and the residents of Goodrich Place who will soon have access to improved units in one of Austin’s highest opportunity neighborhoods.
About the Council of Large Public Housing Authorities
The Council of Large Public Housing Authorities is a national non-profit organization that works to preserve and improve public and affordable housing through advocacy, research, policy analysis and public education. CLPHA’s 70 members represent virtually every major metropolitan area in the country. Together they manage 40 percent of the nation’s public housing program; administer 26 percent of the Housing Choice Voucher program; and operate a wide array of other housing programs. Learn more at clpha.org and on Twitter @CLPHA.
About the RAD Collaborative
The Council of Large Public Housing Authorities (CLPHA)—with the support of the National Equity Fund (NEF), HAI Group, Reno & Cavanaugh, and CF Housing Group—organized the RAD Collaborative for interested Public Housing Authorities, their partners and residents using the Rental Assistance Demonstration to preserve and revitalize public housing properties. Our focus also includes extending RAD to multifamily housing at risk of being lost from the affordable inventory--including Rent Supp, RAP, Mod Rehab and Section 202 PRAC properties. Learn more at radcollaborative.org and on Twitter @SucceedwithRAD.
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Statement From Council of Large Public Housing
Authorities Executive Director Sunia Zaterman
Washington, DC – “The Council of Large Public Housing Authorities (CLPHA), representing more than 70 of the country’s largest and most innovative housing authorities, is calling on Congress to reject the Trump Administration’s FY18 budget, which proposes to slash $6.2 billion in funding to the Department of Housing and Urban Development (HUD), including $2 billion in cuts to public housing. If realized, the draconian cuts included in this budget would not only have severe and cumulative effects on public and affordable housing programs across the country, but it would also shred the safety net of other public assistance programs on which many low-income Americans rely.
“The Trump Administration’s full FY18 budget proposal, released today, Tuesday, May 23, would devastate HUD programs that are currently helping over 1.2 million households that reside in public housing, including families, seniors, persons with disabilities, and close to 800,000 children. The budget targets America’s most vulnerable citizens with drastic cuts to Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF), while also slashing disability benefits and student loan and education programs, thereby crippling essential support systems affecting many of the residents we serve in low-income housing.
“The Administration’s dramatic HUD reductions come at a time when the federal government should actually be investing in public housing as part of the nation’s infrastructure, as such investment generates economic growth, creates jobs, bolsters productivity, and generates tax revenue for localities.
“The budget proposes $628 million for the Public Housing Capital Fund compared to $1.942 billion in FY17; $3.9 billion for the Public Housing Operating Fund compared to $4.4 billion in FY17; $17.584 billion for Section 8 voucher renewals compared to $18.355 billion in FY17; and $1.55 billion for administrative fees compared to $1.65 billion in FY17.
“Everyone should be alarmed by the magnitude of these proposed cuts -- the Public Housing Capital Fund alone sustains a cut of over 67 percent. The irony of this particular cut is that it not only undermines basic health and safety improvements, it also makes it virtually impossible to leverage private investment, which HUD claims is a major policy priority.
“Another example is the proposed $771 million reduction to the Housing Choice Voucher program, which provides housing vouchers to needy families. These budget reductions, coupled with rising rents and inflation, will result in the loss of hundreds of thousands of vouchers and threaten currently-housed families with homelessness.
“CLPHA and the nation’s largest public housing authorities are asking members of Congress to reject the cuts proposed by the Trump Administration, as they will significantly harm our most vulnerable citizens and undermine our already significant public investment in this affordable housing stock.”
The Council of Large Public Housing Authorities (CLPHA), representing more than 70 of the country’s largest and most innovative housing authorities, calls on the Administration and Congress to reject the draconian proposal to slash more than $6 billion in funding to the Department of Housing and Urban Development (HUD), including $2 billion in cuts to public housing.
There are over 1.2 million households currently residing in public housing. Seniors and persons with disabilities constitute over half of all residents, and there are over 600,000 children residing in public housing. Public housing cuts will fall directly on the shoulders of residents currently residing in public housing and reduce opportunities for millions of families languishing on waiting lists across the country.
The public housing capital fund provides modernization and rehabilitation funding for the 1.2 million unit public housing portfolio. The reported cut to the capital fund of $1.3 billion represents close to a 70% reduction from last year’s funding level. These proposed cuts will dramatically accelerate the current estimated loss of 10,000 to 12,000 public housing units already lost annually due to chronic underfunding.
The public housing operating fund covers day-to-day operational and maintenance expenses not covered by resident rents. The reported cut to the operating fund of $600 million is a 13% percent reduction from last year, and approximately 72% of what is needed. This funding level will have a devastating impact on the ability to operate and maintain this housing and severely endanger the health, wellbeing, and safety of our most vulnerable children, families, and seniors reliant on housing assistance.
These cuts directly contradict the findings of the congressionally-mandated 2010 HUD study on the backlog of public housing capital repair needs estimated at $26 billion and annual accruing capital needs estimated at $3.4 billion. HUD’s budget does not come close to meeting the annual need and contributes to the growing backlog need.
The tenant based rental assistance program which provides housing vouchers to needy families will also experience a $300 million reduction according to the reports on the budget. This cut coupled with rising rents and inflation will result in the loss of hundreds of thousands of vouchers and threaten currently housed families with homelessness.
We call on the Administration and Congress to reject these draconian cuts that will harm our most vulnerable citizens and undermine our already significant public investment in this affordable housing stock.
CLPHA Executive Director Sunia Zaterman spoke to the Pew Charitable Trust's Stateline blog about the looming crisis facing public housing authorities (PHAs) if the shutdown continues. In today's article "Cities Scramble as Shutdown Leaves Families in Federal Housing Vulnerable," Zaterman warned that if the shutdown is still in effect by the end of February, many PHAs will not have enough funds to continue rental assistance payments for March and beyond.
“It’s definitely an all-hands-on-deck, high-urgency red alert for agencies that don’t have sufficient reserves for a sufficient amount of time,” Zaterman said. “And most don’t.”
Pacific Standard quoted CLPHA Executive Director Sunia Zaterman in today's article "The Government Shutdown Could Decimate America's Subsidized Housing Programs." Of the partial government shutdown's impact on the housing market, Zaterman said, "Owners in many cities will be faced with financial disruption, foreclosure, or bankruptcy if they're not able to pay their mortgage or meet the other costs of the property... This really is going to ripple through the whole housing market system."
Zaterman added that the shutdown is likely to negatively impact landlords' perceptions of the HCV program and other federally funded rental assistance programs, observing that in light of the shutdown landlords may be discouraged from participating in the HCV program because now "[funding] is something an owner would have to calculate as a risk now that was previously not seen as a risk."
CLPHA’ Executive Director Sunia Zaterman spoke to Multi-Housing News about the disastrous effect the shutdown will have on not only on Housing Choice Voucher funding and other rental assistance programs, but also affordable housing projects, if it continues beyond February. Zaterman added that if the shutdown continues into March, for smaller landlords and property owners especially “there is a huge concern about the ripple effect and concerns about bankruptcy and foreclosure.”
However, as Zaterman noted in a January 16, 2019, joint press release accompanying a national conference call about the effects of the partial government shutdown on low-income people and communities and the affordable housing programs that serve them, the shutdown is already a catastrophe for millions who rely on HUD funding. “Anxious residents and landlords fearful of missed payments, combined with other cascading impacts due to lack of staffing at HUD, including program grants not being renewed and affordable housing development deals not being approved, amount to an unmitigated disaster for millions of low-income families,” said Zaterman.
The Department of Housing and Urban Development today issued additional information about HUD’s contingency plan so that PHAs administering the HCV program may access their HUD-held Housing Assistance Payment Reserves (HHR) under certain circumstances due the lapse in appropriations.
According to the letter, HAP renewal funds and Administrative Fees are scheduled to be paid on time for February, but HUD recognizes that the funds may not cover the monthly HAP needs as a result of additional leasing or costs.
HUD will allow access to HHR funds in situations where the failure to act “would result in an imminent threat to the safety of human life or the protection of property.”
PHAs may request HAP reserves from HUD under the following circumstances:
- To protect families that are imminent risk of termination of assistance; and/or
- PHAs that were eligible to receive a payment for January 2019 and did not receive it (e.g. first time RAD payments for a project) and need reserves to ensure that the property owner(s) receive(s) a HAP payment to continue assistance and protect the residents at the property.
Read the letter for instructions to request an additional payment covered by the HHR.
For more information on the shutdown’s impact on public and affordable housing, join today’s national conference call at 4:00 pm ET for insights from CLPHA and other housing industry experts. Click here to register.
As the partial government shutdown continues and creates more uncertainty for public housing authorities, CLPHA is collecting information on the impacts and effects of the government shutdown on housing authorities and residents.
We are particularly interested in examples regarding landlord willingness to accept new vouchers from HCV participants, and PHA decisions around issuing new vouchers.
We will be sharing your feedback with our media contacts and coalition partners (please let us know if you do not want your PHA’s name identified).
Please send any information to Emily Warren at ewarren@clpha.org as soon as possible.
CHCDF National Call to Learn About the Impacts of the Government Shutdown
CLPHA, as a member of the steering committee of the Campaign for Housing and Community Development Funding, will be participating in a national conference call on January 15 at 4:00 PM ET to provide updates on the latest information and guidance on how advocates can engage lawmakers to help end the shutdown.
From The News Tribune:
In the next three years, the Tacoma Housing Authority is dedicating $10.5 million to expand its Education Project, which seeks to not only house homeless families but bolster student success in schools.
“THA seeks to have people join our housing programs and succeed, not just as tenants but also, as our mission statement contemplates, as parents, students, wage earners and builders of assets,” said THA executive director Michael Mirra. “...We want this certainly for grown-ups who are capable of working. We want this emphatically for children and young people because we do not wish them to need our housing when they grow up. This transformation requires success in schools.”
That transformation includes more than $3 million to expand a program that used to be available only at McCarver Elementary.
Tacoma Housing Authority’s Housing Assistance Program provides rent subsidies and support services like case workers stationed at schools. The goal is to stabilize the home lives of children for a better focus at school.
Read The News Tribune's article "Homeless Tacoma school kids to get help from $10M expansion of program started at McCarver," featuring the Tacoma Housing Authority.
From the St. Paul Public Housing Agency's newsletter:
On October 3, 2019, the PHA successfully closed its RAD transaction converting 3,855 units to RAD Project-Based Rental Assistance (PBRA). Under RAD PBRA, the PHA retains full ownership, and will continue to maintain and operate this deeply affordable precious asset. And because we are a debt-free conversion, we have no need to access LIHTC funds or other forms of financing that require the creation of a non-profit affiliate to hold the asset. RAD also offers the following advantages over traditional public housing funding:
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Through RAD, we are locking in for 20 years the better 2018 capital and operating funding Congress recently appropriated;
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We will receive annual inflation adjustments of 2% to 3% on that better money over the next 20 years;
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We will meet all projected capital needs for the next 20 years without the need for any debt financing. And we look forward to working within the HUD multi-family regulatory framework with the advantages it offers our converted properties.
ABC KSAT 12 published a video about the groundbreaking of the San Antonio Housing Authority's The Artisan at Ruiz development. Click here to watch the video.
From The Columbian:
Vancouver Housing Authority is moving forward with plans that will nearly double the number of affordable housing units it has in Battle Ground.
The authority’s board of commissioners on Thursday approved purchasing 4.37 acres of land in Battle Ground for a future 80-unit development at 306 S.E. Clark Ave. in an older area of town, not far from downtown.
Executive Director Roy Johnson said the opportunity to acquire the land in a “high needs area” came about after a developer couldn’t pull off a planned project. According to Clark County property records, it’s currently owned by RKC Enterprises.
Read The Columbian's article "Land purchase set to double Battle Ground’s affordable housing stock," featuring the Vancouver Housing Authority.
From the San Diego Housing Commission's press release:
Today’s grand opening of 42 apartments at Pacifica at Playa del Sol (Pacifica) celebrated the addition of new housing opportunities for families who need an affordable place to live and, for some, access to services for family members with developmental disabilities.
“At the San Diego Housing Commission, providing affordable, safe and quality homes for low- and moderate-income families is an important part of our mission. Pacifica at Playa del Sol does just that,” San Diego Housing Commission (SDHC) Vice President, Communications and Government Relations Scott Marshall said.
The one-, two- and three-bedroom apartments at Pacifica will remain affordable for 55 years for families with income up to 60 percent of the San Diego Area Median Income (AMI), currently $64,200 per year for a family of four. One of the apartments is a manager’s unit affordable for a family with income up to 65 percent of AMI, which is $69,550 per year for a family of four.