Advocates weighed in during the week of November 28 on two issues under consideration in the House’s Section 8 Savings Act (SESA). The bill, two versions of which have been circulated in draft form, could be taken up by the House Financial Services Subcommittee on Insurance, Housing, and Community Opportunity as early as December 8 (see Memo, 6/24 and 10/14).
On December 1, groups participating in the Preservation Working Group, including NLIHC, sent a letter to members of the House Committee on Financial Services in opposition to recent SESA draft provisions that would significantly increase allowable minimum rents on public housing, voucher, and assisted households.
Currently, the HUD Secretary has the sole authority to set minimum monthly rents, up to $50, in properties with HUD rental assistance contracts. HUD set these rents at $25 a month. Public housing authorities can set minimum monthly rents for public housing and voucher households up to $50.
According to a recently-released HUD report on rents in 2010, 73% of PHAs set minimum rents. Only the lowest income households actually pay the minimum rent, when one is established. Incomes of higher income households are not impacted by minimum rent policies if 30% of their adjusted income, also known as the Brooke standard, is greater than the minimum rent. The HUD report estimates that 14% of public housing and voucher households without an elderly or disabled head of household are ultimately impacted by minimum rents, because 30% of their adjusted monthly income is less than $50.
The draft SESA bill would allow private owners of HUD-assisted housing and PHAs to set minimum monthly rents for tenants to the greater of $75 or 12% of FMR. The Center on Budget and Policy Priorities (CBPP) estimates that rents under this proposal could increase for 685,000 households.
“Large families are guaranteed the harshest impact from this proposal. The greater the number of bedrooms, the greater the likelihood that 12% of FMR, rather than $75, would be a household’s rent. We know that our lowest income and largest families do not have options for affordable housing in the private rental market. Allowing private owners to increase rents to the greater of $75 or 12% of FMR violates the spirit of the assistance contracts HUD has with owners, which call for affordable housing. In many markets, 12% of a two bedroom FMR is well over $200 a month, unfortunately far more than our lowest income tenants can afford,” the December 1 letter says.
Proponents of increasing minimum rent argue that the $50 minimum rent, authorized by the 1998 Quality Housing and Work Responsibility Act, was not indexed to inflation and that an increase to $75 would be close to indexing $50 in 1998 to inflation. Proponents also argue that tying rents to a percent of FMR would better reflect a unit’s value on the private rental market. NLIHC analysis found that incomes for public housing residents and voucher holders have not kept up with inflation. For voucher holders in Naperville, Warrenville and Chicago, Illinois, all in Subcommittee Chair Biggert’s district, incomes from 2000 fell short of what they would be in 2008 if they were indexed to inflation (by $1120, $2404, and $929 a year, respectively).
On November 30, national and state organizations, including NLIHC, signed onto a letter supporting more extensive project-based voucher provisions in SESA as the bill advances. In addition to the draft bills’ inclusion of language that would extend project-based voucher contracts from 15 to 20 years, a provision NLIHC supported in its June and October testimony on SESA to the Subcommittee. The November 30 letter, to Subcommittee Chair Judy Biggert (R-IL) and Ranking Member Luis Gutierrez (D-IL), asks that additional project-based voucher provisions be included in the bill.
Current law allows a PHA to put 20% of its voucher funding towards project‐based vouchers. Each PHA is authorized to spend a set amount on vouchers. The letter asks that this limitation instead be based on the PHA’s number of authorized vouchers instead of its authorized level of funding. This change would make it easier for a PHA and HUD to track, facilitating oversight of the program. Among other requests, the letter also urges the subcommittee to allow an additional 5% of authorized vouchers to serve disabled or homeless populations or to serve areas where vouchers are hard to use.
Access the December 1 letter opposing minimum rent increases: http://nlihc.org/doc/PWG_Opposing_MinRent_Ltr_12-1-11.pdf
Access the November 30 letter supporting additional project-based voucher provisions: http://nlihc.org/doc/PBV_Ltr_11-30-11.pdf
Access the HUD report on rents: http://www.huduser.org/portal/publications/affhsg/srrf_2011.html
Access the November 28 CBPP paper on the minimum rent proposal: http://www.cbpp.org/cms/index.cfm?fa=view&id=3607
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