On September 18, Representative Randy Neugebauer (R-TX) introduced H.R. 5632 “to reform and update the flat rent structure for public housing.” The bill would require all public housing agencies (PHAs) to have minimum rents of no less than $50 per month for public housing residents and voucher holders, and require the HUD Secretary to set minimum rents for project-based Section 8 households at no less than $50. In neither case does the bill establish an upper limit on the amount of rent that a resident can be charged, thus making obsolete the current law that federally assisted residents pay no more than 30% of household income for rent. The bill makes no provisions for hardship exemptions, which although inadequate, are allowed under current law.
Under current law, PHAs can choose to set monthly minimum rents of up to $50 per month for public housing and voucher households. According to a HUD study, 73% of PHAs have $50 minimum rents, 11% have no minimum rent, and the remainder have minimum rents between $0 and $50 per month.
In the project-based Section 8 program, the HUD Secretary has the discretion to set monthly minimum rents of up to $50 per month. However, HUD has long set minimum project-based Section 8 rents at $25 a month.
H.R. 5632 would also allow HUD, at the request of a PHA, to decrease flat rents. The U.S. Housing Act requires public housing residents to choose annually between paying an “income-based rent” or a “flat rent,” one not based on household. The purpose of the flat rent option is to discourage higher-income tenants from moving out of public housing as their income increases.
Congress changed the flat rent option standard to be at least 80% of the Fair Market Rent (FMR) in the FY14 HUD appropriations bill, and HUD directed PHAs to implement the change this summer (see Memo 5/23). The FY14 change is expected to generate $40 million in savings in FY14 alone. Some PHAs have sought to overturn the change, saying that having a flat rent option at 80% of the FMR dissuades the highest income households from staying in public housing, and that if these higher income households move out and are replaced by extremely low income households, PHA rental income will decrease. Mr. Neugebauer’s bill would allow HUD, at a PHA’s request, to set a flat rent less than the 80% of the FMR standard, which could assist higher income residents of public housing in rural portions of metropolitan areas where rural market rates are substantially lower than the area wide FMR.
The bill was referred to the House Committee on Financial Services. Mr. Neugebauer is the Chair of the Subcommittee on Housing and Insurance of the House Financial Services Committee.
NLIHC strongly opposes the bill.
Click here to see H.R. 5632
The HUD minimum rent and hardship study is at http://www.huduser.org/publications/pdf/Rent%20Study_Final%20Report_05-26-10.pdf