HUD’s Office of the Inspector General (OIG) published HUD’s Oversight of Voucher Utilization and Reallocation in the Housing Choice Voucher Program, which reports that HUD faces challenges ensuring that the maximum number of households benefit from the Housing Choice Voucher (voucher) program. The report found that 62% of public housing agencies (PHAs) had voucher-utilization rates of less than 95% (standard performance). In addition, OIG estimates that as of November 2020, more than 62% of PHAs had “leasing potential,” and that leasing potential could increase in 2021. The analysis found that HUD has not exercised its regulatory authority to reallocate resources when PHAs underutilize vouchers.
HUD remains challenged with voucher utilization because some PHAs continue to encounter difficulties beyond their control. In addition, HUD states that it is unable to implement the reallocation regulation because of legislative changes dating back to 2003. As a result, nearly 81,000 vouchers could potentially be used to provide additional subsidized housing. Further, more than 191,000 authorized vouchers were unused and unfunded; however, HUD would need an additional appropriation of nearly $1.8 billion to fund these vouchers.
OIG recommends that the Office of Field Operations implement a plan to assist PHAs in optimizing leasing potential to maximize the number of households assisted and prevent additional vouchers from becoming unfunded. The OIG report also recommends that the Office of Public Housing and voucher programs implement a plan to prevent additional vouchers from becoming unused and unfunded.
HUD annually assesses each PHA’s voucher leasing rate and uses its budget authority to determine a PHA’s “utilization rate.” To determine the annual utilization rate, HUD analyzes each PHA’s housing assistance payment (HAP) spending as a percentage of the total year-to-date funding (including reserves) and the total unit-months leased as a percentage of unit-months available. The higher of these two numbers serves as the utilization rate.
As part of monitoring utilization, HUD assesses each PHA’s “leasing potential,” which is determined by the number of vouchers and amount of funding a PHA is projected to have available at the end of a calendar year and an estimate of how many vouchers could be leased based on a PHA’s average per-unit cost. OIG found that as of November 2020, 62% of PHAs had 80,929 vouchers with leasing potential. For PHAs with significant leasing potential (i.e., PHAs with potential to lease 75 or more vouchers, and with 2% or more vouchers available to lease with current annual funding and reserves), HUD urges them to increase the maximum amount of voucher subsidy allowed and intensify outreach to increase landlord participation.
Some voucher utilization challenges PHA have are due to difficulties that are not within their control, such as lack of landlord interest, lack of available affordable housing, and housing cost increases outpacing a PHA’s available voucher funding.
HUD claims that it is not able to exercise its regulatory authority to reallocate vouchers and associated funding from a PHA with a poor voucher leasing rate to another PHA due to changes imposed by the Omnibus Appropriations Act of 2003. Before 2003, the voucher program was funded based on the number of units under a PHA’s annual contributions contract, meaning that PHAs received funding for all units on their annual contributions contracts, regardless of whether the units were leased. The 2003 appropriations act revised the method for calculating voucher renewal funds, basing the amount a PHA would receive on the total number of unit-months under lease at the end the year. Consequently, funds authorized under an appropriations act could only be used to pay for vouchers associated with units under lease at the end of the year. If a PHA had unused vouchers, it could not receive funding for them the following budget year. Without associated funding, HUD could not reallocate the unused vouchers.
The OIG report 2021-CH-0001 is at: https://bit.ly/3AfwoDV
More information about the Housing Choice Voucher program is on page 4-1 of NLIHC’s 2021 Advocates’ Guide.