HOUSING POLICY

WASHINGTON UPDATE

Dodd Introduces Sec. 8 Voucher Reform Bill

AFFORDABLE HOUSING FINANCE • May 2008

BY BARRY G. JACOBS

Senate Banking Committee Chairman Christopher Dodd (D-Conn.) has introduced a Sec. 8 voucher reform bill (S. 2684), improving the chances for enactment of voucher legislation before the 110th Congress adjourns.

The House passed a voucher reform measure (H.R. 1851) last year.

Dodd said his legislation "will help attract additional private landlords, reduce administrative burdens, and help more families achieve self-sufficiency."

The bill includes provisions to revise the funding allocation formula, inspection requirements, rent and income calculations, and terms for enhanced vouchers. It would also authorize projectbased preservation vouchers as an alternative to enhanced vouchers. In addition, it would authorize funding for 20,000 incremental vouchers annually from fiscal 2009 through 2013.

Under the bill, public housing authorities' (PHAs) allocation of voucher renewal funds would be based on leasing and cost data from the prior calendar year, with certain adjustments. The bill would allow limited overleasing, up to 103 percent of a PHA's authorized voucher level. To enable PHAs to cope with market or program income fluctuations, the bill would allow them to retain reserves equal to 12.5 percent of their annual allocation at the end of 2008, 7.5 percent at the end of 2009, and 5 percent at the end of subsequent years.

After initial inspections, the bill calls for reinspection of voucher units every two years, rather than annually. If a unit fails an inspection and the violation isn't corrected within 30 days, the PHA would have to abate assistance for up to 120 days, and it could use the abated assistance to repair life-threatening conditions. If a unit isn't repaired by the end of the abatement period, the Sec. 8 contract would be terminated.

Income calculations would be simplified, and families on fixed incomes would only have to be recertified every three years. The targeting requirement for extremely low income families would be modified so that the income threshold for these families would be the higher of the national poverty level or 30 percent of the area median income. The bill would generally prohibit assistance to families who have more than $100,000 in net assets or ownership of a residence suitable for occupancy.

To facilitate the use of project-based vouchers in low-income housing tax credit developments, the maximum voucher contract term would be increased from 10 to 15 years. In addition, project-based voucher rents wouldn't be reduced simply because the project has tax credits.

PHAs could project-base as much as 25 percent of their tenant-based voucher funding, up from the current limit of 20 percent, and they could go up to 30 percent if necessary to help homeless people. PHAs could provide project-based vouchers for up to the greater of 25 percent of the units in a project or 25 units, with authority to go up to 40 percent in areas where vouchers are hard to use.

The conditions for enhanced vouchers would be revised to allow families in projects whose owners prepay the mortgage or opt out of a federal housing program to receive such vouchers even if they live in oversized units, though they could be required to move to an appropriately sized unit if available. Families eligible for enhanced vouchers would not have to requalify under the PHA's selection standards.

Dodd, Frank draft bills to address housing crisis

Dodd and House Financial Services Committee Chairman Barney Frank (DMass.) have drafted bills to address the problem of rising home mortgage foreclosures by providing Federal Housing Administration (FHA) refinancing of restructured loans.

Mortgage amounts would be reduced to levels that homeowners could afford, and holders of existing loans who agree to participate in the refinancing program would have to accept the reduced amount as a full payoff.

Frank is contemplating as much as $300 billion in FHA refinancings, while Dodd's bill would support up to $400 billion.

In addition, the Dodd legislation calls for the establishment of new foreclosure prevention goals for Fannie Mae and Freddie Mac. The two government-sponsored enterprises would be required to purchase eligible loans at a discount and write them down to help the borrowers keep their homes.

Frank's bill would provide $10 billion in loans and grants to states for the purchase and rehabilitation of vacant, foreclosed homes for quick reoccupancy.

Barry G. Jacobs is editor of Housing and Development Reporter, the nation's premier source for in-depth, factual coverage of all aspects of affordable housing and community development. The two-part publication includes informed reports and insightful analyses in "HDR Current Developments," and an always up-to-date compilation of essential documents in the "HDR Reference Files." Jacobs is also the author of the annually updated HDR Handbook of Housing and Development Law. For more information, call (800) 723-8077.