A sign of how public housing authorities (PHAs) will operate in the future may be found in a demonstration program called Moving To Work (MTW).
A small group of PHAs around the country are participating in the pilot program, which allows them to design and test new ways to provide housing assistance. Authorized in 1996, the MTW program gives up to 30 participating agencies increased flexibility to operate and relieves them from some of the regulatory burdens placed on housing authorities.
MTW is particularly important at a time when federal funding for public housing is not guaranteed.
Renee Lewis Glover, CEO of the Atlanta Housing Authority (AHA), earlier this year urged a House Government Reform Subcommittee on Federalism and the Census to transition all larger housing authorities into MTW agencies.
“The MTW agreements acknowledge local needs, local market conditions and local economies,” she said.
Glover’s agency has designed a plan with multiple components. One part of it involves positioning project-based Sec. 8 vouchers as a development tool that can be used in creating mixed-income communities.
“The way you raise debt in the market, you put together a pro forma looking at net operating income,” Glover explained. The vouchers are used as part of that financial planning, representing a steady stream of rent for a 10-year period.
For a private developer working on a low-income housing tax credit deal, the vouchers can improve the financial feasibility of a project and allow the development to serve a broader range of income levels.
AHA reported using 969 project-based vouchers in 14 communities. Another 1,094 project-based vouchers are committed to 16 communities that are in different stages of development.
Another more controversial part of AHA’s program is a work requirement for its resident families. Adults between the ages of 18 and 62 who are not disabled have to meet certain work conditions unless they are in job training programs or in school under a four-year schedule created by the housing authority.
Critics are concerned this will lead to evictions, but Glover sees it as a way to raise expectations. “We’re going to have some tremendous success stories,” she said. AHA has yet to evict anyone for being out of compliance with the policy.
Another MTW participant is the Vancouver Housing Authority (VHA) in Washington, which has recently received a three-year extension of its MTW program.
VHA, which operates about 515 public housing units and administers about 2,200 Sec. 8 vouchers, is exploring the possibility of going to a flat-rent policy for public housing as well as a flat-subsidy policy for its voucher program. This is a change from the traditional system that sets rents based on individual income and circumstance. The general idea of the new flat-rent approach is that it will be good for families as their economic positions improve. As a family earns more money, it would be able to save the additional income and not have to apply it toward rent.
“It’s an economic incentive to seek better employment,” said Kurt Creager, CEO of the housing authority. “Ironically, most federal housing programs penalize residents for earning more money, which is something we want to correct in our community using the MTW program flexibility granted us.”
VHA is still working out the details, and it will be several months before a plan is implemented. The housing authority acknowledges that the approach will raise some concerns. Some residents would likely have to pay more under the new plan. For example, the flat rent for a two-bedroom apartment may increase to about $150 from the current average of about $128. Most families, however, would pay about the same or less than before.
This will be the second program tested by VHA. Its first pilot program featured a five-year limit on housing assistance as well as a plan to help families save money. As families earned more, increases in their income-based rents were placed in an escrow account. About 150 families were able to use that account toward buying a house.
The program was successful for many, but officials decided to explore the idea of changing to a flat-rent policy as the five-year time limit approached and as the area’s economy went from boom to bust in the early part of the decade. “We did not want to hold people to account for economic factors beyond their control,” Creager said. “To do so would have undercut those hardworking families who could not transition out of subsidized housing because of a weak employment market in the Pacific Northwest.”
The five-year limit on housing assistance is not included in the current proposal.
Creager calls the PHAs participating in the demonstration program “the better mousetrap gang.” Although it is a small group, he is optimistic that innovative ideas are emerging that can be replicated by other housing authorities elsewhere.
For more information, visit www.hud.gov.
Notice limits impact of rule on project-based voucher rents
The Department of Housing and Urban Development (HUD) has issued a notice, PIH 2006-16, reducing the impact of a controversial rule limiting Sec. 8 project-based voucher rents on low-income housing tax credit units to the tax credit rents.
The provision, which was added to the final project-based voucher regulations, generally follows HUD’s policy against duplicate subsidies. On Sec. 236 projects, for example, the Sec. 236 subsidy is supposed to cover the difference between market rent and the basic rent (the rent based on a 1% mortgage), and Sec. 8 assistance is limited to the difference between the tenant payment and the basic rent, even if the voucher payment standard is higher than the basic rent.
The final project-based voucher rule applies the same principle to tax credit units, presumably on the theory that the tax credit alone provides a sufficient subsidy to assure feasibility for projects receiving maximum tax credit rents. Accordingly, the voucher assistance is limited to the difference between the tenant payment and the tax credit rent ceiling.
Housing groups argued that it would affect the feasibility of some projects where the voucher payment standard is higher than the tax credit rent ceiling, and they also noted that it wasn’t included in the proposed project-based voucher rules issued for comment.
HUD hasn’t yielded on the substance of the rule, but it has provided some relief on its impact. Under Notice PIH 2006-16, the new rent limit will apply only to units for which a public housing agency (PHA) issued a written notice of owner selection under the project-based voucher program on or after Nov. 14, 2005, the effective date of the project-based voucher rule.
– Barry Jacobs