In an effort to address our nation’s increasing levels of segregation, the Obama Administration implemented a U.S. Department of Housing and Urban Development (HUD) Final Rule that changed the way 23 metropolitan areas issued vouchers to low-income tenants. The goal was simple: improve the health of low-income families by increasing access to lower poverty and higher opportunity areas.
The Final Rule was an attempt by the Obama Administration to address the nation’s housing segregation crisis. Segregation levels today mirror those that existed in the 1960s. See study. This resegregation of communities is a crisis exacerbated in metropolitan areas, like San Diego, where vouchers are accepted only in low-opportunity, high-poverty neighborhoods, if at all. Only 15% of children in families that receive housing subsidies live in low-poverty areas, the vast majority of these children live in very poor, segregated neighborhoods. See report.
The Final Rule directed specific local governmental entities that oversee the federally funded Housing Choice Voucher Program to use a rent standard that is determined by small area (zip code) fair market rents, instead of metropolitan-wide fair market rents.
The metropolitan areas targeted by the Final Rule were chosen because of their high concentrations of Housing Choice Voucher Program participants (“voucher holders”) living in concentrated low-income areas relative to all renters within that area. The list of the 23 metropolitan (see list below) includes San Diego.
To understand the significance fair market rents have on voucher holders’ lives and the potential the change had to address the concentration of poverty in our communities, below is a brief summary of how the Housing Choice Voucher Program works (See Code of Federal Regulations – 24 CFR Section 982).
Housing Choice Voucher Program: A Primer
The way fair market rents are calculated has a direct impact on the value of a housing voucher. The value of a housing voucher determines whether a landlord will accept a low-income family’s voucher, and whether the local governmental entity will approve the family living in the rental unit. If a family has a housing voucher but cannot find a landlord to accept the voucher because it is not worth enough, then the voucher has no value. If a family finds a landlord to accept the housing voucher, but the landlord is charging more than the value of the housing voucher, the local governmental entity will not approve the use of the housing voucher for that rental unit.
- Fair Market Rents determine the value of a housing voucher. Annually, HUD estimates Fair Market Rents for metropolitan and non-metropolitan areas. Fair Market Rents are used to determine payment standards.
- Payment Standards must be within an established range of the Fair Market Rent. When a tenant is looking for a landlord to accept her family’s voucher, the tenant must find a landlord who is charging rent that is less than the payment standard (utility costs and utility allowances are involved in the calculation but have a minor impact). Generally, if rent is higher than the payment standard, the voucher holder cannot rent that unit. The payment standard therefore limits the units that the voucher holder can access. As a result, the voucher holder must seek rental units that are below the payment standard.
- When a payment standard is calculated based on a metropolitan region’s fair market rent, rather than on a neighborhood’s fair market rent, the units where rents are below the payment standard are generally clustered in low-opportunity, high-poverty areas. This is the issue the Final Rule attempted to address.
- In some circumstances, a voucher holder can rent a unit even though the payment standard is higher than the rent. However, in these situations, the voucher holder has to pay the difference between the payment standard and the rent (this is in addition to the voucher holder paying her portion of the rent after the voucher is used). If, however, the voucher holder’s total payments towards rent (her portion of the rent after the voucher is used, and the difference between the payment standard and the rent) is more than 40% of her monthly income at the time she is trying to rent the unit, she cannot use her voucher there (the 40% rule only applies upon lease-up – if her rent later increases beyond the payment standard, she can continue living there despite the high percentage of her income that is going to rent).
Before the proposed rule was released, the Obama Administration conducted extensive research on ways to address the increasing levels of segregation and concentrations of housing vouchers in high-poverty areas. The administration also took into consideration evidence from a small area fair market rent demonstration project in Texas (the result of a court settlement – HUD was sued for its willingness to accept racial segregation in Dallas). The demonstration project suggested that the small area fair market rent model may be less costly and more effective than other voucher interventions at de-concentrating families with vouchers from high-poverty, high-crime neighborhoods.
When the Obama Administration released the proposed rule, it invited public comment. Poverty attorneys across the nation submitted comments and concerns. We shared our in-the-trenches expertise in an attempt to ensure that the rule addressed the administration’s goals while protecting the rights of low-income tenants.
One of the main requests of this coalition of poverty attorneys was that current tenants be held harmless if the change to small area fair market rents caused an increase in rent (for example, the voucher holder’s payment standard falls outside the range as a result of a decrease in fair market rent, which could occur to voucher holders living in neighborhoods where the small area fair market rent is lower than the region’s fair market rent. This circumstance would cause a decrease in the fair market rent upon implementation of small area fair market rents). While the Final Rule addressed this concern, it failed to sufficiently protect this sub-group of voucher holders.
Suspension of the Final Rule
On Friday, the current administration issued a letter suspending the Final Rule.
While the Final Rule’s adverse impact on the sub-group of tenants raised by the poverty attorneys may been part of the current administration’s reasoning for suspending the mandatory implementation of the rule (see Interim Report released by HUD yesterday), it is unlikely. The Final Rule could have been amended or HUD could have implemented guidance for the rule to fully protect the sub-group of voucher holders. Suspending the Final Rule was not necessary if this was in fact the motivation.
The timing of the Final Rule’s suspension points towards a more likely motivating factor: dismantling de-segregation efforts. The administration suspended this de-segregation rule only ten days after it announced plans to use the Department of Justice to identify and target universities using affirmative action. The timing of this suspension raises concerns as to the real motivations behind the current administration actions, and whether this is part of a larger strategy to allow segregation.
Pursuant to the letter sent to the governmental entities overseeing the Housing Choice Voucher Programs in the 23 metropolitan areas, the entities can voluntarily implement the Small Area Fair Market Rents if they wish. Metropolitan areas can adopt small area fair market rents and protect all voucher holders by providing discretionary protection for tenants who experience an increase in rent due to the change.
A coalition of poverty attorneys are currently discussing strategies to address the suspension of this rule as well as the nationwide attack on de-segregation efforts.
The 23 Metropolitan Areas (includes San Diego):
Atlanta-Sandy Springs-Marietta, GA
Charlotte-Gastonia-Rock Hill, NC-SC
Colorado Springs, CO
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL
Fort Worth-Arlington, TX
Hartford-West Hartford-East Hartford, CT
North Port-Bradenton-Sarasota, FL
Palm Bay-Melbourne-Titusville, FL
San Antonio-New Braunfels, TX
San Diego-Carlsbad-San Marcos, CA
Tampa-St. Petersburg-Clearwater, FL
Urban Honolulu, HI
West Palm Beach-Boca Raton-Delray Beach, FL
Photo Credits: Department of Housing and Urban Development building
Washington DC, Photo published under a Creative Commons license courtesy of photographer “LunchboxLarry” at Flickr