Rental Housing Assistance Budget Balanced on Backs of Poorest

If you look at the President’s  Fiscal Year 2013 budget for low-income housing assistance as a whole, you’d think it’s pretty good — at least, considering the caps imposed by last fall’s debt ceiling/deficit reduction deal.

Or at least I did. But, as they say, the devil is in the details. And there are some very devilish details in the policy changes proposed to help make the numbers work.

One of them would raise monthly rents for the very poorest households that live in public housing or participate in any one of several programs the budget classifies as Tenant-Based Rental Assistance.

Current Minimum Rent Policy

Under current law, residents of public housing and people with housing vouchers generally must pay 30% of their adjusted income for rent. The same holds for residents of project-based Section 8 housing, i.e., units that have federally-funded vouchers attached to them.

The local public housing authority pays the rest, up to a cap based on the fair market rents the U.S. Department of Housing and Urban Development sets for the area.

For the very lowest-income households, however, 30% of adjusted income can be zero or pretty darn near. PHAs may, if they choose, require them to pay a minimum rent, but only up to $50 a month.

They can, but don’t have to also impose a minimum rent, up to the same maximum, on public housing residents. A $25 minimum rent is generally mandatory for residents of project-based Section 8 housing.

According to a 2010 study for HUD, 88% of PHAs have opted for a minimum rent. Not all of them, however, charge as much as $50 a month.

White House Proposal

For Fiscal Year 2013, the President proposes $4 million less to renew housing voucher contracts than Congress approved for this fiscal year.

Yet the White House fact sheet asserts that HUD’s rental assistance programs will serve as many families as they do now.

How can that be? In the past, increases have been needed just to keep up with rising rents.

Part of the answer is that PHAs would have to charge a minimum rent. And the minimum would be $75 a month, rather than the $50 that’s permissible now.

This may not seem like much, especially for households that are already paying the maximum minimum.

But to fall into the minimum rent category at the $50 rate, a household’s income, with adjustments, would have to be less than $167 a month. The new mandatory minimum would be nearly 45% of this.

Well, the fact sheet says, households would be eligible for hardship exemptions. Nothing new about these.

Under current law, PHAs must have policies for granting such exemptions. Most of the hardships their policies must include a significant loss of income, e.g., a job loss, the death of a family member.

But exemptions are also supposed to be granted if the minimum rent would result in an eviction — in other words, if the family simply couldn’t pay it.

Problem is that hardship exemptions are apparently few and far between. Of the PHAs the HUD study surveyed, 82% granted them to fewer than 1% of the households they served.

Maybe because $50 worked a hardship on only a few. Maybe because PHAs construe acceptable hardships too narrowly. Maybe, as the study suggests, because they don’t make sure that households know they can get exemptions.

Whatever the case, I see no reason to believe that PHAs will suddenly start granting more.

HUD apparently doesn’t think they will since Secretary Donovan has said that the new minimum rent requirement will save $150 million next year.

Households at Risk

The Center on Budget and Policy Priorities recently analyzed a bill already introduced in the House that would set a somewhat lower mandatory minimum rent.

It concluded that nearly 491,000 extremely low-income households would be exposed to “serious hardship and even homelessness.” The President’s proposal, it says, would affect about 15,000 more, bringing the total to well over half a million.

Nearly two-thirds of these households nationwide are families with children. As many as 40,000 include members who are elderly or have disabilities.

Seems to me the right hand doesn’t know what the left hand is doing — or maybe knows, but doesn’t care.

The President proposes a $330 million increase for homeless assistance grants to “continue progress” toward his administration’s goals for preventing and ending homelessness.

At the same time, he seeks savings in housing assistance that could well put more people on the streets — or into the already-stressed shelters and housing the homeless grants support.

NOTE: Fellow D.C. residents, I’ll have a separate post on what this proposal may mean for our HUD-funded rental assistance programs. So check back — or subscribe. You can now get my posts as e-mails just by clicking the Follow button.

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3 Responses to Rental Housing Assistance Budget Balanced on Backs of Poorest

  1. […] the impacts of the mandatory minimum rent proposal in the President’s Fiscal Year 2013 budget, I asked myself what it would mean for extremely […]

  2. […] of those reforms, as I earlier wrote, would require the very poorest of these families to pay a $75 per month minimum rent — […]

  3. […] Proposed Minimum Rent Mandate Mean for Extremely Poor DC Residents? Researching the impacts of the mandatory minimum rent proposal in the President’s Fiscal Year 2013 budget, I asked myself what it would mean for extremely […]

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