Series: Additional Housing Programs

March 15, 2023

Finally, I’m going to conclude the series – a look at federal housing programs reviewed 9 years ago by former Congressman Paul Ryan at the 50th anniversary of the War On Poverty initiative. This column addresses what I’ll call, loosely, ancillary housing programs. That term is apt because these programs are not big capital programs but, rather, programs that do a variety of things: i.e., grant flexibility to Public Housing Agencies (PHA) and some, limited flexibility for residents receiving rental assistance; a program that supports planning of subsidized housing; and, finally, a program that supports conversion and preservation of existing affordable housing.

Moving to Work

The Moving to Work (MTW) program was created in Section 204 of the Omnibus Consolidated Recessions and Appropriations Act of 1996. Originally it was a “demonstration program.” Neither a direct subsidy for residents nor a conduit to construct housing, it is billed as a program to allow local PHAs greater leeway as they implement federal rules. Essentially, the program allows capital and program monies to be combined or used interchangeably; that means voucher funds can be used to rehab a unit, or money for rehab could be repurposed for vouchers.

PHAs that apply and chosen for the program (there are 139 PHAs participating) have wide latitude concerning how they may use these “fungible” housing dollars, provided the moves "assist substantially the same total number of eligible low-income families as would have been served had the funding amounts not been combined." Note the contrast to the Hope VI program (a program we covered in the post about public housing) that allowed a mixing of incomes but resulted in a net loss of subsidized units.

The MTW program has allowed PHAs to use their existing funds to leverage other funds, rework processes set up by HUD, cover rent and other services for tenants, ease the process for private housing providers to accept vouchers, and increase the overall number of vouchers available. This sounds good at a distance but Rep. Ryan’s critique quotes a 2013 Government Accountability Office finding that “HUD does not have policies or procedures in place to verify the accuracy of key information that agencies self-report.”

What bothered the GAO and Ryan was not the flexibility itself, but rather a concern that HUD had no idea what the locals were doing. Were their actions effective? Did HUD’s oversight make use of an objective standard to measure the effectiveness of the flexibility? The GAO pointed out that “HUD staff do not verify self-reported performance information during their reviews of annual reports or annual site visits. Without verifying at least some information, HUD cannot be sure that self-reported information is accurate.”

Not much has changed since Ryan’s review. The apparent answer to the concerns that there is no consistent measurement of progress is a web page dedicated to all the programs participating in the program. A close review of that page tells us that the Fayetteville Housing Authority in Arkansas had its contract renewed, but says nothing about what that PHA will be doing differently, why, and for how long. Did the improvisation improve access to housing or relieve waiting lists for vouchers, for example? None of that is clear.

This lack of clarity shouldn’t be the death knell for Moving to Work. Rather it should encourage HUD and independent housing experts to consider whether this deregulated and more flexible approach should be the baseline of how HUD and local PHAs operate. Allow PHAs to tackle housing problems rather than miring them in endless regulatory tar pits. The problem isn’t necessarily granting the PHAs the freedom to improvise; the culprit may very well be the absence of reliable outcomes data. A better balance has to be found here and it begins with more and accurate data.

Family Self-Sufficiency Program

The Family Self-Sufficiency (FSS) Program was created in the Section 23 of the Housing Act of 1937, as amended in 1990. The purpose of the program was to encourage upward mobility of people receiving rental assistance, especially those who use vouchers. Usually, households pay 30% of their gross income for rent, so if income increases, so does rent. But under the FSS program any increase in income is put into an escrow account and held until the recipient earns his or her way out of poverty. Once families have maintained themselves at a higher level of income, the funds held in escrow are released.

Ryan complains that data collection isn’t good here either and that participants in the program would self-select, that is highly motivated families and individuals participate, thus making the interventions moot; they would have succeeded anyway. That’s a hard charge to prove. Also, a significant portion of the funds for the program, $75 million in 2012 and $113 million in 2022 ends up paying for FSS coordinators and service providers. The program is actually one that needs better evaluation and if indeed it is working, it should be expanded. The most recent grant announcement makes clear that, “PHAs are not permitted to limit FSS participation to those families most likely to succeed.” It is important to establish some measures to determine what this means.

Choice Neighborhoods

The Choice Neighborhoods Initiative was first approved in the 2010 budget and has replaced the Hope VI efforts to improve public housing. The intention of the program is to improve “distressed neighborhoods.” This effort is largely driven by a granting process to local PHAs for those agencies to address three issues,

  1. Housing: Like Hope VI, the idea of the Choice Neighborhoods Initiative is to rehabilitate, replace, and mix incomes in current public housing communities;
  2. People: Like the FSS program grantees are expected to improve the quality of their lives in non-housing areas like health and income; and
  3. Neighborhood: The grantees need to demonstrate that the built environment and surrounding community has improved thanks to the funds granted for changes to public housing.

This program received $120 million in 2012 and $121 million in 2013 and is set to spend more than three times as much - $379 million - in 2023. Ryan didn’t find much evidence to support this program, and neither have I. My bias is pretty strong against dumping cash on local governments for planning. Furthermore, I return to my general criticism of both Ryan and the planners; we can’t afford to spend lots of time and money trying to achieve non-housing goals with housing funds. People need help with rent first. Do that, end as much pain in the housing economy as possible, then take a look at the secondary and tertiary benefits of that. Focusing funds on improving neighborhoods is a waste when we can’t even figure out how to pay people’s rents efficiently.

Rental Assistance Demonstration

The Rental Assistance Demonstration (RAD) program, part of the Consolidated and Further Continuing Appropriations Act of 2012, seeks to preserve existing housing options for eligible families. RAD allows housing providers operating under older subsidy schemes like the Rent Supplement Program to convert their contracts to Section 8. There are also funds available to rehabilitate existing housing units owned and operated by both PHAs and private housing providers.

According to a recent press release announcing a total of $15 billion spent, HUD claimed conversion of “1,533 public housing properties, covering approximately 185,000 affordable rental homes, to the Section 8 platform” and “the creation of 15,000 Low-Income Housing Tax Credit units.”

As I’ve already pointed out, it’s hard to figure out what that last sentence means when the Low Income Housing Tax Credit is allocating billions to states already; is the RAD program claiming credit for those LIHTC units? How exactly does that measurement work? At the time Ryan produced his critique, RAD hadn’t received any appropriations but had only completed the conversion of 14,000 units at no cost, simply shifting the funding source to Section 8. According to the National Low Income Housing Coalition, the program “has received no appropriated funds,” meaning that the $15 billion claim is confusing and dubious. Clearly, conversion to different sources of funding has kept some housing affordable, but the RAD program seems to be yet another program that overlaps with other programs like tax credits.

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