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«Moving to opportunity voluMe 14, nuMber 2 • 2012 U.S. Department of Housing and Urban Development | Office of Policy Development and Research ...»

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Abstract Federal rental assistance programs are not funded adequately to serve all, or even most, eligible households. As a result, millions of households are on Public Housing Authority (PHA) waiting lists to receive a Housing Choice Voucher or a unit in a public housing development. Applicants typically wait years before being offered assistance, and many PHAs have closed their waiting lists to new applicants. Although this problem is longstanding and widely acknowledged, very little is known about the characteristics and experiences of households on waiting lists for rental assistance. A 2009 survey of nearly 1,000 nonelderly, nondisabled rental assistance applicants, selected from a nationwide sample of 25 PHAs, provides new information on these households. The survey shows that households that apply for and receive housing assistance differ significantly from households that the U.S. Department of Housing and Urban Development considers as having worst case housing needs (WCN). Specifically, most rental assistance applicants did not spend more than one-half of their income on housing, primarily because they reduced their housing costs by living with family or friends or by receiving some form of government subsidy. Applicants frequently reported other housing-related problems not included in the WCN measure, such as homelessness, overcrowding, and certain housing quality problems. In addition, many applicants appear to apply for rental assistance to form their own households rather than continue living with family or friends. These findings have implications for our understanding of housing needs and the function of rental assistance programs in addressing those needs.

Introduction This article focuses on applicants to the public housing program and the Housing Choice Voucher Program (HCVP)—the two largest federal rental assistance programs, which serve roughly 1 and 2 million households, respectively. Public housing households live in units that the local housing Cityscape 275 Cityscape: A Journal of Policy Development and Research • Volume 14, Number 2 • 2012 U.S. Department of Housing and Urban Development • Office of Policy Development and Research Leopold authority owns and operates, whereas HCVP (also called Section 8) households receive vouchers that they use to lease rental units in the private market. With some exceptions, households in both programs pay 30 percent of their monthly income—after taking certain deductions for childcare and medical expenses—toward rent, and the housing authority pays the difference between the tenants’ rent contribution and the total cost of the unit.1 To be eligible for public housing or the HCVP, a household’s income must be less than 80 percent of the Area Median Income (AMI) within the Public Housing Authority’s (PHA’s) metropolitan area. Unlike the Supplemental Nutrition Assistance Program (food stamps), Medicaid, or other means-tested programs, however, housing assistance is not an entitlement, and only one in four eligible renter households currently receives any form of federal rental assistance (Steffen et al., 2011). Rental assistance applicants are placed on waiting lists and offered assistance as public housing units or vouchers become available.

Although no one knows exactly how many households are currently on public housing or HCVP waiting lists, the number is surely in the millions. The National Low Income Housing Coalition (NLIHC) surveyed the administrative plans of 134 PHAs for information about their waiting lists.

More than 1.5 million people were on waiting lists just for those PHAs, and more would have been if many PHAs had not closed their waiting lists to new applicants (NLIHC, 2004). A 2009 survey of a nationally representative sample of PHAs with at least 500 units found that 15 percent of PHAs were not accepting new applicants for public housing and 58 percent of PHAs were not accepting new HCVP applicants (Buron et al., 2010). The same survey found that the wait for a public housing unit in most PHAs was 1 year or longer and the wait for a voucher was more than 2 years.

Federal and local policies regarding how to allocate rental assistance resources affect the amount of time applicants spend on waiting lists. In 1979, Congress established federal priorities for admission for households with severe rent burdens, households in severely substandard housing, and households that were displaced by government actions. The Quality Housing and Work Responsibility Act (QHWRA), enacted in 1998, removed these federal preferences. Today, housing agencies must ensure that 75 percent of new admits into the HCVP and 40 percent of new admits into public housing have extremely low incomes—meaning incomes of 30 percent or less of AMI.

Other than meeting these quotas, PHAs have discretion to develop their own admissions preferences for selecting households from their waiting lists.

No national statistics are available on how PHAs set their admissions preferences. NLIHC’s review of administrative plans found that 75 percent of the 134 PHAs in its sample used some sort of local preference system to order their waiting lists, whereas the other 25 percent selected applicants based on a lottery or a first-come, first-served system. The PHAs’ admissions preferences rarely reflected the former federal preference for households that were rent burdened or living in Most housing authorities require households with zero reported income to pay a minimum monthly rent, which, at most, is $50. In addition, some households in public housing units opt to pay a flat rent, which housing authorities set based on the market value of the unit. Voucher recipients also have the option of paying up to 40 percent of their income to rent units with rents that are greater than the PHA's payment standard at the time of the initial lease up, and many recipients pay more thereafter.

276 Refereed Papers The Housing Needs of Rental Assistance Applicants substandard housing. The most common PHA admissions preferences were for applicants who were employed, were involuntarily displaced as a result of natural disasters or government actions, were domestic violence victims, or lived or worked within the PHA’s jurisdiction (NLIHC, 2004).

The characteristics of households on waiting lists for rental assistances are also not well understood. Studies that involve waitlisted households typically include them as a control group to study the effects of rental assistance. The high number of unassisted applicants and the lottery-based selection process that many PHAs use has allowed for several experimental evaluations of rental assistance programs. Jacob and Ludwig (2008) found that households that received a voucher through the Chicago Housing Authority (CHA) had lower quarterly earnings but higher Temporary Assistance for Needy Families takeup rates compared with households still on CHA’s waiting list. An evaluation of the Welfare-to-Work program, which randomly assigned Section 8 applicants to the treatment (voucher) and control (remain on waiting list) groups, found that the treatment group had significantly lower rates of homelessness and overcrowding than the control group.

These effects narrowed, however, as more people from the control group received assistance (Wood, Turnham, and Mills, 2009). Sharfstein et al. (2001) surveyed 74 families who had recently received a voucher through the Boston Housing Authority and found that applicants’ housing units before receiving assistance were significantly more likely to have housing hazards, such as rats, lack of heat, and absence of running water, than their units after receiving assistance. No known studies have focused on why eligible households apply for rental assistance and how they would benefit from receiving it.

Although the literature on the specific characteristics and housing needs of rental assistance applicants is limited, the literature on the housing needs of very low-income unassisted renters (those with incomes of less than 50 percent of the AMI) is extensive. The most influential report on this subject is the U.S. Department of Housing and Urban Development’s (HUD’s) worst case housing needs (WCN) report to Congress. HUD submits this report, based on data from the American Housing Survey (AHS), to Congress every other year to “inform public policy decisions, including decisions on targeting existing resources, determining the need for additional resources, and the form housing assistance should take” (Steffen et al., 2011: 61). Only very low-income households that are living in a rental unit and not receiving government housing assistance can be considered WCN households. Two types of housing problems are considered WCN: severe rent burden and severely inadequate housing. Households have a severe rent burden if they spend 50 percent or more of their monthly income on housing (rent plus utilities). Severely inadequate housing units have one or more serious physical problems related to heating, plumbing, and electrical systems and maintenance (Steffen et al., 2011).

The most recent WCN study, based on AHS data from 2009, found that 7.1 million households, or 55 percent of all unassisted renters with very low incomes, had WCN. Of these households, 94 percent had a severe rent burden but were living in adequate housing, 3 percent were in severely inadequate housing but not severely rent burdened, and 3 percent were both severely rent burdened and living in severely inadequate housing.

The WCN reports have consistently identified severe rent burden as the dominant cause of WCN among very low-income renters (Bostic, 2011). Based on this evidence, a common assumption is that most households that apply for and receive rental assistance are also severely rent burdened.

Cityscape 277Leopold

The WCN report states that, “most assisted households would otherwise experience worst case needs” (Steffen et al., 2011: 10). Other studies that analyzed the relationship between the number of households receiving rental assistance in an area and the number of households with WCN have estimated that between 68 and 76 percent of households that receive housing assistance are selected from the WCN population (McClure, 2011; Shroder, 2002).

These findings have shaped an assumption among some housing policy experts that rental assistance, particularly Section 8, “generally does not materially improve the physical housing conditions experienced by its target population” (Grigsby and Bourassa, 2004: 815). Rather, for most recipients, rental assistance essentially functions as an income support. Assisted households use rental assistance to reduce their housing costs, enabling them to consume more of other goods such as food, clothing, education, and health care. Grigsby and Bourassa (2004: 816) argue in their call for fundamental reform of the Section 8 Program that “[t]he purpose of Section 8 has become not improvement in the housing inventory at affordable rents, but for all practical purposes, affordability alone that is, to reduce rent/income ratios to 30 or 40 percent.” Therefore, the authors argued that Section 8 should be converted into an income-transfer program, giving money directly to eligible households that would presumably spend the money on housing, because it is their greatest expense (Grigsby and Bourassa, 2004).

It is not clear, however, that the WCN measure is a reliable proxy for understanding who applies for assistance and how they benefit from receiving it. Besides very low-income renter households, a variety of other groups might apply for rental assistance. For example, although reducing homelessness is one of the primary functions of rental assistance (Khadduri, 2008), homelessness is not included in the WCN measure because the AHS does not survey households not living in a housing unit. The authors of the WCN report acknowledge this omission as a limitation of the measure.

The WCN measure also excludes renters currently receiving government housing assistance. It does not place restrictions on assisted households applying for other forms of rental assistance, however. For example, nothing prevents a household in a public housing unit from applying for a Section 8 voucher. Using AHS data, Koebel and Renneckar (2003) found that roughly 1.5 million households that claimed to receive rental assistance were either severely rent burdened or living in severely substandard housing. Thus, reported receipt of some form of rental assistance is not necessarily an indication that a household is not motivated to apply for other forms of rental assistance.

When the WCN measure was originally developed, it reflected the federal priorities for rental assistance, as established by Congress. The authors of the WCN report acknowledge that many other housing-related needs are not included in this measure. Applicants may seek rental assistance because they are living in housing that is overcrowded, of poor quality (although not severely substandard), or in a poor-quality neighborhood (Koebel and Renneckar, 2003). They may also apply for assistance so they can afford to live closer to where they work or go to school (Belsky, Goodman, and Drew, 2005). Finally, applicants may use rental assistance as a means to establish their own household rather than live with family or friends (Shroder, 2002). PHAs may offer assistance to applicants with these needs rather than to applicants with worst case needs.

278 Refereed Papers The Housing Needs of Rental Assistance Applicants Survey of Waitlisted Households This article is based on a survey of rental assistance applicants conducted as part of the Study of Rents and Rent Flexibility, a study of possible changes to the rent structure of HUD’s public housing and the HCVP (Buron et al., 2010). The study team interviewed 1,204 nonelderly, nondisabled families from 25 PHAs who were either still waiting for housing assistance or had started receiving assistance within the past 12 months.

In selecting the sample, Buron et al. (2010) purposively chose PHAs in Cambridge, Massachusetts;

Keene, New Hampshire; and Tulare, California, because they had used their enhanced flexibility as Moving to Work (MTW) sites to implement major reforms to their rent structures.2 These 3 PHAs account for a small percentage of all assisted households but 28 percent of all survey respondents.

Buron et al. (2010) selected the other 22 PHAs included in the survey through a stratified, random sampling process based on location, size, and the cost of rental housing within the PHA.

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