Housing Choice Voucher (Section 8) Funding Model

It's not easy being HCV.

Recently, we've been in the headlines for our Housing Choice Voucher (Section 8) program being underspent by a projected $2.9 million. Yes, that's a lot of money.

We'll be able to retain about half of that as a reserve ... a "rainy day fund" that could help us to make sure landlords are paid on time in the event of a funding interruption. That money will still be used for the purpose intended, and almost every business on the planet understands the need to have cash on hand for contingencies -- especially in recent times.

A lot of people want to know ... what about the other half? Why hasn't that been spent down? Why are you sitting on that money? These are fair questions that taxpayers are entitled to understand.

Let's start with the money.
DHA will receive about $20 million for its HCV program in 2008. Those are Housing Assistance Payment (HAP) dollars. HAP dollars must pass through the Housing Authority and be paid out to participating landlords as rent subsidy, so DHA's leaving that money unspent doesn't mean that we can spend it on something else - like office furniture or salaries.

Why not just issue more vouchers?
Naturally, our goal is to spend it on providing as much assistance to as many families as the federal regulations will allow, but that's where we hit the second piece of our funding model -- the number of authorized vouchers. This is what we refer to as our "utilization rate."

DHA is authorized to keep 2,684 vouchers in force. We're not supposed to exceed that number. We currently have about 2,650 (give or take on any given day) in force. There are many families out searching for housing right now, vouchers in hand. When they lease-up, we'll be at capacity ... and still have dollars unspent.

So what can we do?
In this case, we have to go back and review our payment standard and see if -- without paying unreasonable (excessive) rent rates -- we can increase the payment standard and provide more subsidy per family. How much subsidy each family gets depends on several factors -- how many people in the family, their income level and other mitigating factors like disabilities and being elderly. Making these payment standard adjustments, based on local market conditions, and keeping up with changes in standards based on HUD regulations takes some artful, attentive management.

We'll certainly confess that we could have done better, but we have to make clear that this model has presented a vexing challenge to many housing authorities and will be the subject of a pretty hefty overhaul when the Federal Government passes the Section Eight Voucher Reform Act (SEVRA) which likely won't take place until next year. Click here for a SEVRA fact sheet.

The reform act is a bipartisan effort to reduce the administrative burden on housing authorities without leaving space for mischief. It will simplify rent rules, inspections rules and is expected to create a funding source for the family self-sufficiency program -- a program that should be the centerpiece for the HCV approach and doesn't get enough attention!

So that's where we are now. We've just secured authorization from our Board of Commissioners to increase the payment standard to more than 100% of market rate and no more than 110% of market rate. This will be implemented with new vouchers and those recertifying. It will be gradual. With only a handful of staff to work on this and over 2,600 families to serve, it's the only way we can do it.

Meanwhile, we continue to work on improving our customer service and we'll have more initiatives on that topic coming up shortly. Stay tuned!