February 2005

Section 8 Tenants Face Rent Increases Due to
Changes in Housing Authority "Voucher Payment Standards"

PROBLEM:

San Francisco's 7,000 Section 8 voucher tenants will receive significant rent increases this year, likely causing extreme economic hardship, displacement and homelessness.

For the first time ever, Section 8 rents are no longer attached to income. Tenants, who were formerly limited to 40% of their income for rent, can now pay up to 100% of their income for housing.

The City's 25,000 low-income families who are on the Section 8 waiting list will find that their voucher has decreased in value and the pool of Section 8 housing choices has shrunk dramatically.

BACKGROUND:

Housing authorities determine the total amount they will pay towards a Section 8 Voucher annually.

This payment amount is called the Voucher Payment Standard and is based on HUD's Fair Market Rents or "FMR" (It must be within the range of 90%-110% of the FMR)

Fair Market Rents (FMR) are supposed to reflect the reality of the general average rents in a particular housing market (usually City/ Metro Area or County). HUD conducts a "random digit dialing" survey to obtain the data needed to define FMRs for a particular area. There are also many other flaws in their FMR determination formulas that could result in a misrepresentation of the market reality.

This year, HUD's calculations have determined that FMRs in San Francisco are significantly lower than they were last year. FMRs for a two-bedroom apartment, for example, have been reduced from $1775 in 2004 to $1539 in 2005. This is a 13.3% decrease. For larger sized units, the increase has been a 15% difference.

Since 1999, tenant-based Section 8 has taken the form of Housing Choice Vouchers. This means that the voucher will cover the difference in rent between the tenants "affordable" 33% of their income and the Voucher Payment Standard. If the unit's market rent exceeds this total amount, the tenant must pay the difference.

Generally, a tenant's total portion of the rent may not exceed 40% of their income. For voucher holders in need of housing this means far fewer options, since many units may rent for an amount that would require them to pay over 40%.

For families and seniors already in housing when the payment standard changes, the impact is even more extreme. In these cases, even if the rent increases to over 40% of income when their lease expires, the tenant is still required to pay in order to remain in their housing. Otherwise, they must move or risk being evicted for non-payment of rent.

Illustration:

A family on Section 8 can pay $300 monthly for their housing (at 30% of their $1000 income). The VPS is $1775 for their unit. The Housing Authority (HA) therefore pays a balance of $1475. The landlord however charges $1850 for the unit. The tenant thus pays $375 for their unit. When the VPS is reduced (in this case down to $1539), the overall rent does not change, yet the HA pays a smaller portion of the rent. This brings the tenant portion to $311 in addition to their 30% which is $689 total. They are now paying close to 70% of their income for rent. They are therefore extremely rent burdened and the very concept of Section 8 becomes nullified. OR the family is forced to move to a less expensive unit. They are "constructively" evicted from their housing, also a result that would seem counter to the goals of Section 8.

TENANT OPTIONS:

Tenants living in Section 8 units, when faced with a reduction in payment standards that makes their rent unaffordable, have few options other than to move. If they do decide to move, they have 90 days notice before the rent increase takes effect. If they want to stay, tenants may negotiate with their landlord to persuade them to bring their rent down.

They can also provide evidence to the HA of comparable rents to show that their landlord is charging "unreasonable" rent. Based on this information, the HA will request that the rent be lowered. If the landlord does not agree, however, they are withdrawn from the program. Senior and disabled tenants can ask for a waiver to bring their payment standard slightly higher.

ORIGIN OF THE CRISIS

The HUD budget has been a target of cuts by Republicans in Congress and the Administration. This year, each Housing Authority is facing a 4% budget cut. In San Francisco, this means $5.7 million will be lost to the Section 8 program. Lawmakers and department officials have looking for numerous creative ways to cut funding, including ways to push people off of assistance so the spending need appears less. Earlier this year, HUD interpreted Congresses appropriations formulation in a manner that severely cuts funding to voucher programs.

The FMR determination process has been used as a continuation of the fight to cripple HUD programs. Lowering the FMRs, provides a justification for decreasing the funding to localities. In essence, however, this is what the FMR calculations have done: send less money to the local voucher programs. By regulation, the HA must attach their payment standard amounts to the FMR. But even were they to challenge this and raise their county's standard, the money would simply not be there to fund it.

IMPLICATIONS:

There are 7, 379 households currently receiving Section 8 vouchers within the City of San Francisco*. 25,000 more are on the Housing Authority's wait list to receive vouchers. These households are extremely low-income and are on extremely tight or fixed incomes, thus are unable to afford any increase in rent without extreme hardship. Section 8 tenants are comprised of immigrant families, low-wage workers, seniors and the disabled. Their average household income is $15,099.

The sudden and drastic rent increases caused by the change in Housing Authority payment standards will lead to increasing displacement and homelessness if not addressed immediately. Already, Section 8 clients are seeking assistance for situations in which they have received rent increase notices that are unaffordable.

Since November 2004, Housing Rights Committee of San Francisco has seen 23 Section 8 tenants who have received these rent increase notices from the Housing Authority due to a decrease in their voucher payment standard. Most notably, they have been tenants in some of the largest housing developments in the City (Park Merced and Stonestown Apartments), which portends looming disaster. All of these have been Senior residents, many of them immigrants with limited English speaking abilities.