Housing Choice Voucher Programs in North Carolina

Chad Fogelman and Justin Powell, two graduate students in UNC-Chapel Hill's Department of City and Regional Planning, wrote this report for us about a sample of tenant-based Section 8 programs in North Carolina.

Introduction

The Section 8 Housing Choice Voucher program has helped millions of families afford quality rental housing and is frequently cited as one of the U.S. Department of Housing and Urban Development’s most successful programs. [1]  In the federal fiscal year 2003, HUD, working through local public housing authorities (PHA’s), will disburse nearly $12.5 billion dollars (over half the department’s total budget) in housing voucher funds to nearly three million households across the country. Despite this success, there are a number of problems associated with the Housing Choice Voucher program. A scarcity of affordable rental housing, the ghettoizing of voucher holders, and discrimination by landlords are among the problems reported by government agencies, housing advocates, and the media.

Though Section 8 vouchers are funded by federal dollars, they are administered locally; and many of the potential problems depend on a community’s particular situation. This paper presents research into the problems that ten North Carolina PHA’s have encountered in administering the Housing Choice Voucher program. 

Overview of the Section 8 Housing Choice Voucher Program

Authorized by Congress in the Quality Housing and Work Responsibility Act of 1998, the housing choice voucher program was implemented in its current form in October 1999. The program merged elements of HUD’s earlier tenant-based assistance programs: the Section 8 rental certificate program [2] and the Section 8 rental voucher program. [3]

A housing choice voucher is essentially a rent subsidy that enables very low-income people to afford quality rental housing in the private market. By law, a PHA must award 75% of its vouchers to applicants whose incomes are 30% of the area median income (AMI) or less. All applicants must have incomes below 50% of the AMI. A PHA may also establish preferences for selecting applicants who are homeless, involuntarily displaced, and so on. Because a voucher is given to a family or individual, voucher recipients can find their own housing and are not limited to units located in subsidized housing developments. Since the voucher is tenant-based rather than project-based assistance, a voucher holder can change residence and still receive the subsidy.

The PHA pays this subsidy directly to the landlord, and the voucher holder pays the difference between the subsidy and the actual rent charged by the landlord. The amount of the subsidy is the difference of the voucher holder’s contribution—30% of the family’s monthly adjusted household income—and the payment standard. The payment standard, the amount typically needed to rent a unit in the local market, is based on the HUD-determined fair market rent (FMR). If the unit’s rent exceeds the payment standard, the family can still rent the unit but must pay the additional amount. However, program participants may not select a unit for which their share of rent will be more than 40% of their adjusted monthly income. Any housing unit selected by a voucher holder must meet housing quality standards upon inspection.

Administering the housing choice voucher program requires PHAs to have detailed knowledge of complex HUD regulations and the local housing market. PHAs are responsible for securing funding for vouchers, including extra Notice of Funding Availability (NOFA) vouchers. PHAs must coordinate the leasing process, which includes: taking applicants and managing waiting lists, establishing preferences, determining eligibility and calculating payments, educating voucher holders, inspecting units, and building relationships with landlords. Though the leasing process ends with the execution of a HAP (housing assistance payment) contract, PHAs must continue to monitor contracts with landlords, disburse voucher payments, and monitor occupants.

Problems with the Voucher Program

Despite the success of the housing choice voucher program, a number of problems have been reported in the national news media and spotlighted by housing advocates. Some of these problems are the by-products of larger market forces, while others arise in the tenant landlord relationship or in the administration of the process itself. The two principals—voucher-holding tenants and landlords—each have differing perspectives on the program’s flaws.

Nationally, tenants have faced considerable challenges in securing affordable rental housing through vouchers. Initially, applicants often experience long waiting periods. Even after being approved, voucher holders in many communities find rental housing in insufficient supply to meet the demand created by vouchers. Citing Baltimore as an example, a recent article in Governing magazine suggests that even when rental housing can be found, Section 8 vouchers do not create a “move to opportunity”; rather, they end up limiting voucher holders to certain low-income and transitional areas. [4]

There are also indications of abuse by landlords. To maximize their income off vouchers, some landlords provide substandard housing while charging high rents. [5] Discrimination against voucher holders can be prevalent as well. [6] Landlords may refuse to lease to renters who possess vouchers or who are of particular race or ethnicity. Chicago’s voucher program, for example, has had well-documented problems with racial discrimination.

The nature of the voucher program causes problems for landlords as well. The Washington Post, the New Orleans Times-Picayune, and the Chicago Sun-Times all report landlords’ dissatisfaction with the rental voucher program. [7] Landlords find the inspection process to be inconsistent and time-consuming, and they complain that the PHA’s screening and eviction processes do not help with problem tenants. HUD regulations and paperwork also may deter landlords from participating. 

One problem that affects both landlords and tenants involves fair market rent. The fair market values assigned by HUD are often too low for a community. Landlords who cut rates feel the pinch, while voucher holders struggle to find quality rental housing with their low payment standard.

With all these problems in mind, this research effort sought to determine if similar circumstances exist in North Carolina.

Methodology

This study conducted a survey of North Carolina Housing Choice Voucher administrators to determine the characteristics of North Carolina programs and to ascertain the nature of problems existing in North Carolina. A random sample of 20 programs was selected from the 128 programs in North Carolina. Of those, 10 participated in a telephone survey conducted between November 14 and November 20. Administrators were asked a series of questions about their program’s characteristics, then specific questions based on implementation problems reported in other parts of the country. Responding programs included the Statesville Housing Authority, Twin River Opportunities, Housing Authority of the City of Winston-Salem, Johnston County Housing Assistance Payments Program, Monroe Housing Authority, City of Asheville Housing Authority, Western Carolina Community Action, Four County Community Services, City of Albemarle Department of Public Housing, and the City of Charlotte Housing Authority.

Major Findings

The research conducted discovered the following major findings:

• Market supply does not appear to be a major hindrance to placing families in housing in a majority of the communities surveyed.
• Racial and ethnic discrimination against voucher holders does not appear to be widespread, but discrimination on the basis of holding a voucher still is seen in half of the communities surveyed.
• Landlords seek more participation by housing program administrators in the screening and eviction processes.
• Many of the problems identified by housing voucher administrators indicate that there is too much demand for vouchers and not enough resources to satisfy that demand.

North Carolina Voucher Program Characteristics

The ten North Carolina Housing Choice Voucher programs surveyed for this study issued an average of 1261 regular allocation vouchers during their last fiscal year. The largest program issued 4039 vouchers; the smallest issued 310. Dollar values of the vouchers distributed averaged $6,581,464 with a range of $1 million to $24 million (with two programs non-responding). Programs are given the opportunity to apply for additional vouchers from HUD. Of those surveyed, 6 did not apply for additional vouchers, while 4 did. Of the four who did apply, two were denied further vouchers while two received 107 and 185 vouchers, respectively. 

Of the families served by the voucher program, the mean percentage for each program of families served with less than 30% of the area median income was 77% and a range of 40% to 99% (with one program not responding). This indicates that one program is not compliant with federal regulations (which state that programs must have 75% of their clients with incomes lower than 30% of the area median income) but that most programs meet the minimum criteria set out by federal law.

Administratively, the waiting list averages 1080 families, though it ranges from 255 to 2400 families (1 program not responding). Six of the programs stated that their waiting lists are currently open, though two stated that they are intending to close their list. Four currently have closed lists – mainly because the length of time on the waiting list is exceeding a program-designated standard, typically two years. For instance, Charlotte reports having approximately enough families on its waiting list for the next five years. When making selections from the waiting list, five programs do not use preferences allowed by HUD. Those who do use the preferences report that they most commonly use preferences for displaced homeless, the elderly, handicapped, working families, and for families displaced by natural disasters.

Length of time on the waiting list varies significantly between programs. On average, families wait 17.4 months before being selected for a voucher, though this period can vary from 2 months to 39 months. Once selected from a waitlist, families are given 120 days to secure housing. Of the program surveyed, families took an average of 65.3 days to find housing by securing a HAP contract, though it ranges from 45 to 120 days. Nevertheless, not all families selected for a voucher finds housing in that time-span. The turn-back rate (the number of vouchers returned unused after 120 days) was approximately 28.1%. Programs saw significant variations with one program reporting a turnback rate of less than 1% with another reporting a turnback rate up to 60%.

North Carolina Voucher Problems

North Carolina Housing Choice Voucher programs share some of the problems seen in the rest of the nation, yet these programs also face some noticeably different challenges.

Adequate supply of rental housing is not particularly a problem for 7 of the voucher programs. The most common explanation for this given by the programs is that the current weak economy has created a soft rental market, thus making housing much easier to find for voucher holders. In the three programs that mentioned inadequate supply, the most common reason for the problem included tight rental markets and low fair market values assigned by HUD, thus giving them vouchers with values too low for the rents in the community.

Six programs reported that the program does not limit voucher holders to specific parts of their community, a finding that suggests the program is meeting its goal of helping families “move to opportunity”. Nevertheless, four programs did report that voucher holders were limited to certain areas. Interestingly, these four programs were rural or small-town programs. These PHA’s reported that voucher holders were limited to specific housing types or to parts of their community not always desired by voucher holders.

Half of the programs reported that voucher holders are sometimes denied housing because they hold a voucher. Several programs reported that this required extensive education of both landlords and tenants about the program to prevent this problem. Nevertheless, one program reported that the soft rental market in their community has brought landlords to the agency seeking out Section 8 voucher holders. Unlike many national studies, none of the voucher programs had any reported problems with racial and ethnic discrimination, though three programs reported they suspect it may be occurring.

Landlord problems with the screening and eviction process were seen in five communities. Most agencies reporting landlord complaints about the processes stated that landlords wanted the voucher program to assume control over the process. Nevertheless, all programs give the authority for screening and eviction to the landlord. As for other HUD regulations, half of the communities reported that landlords have problems with the HUD regulations with the most common complaints surrounding paperwork and the inspections process.

Programs also reported other problems in the administration of vouchers. Two reported problems with the insufficient administrative monies given by HUD and stated it is difficult to accomplish their mission with the given funds. In the same vein, two programs also reported that they had too many clients to serve with given resources. One program mentioned that HUD regulations continue to change and it makes their job difficult with constant change. Another program saw that their community has a lack of housing variety to make the program work well. Another program identified the challenge of getting client participation in the process. Finally, two programs reported that the Housing Choice Voucher program often ignores needs like security deposits or helping tenants get utility hook-ups.

Recommendations

In order to help make North Carolina’s Housing Choice Voucher program become stronger, the findings of this study point to the following changes:

• Increased Tenant and Landlord Education:  Voucher administrators should consider expanding their public education efforts toward tenants and landlords. In particular, the educational program should clearly enumerate the rights and responsibilities of the tenant and landlord. Furthermore, educating landlords specifically could mitigate the problems associated with landlords refusing vouchers and helping them learn their proper role in screening and eviction.

• Additional Resources Needed:  By all indications, Housing Choice Voucher administrators are limited in what they can accomplish. Limited funds for administration seem to prevent fully exploiting the potential for the voucher program. Moreover, administrators should be keen to explore options already available such as applying for additional vouchers when HUD makes them available.

These recommendations should be augmented by further research on an expanded sample to determine if there are other issues in administering the Housing Choice Voucher program.

Conclusions

The Housing Choice Voucher program appears to be an effective market-based solution to providing affordable rental housing for low-income families, though nationally some problems have occurred during implementation. North Carolina programs face their own set of challenges to meeting this mission, particularly landlords denying vouchers and too few resources for the demand created by vouchers. Still, overall, North Carolina does not face many of the problems associated with the Housing Choice Voucher program in other areas of the country.