Today’s Read: Federal Rules Hiking Rents Could Hit 56,000 Low-Income Families Hard

Update: On November 15th, HUD announced that it had exempted New York City and other cities with a vacancy rate below 4 percent from the changed rule.

The Section 8 Housing Choice Voucher program is one of the most powerful tools for ensuring housing stability, and it is consistently proven to be an effective long-term solution to homelessness. But a new rule proposed by the federal Department of Housing and Urban Development (HUD), which funds Section 8, could dramatically alter the program – and put tens of thousands of households in New York City at risk of losing their homes.

The Section 8 program provides a crucial buffer against unaffordable housing costs by covering a portion of the rent for low-income tenants. The voucher holders contribute 30 percent of their income; HUD covers the remaining amount up to a certain limit, based on its determination of the Fair Market Rent (FMR) for that apartment.

HUD is now proposing to change the way it calculates that rent limit by utilizing a method referred to as “Small Area Fair Market Rent” (SAFMR). The proposed method would base the rent limit calculations on the rents within specific zip codes, rather than using a uniform FMR for all of New York City and surrounding areas. The putative goal is to encourage low-income renters to move into affluent (and designated “high opportunity”) neighborhoods – where they would supposedly have access to better schools and community services – by increasing the amount of their vouchers.

One result of this approach would be that those who remain in poorer neighborhoods would see the value of their voucher drop. For example, a family living in the Lower East Side would see their rent limit drop from $1,571 to $1,130 per month, and thus the amount of their Section 8 voucher would be decreased by $441 – creating a devastating financial burden on the family. These low-income families would have to come up with hundreds of additional dollars each month, or try to find even cheaper apartments somewhere – a nearly impossible task in New York City’s housing market.

Because 65 percent of voucher holders in NYC live in zip codes that would be considered “low-opportunity” under the new guidelines (a designation that does not account for the upward trajectory of many of these neighborhoods), 56,000 households would see their share of monthly rent increase. The low vacancy rate throughout NYC, as well as discrimination and other barriers, would make it virtually impossible for all of these families to move to “high-opportunity” neighborhoods, even with the incentive of a more valuable voucher.

While deconcentrating poverty is a laudable goal, the proposal would have unintended – and catastrophic – ramifications in a housing market as tight as New York City’s. The Coalition for the Homeless and 46 other organizations signed onto comments objecting to the proposed rule, and testimonies delivered at a New York City Council hearing on Wednesday evidenced broad consensus among elected leaders, advocates and tenants that this proposed change would do far more harm than good. With record numbers of New Yorkers bedding down in shelters and thousands more grappling with unaffordable rents, it is imperative that HUD understands that the housing market here is fundamentally different than in test cities such as Houston (on which the proposal is based), and exempt New York City from the rule. If it does not, it will needlessly exacerbate an already dire housing and homelessness crisis.

The Daily News summarized the main concerns with HUD’s proposal:

Citywide, tenants with Section 8 would have to pay more in 65% of ZIP codes.

More than half of the households who would be hit with rent hikes include seniors or people with disabilities, [NYCHA executive vice president Cathy] Pennington said. Families with vouchers make on average just $15,803 a year.

Under Section 8, the tenant pays 30% of their income in rent, and the feds pick up the tab for the rest, up to a limit based on the fair market rent for the area. It’s currently $1,571 for a two bedroom in the New York area.

The new rules would replace the limit with 187 different limits for each ZIP code. Families living in a neighborhood where the cap got cut would either have to pay the difference themselves, or move.

“The bottom line is that in New York City, there’s nowhere to move to,” Pennington said.

The well-intentioned proposal ignores that even if residents are willing to leave their long-time homes, it may be impossible to find an apartment that will take the voucher, she said.

Just 3.45% of city apartments are vacant, dropping to 1.8% for the least expensive ones.