Earlier this month, our Managing Director Ben Metcalf testified before the House Financial Services Committee at a hearing on whether the United States Congress should advance legislation to make housing choice vouchers universally available to qualifying low-income households. Today only about one-quarter of the eligible population receives a housing choice voucher. Making the voucher an entitlement was a campaign pledge for the Biden-Harris Administration, but that idea has been notably missing from the otherwise bold set of proposals for housing investment included in the American Jobs Plan and American Family Plan recently introduced by the White House. Those plans have included critical major capital investments, like new funding for the Low-Income Housing Tax Credit program, homeownership tax credits, energy retrofits, and public housing modernization. But the plans offer only incremental investments into ongoing federal rental assistance, in particular a request for $2 billion for new project-based rental assistance aimed at directly spurring construction.
Universal voucher assistance could indeed have a transformative effect on our housing challenges, and their absence from these major plans is unfortunate. Universal vouchers could create a ready pathway to end street homelessness, functionally eliminate housing cost burdens for low-income households, greatly aid household mobility, substantially reduce child poverty, and facilitate new housing construction. For these reasons, House Financial Services Committee Chairwoman Maxine Waters has introduced the Ending Homelessness Act of 2021, which would establish a universal housing program. During their remarks at the recent hearing, the Democratic members of the House Financial Services Committee at least seemed to embrace the necessity of this step. Yet, beyond the sizable price tag for onboarding housing vouchers as a new federal entitlement program (estimated by the Urban Institute at $62 billion per year), there may be some logic to what may be the Administration’s interim plan to incrementally add to the pool of federal rental assistance while tackling other housing challenges first.
Now is a good time for a closer look at opportunities to improve the housing voucher program. A number of operational challenges complicate the program’s efficiency, particularly in our most supply-constrained markets like those in California where even voucher-holding families still struggle to access decent housing. As the Terner Center’s recent federal framework Building a Better Ladder of Housing Opportunity in the United States lays out, adding funds to our existing programs without addressing the underlying flaws in program design and delivery would miss an opportunity to finally “get it right.”
Accordingly, Metcalf’s testimony offered five next steps to effectively realize the vision of housing voucher expansion:
First, accelerate the deployment of known fixes to the voucher program:
- Update the Department of Housing and Urban Development (HUD)’s process for setting Fair Market Rents.
- Streamline and improve the physical inspection program to make it less onerous for owner participation.
- Make it more difficult for landlords to directly or indirectly discriminate against voucher holders seeking to rent housing.
- And invest heavily in renter counseling and landlord outreach.
Second, prioritize expanded vouchers for the most vulnerable populations, such as people currently or formerly experiencing homelessness or other extremely-low-income people, in alignment wherever possible with state and local affordable housing priorities.
Third, accompany voucher expansion with a targeted renter’s tax credit for those who are approaching a phase-out of eligibility. As a renter’s income rises, their assistance declines. Yet they still often lack the resources to build savings that can facilitate greater economic mobility. And renters just above the upper eligibility threshold still often have only a tenuous foothold in housing security, especially if vouchers are prioritized as they are today to extremely and very low-income households. A targeted renter’s tax credit could ensure expanded assistance helps renters avoid the twin challenges of the “subsidy cliff” and asset limits.
Fourth, mandate capacity standards for voucher-administering entities and have new vouchers administered by the same entities that are overseeing state and local affordable housing programs wherever possible. The current system requires HUD to work through thousands of voucher-administering public housing authorities (PHAs) whose capacity to implement the voucher program vary greatly. In addition, PHAs today often sit outside of the mainstream affordable housing capital subsidy delivery structure because of their unique structure and funding streams, responsibilities for public housing, and administrative and compliance relationships to HUD. HUD should be given the flexibility to allocate new vouchers to state or regional governments, or other non-traditional entities.
Fifth, pair vouchers with a robust production-oriented strategy. The federal government should work constructively with local governments to eliminate or modify exclusionary zoning and other land use policies that serve as harmful barriers to new housing. A large share of new housing vouchers should also be tied to new rental housing communities through project-based allocations. In financing traditional affordable housing, project-based vouchers provide additional mortgage proceeds that can be used to close funding gaps in many new construction and preservation projects. But an expanded voucher program should also be used to spur market-rate mixed income construction, where new vouchers are paired with expanded federal investment into programs used by market-rate developers, including the tax-exempt bond program, the Federal Housing Administration’s 221(d)(4) programs, and more aggressive set of debt products that might be made available by Fannie Mae and Freddie Mac.
A universal housing voucher program is an overdue step to alleviate homelessness and widening inequality. Such a change should be paired with reforms to increase the effectiveness of the program as well as strategies to bolster housing production.
Read Managing Director Ben Metcalf’s full written testimony here. His remarks to the House Financial Services Committee and his responses to the variety of questions raised by members of Congress over the three hour discussion can be viewed below. His response to Questions for the Record submitted by Committee Members can be read here.