Characteristics and Dynamics of Homeless Families with Children. 2.1 Assisted Housing Programs

10/01/2007

Assisted housing programs are examined first, which, of the two groups of programs, is the more likely to be usable by parents who have become homeless and are seeking permanent housing. Because assisted housing programs charge rent on the basis of actual income, however low, any family exiting homelessness should be able to afford to live in an assisted housing unit.

Administrative data collected by HUD make it possible to know a great deal about the units in the assisted housing programs: how many there are, how many bedrooms they have, whether families with children are living in them, and where they are. In 1998 HUD released a public-use data set called Pictures of Subsidized Housing that contains this information.6 The estimates of numbers of units in Exhibit 3 are based on the percentage distributions of different types of assisted housing units as of 1998 but updated to reflect the numbers of public housing, project-based Section 8, and voucher units as of 2004 that are shown in January 2005 HUD budget materials (U.S. Department of Housing and Urban Development [HUD], 2005a).

Of the 4.8 million total units of assisted housing, 2.6 million have two bedrooms or more and potentially could be occupied by families with children. More than half a million of these assisted rental units (511,000) turn over each year and might be used by families exiting homelessness. Exhibit 3 shows how these units are distributed across the three major programs and also shows how many have more than two bedrooms.

Category

Public housing

Section 8 projects1

Housing Choice Vouchers

Total assisted housing units

Exhibit 3:
Assisted housing units that could serve families with children

Two-bedroom units

280,000

408,000

779,000

1,467,000

Annual turnover

50,000

73,000

164,000

287,000

Three or more bedroom units

290,000

201,000

646,000

1,137,000

Annual turnover

52,000

36,000

136,000

224,000

Total units that could serve families with children

570,000

609,000

1,425,000

2,604,000

Annual turnover

103,000 110,000 299,000  512,000
1 Units produced under the Section 8 Moderate Rehabilitation program are classified as belonging in Section 8 projects. This is the “mainstream” Section 8 Moderate Rehabilitation program, which has many units with multiple bedrooms, as distinct from the “SRO Moderate Rehabilitation” program, which is one of the HUD McKinney-Vento programs for the homeless and has mainly zero or one-bedroom units.

Public Housing. The oldest of the assisted housing programs (created in 1937), public housing now has approximately 1.2 million units. Fewer than half of those units, approximately 570,000, have multiple bedrooms. While the popular image of the public housing program is that of a family program, a large portion of the program consists of developments that have been designated for occupancy by the elderly. In addition, “general occupancy” public housing developments often have some zero or one-bedroom units, as well as units with multiple bedrooms.

The public housing program is not growing. New units of public housing have been produced in the past 2 decades in very small numbers and only when a public housing authority (PHA) has received capital funds that may be used to replace public housing units that have been demolished or otherwise retired from the stock of public housing. The current (as of 2005) scenario is that a few PHAs may be able to amass sufficient “replacement factor” capital funds to undertake the development of new projects. Such developments would not add to the overall stock of public housing that might serve families leaving homelessness. On the other hand, it might be possible to persuade one or more PHAs to agree that some (or all) units in a replacement factor project should be used for parents who are exiting homelessness. The use of replacement factor funds requires approval from HUD.

The number of multiple bedroom public housing units has dropped slightly over the past decade, as distressed public housing developments have been redeveloped under the HOPE VI program or otherwise retired from the public housing stock. The estimates in Exhibit 3 reflect the loss of about 100,000 public housing units since 1998 and are based on an assumption that most of the reduction has been in family units. Many of those units are not lost to the entire system of assisted housing, because demolished public housing units are replaced by Housing Choice Vouchers.

For the public housing program as a whole, recent analysis of administrative data shows that between 10 and 14 percent of all households in the program are newly admitted each year (HUD, 2002). An analysis focusing just on families with children suggests that 18 percent of units occupied by families with children become vacant each year (Lubell, Shroder, and Steffen, 2003).7 Applying this 18 percent rate to public housing units with two or more bedrooms, it is estimated that 103,000 units that could be occupied by families turn over each year, including units with two bedrooms and units with three or more bedrooms (Exhibit 3).

Public housing developments are owned and operated by PHAs. Both the capital and the operating costs for public housing are funded by grants from the Federal Government. Waiting lists for the program are maintained by PHAs and, in recent years, Federal law has given PHAs fairly broad discretion for setting priorities for who gets selected from the waiting list to fill vacant units on the basis of income level, household type, and other preferences that could include, for example, work effort or special needs.

Project-based Section 8. Project-based Section 8 is actually a family of programs that produced subsidized rental housing during the 1960s, 1970s, and 1980s. Section 8 projects either were built in the first place with rental subsidies that follow the assisted housing rules (30 percent of actual income is charged for rent) or had such Section 8 subsidies added to them later in order to make them more affordable for current residents or to help maintain the financial viability of the housing developments, or both.

Section 8 projects are privately owned, and the private owner contracts directly with HUD to receive for each occupied unit a subsidy equal to the difference between 30 percent of the household’s income and a total rent agreed to by HUD as necessary to operate the housing development and pay its debt. Private owners of Section 8 projects have somewhat less discretion than PHAs to set their own priorities for their waiting lists, and many owners take households from their waiting lists on a first come, first served basis. They may—and most do—screen potential tenants for such things as credit ratings, rent payment histories, and criminal records.

As shown by Exhibit 3, there are 609,000 multiple bedroom units that might be occupied by families with children in privately owned Section 8 projects. About 408,000 of these units have two bedrooms, and 201,000 have three or more bedrooms. It is assumed that the annual turnover rate for family units is the same as for public housing, 18 percent. Thus, 110,000 units that could be occupied by families with children become available each year, including units with two bedrooms and units with three or more bedrooms.

Like public housing, the project-based Section 8 program is shrinking at a modest rate, rather than growing. Owners of Section 8 projects have the legal authority to end their contracts with HUD when those contracts come to the end of the term (the number of years) originally agreed to. Many Section 8 projects have reached that “opt out” point, and some owners have chosen to leave the program and convert their property to market rate rental housing or to something else. The numbers in Exhibit 3 reflect a reduction of about 5 percent of the project-based Section 8 units between 1998 and 2004. As is the case for public housing, some of the “lost” units have been replaced by vouchers, and these increases in the size of the voucher program are reflected in Exhibit 3.

Housing Choice Vouchers. Housing Choice Vouchers are tenant-based rather than project-based. Families and individuals use subsidies administered by PHAs (usually, but not always, the same entities that own and operate public housing) to rent private market housing. The housing must pass a housing quality inspection, and the landlord must be willing to participate in the program.

Vouchers do not have a predetermined distribution of unit sizes. As a household comes off a PHA’s waiting list, the PHA issues a voucher for the unit size needed by the household. In the earliest years of the voucher program and its predecessor Section 8 certificate program, PHAs kept separate waiting lists for different unit sizes, but that practice ended many years ago. Over time the voucher program has become a program serving mainly families with children. As shown by Exhibit 3, more than 1.4 million of the approximately 1.9 million vouchers are used to rent units with two or more bedrooms: 779,000 in two-bedroom units and 646,000 in units with three or more bedrooms. The voucher program is by far the largest component of assisted housing for serving families with children. The annual turnover rate for vouchers is 21 percent (Lubell, Shroder, and Steffen, 2003). Assuming that families with children come to the top of waiting lists at the same pace as before, it is estimated that 299,000 vouchers each year become available for use by new households.

The voucher program began in the mid-1970s, grew at a rapid pace during the 1980s, grew at a slower pace during the 1990s, and is now static in size, except for the growth associated with vouchers that are allocated to PHAs to replace public housing units retired from the stock and units in Section 8 projects with owners that opt out of the housing assistance system.8

PHAs administering the voucher program have been given increased flexibility to determine their own priorities among the households on the waiting lists for the program. During the 1990s, the funds appropriated by Congress for additional vouchers often included special set-asides of units for the homeless or for people with disabilities, but these set-asides have disappeared and the units have been absorbed into the mainstream voucher program. In addition, housing legislation in the late 1990s eliminated a system of Federal preferences that put at the top of voucher waiting lists households with extreme rent burdens (paying more than 50 percent of their income for housing), households living in substandard housing, and people who were homeless. Instead, an income-based rule applies: at the time vouchers are first used, 75 percent of those using them must have incomes below 30 percent of the local median (“extremely low” incomes). Subject to this constraint, PHAs can set their own preferences for admission to the voucher program.

Exhibit 4 compares the NSHAPC-based number of families with children who need permanent mainstream housing from Exhibit 2, and the unit sizes they need, with the annual turnover of assisted housing units from Exhibit 3. To compare annual turnover in assisted housing with a very rough estimate of the number of parents leaving homelessness with children during the course of the year, the point-in-time estimates shown on Exhibit 2 have been multiplied by 3.

Exhibit 4:
Comparison of annual turnover of assisted housing units with homeless families
that need mainstream permanent housing

 

Annual turnover in assisted housing

Category

Public housing

Section 8 projects

Vouchers

Total

Total mainstream units needed/ratio

Two bedrooms

50,000

73,000

164,000

287,000

118,290 2.4 to 1

Three or more bedrooms

52,000

36,000

136,000

224,000

48,060 4.7 to 1

Total 103,000 110,000 299,000 512,000 166,350 3.1 to 1

There are about three units of assisted housing turning over each year for every homeless parent who needs permanent mainstream housing. Furthermore, for the nation as a whole, there is no relative shortage of units that could serve families who need three or more bedrooms. The ratio of units turning over to needs for such units is almost 5 to 1.

Almost 60 percent of the units potentially available to parents who have become homeless and their children are in the Housing Choice Voucher program, close to 300,000 units. There are slightly more family units in the privately owned Section 8 stock than in the public housing program, although the public housing program has substantially more units turning over each year for families who need three or more bedrooms.

The next two sections (2.2 and 2.3) examine the degree to which the affordable housing programs, HOME and the LIHTC, may provide an additional potential resource for families leaving homelessness. Section 2.4 discusses the barriers that may prevent parents who have become homeless from using assisted or affordable housing and describes some strategies for overcoming those barriers.

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