HUD considers change to Section 8 rents

HUD considers change to Section 8 rents that could upend rental market

The federal government is considering an overhaul of its subsidized housing program that would change the way it determines rent limits from a one-size-fits-all approach for metro areas to a more localized approach that could allow more people to move to Baltimore's suburbs.

The proposal is designed to allow people to use Section 8 vouchers — known as Housing Choice Vouchers — for apartments in areas that are currently too expensive, offering families a better chance at the lifelong benefits that come from growing up in more stable neighborhoods with less crime, lower poverty rates and better schools.

The change could have broad implications for the Baltimore region's rental market and for poor families in the city, where at least one recent study found a child's chance of escaping poverty is the worst in the country.

"It would be awesome because of course people want their kids to be in a safer neighborhood, a nicer neighborhood with better schools," said Cynthia Barley, 50, a voucher recipient who is disabled and pays about $130 a month toward the $1,088 rent her landlord charges for a two-bedroom apartment in Brooklyn.

Housing advocates welcomed the possible change, calling it long overdue, but some officials voiced concern about its unintended consequences for the city and others said it could disrupt otherwise stable neighborhoods in the counties. Voucher holders represent about 7 percent of the region's renters and 9 percent in the city, according to a recent Baltimore Metropolitan Council report.

"This is nothing more than a big push to try to spread government-subsidized rentals in all the areas of the county," said Del. Patrick L. McDonough, a Republican who represents Baltimore and Harford counties. "I think it's going to turn out to be a big issue. ... I'll fight it in any way I can."

Under the current system, voucher holders typically pay about 30 percent of their incomes in rent, with the voucher covering the difference, up to a HUD-determined limit that supposedly reflects market prices in a metro area.

HUD could change to a ZIP code-based approach by 2017; the department started seeking comments on it this month, said Kathy O'Regan, HUD assistant secretary for policy development and research.

Philip Tegeler, executive director of the Poverty & Race Research Action Council, a Washington-based civil rights policy organization, said he expects HUD to implement the change, even if it generates some pushback.

"This administration at HUD is not afraid to do reform. The question is how quickly they'll get the rule out and when it will go into effect," he said. "It's not an imminent change but it's a really important policy shift."

Baltimore Housing Commissioner Paul T. Graziano worried about the potential effect on the city. Lower rent limits could discourage badly needed investment in vacancy-plagued areas or force voucher holders who wish to remain in the same neighborhoods into lower-quality units, he said. If average subsidies increase, fewer people might be able to participate.

"We're not attacking this thing. We understand the goal of expanding areas of opportunity on the one hand," Graziano said. "But we're very concerned about the impact in the city on the other hand and, again, we just think that it needs a lot more scrutiny and a lot more analysis."

HUD began using the ZIP code system in Dallas in 2010 after a lawsuit that argued that metro-wide voucher rent limits steered recipients to slums, contributing to racial segregation and limiting families' ability to find housing in better neighborhoods.

In Dallas, the switch has already prompted some families to move into better areas, while the program's cost remained neutral because the rent increases as families moved to better neighborhoods were made up for by reduced payments to landlords elsewhere, O'Regan said.

Among the Baltimore region's roughly 25,000 voucher holders, more than 60 percent — or about 14,664 households — live in areas deemed "low opportunity," based on measures including education, poverty and crime, according to a report issued last year by the Baltimore Metropolitan Council.

A recent study led by Harvard University economists found that for children under 13 whose families moved to better neighborhoods, each year made a difference in terms of higher annual incomes in their 20s and increased college attendance rates. Their research found separately that of 100 metro areas in the United States, children in Baltimore have the lowest chances of escaping poverty.

Stefanie DeLuca, a professor of sociology at the Johns Hopkins University, who has examined the ways neighborhoods affect family outcomes, said the change will go a long way toward expanding opportunity for families in these neighborhoods.

"In many ways," she said, "this change is a no-brainer."

Shonda Billings, 34, is less persuaded that the change will help families.

Accepted into the Section 8 program in 2014 after more than a decade on the waitlist, she found a two-bedroom place in Hamilton Hills for herself and her two children for $855 a month, calling it a big step up from Park Heights, where she rented before.

If the program encourages people to move to more expensive neighborhoods, she said, their other costs could rise.

"That defeats the purpose," she said. "To me, I really think they're trying to push minorities out of the city and bring the majority back in."

To have the desired effect, DeLuca and others said, any change would have to be accompanied by counseling for families about the opportunities in other areas and outreach — or legal action — to change the minds of landlords now unwilling to accept tenants from the program.

Even then, minimal public transport and the scarcity of social networks in outlying areas might sustain the appeal of traditional neighborhoods, said Richard Hall, who served as state planning secretary under former Gov. Martin O'Malley and is now executive director of Citizens Planning & Housing Association Inc. Still, he said, taking a more targeted approach "makes sense."

The ZIP code approach builds on efforts underway in Baltimore, thanks to a lawsuit filed against HUD in 1995. That suit led to the establishment of a Baltimore-area mobility program that allows vouchers to be used for apartments with higher rents if they're located in higher-opportunity areas.

HUD's proposed change goes further by reducing the rent limit for some areas.

Jack BeVier, a partner at The Dominion Group, which rents to about 500 voucher holders in Baltimore and performs rehabs, said reducing voucher payments could discourage investment in low-rent, high-poverty areas.

Graziano shares that concern and expects to seek changes to the formula for the new rates proposed by HUD — many of which are below current levels in the city.

"We're going to look at it a lot more closely, but the preliminary [signs] are that it would really dramatically undermine what we're doing and severely limit people's housing choice and reduce the quality of the housing they would end up with," he said.

If many people used the vouchers for more expensive areas, it also could reduce the total number of recipients — a blow for a city where nearly 74,000 people applied last fall for a spot on the waiting list.

On the other hand, if the average subsidy declined, more people might have access to assistance.

Eva Rosen, a postdoctoral fellow at Harvard University, who lived in Park Heights and researched landlords in the Section 8 program, said many Baltimore property owners seek voucher tenants, for whom they know the government will guarantee the majority of the rental payment at a premium rate.

Tailoring rents to local markets could reduce the incentive to steer voucher recipients to units in lower-rent areas and potentially reduce housing costs, even for people who don't have vouchers, she said.

"If it works the way it's supposed to … then the fair-market rents in poor neighborhoods will go down and fair-market rents in wealthy neighborhoods will go up," she said.

County leaders said they are reviewing the proposal to see what effects it might have.

"These new guidelines could provide increased housing opportunities for families and individuals to give them better access to education, transportation and job opportunities," said Ellen Kobler, a spokeswoman for Baltimore County Executive Kevin Kamenetz.

Clifton Martin, CEO of the Housing Commission of Anne Arundel County, said the idea has merit and he expects it to be implemented, but he worries it could make the program more difficult to administer, more complicated for tenants looking for properties and more opaque for landlords. It also may reduce the number of voucher holders since rent limits increase in Anne Arundel, he said.

Even those who stand to benefit recognize HUD's proposal could spark opposition.

"Not only will they have to fork out more money," Barley said, "but neighborhoods are going to complain about poor people coming in."

nsherman@baltsun.com

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