Velazquez, Schumer Question Section 8 Changes

Letter from NYC Lawmakers Says Plan Could Raise Rents on Working Families

Washington, DC – U.S. Rep. Nydia M. Velázquez (D-NY) and U.S. Senator Chuck Schumer (D-NY) have written the U.S. Department of Housing and Urban Development (HUD) about the agency’s proposal to change how it calculates the value of housing vouchers for low income renters. HUD’s plan would begin tying the value of these Section 8 vouchers to rents in a zip code rather than the current system that is based on the larger metropolitan area.

While the intent of the plan is to make more affluent areas affordable for voucher holders, in a place like New York City with a very low vacancy rate, the outcome would be increasing the amount that voucher holders must pay out of pocket to stay in their home. In their letter, which was signed by all Democratic Members of the New York City Congressional delegation, the Members of Congress argue that HUD’s proposed changes to the Section 8 voucher program would be a poor fit for New York City.

“Forcing this ‘one-size fits all’ approach to the voucher program could leave thousands of New Yorkers facing an unfair choice between moving or paying more rent out of pocket,” said Rep. Velázquez. “At minimum, HUD needs to think through how any changes would impact cities like New York and how to avoid disrupting tenants’ lives.”

“In a place like New York City with a very low vacancy rate, the outcome of this plan would be increasing the amount that many voucher holders must pay out of pocket to stay in their home -- or even cause some to lose their affordable housing. HUD must go back to the drawing board and work with the affordable housing community in New York to devise a plan that works,” said Senator Schumer.

The full text of the lawmakers’ letter is below.

The Honorable Julian Castro
Secretary
U.S. Department of Housing and Urban Development
451 7th Street S.W.
Washington, D.C. 20410

Dear Secretary Castro:

We write to you on a matter of pressing concern in the administration of the Housing Choice Voucher (“HCV”) program in New York City. The Department of Housing and Urban Development’s (“the Department”) recent proposal to use Small Area Fair Market Rents (“SAFMRs”) in New York City is well intentioned, but we are worried the proposal is likely to result in unfavorable outcomes for a number of New York City’s tenants and families who currently participate in the HCV program.

The Department’s proposal seeks to use SAFMRs in New York City, and other select metropolitan areas around the country, to provide tenants with a more effective means to move into neighborhoods of higher opportunity. Under the proposal, the Department will calculate Fair Market Rents (“FMRs”) by ZIP Code, instead of calculating FMRs as a single metropolitan area FMR, in order to more accurately reflect housing sub-markets within a metropolitan region. By calculating FMRs by ZIP Code, the Department hopes that Small Area FMRs will afford HCV tenants and families with a subsidy adequate enough to make higher opportunity neighborhoods more accessible.

We appreciate the Department’s desire to encourage and enhance outcomes and opportunities for tenants and families, and the proposal may work well in some localities. However, in the high-cost, extremely low vacancy area of New York City, the proposal is likely to negatively impact a majority of tenants and families participating in the program.

In New York City, the local housing agencies estimate that rental assistance payments would decrease for roughly 56,606 HCV tenants because of the Department’s proposal. This means, that within 13 to 24 months of the final rule taking effect, these individuals and families will be expected to move to a higher-income neighborhood, be forced to re-negotiate with their landlord for a lower rent, or assume a significantly higher rent burden in order to stay in their home.

For those tenants and families facing a decrease in their monthly rental assistance payments that may choose to move, these individuals and families are likely to face limited rental options and encounter significant hardship in finding new housing due to the City’s extremely low vacancy rate, which currently stands at 3.45%. Some may face financial barriers to moving such as an inability to afford a larger security deposit or associated moving costs. Others may decide to stay in their home, choosing instead to remain close to social, family, or professional networks in their neighborhoods.

For those tenants and families who choose to stay in their homes, the change to SAFMR will likely result in a reduced voucher subsidy. It is unlikely that landlords will accept lower rents, which will lead many existing tenants and families to face a significantly higher rent burden just to stay in their home. One estimate anticipates that in some ZIP Codes around the City the average rent burden will rise by as much as $403 per month. Further, lowered voucher subsidies may drive some landlords who currently accept vouchers to leave the Department’s program altogether, resulting in displacement of current voucher households and a further reduction of rental units affordable to those individuals and families who need them the most.

At the other end of the spectrum, rental markets across the five boroughs where SAFMRs will be greater than currently published FMR levels, the net result would likely be an increase in per capita spending for each unit of HCV assistance. At a time when budget authority is already insufficient to support the existing number of New York City tenants and families participating in the program, the rise in the subsidy cost per household is likely to further reduce the number of tenants and families that can be assisted by the program overall.

Any final rule adopted by the Department must limit the harm to those existing tenants and families currently participating in the HCV program. In an extremely tight rental market like New York City, the final rule should not force those individuals and families most in need of rental assistance to choose between facing a higher rent burden and leaving their home. In response to the Department’s request for public comment, a number of New York City’s housing agencies, tenant-based organizations, and housing experts have all submitted a number of forthright and constructive ideas and recommendations for improving the Department’s proposal. We urge the Department to review each and every-one of those ideas carefully and include their recommendations in adoption of the final rule to ensure New York City HCV tenants and families are not significantly impacted by a substantial and abrupt decrease in FMRs.

Providing low-income individuals and families with more housing options, especially in high-opportunity neighborhoods is something we should all strive to achieve with the HCV program. But program changes should not be implemented that will negatively impact New York City individuals and families who choose not to or who are unable to move.

Sincerely Yours,

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