Federal Government Aid for the Homeless - Vouchers

How Voucher Programs Work

Voucher programs pay a portion of the rent for qualifying families. Only low-income families are eligible, specifically those with incomes lower than half of an area's median income. Under some circumstances, families with up to 80% of the local median income may also qualify; such cases may involve, for instance, families displaced by public housing demolition. The family pays 30% of its income in rent. Vouchers are issued by the Public Housing Agency, which executes assistance contracts with the landlord, who must also qualify.

Two major voucher programs are available: tenant-based and project-based. In tenant-based programs, the voucher "follows" the tenant when the tenant moves to another qualifying unit. In project-based programs, the voucher "attaches" to a project. Families are directed to participating projects after they qualify. Tenants cannot automatically transfer their voucher in a project-based dwelling to another—but they may qualify for tenant-based vouchers after they move.

In addition to these two basic programs, HUD also has five other voucher programs. Conversion vouchers are used to help tenants relocate when public housing is demolished. Family unification vouchers are used to help families stay together. Homeownership vouchers assist families in purchasing a first home or another home if the family has not lived in a house in the past three years. Participants must be employed and have an income of at least minimum wage. Vouchers for people with disabilities and welfare-to-work vouchers assist the elderly or non-elderly disabled and families transitioning from welfare to work.

In all of these programs, the housing supplied is privately owned and operated and rents paid are at or below fair market rent (FMR). HUD determines the FMR in every locality of the nation by an annual survey of new rental contracts signed in the past fifteen months. The FMR is set as the fortieth percentile of rents paid, meaning that 40% paid a lower rent and 60% paid a higher rent. HUD has chosen the fortieth percentile to increase housing choices while keeping budgets at reasonable levels. Table 5.5 presents FMRs used by HUD in a sample of cities around the country in 2005. Rents in certain cities are calculated at the fiftieth percentile under new HUD rules that went into effect in 2001 for thirty-nine markets, which resulted in a raise in the FMR in these localities.

Of the cities in Table 5.5, the highest FMR for 2005 was in Boston, Massachusetts ($1,266 per month). The lowest FMR was in Louisville, Kentucky ($553 per month).

Voucher Usage

As shown in Table 5.6, the amount of subsidized housing and Section 8 housing vouchers declined across all categories between 2003 and 2005. Project-based Section 8 housing has declined dramatically because funding for new construction stopped in 1983 with some minor exceptions (including construction/rehabilitation aimed at supporting homeless programs). Support of housing in such units continues, but the housing stock is going out of use through demolitions and conversions. Thus in 2005 the vast majority of Section 8 housing vouchers were tenant-based.

Characteristics of Voucher Residents

Although tenant-voucher residents have a fractionally higher average household income than public housing residents, they also have a larger family size. Therefore, two-thirds of voucher users (66%) and a little more than TABLE 5.5
Fair market rental rates for selected metropolitan areas, 2005
[In dollars]
SOURCE: Adapted from "Survey Results," in Fair Market Rents for the Voucher Choice Housing Program and Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 2005, Department of Housing and Urban Development, February 28, 2005, http://www.huduser.org/Datasets/FMR/FMR2005R/Revised_FY2005_FMR_Preamble.pdf (accessed March 12, 2005)

TABLE 5.6
Subsidized units available under public housing and voucher programs, 1998, 2003, and 2005
SOURCE: Created by Melissa Doak for Information Plus from "Basic Counts," in A Picture of Subsidized Households in 1998, U.S. Department of Housing and Urban Development, August 28, 1998, and Resident Characteristics Report, U.S. Department of Housings and Urban Development, March 2005, http://www.hud.gov/offices/pih/systems/pic/50058/rcr/index.cfm (accessed April 11, 2005)

half (56%) of public housing residents have an extremely low income for their family size (See Table 5.7). The shift of the subsidized population from public housing toward voucher housing represents not an improvement so much as a shift in policy, whereby the provision of housing in the future appears to be headed for privatization. Barbara Sard has argued in the HUD journal Cityscape: A Journal of Policy Development and Research ("Housing TABLE 5.7
Selected characteristics of subsidized housing populations, 2005
SOURCE: Adapted from Resident Characteristics Report, U.S. Department of Housing and Urban Development, March 2005, http://www.hud.gov/offices/ pih/systems/pic/50058/rcr/index.cfm (accessed April 11, 2005)

Vouchers Should Be a Major Component of Future Housing Policy for the Lowest Income Families," vol. 5, no. 2, 2001) that tenant-based voucher programs give low-income people choices in housing and avoid problems of concentrating all poor people in housing projects.