Possible PHA Strategies to Respond to 04 Funding Shortfall



Possible Strategies to Respond to the Effects of Funding Shortfalls on the Housing Choice Program at the Local Level in 2017

According to HUD PHAs will receive a proration of funding for 2017. Available strategies for PHAs to deal with funding cuts are ranked in four categories. “Best” responses are those that will advance program goals of paying reasonable rents and enhancing housing choice while providing decent quality, affordable housing to the maximum number of authorized families. Responses that would cause “minimal,” “moderate” and “severe” harm are those that undermine one or more of these goals.

|I. Best Responses |Savings Potential |Legality |Pros |Cons |

|1. Aggressive rent reasonableness|Depends on degree of |Yes (see 24 CFR 982.507|No shift in rent burden to |If overdone could cause owners to |

|– individual unit determinations |improvement possible. May |and PIH Notice 2005-1, |tenants; no mid-term |opt out; |

| |reduce rents during lease |¶ 6.) |termination of contracts |Staff intensive (though could |

| |term. | | |prioritize units with highest |

| | | | |rents) |

|1a. Across the board rent |Depending on % reduction could|?; increased if based |Same, and |More risk of owner opt-out |

|reasonableness reductions |be fairly substantial |on some data and |much less staff time required | |

| | |rebuttable by owners | | |

|2. More accurate income/tenant |Probably slim |yes |Helps PHA on SEMAP and RIM |Time-consuming; could result in |

|payment determinations | | |reviews; increases program |adverse actions for some tenants |

| | | |credibility | |

|3. Voluntary rent reductions by |Depends on % that agree; will |Probably. See PIH |No shift in rent burden to |If overdone could cause owners to |

|owners |have more potential in many |Notice 2005-9, ¶ 3(e).|tenants; no mid-term |opt out; |

| |agencies than #1. | |termination of contracts |some administrative burden |

|4. Ask HUD to order jurisdictions|Depends on circumstances; |See 982.355(d)(2), |No adverse consequences for |Reduces leasing rate for initial |

|that bill (and are not overleased)|could be substantial |(f)(4), but HUD has so |participants |PHA. May reduce access to new |

|to absorb portables | |far refused | |vouchers for families on waiting |

| | | | |list of initial agency. |

|5. Increased HQS enforcement |Depends on circumstances: |Yes |Improved housing conditions |Could increase evictions or force |

| |savings results from | | |tenants to move; may force |

| |suspending HAP for violations | | |landlords out of program; staff |

| | | | |intensive |

|6. Administrative efficiencies |Depends on circumstances |Yes: excess admin. fees|Helps PHA in long-run |PHA may want to save any excess |

| | |may be used to meet | |fees against future “rainy day” |

| | |subsidy gap | | |

|II. Responses that Cause Minimal |Savings Potential |Legality |Pros |Cons |

|Harm | | | | |

|1. No delay in rent |Small (?) and only for |Yes — option now | |Eliminates only general and |

|recertification when tenant income|agencies that now delay | | |earned income disregard in |

|increases | | | |voucher program; more staff |

| | | | |time |

|2. No new FSS enrollees |? — depends on what PHA |Depends on whether PHA meets |Saves staff time |Reduces self-sufficiency |

| |would otherwise have allowed |mandatory level (but waiver | |efforts and tenant savings |

| | |likely) | | |

|3. No “moving” vouchers for |Seems none unless don’t honor |Illegal if other vouchers being | | |

|families in project-based voucher |project-based contract or else|issued | | |

|units |part of no issuance strategy | | | |

| |below. | | | |

|4. Strict enforcement of (or |Depends on how much of a |Yes, if consistent with HUD rules,|Consistent enforcement |Rent increases for newly |

|changes to) occupancy standards on|change from current agency |including that “children of |of current occupancy |“overhoused” families. |

|unit size |policy and timing of |opposite sex, other than very |standards would promote |Larger families may have |

| |implementation |young children, may not be |fairness and uniformity |more trouble finding willing|

| | |required to occupy the same | |landlord due to restricted |

| | |bedroom or living/sleeping room.” | |BR size of voucher. May |

| | |See 24 CFR 982.401(d); HUD 6/14/04| |impair family dynamics |

| | |powerpoint, slide 52*. But see | | |

| | |PIH 2005-9, ¶ 4(b), purporting to | | |

| | |allow standard of 2 persons per | | |

| | |bedroom, regardless of sex or age | | |

| | |without waiver request | | |

|5. No rent increases for units of|Moderate [?] |Unclear. Lease Addendum and HAP |Simple to administer; no|In rising market may |

|tenants staying in-place, | |contract say rent shall not exceed|direct rent shift to |increase owner opt-outs and |

|regardless of whether rent | |reasonable rent. But HUD 6/14/04 |tenants |generally undermine |

|increase requested is reasonable. | |powerpoint, slide 55, says PHA may| |confidence in program. PHAs|

| | |not refuse to “process” owner | |may be able to minimize harm|

| | |requests for rent increases. No | |through good outreach. |

| | |known landlord legal challenge. | | |

* Housing Choice Voucher Appropriations Implementation, June 21, 2004 available at . See also Follow-Up Questions to June 14th and June 21st Broadcasts on Housing Choice Voucher Program available at .

|III. Responses that Cause |Savings Potential |Legality |Pros |Cons |

|Moderate Harm | | | | |

|1. Increase minimum rent |Depends on how many families |Yes, up to $50/month | |Hurts poorest families; |

| |paying less and likely hardship| | |tenant exception requests |

| |exceptions | | |could be time-consuming |

|2. Decrease payment |Small initially; Increases with|Yes (for new participants and movers, and|Good only if really |Shifts rent burdens to |

|standards |time, depending on % of rents |stayers after 2nd redetermination) 24 CFR|were too high (so may |tenants; undermines choice |

| |above new payment standard and |982.505(c)(3). Examine whether likely to|be better if done only|and deconcentration; could |

| |amount of moves/new |result in more than 40% of families |for some neighborhoods|hurt utilization and |

| |participants |paying more than 30%. |or BR sizes) |success (esp. for lowest |

| | |Anti-discrimination provisions probably | |income) |

| | |require new policies to apply to all | | |

| | |households of same size in particular | | |

| | |area, regardless of family type, | | |

| | |despite.the language of the conference | | |

| | |report directing PHAs to protect elderly | | |

| | |and disabled households from significant | | |

| | |impacts. PIH 2005-9, ¶3(a) advises that | | |

| | |90% of FMR floor may be waived despite | | |

| | |effect on rent burdens. May be | | |

| | |inconsistent with statute. | | |

|3. Adjust preferences to |Modest and only affects new |Yes (assuming no problem posed by Con | |Hurt homeless and other |

|admit no more than 75% and |admissions |Plan). | |extremely poor applicants |

|highest income ELI | | | | |

|households | | | | |

|4. Reducing or temporarily |Significant (but may impact |No. See HUD’s 6/14/04 webcast and |During lease, tenants’|Likely landlord opt-outs. |

|suspending payments to |future funding if suspending |powerpoint, slides 55, 56 |share of rent may not |PHA liability for penalty |

|owners (w/o rent reas.) |payments reduces determination | |be subject to |for late payments if |

| |of “units leased”) | |increase. |suspend. |

|5. No moves except to same |Depends on program size and |Unclear. If lack funds, HUD regs allow |Probably affects few |Contrary to purpose of |

|or lower rent units |types of moves |denial of all moves, not just to more |tenants and no owners |program; could interfere |

| | |expensive units. See 982.314(e)(1). But| |substantially with |

| | |HUD 6/14/04 ppt. # 53 allows denial of | |families’ lives |

| | |moves to more expensive units. May | | |

| | |violate fair housing obligations. (Cathy:| | |

| | |I think we could cut ref. to ppt in light| | |

| | |of 2005-9, ¶3(c).) Yes I agree | | |

|6. No portability (or only |Similar to above |PHA may not prohibit or treat portability|Same |Same |

|if not more costly or if | |moves differently from other moves. See | | |

|receiving PHA absorbs) | |Russell letter 10/21/04, 24 CFR 982. | | |

| | |355(e)(6), PIH 2005-1, ¶6. PIH 2005-9, | | |

| | |¶3(c): any denial of moving only if | | |

| | |insufficient funds, but does not clarify | | |

| | |meaning of “insufficient.” | | |

|7. No increase in utility |Only saves money to extent |Depends on data. PIH 2005-9, ¶3(b) | |Higher actual tenant |

|allowance |gross rents currently below |notifies PHAs that HUD may waive the | |payments |

| |payment standard. |requirement of 24 CFR 982.517(c) that | | |

| | |utility allowances must be increased any | | |

| | |time utility rates increase by 10% or | | |

| | |more. May violate statutory rent | | |

| | |requirements. CB: is this right? YES FOR| | |

| | |A CHART IT IS OK. | | |

|8. No FSS escrow deposits |Depends on # of families |No. See HUD’s 6/14/04 powerpoint, slide |May make up payments |Undermines PHA commitments |

| | |56. |later | |

|IV. Responses that Cause |Savings Potential |Legality |Pros |Cons |

|Severe Harm** | | | | |

|Reduce # served by |Substantial |yes |Easier to reverse than |Hurts applicants at top of list and |

| | | |many other policy |social service programs that rely on |

|a. not issuing unused | | |changes; saves staff |availability of vouchers. Could lock in|

|authorized vouchers (on | | |time |lower maximum number of vouchers. Hard |

|turnover or otherwise) | | | |to make visible. If lose high-performer|

| | | | |status, more admin. burdens |

| b. by more aggressive |Substantial |Depends on grounds and process| |Also hurts families terminated; because|

|fault terminations | |used | |formerly would have worked out problems|

| | | | |may be seen as arbitrary or unfair; |

| | | | |staff intensive |

| c. by also freezing |Substantial |Yes |Easier to reverse than |Also hurts affected families. Bad |

|vouchers of searchers | | |many other policy |publicity for agency (though helps make|

| | | |changes. |harm visible). |

| d. by denying all moving |Depends upon number of |No. See III (5) and (6). | |Unfair impact on families needing to |

|vouchers |requests and whether some | | |move; contrary to the purposes of the |

| |families leave program as | | |program. See III (5) and (6). |

| |result. | | | |

|2. Terminate some or all |Substantial, depending on |Probably illegal (unless HUD |Shares pain; May |Shifts rent burdens to tenants; Some |

|HAP contracts with owners |amount of payment standard |changes reg); some argue |maintain number of |owners will terminate and displaced |

|and reoffer at lower payment|reduction |within PHA discretion if |vouchers in use |families may not find other units; |

|standard | |funding inadequate [CB: should|(depending on owner |Undermines owner confidence. |

| | |we revise to include THA |opt-outs and tenants’ |Politically invisible |

| | |“voluntary” procedure?] WHY |ability to find new | |

| | |NOT, LEAST HARMFUL |units) | |

|3. Terminate a small % of |Substantial. Most savings |Yes (if PHA has insufficient |Very visible. Fewer |Risk of homelessness etc. to families |

|current participants |if terminate poorest |reserves to cover funding |owners affected. |affected. Could mitigate harm somewhat|

| |families with least ability|shortfall and PHA adopts | |if offer public housing units. |

| |to afford rent; may be |criteria properly). HUD urges| |Undermines confidence in reliability of|

| |required for those few PHAs|PHAs to contact HUD | |funding. |

| |that would otherwise be |beforehand.[CB: should we | | |

| |overleased for the calendar|delete last sentence since | | |

| |year. |this statement is not repeated| | |

| | |in 2005 notices?] YES BUT DO | | |

| | |WE WANT TO SAY SOMEWHERE THAT | | |

| | |COMPLAINING TO HUD CONGRESS, | | |

| | |NEWSPAPERS, ETC MAY STILL | | |

| | |PRODUCE $, IF AGENCY HAS DONE | | |

| | |ALL IT CAN AND STILL CANNOT | | |

| | |LIVE WITHIN BUDGET? | | |

** Severity of harm increases as read down this chart.

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