Section 8 housing
By: J. David Chapman/January 18, 2018
There are important housing policy decisions under consideration in our nation’s capital.
More than 5 million households use some sort of federal rental assistance. These programs brought more than $41 billion of federal funding into states and communities in 2016.
The largest, most significant and impactful housing program is the Housing Choice Voucher program, popularly known as Section 8. This U.S. Department of Housing and Urban Development program helps pay rent for more than 2.2 million households with more than $20 billion in federal funding.
The program was designed to help get America’s poorest renters out of neglected public-housing projects, thereby distributing poverty across cities and communities into areas of opportunity. Theoretically, by moving them into these areas of opportunity, they would have greater access to jobs, education, and health care.
Studies show that even moving an individual a few miles can affect his or her future heath and economic prospects. It is also designed to address the disproportionate amount of household income low-income families spend on shelter. Tenants in the program are only required to pay approximately 30 percent of their income on housing; the federal government covers the remainder.
I’ve written about the dangers of a lack of socioeconomic diversity, and its associated concentrated poverty, having a devastating effect on communities. Government housing programs in the past that placed low-income families in geographically centric government-owned locations called projects have produced less than favorable results. The best results have been achieved when communities have mixed-income options diluting poverty throughout cities. The Section 8 program attempts to do this by steering low-income tenants to private landlords, with rent subsidized by the federal government.
Currently Section 8 compensates landlords with a formula that bases rent on comparison properties by county. I managed a fairly significant Section 8 portfolio at one time with many properties in Edmond as well as properties in south Oklahoma City.
Because the fair market rent cutoff point is calculated for the entire county, it often consigns voucher holders to impoverished neighborhoods. We were receiving very similar rents for properties in south Oklahoma and Edmond. My south OKC properties’ rents were above market and the Edmond properties were below market due to the county-wide formula. A more equitable solution might be a ZIP-code-specific rate formula.
J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).