Bay Area Section 8 and Housing Vouchers

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Using Section 8 vouchers to help pay rent, is becoming harder when landlords decide to leave the program. The way the Section 8 program works is voucher-holders pay what they can afford about 30 percent of their income and then the voucher pays the rest. The local housing authority, along with landlords, an example would be to decide the fair market rate for three-bedroom was $2,800. A resident would pay $2,500, then the voucher picks up the difference, in this case, the remaining $300.

But the thing is, anyone who knows San Francisco real estate knows you can find someone willing to pay more than $2,800 for a three bedroom these days even in a less-fancy neighborhood like The Bayview. Landlords know they can get more from their property, so they quit the program. Because so many other landlords are opting out too, it makes it harder to find places that aren’t full and will take the vouchers. When someone can’t find anyone to take her voucher in San Francisco, they have to transfer their registration to wherever they’ll move. It’s called “porting” it’s a little bureaucratic shuffle that takes about two weeks. But that means that whenever someone on section 8 gets close to landing a place, they’ll have to ask the landlord to wait and that can be problematic with demand for housing.

The Section 8 program has never been big enough to subsidize everyone that qualifies to be on it. The program was a good deal for landlords with property in low-rent districts. But in today’s Bay Area housing market, low-rent districts are quickly getting bid up. Eric Johnson, the director of the Oakland Housing Authority, says Section 8 participation in gentrifying neighborhoods has “dropped to nothing.”

Those are neighborhoods like The Bayview, or in Johnson’s city Oakland the ones around Lake Merritt. Johnson says housing prices in the Bay Area have escalated so quickly, the vouchers haven’t kept pace. But it’s not just that they’re lagging; the way the federal government calculates fair rental prices is so flawed that in 2015, Oakland’s voucher values actually went down.

“In the most rapidly increasing rental market in the country,” says Johnson, “they say your rents have gone down 3 percent. That kind of insanity has got to stop.”

That happened because the calculations were based on national averages… from three years ago.

“All that plays into a program that, in my view, is really in a state of crisis,” Johnson adds.

Johnson is on a mission to reform Section 8. He’s the head of the Oakland administration, but it’s a national program: Johnson works under the Department of Housing and Urban Development. To zoom out: across the country just over two million households receive vouchers, at a cost of $20 billion a year. The funding fluctuates, but over the decades it’s basically hung on. Section 8 has replaced public housing as the major federal low-income housing program.

One of the main reasons people like it, is that it’s also an investment in the private sector. Johnson puts it succinctly: “People make money off it.”

With vouchers, landlords make a bigger profit renting to poor people than they would if they could only charge what those people can afford. So the government’s idea was it’s a win-win.

“You had one side of the aisle that liked it because it was providing housing to families, it was making housing affordable, so they supported it for that reason,” says Johnson. “And on one side of the aisle they supported it because property owners liked it. Because it was a guaranteed source of income and it was a good program… But, the world changes.”

The program has gotten more expensive for the government to fund. For a lot of complicated reasons, average rental prices have been driven up way beyond just the actual bare-bones cost of sheltering people. It means property owners can make bigger profits today, and if Section 8 doesn’t subsidize the same profits, property owners opt for the private market.

Some people argue this is why vouchers are ultimately more expensive than government-owned public housing. Advocates of “socialized housing” as they call it in places like the Netherlands and Singapore say the beauty of it is there’s no dealing with the craziness of the private market. The rent from tenants and the government subsidy just has to add up to the actual cost of housing people not all that and a profit for landlords. But to Eric Johnson, working with the private market is actually the upside of the voucher system. That’s because the industries involved lobby for it and keep it politically viable. Nobody lobbies for public housing, and that’s why he doesn’t see flipping back to that system as an option.

“If we were to flip, I would be really cautious about that if it was dependent on the federal government writing a check to keep the units livable,” says Johnson. “Because the history in this country is that’s not going to happen.

Johnson thinks the best thing to do is work with what we’ve got and improve the Section 8 program. His city, Oakland, is one of a bunch in the country that are special experimental cities, which means they get to pilot reforms that might get adopted across the country.

If the reforms work here in Oakland, Eric Johnson says, “we’re going to go pound the hill and say, ‘Let everyone have these opportunities.’”

Original Article