CHN: Section 8 Reform Bill Passes House

With strong bipartisan support the House passed much needed changes to the Section 8 rental voucher program, the largest federal housing program for low-income households.  Under the program voucher holders pay 30 percent of their income for rent and HUD pays the rest.  Seventy-five percent of vouchers must go to extremely low-income families earning less than 30 percent of their area’s median income.  To his credit, Rep. Barney Frank (D-MA), chairman of the Financial Services Committee, shepherded the Section 8 Voucher Reform Act (SERVA), H.R. 1851, through the House with an overwhelming vote of 333-83.
If it passes the Senate and is signed into law, SERVA will reverse policies within HUD that have led to the loss of 150,000 Section 8 units over the last four years.  HUD has been using a flawed formula to reimburse the 2,400 Public Housing Authorities (PHAs) who offer housing vouchers to nearly 2 million families.  The formula uses an old three-month snapshot of vouchers in use during the prior year to determine payments, resulting in overpayments and underpayments to PHAs and $1.4 billion in unused money.  Under SERVA, allocation of funds will be based on the previous year’s expenditures.  PHAs will also be allowed to maintain a small pool of reserves equal to one and one-half months of Section 8 payment, and be able to borrow a limited amount against the following year’s allocation.  This serves as an incentive to reissue vouchers quickly to those on waiting lists when no longer needed by prior recipient households and to issue more than their authorized number of vouchers because not every voucher-holder will find housing.

Other positive features of SERVA include eliminating barriers allowing voucher recipients to move to a new community with job opportunities without losing their voucher, exempting 10 percent of earned income as an incentive to work, adjusting income eligibility in rural areas to increase utilization of vouchers, and incentivizing PHAs to issue vouchers by basing administrative fees on the number of vouchers allocated.  While falling short of restoring all of the vouchers lost in recent years, the bill does authorize 100,000 new vouchers over five years.

During floor consideration three ominous amendments were rejected.  They would have dropped authorization of new vouchers, placed a 7-year time limit on most voucher households, and created a new work requirement.  On a procedural vote, the House agreed to changes that require documentation of status to ensure that undocumented immigrants are not benefiting from Section 8.

The Senate has not yet acted on similar legislation.  The Administration has expressed support for the current structure of the Section 8 program with its many defects saying that the changes will increase the cost of the program.

Housing and Homelessness