For other versions of this document, see http://wikileaks.org/wiki/CRS-RL33270 ------------------------------------------------------------------------------ Order Code RL33270 The Section 8 Housing Voucher Program: Reform Proposals in the 108th and 109th Congresses Updated May 16, 2007 Maggie McCarty Analyst in Social Legislation Domestic Social Policy Division The Section 8 Housing Voucher Program: Reform Proposals in the 108th and 109th Congresses Summary The Bush Administration has proposed eliminating the Section 8 Housing Choice Voucher program and replacing it with a new program in each of the past several years. While the specifics have changed, each proposal would significantly alter key features of the current program, including its administration, funding distribution, tenant contributions toward rent, initial and ongoing eligibility of families, and the eligible uses of program funds. The first proposal was referenced in the President's FY2004 budget request and was later introduced in the 108th Congress (H.R. 1841/S. 947). Called the Housing Assistance for Needy Families Act of 2003, it would have created a new block grant administered by states -- rather than the local public housing authorities (PHAs) that administer the current program -- and eliminated many of the current rules governing the program. Hearings were held on the legislation, although no further action was taken. Language to enact the second proposal, called the Flexible Voucher Program (FVP), was included in the Administrative Provisions section of the President's FY2005 budget request. Under the FVP, PHAs would have retained administration of the new grant program, although most of the federal Section 8 voucher rules and regulations would have been eliminated. The Appropriations Committees did not include the language in their versions, nor the final version, of the FY2005 HUD budget, and authorizing legislation was not introduced before the close of the 108th Congress. The President's FY2006 budget request again called for enactment of a Flexible Voucher Program. During the first session of the 109th Congress, a modified version of the FVP was included as Title I of the State and Local Housing Flexibility Act of 2005 (H.R. 1999/S. 771). The President's FY2007 budget request reiterated the Administration's support for the bill. The House Financial Services Committee held hearings on the bill, although no further action was taken before the close of the 109th Congress. In the second session of the 109th Congress, the House Financial Services Committee approved a bipartisan Section 8 voucher reform bill, the Section 8 Voucher Reform Act of 2006 (H.R. 5443). While notably narrower in scope than the President's reform proposals, it would have represented the first major reform of the program since the Quality Housing and Work Opportunity Reconciliation Act of 1998 (P.L. 105-276). It was not enacted before the close of the 109th Congress. This report includes a table comparing the key features of the reform proposals from the 109th Congress. It will not be updated. Contents Current Program Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Eligible Uses of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Tenant Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Calculation of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Work Requirements and Time Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Funding Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Reform Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Proposals from the 108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Housing Assistance for Needy Families (HANF) . . . . . . . . . . . . . . . . . 8 The FY2005 Flexible Voucher Program . . . . . . . . . . . . . . . . . . . . . . . . 8 Proposals from the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The State and Local Housing Flexibility Act of 2005 . . . . . . . . . . . . . . 9 The Section 8 Voucher Reform Act of 2006 . . . . . . . . . . . . . . . . . . . . . 9 List of Tables Table 1. Key Features of Recent Reform Proposals Compared to Current Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 The Section 8 Housing Voucher Program: Reform Proposals in the 108th and 109th Congresses Current Program Features The Section 8 Housing Choice Voucher program has come under increasing criticism from the Administration and Congress for its cost and its complexity. Recent changes in the way the program is funded have largely addressed concerns at the federal level about "spiraling costs"; however, the new funding structure has not reduced budget pressures for the local public housing authorities (PHAs) that administer the program.1 Noting these concerns, the Administration has argued in each of the past several years that the existing Section 8 voucher program should be dismantled and replaced with a new, broader-purpose grant program. Thus far, low- income housing advocates and PHA groups have generally opposed the Administration's reform initiatives, although both have begun to call for some type of reform to lessen the administrative burdens on PHAs and to help them better administer their voucher programs in a budget-constrained environment. The Administration's reform proposals have changed over the years, and they have differed substantially from the reform proposals supported by PHA groups and low- income housing advocates. Despite their differences, each proposal would alter several key features of the current program, which are discussed below. Administration The current Section 8 Housing Choice Voucher program, and its approximately 2 million vouchers, are administered by more than 2,500 local PHAs across the country. PHAs vary greatly both in their size and their capacity. Some administer as few as 10 vouchers, while one PHA, the New York City Housing Authority, administers almost 90,000. Half of all PHAs administer 250 or fewer vouchers.2 Some PHAs have a full-time director and a large staff; others have one person serving part-time as director and staff. This heterogeneity has been criticized by some researchers, housing advocates, and the Administration. They argue that housing markets are regional, and thus that 1 For more information, see CRS Report RL33929, Recent Changes to Section 8 Housing Voucher Renewal Funding, by Maggie McCarty. 2 Written Testimony, Michael Liu, Assistant Secretary for Public and Indian Housing, Department of Housing and Urban Development, hearing before the Housing and Community Opportunity Subcommittee of the House Financial Services Committee, May 22, 2003. CRS-2 housing programs should be administered on a regional level. They point out that most other social service programs serving the low-income population -- such as Temporary Assistance for Needy Families, Child Care Assistance, and Food Stamps -- are administered at the state level. If the voucher program were administered at the state level, they contend, it might be easier to coordinate it with other services. The organizations representing PHAs have disagreed, arguing in favor of the current locally driven and focused system. PHAs have important local connections with entities ranging from landlords to local zoning boards, connections that states, they contend, would not have.3 Furthermore, they have expertise in administering federal housing assistance for the poor both through the voucher program and the federal public housing program. Eligible Uses of Funds Today's voucher program provides a defined subsidy, called a voucher, that a family can use to help pay its housing costs in the private market. That voucher pays roughly the difference between rent and the tenant's contribution.4 In some cases, families can use their vouchers to help pay for a mortgage, but only if their local PHA chooses to run a homeownership voucher program. The bulk of PHA funding, which comes from HUD, is used to renew vouchers. No funds have been provided for new vouchers since 2002.5 PHAs earn administrative fees, which they can use for other purposes, such as providing supportive services, downpayment or security deposit assistance, or housing search assistance. This system is governed by hundreds of pages of regulations and guidance that make the program, some argue, overly prescriptive and difficult to administer. The Administration and PHAs agree that the current structure limits the ability to undertake innovative initiatives. Reflecting this concern, the Bush administration has proposed redefining the concept of a voucher by instead providing funds that could be used for rental assistance, homeownership assistance, and supportive services, as defined by the grantee. A "voucher" would no longer have uniform meaning, and PHAs could provide more or less generous assistance to families at their discretion, outside of most current federal rules (i.e., quality standards, portability, income targeting, income-based rent, etc.). Such a reform would be consistent with the 1996 welfare 3 National Association of Housing and Redevelopment Officials (NAHRO), NAHRO Direct News: Section 8, May 29, 2003, attachment C. 4 The actual calculation of the value of a voucher is more complicated than presented here. See later discussions under the headings "Tenant Rent" and "Calculation of Income." 5 While no new vouchers (often referred to as incremental vouchers) have been funded since 2002, Congress has funded new tenant protection vouchers every year. Tenant protection vouchers are provided to families that had been receiving other forms of housing assistance, but are losing that assistance through no fault of their own (such as when public housing is demolished or when the long-term contract on a project-based Section 8 property is expiring). While the addition of new tenant protection vouchers does increase the number of families receiving vouchers, it does not necessarily increase the number of families receiving housing assistance, since the families that receive them had been previously assisted through another program. CRS-3 reform law that abolished the Aid to Families with Dependent Children (AFDC) program and replaced it with a broader-purpose Temporary Assistance for Needy Families (TANF) block grant. Critics of this type of administrative flexibility at the PHA level contend that many of the current rules governing the voucher program are designed to protect voucher recipients. They worry that the needs of low-income families could go unmet if federal rules are abandoned, especially if funding is constrained and PHAs are forced to make difficult tradeoffs. Some further contend that without strong oversight, broad block grants could be open to waste, fraud and abuse. Tenant Rents Under the current rules of the voucher program, families are required to pay roughly 30% of their adjusted incomes toward rent.6 It is generally accepted that housing is affordable for low-income families if it costs no more than 30% of their adjusted gross income, on the assumption that low-income families need the full remaining 70% to meet their other needs. However, this figure is somewhat arbitrary. For some families with little work, transportation, medical, child care, or other outside costs, 40% or even 50% of income might be a reasonable contribution toward housing costs. In fact, the current voucher program allows families to choose to pay up to 40% of their incomes toward housing costs initially, and even greater amounts upon renewal of a lease. For other families, with high expenses for work, transportation, medical, child care, or other outside costs, some percentage lower than 30% might be the most reasonable contribution. Critics of the current rent calculation, including the Bush Administration and some PHA groups, have argued that PHAs should have the flexibility to modify the existing income-based rent system or adopt new systems partially or fully decoupled from income, such as flat or tiered rents. Under flat rents, families pay a PHA- determined, fixed below-market rent, based on unit size, regardless of their incomes. As incomes change, rent would stay the same. Current law permits PHAs to set flat rents for public housing. Families are permitted to choose to pay flat rents, but must be permitted to switch back to income-based rents. Under tiered rents, PHAs set different flat rents for broad tiers of income. Families pay the rent charged for their income tier, and only fluctuations in income that move them from one tier to another would change their rent. Unless flat or tiered rents were set low, the change would generally result in shallower subsidies paid to families. Shallower subsidies would allow PHAs either to save money or serve more people with the same amount of money, depending on the authority provided by HUD and Congress. Another argument in favor of moving from an income-based rent to a flat rent concerns administrative ease. The current complicated rent calculation, paired with the difficulty of verifying the incomes of tenants, has led to high levels of error in the subsidy calculation. According to a HUD 2001 Quality Control study, 60% of all 6 The formula is actually more complicated. Families must pay the higher of 30% of adjusted income, 10% of gross income, the amount of welfare benefits designated for housing costs, or PHA minimum rents (which can be no higher than $50 a month). CRS-4 rent and subsidy calculations contained some type of error. HUD has estimated an annual $2 billion in subsidy over- and under-payments in the Section 8 voucher program. These errors have led the Government Accountability Office (GAO) to designate the Section 8 program a "high risk" program, meaning that it is particularly susceptible to waste, fraud, and abuse. Beginning with the FY2003 Consolidated Appropriations Act (P.L. 108-7), HUD was given access to the National Directory of New Hires, a database that may allow PHAs to better verify income data. There has been some improvement. A 2003 Quality Control study released in 2004 found a 37% reduction in erroneous payments from 2001, although 40% of subsidies were still erroneously calculated. Adopting flat or tiered rents could substantially reduce -- if not eliminate -- errors in rent calculations. Another argument in favor of a flat rent structure involves the work disincentives inherent in the current calculation. Since rent goes up as income goes up, families have a disincentive to increase earnings and/or an incentive to hide income. Families, therefore, face an effective 30% tax on any increase in earnings. To get around this problem in the Public Housing program, Congress has instituted a mandatory income disregard; however, no such mandatory disregard exists in the voucher program, except in the case of certain disabled recipients.7 If PHAs choose to disregard increased earnings, they must pay the difference out of their own budgets or face sanctions from HUD for not accurately calculating subsidies. Under flat or tiered rents, families can generally increase their earnings without facing changes in their rents. Low-income housing advocates generally support income-based rents over flat rents. Flat rents are not as responsive to changes in family income as income-based rents, and their adoption could result in some families paying much more toward rent than is generally considered affordable (30% of income). Calculation of Income Under the current voucher program, rent is based on a family's annual adjusted income. The current system for calculating income has been criticized as cumbersome and prone to errors. Annual income, for the purpose of rent determination, is all amounts that are anticipated to be received by all members of a household during the subsequent 12 months, with some exclusions (such as foster care payments).8 Anticipating low- income families' future incomes can be very difficult, as their employment is often variable. The composition of a family may also be variable, with members joining or leaving the household over the course of a year. Further, PHAs are expected to verify families' incomes using third-party sources, which can be a time-consuming 7 For more information, see the National Housing Law Project's Earned Income Disregard Packet for Public Housing Voucher Program and Other HUD Programs, available at [http://www.nhlp.org/html/pubhsg/eid_packet.htm]. 8 Summarized from 24 CFR 5.609. CRS-5 process.9 Once the total amount of income has been determined, the family may qualify to have certain amounts deducted from total income, such as $480 per dependent, $400 for elderly and disabled households, and reasonable child care expenses, disability expenses, and certain medical expenses of the elderly or disabled.10 The complexity of the income determination system is a major factor behind the high rates of error in rent determination. Many of the current requirements are regulatory, rather than statutory, and PHA groups have called on HUD to simplify the process. HUD has stated that it is looking at ways to improve the income calculation process,11 although no major administrative changes have been made. Eligibility The current voucher program sets initial eligibility for assistance at the very low-income level (50% or below of area median income (AMI)), with a requirement that 75% of all vouchers be targeted to extremely low-income families (30%, or below AMI).12 The Administration has advocated raising eligibility levels and loosening targeting requirements. They argue that both penalize working families by limiting their eligibility for assistance. Further, serving higher income families could result either in cost savings or the ability to serve more families with the same amount of money. Low-income housing advocates generally support retaining current income eligibility and targeting requirements. They argue that the lowest- income households face the heaviest rent burdens and are the most in need of assistance. Work Requirements and Time Limits The voucher program does not currently have time limits or work requirements. Families that receive voucher assistance can retain that assistance until either they choose to leave the program; they are forced to leave the program (due to non- compliance with program rules or insufficient funding); or their income rises to the point that 30% of their income equals their housing costs, at which point their subsidy is zero. The Public Housing program does have a mandatory eight-hour work or community service requirement for non-elderly, non-disabled tenants; however, most public housing residents are exempted, and it is unclear how thoroughly the provision has been implemented.13 9 See 24 CFR 982.516 (a). 10 See 24 CFR 5.611 for a list of deductions. 11 See Government Accountability Office (GAO), Progress and Challenges in Measuring and Reducing Improper Rent Subsidies, GAO-05-224, Chapter 5. 12 For example, 50% of AMI in Missoula, MT was $24,050, and 30% was $14,450 in 2005. Fifty percent of AMI in San Francisco, CA was $50,900, and 30% was $30,550 in 2005. 13 For more information on the community service/work requirement in public housing, see CRS Report RS21591, Community Service Requirement for Residents of Public Housing, (continued...) CRS-6 Some have advocated setting time limits for receipt of voucher assistance and making work a requirement for ongoing eligibility. They argue that under the current system, families have no incentive to increase their incomes or work efforts and leave the program. This concern is exacerbated by the fact that many communities have long waiting lists for assistance, and since new vouchers have not been funded for several years, turnover in the current program is the only way to bring in new families. Adopting a work requirement in the voucher program may help encourage non- elderly, non-disabled households that are not currently working to go to work, although it may not increase their incomes. Research based on the 1996 welfare reform changes (P.L. 104-193) indicates that for many poor families, increases in work do not necessarily translate into greater total income, and most households need work supports (such as child care and transportation assistance) in order to make them successful in becoming financially self-sufficient.14 Such supportive services are not currently part of the voucher program, and would require additional funding. Furthermore, there is evidence that families with children, those most likely to be affected by work requirements and time limits, leave the program relatively quickly. According to HUD research from 2003, the median length of stay for families with children is two and a half years.15 Further, it is unclear how low- income families would meet their housing costs after leaving the program if their incomes had not risen significantly. HUD conducted research looking at families with children who left the voucher program over a five-year period, and found that less than 1% of them had incomes sufficient to afford an apartment at the fair market rent in their community.16 Another option would give incentives to families to increase their work efforts and therefore their incomes. Non-elderly, non-disabled families could be encouraged to find and increase work through expansions in the Family Self-Sufficiency program, which provides work supports and deposits tenant rent increases resulting from work into escrow accounts on their behalf. Low-income housing advocates generally support expanding the FSS program, which encourages work and increases in earnings. However, expanding FSS would not result in cost savings, since as families' incomes rise, their rent increases are deposited in an escrow account. 13 (...continued) by Maggie McCarty. 14 See CRS Report RL30797, Trends in Welfare, Work and the Economic Well-Being of Female-Headed Families with Children: 1987-2002, by Thomas Gabe. 15 Jeffery Lubell, et al. Work Participation and Length of Stay in HUD-Assisted Housing, U.S. Department of Housing and Urban Development, Office of Policy Development and Research, Cityscape: A Journal of Policy Development and Research, Volume 6, Number 2, 2003. 16 Department of Housing and Urban Development, Performance and Accountability Report, FY2004, p.2-65. CRS-7 Funding Allocation Prior to FY2003, HUD reimbursed PHAs for the actual cost of their vouchers. The cost of a voucher is equal to roughly the difference between the rent (capped by a maximum set by the PHA and called the payment standard) and the tenant's contribution toward the rent (30% of the tenant's income). PHAs' costs fluctuate as tenants' incomes and market rents increased or decreased, and each year, HUD would ask Congress for funding sufficient to cover what HUD anticipated it would take to fund PHAs' costs. Due partly to changes in the rental market and partly to changes in the rules of the voucher program (such as increases in the payment standard), PHAs' actual costs began rising rapidly in 2002 and 2003.17 This raised concerns for both the Administration and Congress. Partly in response to these cost increases, the Administration proposed potentially cost-saving changes in both the way that PHAs received funds and in the underlying factors that led to the cost growth, including the amount tenants were asked to contribute toward rent and the maximum payment standard as a part of each of their reform proposals. Congress reacted by changing only the way that PHAs receive their funding. Rather than being reimbursed for their actual costs, PHAs in recent years have received a budget based on what they received in the previous year.18 This new funding formula has led to problems for many PHAs, whose actual costs are still driven by the difference between rents and incomes in their communities while their funding is capped. As a result, some PHA groups have called for either a change back to an actual cost funding formula or changes to the structure of the voucher program that would allow them to better control their costs. Reform Proposals Every year since 2003, the President has proposed eliminating the Section 8 voucher program and replacing it with a new initiative. Bills to enact the President's reform have been introduced in Congress, although no further action has been taken. In 2006, a bipartisan voucher reform bill, which would have modified the voucher program but largely retained its current structure, was approved by the House Financial Services Committee, but no further action was taken before the close of the 109th Congress. Proposals from the 108th and 109th Congresses are discussed briefly below; a comparison of bills from the 109th Congress to current law can be found in Table 1. 17 See Government Accountability Office, Policy Decisions and Market Factors Explain Changes in the Costs of the Section 8 Programs, April 2006. 18 See CRS Report RS22376, Changes to Section 8 Housing Voucher Renewal Funding, FY2003-FY2006, by Maggie McCarty. CRS-8 Proposals from the 108th Congress Housing Assistance for Needy Families (HANF). The 2003 HANF program (H.R. 1841 and S. 947, 108th Congress) was a Bush Administration initiative that would have replaced the existing tenant-based voucher program that is administered by local PHAs with a formula grant to states. Rather than receiving funding for a fixed number of units, states would have received a fixed budget, proportional to the amount of funds the state was receiving under the Housing Choice Voucher program. States would have had broad discretion in how they used their funds, including for homeownership purposes. The Secretary of HUD would have been permitted to lower the 75% targeting requirement to 55%, impose minimum rents, increase eligibility to 80% of area median income, and reduce the frequency of housing quality inspections from annually to every three years. Low-income housing advocates opposed HANF out of concern that it could lead to an erosion of funding and that it would not serve low-income families adequately. PHA groups opposed the proposal to transfer administration to states and also voiced concerns about erosion in funding levels. Although multiple hearings were held, no further action was taken, and HANF was not enacted in the 108th Congress. The FY2005 Flexible Voucher Program. The President's Flexible Voucher Program (FVP), was first recommended in the second session of the 108th Congress in the Administrative Provisions section of the FY2005 HUD budget request. The HUD Secretary testified that the Department did not plan to pursue authorizing legislation. Rather, officials stated during a hearing before the VA, HUD and Independent Agencies Appropriations Subcommittee on March 4, 2004, that they appreciated the leadership of the Appropriations Committees and were asking them to include the provision in the FY2005 appropriations bill. The proposal, like HANF, would have replaced the voucher program with a broader-purpose grant program. Unlike HANF, PHAs would be asked to administer the FVP. They would have received a fixed number of dollars that they could have used to serve as many families as they chose, providing a broad range of assistance ranging from cash grants to ongoing rental assistance. Adoption of FVP would have eliminated caps on on how much families could be required to contribute towards rent, increased income eligibility to 80% or below of AMI, and eliminated any targeting requirements. The House Financial Services Committee, in their Views and Estimates of the President's FY2005 Budget, was critical of the President's FVP proposal. The Chairman of the Senate VA, HUD and Independent Agencies Appropriations Subcommittee stated in a hearing on April 1, 2004, that the Flexible Voucher proposal was "a poor substitute for flaws in the program" and that the Committee would not have the "luxury of time to consider fully" the proposal.19 The FVP was not enacted before the end of the 108th Congress. 19 Statement of Senator Kit Bond, VA- HUD Appropriations Subcommittee FY2005 Budget Hearing, April 1 2004. CRS-9 Proposals from the 109th Congress The State and Local Housing Flexibility Act of 2005. The Administration's State and Local Housing Flexibility Act of 2005 (SLHFA) was introduced in the first session of the 109th Congress by Senator Allard on April 13, 2005, and by Representative Gary Miller on April 28, 2005, as S. 771 and H.R. 1999, respectively. The bill consisted of three titles. Title I, The Flexible Voucher Act, is discussed further below. Title II, Public Housing Rent Flexibility and Simplification, would have permitted PHAs to alter income and rent calculations for public housing in the same ways as under Title I. Title III, the Moving To Work Program, would have made the current Moving to Work demonstration a permanent program with expanded eligibility for PHAs, and expanded waiver authority for the Secretary of HUD. Title I of SLHFA was similar to the Flexible Voucher Program proposed by the Administration as part of the FY2005 budget request. It would have replaced the current voucher program with a broader-purpose grant program. PHAs would have continued to administer the program, although if they were not meeting the Secretary's performance standards, their funds could be awarded to other entities selected by the Secretary. Under the bill, Flexible Voucher Program funds could be used for six eligible activities: tenant-based rental assistance; project-based rental assistance; tenant- based homeownership assistance for first-time homebuyers; self-sufficiency activities, including escrow savings accounts; other activities, as specified by the Secretary, in support of tenant-based, project-based, or homeownership assistance; and administrative costs. Income eligibility, targeting, subsidy determination, and quality inspection rules would all have been loosened, while portability and enhanced voucher features would have been restricted. The changes in the bill would have been phased in. The Secretary was directed to develop temporary implementing regulations within 90 days of passage, and final regulations, not including funding formulas, within 18 months. The Secretary was also directed to undertake negotiated rulemaking to develop grant and administrative fee allocation formulas, to be published within 24 months. Hearings were held on the SLHFA in the House on May 11, 2005; hearings were not held in the Senate. The President's FY2007 budget request, introduced on February 6, 2006, reiterated HUD's support for the bill. No further action was taken on SLHFA before the close of the 109th Congress. The Section 8 Voucher Reform Act of 2006. On May 22, 2006, the Chairman of the Housing and Community Opportunity Subcommittee of the House Financial Services Committee introduced the Section 8 Voucher Reform Act of 2006 (H.R. 5443), a bipartisan Section 8 reform bill cosponsored by the subcommittee's ranking member. It was approved by the subcommittee on June 8, 2006, and by the full committee on June 14, 2006, although no further action was taken before the close of the 109th Congress. CRS-10 Unlike the Bush Administration proposals, which sought to eliminate the voucher program and replace it with a new program, H.R. 5443 would have retained the basic structure of the current voucher program while implementing changes primarily designed to make the program easier to administer. Specifically, the bill proposed to ! modify the current definition of income to exclude imputed income from assets; ! eliminate or replace many of the deductions and allowances from income; ! provide PHAs with several methods for calculating income; ! change the targeting threshold to the greater of 30% of AMI or the poverty level; ! eliminate the gross income calculation for rent; ! modify income reexamination requirements; and ! modify the process and timing for conducting housing inspections. Several of these administrative changes would also have affected the public housing and project-based Section 8 programs. H.R. 5443 would have adopted a new renewal funding formula, authorized the use of vouchers to provide downpayment assistance, required the Secretary to develop performance standards, and expanded and made permanent the Moving to Work demonstration. Amendments added during full committee consideration would have authorized a Manufactured Housing pilot, altered the treatment of certain military pay for purposes of several housing programs, and increased the rent levels for certain project-based vouchers in low-income housing tax credit properties. H.R. 5443 received endorsements from PHA groups and low-income housing advocates. As noted earlier, the bill was not enacted before the close of the 109th Congress. CRS-11 Table 1. Key Features of Recent Reform Proposals Compared to Current Law Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) Section 8 Housing Choice Voucher Program Administering Body The majority of voucher programs are No change from current law. PHAs would be permitted to administer the administered by local, quasi-governmental Flexible Voucher Program (FVP). If a PHA public housing authorities (PHAs), although were not organized or the Secretary determined state housing agencies often serve as PHAs. the PHA was not capable of effectively Where no PHA has been organized or where administering the assistance, the Secretary the Secretary determines that the PHA is could choose "any other entity" to administer unwilling or unable to implement a program or the grant. It does not limit other entities to is not performing effectively, the Secretary or public or private nonprofits. (Sec. 103(14)) another public or private nonprofit organization can serve as a PHA. (42 USC 1437a(b)(6)) Type of Assistance The Secretary may provide assistance to PHAs No change (see Downpayment Assistance). The Secretary would be permitted to provide to provide tenant-based assistance to low- grants to PHAs to provide tenant-based rental income families. The PHA is to use a payment assistance, project-based rental assistance, standard to determine the amount of assistance tenant-based homeownership assistance, and provided to a family. (42 USC 1437f(o)(1) related assistance, including self-sufficiency The rental assistance -- or housing assistance programs. (Sec. 104 and 108) payment (HAP) -- covers monthly rental subsidies and utility costs. The assistance may also be used to provide project-based assistance and homeownership assistance. (42 USC 1437f(o)(13) and (y)) Project-based PHAs may attach up to 20% of their vouchers Same, except would permit a higher maximum PHAs would be permitted to use up to 20% of vouchers to existing housing units. No more than 25% rent for project-based vouchers in Low-Income their funds to provide project-based assistance. of units in a building may have project-based Housing Tax Credit Units. (Sec. 13) No more than 25% of units in a building could vouchers attached to them. Families living in have project-based vouchers attached to them. units with project-based vouchers are permitted Families would be permitted to move after one to move after one year. (42 USC 1437f(o)(13)) year, subject to sufficient funding. (Sec. 108(b)) CRS-12 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) Downpayment A PHA may, in lieu of providing monthly Downpayment assistance would be authorized, Same as H.R. 5443 (Sec. 108(c)) assistance for assistance payments, provide a downpayment not subject to direct appropriations, for eligible first-time homebuyers grant for an eligible first time homebuyer less families who had been receiving assistance for than or equal to the sum of the monthly at least 12 months. Downpayment assistance assistance payments the family would have would be provided as one-time-only grants, received for a year. The availability of capped at $10,000, to be used by families as a downpayment assistance is subject to direct contribution toward downpayment and appropriations, and since direct appropriations reasonable closing costs. (Sec. 8) have never been provided for this purpose, downpayment assistance has never been provided in the voucher program. (42 USC 1437f(y)) Eligibility Generally, families are initially eligible if they The bill would not change income eligibility, Families would be initially eligible if they were are low income (80% or below of area median although it would change the definition of low-income, did not have significant interest in (Also applies to Public income (AMI)) and are either very low- income, which would affect eligibility (see real property or have assets exceeding a limit Housing (PH) and income, (at or below 50% of AMI), were "Income" below). It also sets an asset test such set by the Secretary. (Sec. 107(a) and 202(b)) Project-based Section previously receiving assistance, or meet other that assistance could not be provided to 8 Rental Assistance criteria established by the Secretary. (42 USC families whose net family assets exceeded (PBRA)) 1437a(a) and 42 USC 1437f(o)(4)) $100,000 or who had present ownership interest in real property suitable for occupation and in which the family had the right to reside. (Sec. 4(a)) Income Review and The PHA must review family income upon Income would be reviewed initially and Income would be reexamined every other year Continuing Eligibility selection for assistance and annually thereafter. reexamined annually thereafter, except: and every three years for elderly or disabled If a family's income rises above the low- -families could request reexamination earlier if households. Upon income re-examination, if (PH and PBRA) income level, they may continue to receive their income drops by $1,500; family income were to have risen above the assistance. (42 USC 1437a(a)(1)) If a family -income must be reexamined at any point that low-income level, the family would no longer experiences a change in income, they may income rises more than $1,500 (increases in be eligible for assistance. (Sec. 107 and 202(b)) request a mid-year reexamination. earned income are not counted for this purpose unless the family's income had been reexamined because of a drop in income); -families on fixed incomes would be permitted CRS-13 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) to self-certify their income each year for up to three years. (Sec. 3(a)) Upon income re-examination, if family income were to have risen above the low-income level, the family would no longer be eligible for assistance. (Sec. 4(a)) Definition of Income The term income means income from all The bill would strike the definition and replace The term gross income would be defined as sources from each member of the household, as it with a definition that includes income from income from all sources for each family (PH and PBRA) determined in accordance with criteria all sources, including recurring gifts and member of a household without deductions or prescribed by the Secretary. The definition of receipts, actual income from assets, and profit exclusions, notwithstanding any other income adopted in regulation includes imputed or loss from business. It excludes imputed provision of law. (Sec. 103(8) and 202(b)) returns on assets and excludes income in returns on assets, all earned income from excess of $480 for full-time students (including dependent full-time students, other mandatory head of household and spouse). (42 USC federal exclusions, and other exclusions set by 1437a (b)) the Secretary. (Sec. 3(b)) Deductions -$400 for elderly or disabled families, Would replace current deductions with: No deductions established. from Income -certain unreimbursed medical expenses above -$750 for each elderly or disabled family 3% of a family's income, -$500 for each minor dependent (PH and PBRA) -reasonable child care expenses that allow for a -Certain unreimbursed medical expenses family member to be employed or further his greater than 10% of income for elderly and or her education, disabled families -$480 for each member of the household who is under 18, a full-time student, or over 18 and Deduction amounts are to be adjusted annually disabled, by an inflation factor set by the Secretary and -child support, up to $480 per child (subject to rounded down to the nearest multiple of $25. appropriations), (Sec. 3(b)) -spousal support (subject to appropriations), -earned income of minors, -earned income for certain Section 8 residents (subject to appropriations), -other permissible exclusions as determined by the PHA. (42 USC 1437a(b)) CRS-14 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) Income Calculation Not specified in statute, but in regulation, HUD PHAs would be permitted to use prior year's Not specified. has established a system for calculating income income (if it had been determined by the PHA) (PH and PBRA) that attempts to predict income in the coming to determine next year's income. Earned 12 months and requires third-party verification. income would be calculated as the previous year's earned income, minus 10% (only when calculating rent). If prior year's fixed income were used, the PHA would be required to apply inflationary adjustments, as determined by the Secretary. PHAs could make other adjustments as appropriate to reflect current income. PHAs can use income calculations used in other programs (such as TANF, Medicaid, Food Stamps). (Sec. 3(a)) Targeting Of families initially provided assistance in any Of families initially provided assistance in any Of families selected for assistance during a fiscal year, PHAs must target 75% of all fiscal year, PHAs would be required to target one-year period, PHAs would be required to vouchers to those at or below 30% of area 75% of vouchers to those at or below the target 90% of all assistance to families at or median income (AMI). (42 USC 1437f(o)(4) higher of 30% of AMI or the poverty line. below 60% of AMI. (Sec. 107(c)) and 1437n(b)) (Sec. 5) Subsidy Levels Benefits are statutorily set as rental subsidies No change. PHAs would be permitted to establish their and Rents equal to the difference between the lesser of own methodology for setting reasonable and rent or the payment standard (set by the PHA appropriate subsidy levels and would not be at between 90%-110% of the fair market rent required to use FMR. However, they would be (FMR)) and the tenant's contribution (see required to set a maximum subsidy level. (Sec. below). (42 USC 1437f(o)(1)(B)) Rents 109) If the PHA provided downpayment charged for assisted units must be reasonable assistance, the maximum grant would be compared to comparable dwelling units in the $10,000. (Sec. 108(c)) Rents charged for private market. (42 USC 1437f(o)(10)(A)) assisted units would be required to be reasonable compared to modest, non-luxury unassisted units in the local market and reasonableness would be required to be assessed annually. (Sec. 109 ) CRS-15 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) Tenant Contribution Tenant contributions are statutorily set as the Same as current law, except the 10% of gross PHAs could establish rents based on a greater of 30% of a family's adjusted gross income contribution would be eliminated. percentage of income, flat rents, tiered rents, or (PH and PBRA) income, 10% of a family's gross income, (Sec. 3(c)) some combination of the three models, at their welfare rent (the amount of a welfare benefit (Only for voucher program) discretion. There would be no cap on tenant designated for housing costs) or the minimum contributions. PHAs would be required to set rent (set by the PHA, not to exceed $50, with a minimum rents. (Sec. 109 and 202(b)) hardship exemption). Families cannot be required to contribute more than 30% of their adjusted incomes, although they can choose to contribute up to 40% in the first year and higher thereafter. (42 USC 1437a(1) and 1437f(o)(2)) Termination, Time Current law does not include any time limits or Same as current law, although families whose PHAs would be able to set standards for Limits, and Work work requirements. Families can continue to gross incomes increased above 80% of AMI continued eligibility, including time limits and Requirements receive assistance (even if their incomes would lose eligibility for assistance. (Sec. 4(b)) work requirements. Beginning in January 2008, increase above 80% of AMI) as long as they PHAs would be permitted to establish time remain compliant with program rules. Once limits of no less than five years (term limits their incomes increase to the point that their would not apply to elderly and disabled tenant contribution is equal to the rent, their families). Families whose gross incomes subsidy is zero. increased above 80% of AMI would lose eligibility for assistance. (Sec. 107(d)) Enhanced Vouchers Families receive enhanced vouchers when they No change. Enhanced vouchers would be administered are displaced from other rental assistance under current rules for one year. After one programs (when project-based Section 8 year, enhanced vouchers would be contracts for private units end). Enhanced administered under the local FVP rules. (Sec. vouchers are administered by the local PHA. 115) The payment standard for an enhanced voucher is equal to the rent for the unit (even if it is greater than the PHA's payment standard), allowing a family that would otherwise be displaced to remain in that unit. The "enhanced" feature of the voucher remains for CRS-16 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) as long as the family lives in the unit. (42 USC 1437f(t)) Inspection of Units PHAs must inspect units to ensure that they The requirement that PHAs inspect the units PHAs would be required to inspect units within meet federal housing quality standards prior to prior to initial occupancy would be waived if 60 days of the first payment made to the owner occupancy and at least annually thereafter. the unit was previously occupied by a family and again at least once every four years PHAs can choose to use local, state, or federal with a voucher and the unit had passed thereafter to ensure that they meet federal housing quality standards (HQS), as long as inspection within the prior year or if the unit housing quality standards or other standards state or local standards are as strict or stricter had otherwise passed inspection in the prior approved by the Secretary. PHAs would be than federal standards. (42 USC 1437f(o)(8)) year under any federal, state, or local program, required to inspect at least one-quarter of units and the PHA certifies that the standards used each year. (Sec. 112) meet or exceed HQS. If a unit fails inspection for non-life threatening reasons, the PHA can make payments for up to 30 days while the unit is repaired. Thereafter, units are to be inspected biennially and a PHA must inspect up to 50% of units each year. (Sec. 2) Portability Families receiving voucher assistance, after No change. PHAs would be permitted to enter into one year, can move to any jurisdiction in the agreements with other PHAs in the same state country where a voucher program is being or region to facilitate the ability of families administered. (42 USC 1437f (o)(5)) who have been receiving assistance for at least one year to move to another jurisdiction within the state or region. Families would only be able to move across jurisdictions with preexisting agreements. If the PHA wishes to establish a region with more than one state, it would be required to first notify HUD. (Sec. 113) Transition/ Not applicable. Not applicable. Families receiving homeownership assistance Grandfathering or project-based voucher assistance on the day before enactment would continue to receive (PH and PBRA) assistance under current law for the length of CRS-17 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) their contracts. (Sec. 104) Elderly and disabled households receiving assistance on the day before enactment would continue to be treated under current law until January 2009. Elderly and disabled households receiving assistance after the date of enactment would also be treated under current law until January 2009, unless their PHA had devised a plan for meeting the needs of the elderly and disabled prior to a January 2009 deadline for developing such a plan. (Sec. 105) Funding Funding for voucher renewals is permanently The bill would replace the existing renewal The Secretary would be required to establish a Authorization and authorized, subject to appropriations. Under formula and authorize such sums as necessary formula, through negotiated rulemaking with Allocation current law, subject to appropriations and to renew voucher contracts and provide tenant stakeholders, within 24 months for allocating beginning in FY1999, the Secretary is directed protection and enhanced vouchers through funds to PHAs. In the interim, PHAs would to renew all expiring voucher contracts by FY2011. receive a proportionate share of funding based applying an inflation factor to an allocation on their prior year's funding level. (Sec. 110) baseline, adjusted for new authorized vouchers Renewal funding would be allocated based on (including tenant-protection vouchers). The leasing and cost data from the previous year, baseline was set at a level sufficient to continue plus an annual adjustment factor with assistance for the actual number of families adjustments for the first-time renewal of assisted as of October 1, 1997. (42 USC tenant-protection and enhanced vouchers and 1437f(dd)) with other adjustments as necessary. Moving to Work (MTW) agencies would be funded Beginning in FY2003, the appropriations law pursuant to their agreements. began to include instructions on how the Secretary was to distribute funds. In FY2004, Leasing and cost data would be calculated no PHAs were funded based on the number of less than biennially by using the average for vouchers they actually used as of their end of the most recent calendar year for which data the year statement (with adjustments made for are substantially verifiable and complete changes) and the cost of those vouchers (based (including vouchers set-aside for project-based on their end of the year statement, not adjusted assistance). for changes). In FY2005, PHAs were funded If funding were insufficient to fully fund all CRS-18 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) based on their actual costs and number of PHA budgets, then the Secretary would apply a vouchers in use over a three-month period in pro-rata reduction to each agency's budget (not FY2004, pro-rated to fit within the amount applicable to funding for enhanced/tenant appropriated. In FY2006, PHAs received a protection funds). On May 1 of each year, pro-rata share of the amount appropriated, HUD would be required to recapture any based on what they received in FY2005. amount over 1/12 of the amount allocated to the agency for the first year, leaving agencies Prior to FY2005, agencies were provided a 12- with a one-month program reserve. Of those month program reserve. In FY2005, recaptured funds, the Secretary would first set appropriations law reduced agency reserves to aside amounts to reimburse agencies for one week. In FY2006, agencies are guaranteed increased portability and Family Self no minimum reserve. Sufficiency costs and reallocate the rest to agencies spending 99% of their funding but leased below their authorized level, although the Secretary could prioritize PHAs that leased less vouchers in the preceding year than in the 12-month period ending on April 1, 2004. Reallocated amounts could be used to increase leasing rates up to the authorized level. At the last three months of each calendar year, the Secretary could advance up to 2% of an agency's allocation to the agency to be used for additional voucher costs (including temporary over-leasing), at the agency's request. PHAs would be required to repay HUD through a reduction in their subsequent allocation. (Sec. 7) Administrative Fees Prior to FY2004, administrative fees were paid No change. HUD would be required to develop a final to PHAs on a per unit basis calculated roughly formula for allocating administrative fees as a percentage of FMR. In recent years, under within 24 months via negotiated rulemaking. In appropriations law, PHAs have received the the interim, PHAs would receive a pro-rata same proportion of total funds that they had share of the amount available for CRS-19 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) received in the previous year. In FY2006, the administrative fees, based on what they amount available for administrative fees was received in the previous year, although the equivalent to just under 9% of the amount Secretary would have the authority to retain up provided for vouchers. (42 USC 1437f(q)) to 5% to provide special fees for non-routine expenses. (Sec. 117) Grantee Performance PHAs are evaluated annually through the The Secretary would be required to establish The Secretary would be required to establish Section 8 Management Assessment Protocol performance standards and a performance performance standards and a performance (SEMAP), which is a set of 14 criteria assessment system. assessment system. PHAs would be required to established by HUD via regulation, which make annual reports to the Secretary and those primarily focus on agency compliance with Agencies would be assessed on their annual reports would be required to be made program rules and regulations rather than performance regarding: publicly available on the Internet. program goals or outcomes. Its 14 indicators -quality of the dwelling units obtained using include: assistance; If a PHA received a failing score, the Secretary -Proper selection of applicants from the -extent of utilization of assistance amount would determine how best to administer the housing choice voucher waiting list, provided to the agency; grant, including: -Sound determination of reasonable rent for -financial condition of the agency; -turning over administration of the grant to each unit leased, -timeliness and accuracy of reporting by the another PHA or other entity; -Establishment of payment standards within the agency to the Secretary; -appointing a receiver; or required range of the HUD fair market rent, -other areas the Secretary deems appropriate. -setting a deadline for the PHA to improve. -Accurate verification of family income, (Sec. 106) -Timely annual reexaminations of family Using these standards and procedures, the income, Secretary would be required to conduct an -Correct calculation of the tenant share of the assessment of the performance of each agency rent and the housing assistance payment, and submit a report to Congress regarding the -Maintenance of a current schedule of result of each assessment. (Sec. 10) allowances for tenant utility costs, -Ensure units comply with the housing quality standards before families enter into leases and PHAs enter into housing assistance contracts, -Timely annual housing quality inspections, -Performance of quality control inspections to ensure housing quality, -Ensure that landlords and tenants promptly CRS-20 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) correct housing quality deficiencies, -Ensure that all available housing choice vouchers are used, -Expand housing choice outside areas of poverty or minority concentration, -Enroll families in the family self-sufficiency (FSS) program as required and help FSS families achieve increases in employment income. If PHAs fail SEMAP, they can be deemed "troubled." Troubled agencies must agree to an onsite assessment and a plan designed to bring them into compliance. If the PHA is unwilling or unable to abide by its plan to move to compliance, the Secretary can: -contract with another PHA or private manager to administer the program; -appoint a receiver; -take over the administration of the program; or -other actions the Secretary deems appropriate. Deconcen- PHAs are prohibited from concentrating very No change. Eliminates current provision. tration low-income families in public housing units in requirement certain public housing projects or certain buildings within projects. The Secretary must (Public Housing only) review PHA compliance and PHAs must submit an admissions policy designed to provide for deconcentration of poverty and income mixing. CRS-21 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) Moving to Work Purposes The purpose of the program is to provide PHAs The purposes of the program would be to: Same as H.R. 5443. (Sec. 302) and the Secretary the flexibility to design and -give incentives to families to become self- test various approaches for providing and sufficient; administering housing assistance that: -give PHAs and the Secretary the flexibility to -reduce cost and achieve greater cost develop approaches for providing and effectiveness in federal expenditures; administering housing assistance that achieves -give incentives to families with children greater cost-effectiveness of federal where the head of the household is working, expenditures; seeking work, or preparing for work; and -increase housing opportunities for low-income -increase housing choices for low-income families; families. (42 USC 1437 Note) -reduce administrative burdens on PHAs; and -allow federal resources to be more effectively utilized at the local level. (Sec. 6) Authority Authorizes the Secretary to conduct an MTW Would direct the Secretary to establish a Would direct the Secretary to establish a demonstration. The Secretary is permitted to Moving to Work program in which PHAs Moving to Work program in which PHAs select up to 30 agencies for participation. (42 meeting the eligibility criteria can participate. meeting the eligibility criteria can participate. USC 1437 Note) Would limit participation to no more than 40 No limit would be set on the number of agencies. (Sec. 6) agencies that can participate. (Sec. 302) Use of Assistance Participating PHAs may combine Public No change. (Sec. 6) No change. (Sec. 302) Housing operating funds, Public Housing capital funds, and Section 8 voucher funds to provide housing assistance for low-income families and services to facilitate the transition to work on such terms and conditions as set by the PHA and approved by the Secretary. (42 USC 1437f Note) CRS-22 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) PHAs must continue to assist substantially the PHAs would be required to continue to assist There would be no requirement that PHAs same total number of eligible low-income substantially the same total number of eligible continue to serve the same number of families. families and maintain a comparable mix of low-income families as if funds had not been (Sec. 302) families (by family size) as would have been combined under the program. (Sec. 6) served if the assistance had not been combined under the demonstration. (42 USC 1437f Note) Waiver Authority The Secretary may waive provisions of the The Secretary would be permitted to waive any Same as H.R. 5443. (Sec. 302) U.S. Housing Act of 1937, although Section 18 portion of the act with respect to assistance (demolition and disposition requirements) and under MTW, except Section 18. The Secretary Section 12 (Davis Bacon and community would also be permitted to provide streamlined service requirements) cannot be waived. (42 procedures (including procurement procedures) USC 1437 Note) and provide for immediate implementation of such procedures. (Sec. 6) Application, Selection In selecting applicants, the Secretary must take Agencies may submit applications to the Agencies may submit applications to the Criteria, and into account: Secretary, in such a form prescribed by the Secretary, in such a form prescribed by the Eligibility -the potential of the agency to plan and carry Secretary, if they are eligible. Secretary, if they are eligible. out a program under the demonstration; -the relative performance of the agency on the In order to be eligible, agencies would have to: In order to be eligible, agencies would be Public Housing Assessment System; and -be high performing agencies under applicable required to: -other appropriate factors set by the Secretary. rating systems; and -participate in the MTW demonstration at the -manage at least 500 units of public housing or time of application; Agencies' applications must: manage at least 500 vouchers. -be designated a high performing agency with -request the authority to combine public respect to the public housing and voucher housing and Section 8 voucher funds; In selecting agencies, the Secretary must programs; -be submitted after public hearings and citizen consider the extent to which PHAs meet -manage at least 500 units of public housing; participation; and criteria set by the Secretary, including: -administer at least 500 vouchers; or -include a plan, developed by the agency with -demonstrated capacity to develop and manage -meet other criteria as set by the Secretary, public and resident comments, that includes a successful program; including: criteria for: -demonstrated compliance with statutes and -- demonstrated capacity to develop and -- families to be assisted, 75% of whom must regulation applicable to HUD programs in manage a successful program; be very low-income; which the agency participates or has -- demonstrated compliance with statutes and -- reasonable rent policies designed to participated; regulation applicable to HUD programs in CRS-23 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) encourage employment and self sufficiency; -commitment of nonfederal resources which the agency participates or has -- continuing to assist substantially the same (including in the local community); and participated; number of people; -demonstrated commitment by local -- commitment of nonfederal resources -- maintaining a comparable mix of families government to removing regulatory barriers to (including in the local community); and (by family size); and affordable housing. (Sec. 6) -- demonstrated commitment by local -- assuring housing meets quality standards. government to removing regulatory barriers to affordable housing. (Sec. 302) PHA applications may also request technical assistance from HUD to assist with design of the demonstration and participation in a detailed evaluation. From FY1996-FY1998, the Secretary was authorized to use up to $5 million for technical assistance to PHAs and to conduct detailed evaluations. (42 USC 1437 Note) Term of No term specified in law; in practice, generally PHAs would be permitted to participate for a No term specified. participation 5- to 7-year contracts, with extensions. (42 three year term. Upon expiration, the agency USC 1437f Note) could reapply for an additional three year period, as long as the agency had not failed to comply with performance standards. (Sec. 6) Program -75% of families assisted must be very low As a condition of participation, PHAs would be Same as H.R. 5443. (Sec. 302) requirements income; required to: -PHAs must establish reasonable rent policies -consult with their communities; designed to encourage employment and self -target no less than 90% of assistance to sufficiency; families with gross income at or below 60% of -PHAs must continue to assist substantially the median income; same number of people; -establish reasonable rent policies designed to -PHAs must maintain a comparable mix of encourage employment and self sufficiency; families (by family size); and -provide assurance that housing meets HQS; -PHAs must assure housing meets quality and standards. (42 USC 1437f Note). -provide other information as required by the Secretary. (Sec. 6) CRS-24 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) Evaluation, The Secretary is to provide training and Until January 1, 2008, the Secretary would be Same as H.R. 5443, except H.R. 1999 does not Assessment, and technical assistance during the demonstration permitted to use current public housing and include language permitting the Secretary to Performance and conduct detailed evaluations of up to 15 voucher assessment systems. Otherwise, include a baseline performance level among the Standards agencies to identify replicable program models agencies would be evaluated under a system performance standards set for MTW agencies. promoting the purpose of the demonstration. designed by the Secretary. (Sec. 302) In making assessments, the Secretary must The Secretary would be required to issue a consult with representatives of PHAs and proposed and final rule to implement residents. (42 USC 1437f Note) performance standards for MTW agencies (the final rule must be issued within 24 months of enactment). They may include: -A baseline performance level; and -Standards for -- moving assisted low-income families to economic self sufficiency, -- reducing per family costs of providing housing assistance, -- expanding housing choice for low-income families, -- improving program management, and -- increasing the number of homeownership opportunities for low-income families; and -other performance goals set by the Secretary. (Sec. 6) Record Keeping and Agencies must keep records as required by the Agencies would be required to keep records as Agencies would be required to keep records as Reports Secretary. Agencies must supply reports and required by the Secretary, submit reports in required by the Secretary and submit reports in in a form and time set by the Secretary which: such a time and form as required by the such a time and form as required by the -document use of funds, Secretary and submit annually such Secretary. The Secretary and GAO must have -provide data requested by the Secretary for information to the Secretary as needed to full access to all pertinent documents. (Sec. assessing the demonstration, and evaluate the program. The Secretary and GAO 302) -describe and analyze the effect of activities in must have full access to all pertinent meeting objectives. documents. The Secretary and the Government CRS-25 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) Accountability Office (GAO) must have full The Secretary would be required to submit access to all pertinent documents. annual evaluations of PHAs to Congress, The Secretary has no later than 180 days after including finding and recommendations for the third year of the demonstration to submit to appropriate legislative action. GAO would Congress a report evaluating programs carried also be required to submit a report to Congress out under the demonstration, including within 12 months on the extent to which findings and recommendations for applicable participating agencies are meeting the goals legislative changes. (42 USC 1437f Note) and purposes of the program. (Sec. 6) (Report submitted in 2004) Funding The amount of assistance received by the The amount of assistance received by a Same as H.R. 5443. (Sec. 302) agency is not diminished by their participation participating agency, subject to appropriations in the demonstration. MTW agencies are (and any applicable proration), would not be funded based on their agreements with HUD, affected by participation in the program. (Sec. although they are subject to any funding 7) prorations. (42 USC 1437f Note) Transition Not applicable. Subject to procedures and requirements set by Subject to procedures and requirements set by the Secretary, PHAs under an existing MTW the Secretary, PHAs participating in the MTW contract on the date of enactment could apply demonstration could opt out and join the MTW for participation in the MTW program: program. PHAs that would terminate their -at any time before the expiration of their MTW demonstration participation in 2005 or existing MTW contracts as long as they agree 2006 could renew their MTW demonstration to opt out of existing MTW contracts; or agreements for another three year period and, -upon expiration of existing contracts. at the end of that three year period, apply for Upon application, agencies would be treated as the MTW program. (Sec. 302) if they are reapplying under the new program. The Secretary would be prohibited from extending existing MTW contracts after enactment. (Sec. 6) CRS-26 Feature Housing Choice Voucher Program Current Section 8 Voucher Reform Act of 2006 The State and Local Housing Flexibility Act Law (H.R. 5443, 109th Congress) of 2005 (United States Housing Act of 1937) (H.R. 1999/S. 771, 109th Congress) Other Provisions Manufactured Not applicable. Would establish a pilot program to determine No provision. Housing Pilot whether restructured rent calculations for Program manufactured housing assistance will increase the affordability of manufactured housing. (Sec. 9) PHA Reporting to Not applicable. Would authorize PHAs to report information No provision. Credit Agencies on families' rent payment histories to credit reporting agencies. (Sec. 11) Treatment of Basic Not applicable. Would require that federal housing programs No provision. Allowance for Housing (excluding rental assistance programs) treat Payments basic allowance for housing funds in the same way that Section 8 vouchers are treated for purposes of eligibility. (Sec. 12) Source: Congressional Research Service analysis of current law (42 USC 1437 et. seq.); H.R. 1999/S. 771 (109th Cong.); and H.R. 5443 (109th Cong.). ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL33270