Housing Subsidies, Housing Vouchers; It’s Complicated, People!

Last week I discussed the unpleasant fact that the Housing Choice Voucher Program is specifically designed to help low-income families to somewhat better housing, whether you describe it as “medium-quality” or “modest”.  The Benjamins then do their part, as too many better neighborhoods are simply out of reach for a voucher household.  Please don’t jump to conclusions; this does not begin to excuse the result when that result so concentrates housing vouchers in just a few communities.  That is simply unacceptable.

I am proposing the exact opposite of acceptance; the need is for correction.  Correction, in turn, requires understanding the way things are and why they actually got that way, rather than seeing in a situation what you have already decided you want to see.  This has been my mantra from the beginning, and in “Section 8” I can see no other subject more in need of this approach (Okay, “Obamacare” probably ranks higher today, but “Section 8” has been around a lot longer).

That’s why I don’t like the term “Section 8”.  The phrase long ago became a buzzword, employed only to deliver unspoken messages to those who hear it.  Several completely different programs, administered at different levels of government, comprise the available spectrum of rental housing subsidies.  They are lumped together in the public consciousness as “Section 8,” and the result is predictable: the frequent exchanging of nonsense someone read on the Internet. 

I separated out Public Housing in a previous post, because it does not belong in the same conversation as Housing Choice Vouchers or Low Income Tax Credits.  Or at least I tried to.  A reader proceeded to comment about how they seem to be owned by just a few landlords.  This is an example of the honest, but all-too prevalent confusion that results from lumping together very different programs under one buzzword.  Public Housing is completely free of “private landlords”; when you see a problem, you know who to call: the MCHA. 

Public Housing is pretty much unique in its administration, but vouchers and LITC subsidies do involve private landlords.  That’s an important shared quality, and we will return to it.  The programs themselves, however, are completely different, and there are others that show up from time to time in new development proposals.  Any rational attempt to correct the all-too-apparent problems with the programs first requires an understanding of how they are different and what each is actually designed to do.

The various subsidy programs to builders should be discussed by the individual case, whether we are talking about earlier projects—such as the conversion of Rittenhouse School in Norristown—or any new ones that appear (here’s where I get to mention “Pennrose” once more).  Their boundaries can be easily identified, and the discussion focused.  Housing Choice Subsidies possess no boundaries, at least theoretically.  Last week’s post should begin to clear up why that doesn’t happen, but there is more to examine.  The obvious financial boundary I discussed last week does not by itself explain why so many vouchers end up within the boundaries of Norristown and Pottstown.  There are additional reasons.

It is time for me to disappoint some of you by rejecting the argument that the concentration of housing choice vouchers in Norristown and Pottstown is the result of some sort of conspiracy.  The staff of the Montgomery County Housing Authority is not meeting in secret devising ways to lure people to Norristown and Pottstown.  At the same time, I am not any more willing to believe that every recipient of a housing choice voucher chose to live in Norristown or Pottstown because that’s where they wanted to go than I am that someone simply threw a dart at a map blindfolded to locate public housing.  Reality has this annoying way of being complex, despite our best efforts to ignore that basic fact.  There are several aspects to the problems of housing choice vouchers and moral judgments—particular quick ones—should be avoided, if possible.  The evidence is incontrovertible, but a conspiracy is not a necessary part of the explanation.  Norristown and Pottstown have become “dumping grounds,” even if no one has performed any conscious “dumping,” and the blame for that can be spread around.

They are not in Norristown and Pottstown because of a conspiracy, but they are also not there just through the workings of “market forces” either.  They weren’t dumped there, they weren’t directed there, they didn’t end up there because they need other services, nor for any other reason or even combination of reasons.  Why?  Because "THEY" DO NOT EXIST.  “They” are a collection of individuals, with individual reasons for being in the program.  What we must all do is begin by rejecting any explanation that results from viewing Housing Choice Voucher recipients as being any one thing, regardless of what that is.  Allusions to homogeneity, regardless of what they focus on, tend to trigger visceral reactions that deliver subtle, often subconscious judgments that are not justified by the collection of individual realities that actually exist.  Voucher holders exist across a broad spectrum; from second or third generation recipients for whom this condition has become a way of life to those who are on it temporarily because of individual circumstance, often health related.  People enter the program, people leave it, just not nearly enough of them; dependency is clearly an issue.  The voucher program aids many of those who need it most, and some of them show their gratitude by scamming it.  You might perhaps remember that I have previously written about “gaming the system from below,” and the principle certainly applies here.

All this exists, and more (Wait until I get to discussing the part landlords play in this).  Recognition doesn’t mean acceptance, and is absolutely necessary if you actually want to do something about the problem other than just denounce its results.  The point is that ANY and EVERY attempt to lump voucher recipients under one classification will produce conclusions that are self-defeating if translated into action.

Next week I take a look at the central player in this complex maze, the Montgomery County Housing Authority, and how we must understand it for what it is if we are to have any positive effect in correcting the evident shortcomings of the Housing Choice Voucher Program.

Housing Choice Vouchers: It's Not All About The Benjamins

But a lot of it is, and that’s what I will focus on this time.  Be warned: the Housing Choice Voucher Program is enormously complicated, and this is no place for a detailed analysis.  I will stick to the basics, because understanding why voucher holders seem to end up in one of two locations isn’t about corruption or conspiracy (although I accept that corruption is not absent), it’s about what the program is designed to do and how the regulations say it must be done.  These ultimately derive from the funding that is available, so it’s The Benjamins that I begin with.

First, I want to clear up an issue of terminology.  In my first post on housing assistance I used the term “individual” to describe a voucher holder.  While an individual can receive a voucher, the program is structured around the household, and that is the term I will employ from now on.  The amount of a voucher is calculated utilizing both household income and household size, (and a few other things, of course). 

The 2012 report that I have been using for my data lists 2,625 vouchers in effect as of that year, and I will continue to use that data.   Keep in mind that anything produced in 2012 utilizes data from no later than 2011, and it’s now 2014, so don’t fixate on the precise numbers.  They have probably changed a little, but the reasons for the disparity in voucher locations most certainly have not.

The Montgomery County Housing Authority (MCHA) administers the housing choice voucher program as the jurisdictional public housing authority for the county.  At the foundation of everything, of course is the fact that the MCHA has only a fixed—and inadequate—amount of money to distribute on an annual basis.  HUD also caps the number of vouchers that MCHA can issue, but the money allotted is not enough to fund all the vouchers it could issue.  There is also a waiting list with about 900 households on it, but no new names have been added to it since 2007.

Each voucher amount is a separate calculation, but all derive from obedience to the rules and use of the formulas.  The formulas aren’t basic at all, but we only need to know about them, not the details.  I will be just skimming the surface of a hugely complicated program, but will try to outline its fundamental rules.

The foundation of the whole program of housing subsidies is a belief that an American family should have to pay no more than 30% of its net income for housing.  A lot of research (and no small amount of controversy) went into establishing this baseline number, and a lot of misunderstanding has resulted.  Despite all the lip service paid to this number, the program is not structured to cover the difference between 30% of a voucher-holding household’s income and the amount it pays for rent, as we will see.  But what makes the 30% figure so important is that we are talking about this percentage of the income of the lowest earners on the local wage front.  The average annual income of program participants in Montgomery County, Pa. is $15-16,000.  Keep in mind that’s an average figure, with some lower and some higher.  The voucher holder is required to pay 30% of its income to the private landlord, and that may not be very much.  The MCHA thus ends up paying a substantial amount of the rent (directly to the landlord), but even that will not usually make up the difference between the rent and the tenant’s contribution.  You’ll see why—and how important it is—if you stick with me through this.

Remember, the vouchers are portable, so there is theoretically no barrier to a household moving where it wishes to live.  But The Benjamins say otherwise.  The Housing Choice Voucher Program is not designed to make up the difference between 30% of a household’s income and the prevailing market rent in any particular neighborhood.  The actual amount is determined by several bureaucratic calculations, the combination of which reduces how much a voucher is actually worth.

The first is something called the “Fair Market Rent” (FMR).  Note the terminology: “fair,” not “free”.  That’s important.  The term “Fair Market Rent” is borrowed from the real estate industry, although the end product is pretty much the opposite of what the term means in that context.  It’s not determined by local supply and demand, but by HUD, and it is customized for the huge variation in rental prices in the different “jurisdictions” all across the country.  HUD basically collects rental rates from several locations in a jurisdiction such as Montgomery County, Pa., from the low to the high.  It then processes this information and arrives at a net figure that applies throughout the county, regardless of a housing unit’s actual free market rent.  This doesn’t mean that the FMR is a single number.  The amount is based on the number of bedrooms in a unit and how the tenant pays utilities (the FMR includes the cost of utilities in addition to the rent), which makes for an enormous number of variations in the actual amount of each voucher.

There is a second number that figures in here.  HUD has different arrangements with each of its jurisdictions about how much of the FMR it is actually going to pay.  It’s called the Percentile.  As the FMR is assumed to be a figure near the middle, the ideal arrangement is when HUD allows a housing authority to spend at the 50^th Percentile.  Then—and only then—is the amount the authority can pay for a voucher equal to the FMR.  The allowed percentile varies with jurisdictions, and can be lowered.  HUD pays Montgomery County at the 50^th percentile, and thus at the FMR.  This becomes the maximum amount the MCHA can offer in a voucher.

This is so important that I will review the point:  a public housing authority allocates a specific amount of money to a voucher according to a calculation utilizing bureaucratically-processed information.  The voucher holder then has to utilize that voucher in the free market world of real estate.  That is a major disconnect, because while criticism of the housing choice voucher program derives from real world experience, all housing authority actions—with The Benjamins most definitely included—take place in accordance with a voluminous and detailed collection of regulations.  To say that “reality doesn’t matter” does not overstate the point by much.

The FMR is an average number, and should be somewhere around the middle of the true free market rents available around the county.  The actual rents charged are, of course, determined by private landlords.  The market rent for a specific bedroom unit in Wynnewood, for example, is considerably more than for the same bedroom unit in Norristown or Pottstown.  So, which landlords are most likely to reject the voucher program?  Clearly, those whose rents are so high that the subsidy doesn’t make up the difference, and that pretty much means at least half of all the available rental units in the county. 

Here’s the bottom line:  The current structure of the Housing Choice Voucher Program, even before considering any other of its many issues, strongly directs the recipients into the less expensive half of the rental units in Montgomery County.  Before we continue with a critique of what the program fails to accomplish, we must understand that this is exactly what the voucher program was designed to do: aid low-income families to move into what Wikipedia calls “medium-quality apartments”.  The MCHA says the actual wording of the Act is “modest”.  Please note that I said "understand," not "accept".  I plan to continue educating you about not just the program's shortcomings, from from where they truly originate, so that blame--and thereby corrective action--can be more effectively focused.

At a fundamental level the problem is all about The Benjamins in that with a great deal more money the other obstructions could be overcome.  That’s not a real world scenario, however, and adding a smaller amount would have opposite effects on the two goals I set out at the beginning of my first post on this subject.  Simply “throwing more money at the problem”—adding to the housing authority’s budget but not altering any of the rules under which it is distributed—would at least lessen the number of needy people on the county waiting list, and that’s a good thing.  But it would also increase the number of housing vouchers in Norristown and Pottstown, and that’s not.  More money by itself is not the answer.  Next time we discuss more about why this is true.

My thanks to Joel Johnson and his staff at the Montgomery County Housing Authority for leading me through the maze of the programs they administer (and some they don’t).  All errors of fact expressed above—and in future posts—are mine alone.

Public Housing is Still Around, and Guess Where?

Last week I wrote about Housing Choice Vouchers, and how their current distribution in Montgomery County is obscenely weighted toward Norristown and Pottstown.  I promised to begin looking at “why?” but I also mentioned that Federal housing assistance is a complex and multi-faceted topic, so this time I pile on the evidence about the concentration of housing assistance and extend it to both Royersford and Conshohocken while simultaneously discussing another well-known form of housing subsidy.  Not only is it well known, it’s much older.  It’s called “Public Housing”.

Public housing a different form of assistance than housing choice vouchers, and these differentiations must be understood.  Only you, the residents of these towns, can determine how each variation of assistance affects your community, so you shouldn’t just lump them together under some buzzword like “Section 8,” but be aware of the nature of each.  The public housing program also generates an entirely different subset of the question “why?” but I’m going to dispose of it rather quickly, because the answer should be considered a minor issue today, and there are more important ones to discuss.

I mentioned last week that housing choice vouchers are part of the shift in emphasis to “tenant-based” programs over the previously emphasized “site-based” ones.  The latter have not disappeared however.  In something of an oversimplification, the “site-based” programs fall under two categories: “public housing” and all the others.  The second category really isn’t a category, just my lumping together of a number of different programs, administered at different levels of government.  They offer subsidies to build housing with a specified number of units made available to low-income renters, and monthly rent subsidies.  These are not housing choice vouchers; the money passes directly from the monitoring agency to the owner without the residents touching it; it’s all by the numbers.  It is perhaps the most controversial of the “site-based” subsidies, because new proposals to build such subsidized housing show up periodically in the news (can you say “Pennrose,” boys and girls?). 

Public housing is the true survivor among housing programs, and still refers to government owned and administered housing complexes.  The biggest ones in our large cities are long gone, and good riddance.  Still, the program remains in existence, as do public housing locations in Montgomery County, administered by the County Housing Authority (MCHA).  Public Housing gathers housing aid recipients in one location.  This distinguishes it from the other “site-based” subsidy programs, which seek to include some of those under assistance among those who pay the full fare, which makes them somewhat integrative.   

There are 614 public housing units directly under the ownership and administration of the MCHA (technically, the Federal Government owns the properties, but never mind).  These are divided among seven public housing complexes.  Montgomery County’s public housing sites were built between the 1940s and the 1980s.  The general occupancy sites are the oldest, built between the 1940s and the 1960s.  High (actually mid) rises for the elderly/disabled are more recent, dating from the 1970s and 1980s.  Given my focus on the eight towns on the Schuylkill below Reading, I found it interesting to learn that five of the seven housing complexes are located in the valley, in three of its towns.  I suspect that declining property values after the Second World War had a lot to do with this.

For those who know how heavily Norristown is laden with housing choice vouchers, the good news is that Norristown does not have any public housing complexes.  The bad news is that Pottstown has three, including the largest one of them all.  In fact, Pottstown has 361 of the 614 units of public housing in Montgomery County, just under 59% of the total.  This interesting statistic at least adds to the prima facie evidence that Pottstown has received a disproportionate share of the MCHA’s attention.

There are two categories of public housing complexes: General Occupancy and Elderly/Disabled.  Both require the applicant to qualify according to the financial criteria, but the latter groups together those who are additionally not physically capable of living on their own.  So let’s be careful here, and try to maintain some sort of balance.  It only makes sense to group together the elderly/disabled (often the same people, by the way), given the need for special physical requirements (elevators) and internal dimensions to accommodate their medical needs.  This also explains why elderly/disabled complexes tend to be the newer buildings, as accommodating them in existing ones can require prohibitively expensive modifications.  Four of the county’s seven public housing locations are reserved for the elderly/disabled, and two of Pottstown’s three—Pollock House and Smith Towers—fall into this category.  It is hard to question money spent on these, and I seriously doubt that their residents contribute greatly to Pottstown’s crime problem, at least as perpetrators.  The concentration of two out of four such homes in Pottstown does represent a variation of the question “why?” but the answer will be different than anything about housing choice vouchers.

The other two complexes in the river towns are the Golden Age Manor in Royersford and Lee Towers in Conshohocken, and both are limited to the elderly/disabled.  I would be interested in knowing from the residents of these two towns if they have any opinions about these projects, and how well they fit into the town’s makeup.  There are other examples of housing subsidies in each town, so the question is also how these two compare to others as community issues.  Are they?  At all?  I’d like to hear from you.

It should come as no surprise that “general occupancy” housing complexes are much more likely sources of trouble than their elderly/disabled counterparts.  For the record, the two county public housing complexes not located in the Schuylkill Valley—North Hills Manor in Upper Dublin and Crest Manor in Willow Grove—are also “general occupancy”.

The third public housing complex in Pottstown is Bright Hope Community.  Bright Hope (not its original name) is located in the borough’s west end and it is the oldest such complex still open in the county.  It is by far the largest public housing site in Montgomery County, containing one less unit than do the other “general occupancy” complexes in North Hills Manor and Crest Manor combined.  It has had an up-and-down history of crime and drugs.  No long ago I wrote a post about “gaming the system” and referenced a drug bust at Bright Hope.  Pottstown urban activists are well aware of the place.

So, after two posts, it is clear that housing assistance of one sort or another is disproportionately present in both Norristown and Pottstown.  We will review possible reasons for this in upcoming posts (hint: it’s all about the Benjamins), but until then let’s begin by accepting that this is a complex situation.  Many factors enter into it, so don’t expect to have your simple reason for it all verified by me.  On rare occasions we may encounter something that actually has a simple answer, but only simple minds insist on simple answers.  The truth is not “out there”; it lies athwart the middle, as it always does, and it contains contradictions.