Low-income families have historically struggled to access low-poverty neighborhoods through federal housing programs. They have been challenged by a number of barriers, from transportation to discrimination, and have been left with no other alternative but to move into areas of concentrated poverty. But with HOTMA, there is hope. H.R. 3700, the Housing and Opportunity through Modernization Act of 2015 (HOTMA), has unanimously passed both the House and the Senate. President Obama is expected to sign this bill that updates several components of the nation’s low-income housing programs. Among other changes, the bill boosts an effective tool to serve low-income families: project-based vouchers.The U.S. Department of Housing and Urban Development’s (HUD) Housing Choice Voucher program provides two types of housing vouchers to more than 2.2 million low-income families. The first is the tenant-based voucher – a rental subsidy – that pays a portion of a private market unit’s rent and moves with a family.
The other type is the project-based voucher, or PBV. PBVs are attached to units, not families. A local public housing authority (PHA) works with a landlord to attach a PBV to a private market unit. The rent structure works the same way as the tenant-based voucher: families generally pay 30% of their monthly income towards rent, and the voucher covers the difference between this payment and the unit’s rent.
So what makes PBVs so great?
For one, they help vulnerable populations, like the homeless or those with disabilities, get access to supportive services. In most PHA developments, not more than 25% of the units can be project-based, but projects that provide supportive services can exceed this cap. Supportive services aim to help vulnerable populations achieve housing stability, and attaching PBVs to more than 25% of the units in housing developments helps service providers more efficiently meet this goal.
PBVs also help low-income households access low-poverty “areas of opportunity.” Families issued traditional tenant-based vouchers must jump multiple hurdles to actually use their vouchers. They have at least 60 days to both find a unit that meets certain health standards and find a landlord willing to even accept their voucher. PBVs, rather, designate physical units for low-income families and thus ensure long-term affordability. They allow low-income families to sidestep many of the barriers of traditional tenant-based vouchers and escape concentrated poverty.
HOTMA builds on these impacts by expanding the role of PBVs in fighting poverty. This bill increases the 25% PBV unit-cap to 40% in a project where voucher use is difficult or where the census tract poverty rate is 20% or less.
In addition to the 25% cap, PHAs usually cannot devote more than 20% of their overall voucher funding to PBVs. HOTMA changes the cap to be based on overall voucher units and increases the cap to 30% if the PHA uses the added 10% to house the homeless or veterans, to provide supportive housing for individuals with disabilities or the elderly, or for projects in areas where voucher use is difficult.
Image source: Center on Budget and Policy Priorities
Research has demonstrated the importance and benefits of living in these low-poverty neighborhoods. Raj Chetty and other Harvard economists recently conducted a follow-up study of HUD’s Moving to Opportunity demonstration, a random-assignment study that gave families in the treatment group housing vouchers to be used in low-poverty neighborhoods. The team found that children in the treatment group younger than 13 when their families moved were 32% more likely to go to college and earned 31% more than their counterparts in the control group.
HOTMA has the potential to strengthen the impact of federal housing vouchers nationwide, expand opportunities for all low-income families in need of housing, and give credence to HUD’s description as the “Department of Opportunity.”
Matt Gerken is a public policy graduate student at Duke University focusing on affordable housing, homelessness, and quantitative analysis.