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July 2001
INTRODUCTION
Housing is generally the
largest single expense low-income households face.
According to the federal government, housing is “affordable” to a
low-income family as long as the cost of housing
(rent or mortgage/tax payments plus basic utilities) does not exceed 30
percent of household income. Consistent
with this standard, households earning $11,000/year or $917/month (minimum
wage) cannot afford to pay more than $275/month for rent and utilities.
People with disabilities who
may be receiving Supplemental Security Income (SSI) or who work in low wage
jobs find it very difficult to find housing that is affordable.
This Federal Housing Resource Guide provides information on key federal
programs and resources that can be used to assist low-income people with
disabilities with their housing needs.
|
|
Annual
Income |
Affordable
Monthly Housing Cost |
|
$ 150 |
||
|
$ 11,000 (federal minimum wage) |
$ 275 |
|
|
$ 15,000 |
$ 375 |
|
|
$ 20,000 |
$ 500 |
|
Though most of these programs
are federally funded by the U.S. Department of Housing and Urban Development
(HUD), some (as indicated) are administered and available through state
or city housing and community development offices.
CHANGING FEDERAL ENVIRONMENT
Currently, the federal
government is experiencing significant changes in how housing programs are
administered and at what level of funding these programs will continue.
These changes will impact federal housing programs for years to come.
Though at this time it is difficult to predict the outcome of this
debate, the following changes are already underway:
§ Potential cuts to many federal housing programs;
§ A “devolution” of program responsibility from the federal to state and local governments;
§ Greater focus on achieving mixed-income environments in most public and private affordable housing programs; and
§
Less federal oversight and regulation.
Throughout this Federal
Housing Resource Guide, changes that are known or are very likely to occur are
indicated in the program summaries.
FEDERAL HOUSING PROGRAMS
Below are brief program
summaries of commonly used federal housing programs and resources.
HUD funds most of these programs, though there are some noted
exceptions. The programs indicated
below are administered and available through your state or city housing and
community development offices. Often times when looking for resources the best
place to start is the city and local level to find out how funds are being
spent in your community.
I. Public Housing Agencies and the PHA Plan
Public Housing Authorities (PHAs)
were created by the Housing Act of 1937 to develop, own, and manage federal
public housing under contract with HUD. PHAs
are overseen by a Board of Commissioners or Director who are either elected or
appointed by the city or town. PHAs
administer federal public housing units as well as Section 8 tenant-based
vouchers. Historically, PHAs have
been highly regulated by HUD. However,
recent federal legislation has given greater flexibility to PHAs to decide how
to use federal housing resources to meet housing needs in local communities.
Federal public housing is
developed, owned, and operated by PHAs. HUD
provides an operating subsidy to pay for the costs of operating and managing
the housing not covered by tenant rents. Public housing tenants typically pay
a limited percentage (usually 30 percent) of their income as rent to the PHA.
The 1998 Quality Housing and
Work Responsibility Act, commonly called the Public Housing Reform, made major
changes in federal public housing and Section 8 programs. Highlights
of the important changes to HUD’s housing programs include income targeting
and “deconcentrating” public housing.
§ The complex provisions of this part of the legislation allow higher income targeting for public housing units and lower income targeting for the Section 8 rental assistance program. For example, PHAs will be required to make not less than 75% of their Section 8 rental subsidies available to households whose incomes are less than 30% of the Area Median Income.
§ Another change is the implementation of minimum rents. Under the new law, PHAs will be allowed to impose minimum rents of $0 to $50 a month for public and Section 8 assisted residents. Exemptions are permitted under certain circumstances.
§
New Section 8 Homeownership provisions permit PHAs to use
Section 8 tenant -based rental assistance to support homeownership for
low-income households.
Beginning in 2000, PHAs were
required to prepare and submit to HUD a five year Public Housing Agency Plan
covering all aspects of a PHA's operations, including PHA income targeting and
tenant selection preferences for federal public housing units and Section 8
rent subsidies. The PHA Plan must
be developed in consultation with a Resident Advisory Board and be consistent
with the housing needs and housing strategies described in the community's HUD
mandated Consolidated Plan.
Through the PHA Plan, PHAs may
establish tenant selection preferences for their public housing units.
PHAs may also designate studio and one-bedroom public housing units as
“elderly only” housing – and reduce the supply of public housing units
available to people with disabilities. However,
PHAs can only designate “elderly only” housing if the PHA has a separate
HUD-approved PHA Allocation Plan requesting the designation.
Federal Public Housing Units
Since the 1970s HUD has funded
very few new units of public housing. Many
PHAs are now competing for HUD’s HOPE VI Public Housing Revitalization
Program, which provides funding for the demolition and redevelopment of older
and deteriorated public housing. In
an effort to revitalize the image of public housing, public housing units
developed under the HOPE VI program are frequently targeted to moderate income
rather than low-income households.
In the next few years there is
likely to be no new funding for public housing development, and cuts in
operating and modernization funds. In
addition, tenant selection policies are undergoing fundamental changes with
the elimination of federal mandatory preferences (including those for people
who are homeless or at risk of homelessness) and the raising of public housing
income limits. The primary goal of
these changes is to create more mixed income housing developments.
Although federal mandatory
preferences are no longer applicable, PHAs may choose to establish local
preferences for tenant selection, and may adopt a preference for people
with disabilities. PHAs have a
good deal of latitude in selecting local preference categories, though these
categories should be based on local needs (as indicated in the Consolidated
Plan, the PHA Plan or other public planning processes).
In the future, as noted above, PHAs are likely to have broader
discretion over the administration of public housing.
Section 8 Housing Choice Voucher Program
The Section 8 tenant-based
certificate and voucher programs were created by Congress as an alternative to
public housing and privately owned subsidized housing developments with two
goals in mind. These were to allow
low-income households more choice in housing; and to reduce the concentration
of low-income households living in particular neighborhoods, especially in
urban areas. The Section 8 program
is administered mostly by PHAs and provides tenant-based rental subsidies that
can be used in privately owned rental housing chosen by the program
participant that meets Section 8 guidelines.
The PHAs are responsible for tenant selection, managing the subsidy
account, and inspecting apartments before they are rented.
Under the Section 8 tenant-based program, PHAs provide a rental subsidy
directly to landlords on behalf of eligible tenants who select housing that
meets program guidelines. In
general, tenants pay 30 percent of their income in rent and the PHA pays the
difference between this and the rent charged for the unit.
Rents must be “reasonable” and equal to or below a Fair Market Rent
established by HUD based on the median rent for the area.
Since 1974, this program has become the major form of federal housing
assistance available to very low-income households.
Under new public housing
reform legislation, the Section 8 certificate and voucher programs were merged
into the new Housing Choice Voucher Program.
The Housing Choice Voucher program also provides a rent subsidy paid by
the PHA on behalf of the program participant directly to the landlord.
However, when new Section 8 participants receive a Housing Choice
Voucher, they may pay no more than 40 percent of their income in rent.
The amount of the Section 8 rent subsidy paid by the PHA is based on
HUD Fair Market Rents for the area.
As mentioned above, until recently, PHAs were required to provide preference to very low-income families (income below 50 percent of median) who are homeless or at risk of homelessness. However, Congress recently eliminated these requirements. Under new federal laws, PHAs must target at least 75 percent of their Section 8 rent subsidies to households with incomes below 30 percent of the median income. PHAs may also establish other tenant selection preference categories that are consistent with local housing needs. For example, PHAs may adopt a local preference for people with disabilities, although there is no requirement that they must do so. There is usually a very long waiting list for Section 8 vouchers, and many PHAs open their Section 8 waiting lists for new applicants for very limited periods of time.
Section 8 Mainstream Program for People with Disabilities
Most of these rent subsidies
were intended by Congress to replace the federal public and assisted housing
units that are no longer available to people with disabilities because of the
designation of “elderly only” housing.
The Section 8 rent subsidies are usually referred to as the Section 8
Mainstream Program for People with Disabilities.
Unfortunately, very few PHAs actually applied for this funding.
To address this lack of
interest on the part of PHAs, in 1999, Congress directed HUD to modify the
Section 8 Mainstream program and permit non-profit disability organizations as
well as PHAs to apply and administer the program.
Non-profit organizations are required to run the Section 8 program in
the same manner as PHAs.
Privately-Owned Federally Subsidized Rental Housing—Elderly Only
Policies
Beginning in the early 1960s,
Congress created a number of programs that encouraged the development of
privately owned affordable housing. This
was a move away from public housing and toward public/private partnerships
where the federal government would provide incentives to private developers to
keep all or some of their units in multi-family developments affordable to low
income people. Privately owned
affordable housing remains the largest source of affordable housing, exceeding
both public housing and tenant-based rental subsidies, nationally.
During the 1970s, HUD
stimulated the development of privately owned affordable housing through such
programs as the Section 221(d)3 and Section 236 programs which combined
long-term mortgages with federal mortgage insurance.
After Congress created the Section 8 program in the 1970s, many of
these properties also received Section 8 project-based rental assistance tied
to some or all of the units. Until
1992, the one-bedroom units in these developments were available equally to
elderly households (age 62 and older) and people with disabilities under age
62. However, since the mid-1990s,
owners have had the discretion to restrict or exclude people with disabilities
from eligibility under “elderly only” designated housing policies.
In
the 1970s and early 1980s, the Section 8 New Construction and Section 8
Substantial Rehabilitation program was also used to encourage new subsidized
housing development. As an
incentive to expand private subsidized housing production/rehabilitation
activities, HUD made 15-year commitments of Section 8 rent subsidies to
housing developers who were required to provide units to Section 8 eligible
households, including people with disabilities.
Developers used this Section 8 guarantee to obtain financing from other
sources. Since 1992, these
properties have also been permitted to adopt “elderly only” housing
policies and limit the occupancy of units by people with disabilities under
age 62.
The
Washington D.C.-based Consortium for Citizens with Disabilities Housing Task
Force and the Technical Assistance Collaborative, Inc. estimated in a 1996
report that by the year 2000, as many as 273,000 federally subsidized housing
units may be converted to “elderly only” housing and therefore no longer
be available to people with disabilities under the age of 62.
This figure appears to be lower than the actual amount to date.
Most privately owned federally subsidized Section 8 developments in the
II. Subsidized Housing
Programs to Expand the Supply of Affordable Housing
The Consolidated Plan
The Consolidated Plan (ConPlan)
is a HUD mandated application and strategic planning document prepared by all
states and certain local government jurisdictions every year.
In order to get the funds each eligible unit of government must submit
a comprehensive strategic plan every 5 years with an annual update to that
plan every year. The Consolidated
Plan must be approved by HUD each year and it controls the use of four HUD
programs administered by state and local housing officials.
These four HUD programs are: the HOME Program; the Community
Development Block Grant Program; the Emergency Shelter Grant Program;
and the Housing Opportunities for People with AIDS Program.
(Each is detailed below.) These
funds are allocated to units of local government based on a formula for need.
The ConPlan is intended to be
a comprehensive, long-range (5 year) planning document that describes housing
needs and market conditions, housing strategies, and outlines an action plan
for the investment of federal housing funds.
The ConPlan is important to the disability community because it
controls how federal housing funds will be used to expand affordable housing
opportunities, and who will benefit from these affordable housing activities.
The housing needs and housing strategies adopted in the Consolidated
Plan are also intended to influence the development of other HUD mandated
strategic plans – specifically the new Public Housing Agency Plan prepared
by PHAs and the Continuum of Care Plan which guides the use of HUD
McKinney/Vento Homeless Assistance Programs.
HOME
Program
Congress
created the HOME Investment Partnerships Program in 1990.
The HOME program is a formula grant of federal housing funds to states
and local jurisdictions. Local
jurisdictions are larger cities and consortia of smaller communities (called
“Participating Jurisdictions”). During
2001, Congress appropriated $1.7 billion that was allocated by formula to
approximately 500 communities and states.
HOME funds can be used for the following uses:
§ Rental housing production and rehabilitation loans and grants;
§ First-time homebuyer assistance;
§ Rehabilitation loans for homeowners; and
§
Tenant-based rental assistance (2 year renewable contracts).
All housing
developed with HOME funds must serve low and very low income individuals and
families. For rental housing, at
least 90 percent of HOME funds must benefit families whose incomes are at or
below 60 percent of area median income; the remaining 10 percent must benefit
families with incomes at or below 80 percent of area median income.
(Your state or participating jurisdiction may have even lower income
targeting for their HOME funds) 15 percent of a state or local jurisdictions
HOME funds must be set-aside for use by community based non-profit
organizations (called “CHDOs”).
Community
Development Block Grant (CDBG)
The CDBG
program is a federal grant provided to CDBG “entitlement communities”
(typically municipalities with populations over 50,000 and urban counties with
populations over 200,000) and to all states.
States may use CDBG funds only in non-entitlement communities,
including rural areas. During
2001, Congress appropriated $4.4 billion for the CDBG program. At least 70 percent of
CDBG funds must be used to benefit low and moderate-income people by providing
decent housing and a suitable living environment, and by expanding economic
opportunities. CDBG can be spent
on any of the following activities:
§ Housing rehabilitation (loans and grants to homeowners, landlords, non-profits, developers);
§ New housing construction (only if completed by non-profit groups);
§ Purchasing land and buildings;
§ Construction of public facilities such as shelters for the homeless;
§ Construction of neighborhood service centers or community buildings;
§ Code enforcement, demolition, and relocation funds for people displaced because of CDBG projects;
§ Making buildings accessible to the elderly and handicapped; and
§
Public services (capped at 15 percent of a jurisdictions CDBG
funds) such as employment services and health and child care.
Jurisdictions
must certify that their use of CDBG gives maximum feasible priority to
activities that will benefit low and moderate-income people or aid in the
prevention or elimination of slums or blight.
Interpretation of these goals has often led to conflict between
community groups and the state and city housing or community development
offices responsible for administering the grant.
Emergency
Shelter Grant (ESG)
Created with
the authorization of the Stewart B. McKinney/Vento Homeless Assistance Act in
1987, the ESG program provides federal (HUD) grants to states and localities
based on the formula used for the CDBG program.
Program funds are awarded to grantees in proportion to their last
year’s CDBG allocation (see above). If
localities do not meet minimum grant standards, their funds are added to their
state’s allocation. In 2001,
Congress allocated approximately $150 million in Emergency Shelter Grants.
Eligible activities for use of ESG include:
§ Renovation, major rehabilitation, or conversion of buildings for use as emergency shelter;
§ Up to 30% on essential services for the homeless;
§ Up to 30% on homeless prevention efforts; and
§
Shelter operating costs, such as maintenance, insurance,
utilities, rent, and furnishings (no more than 10% for operating staff costs).
Housing
Opportunities for People with AIDS program (HOPWA)
HOPWA
is a HUD program that funds housing and services for people with AIDS.
It is available as a block grant to states and larger metropolitan
areas based on the incidence of AIDS in these areas.
Approximately $230 million was appropriated for HOPWA in Fiscal Year
01. Eligible activities under the
program include:
§ Housing information and coordination services;
§ Acquisition, rehabilitation and leasing of property;
§ Project-based or tenant-based rental assistance;
§ Homeless prevention activities;
§ Supportive services;
§ Housing operating costs;
§ Technical assistance; and
§ Administrative expenses.
The federal government created
the LIHTC program in 1986 in order to create incentives for investment in
low-income housing development by giving federal tax credits to investors in
affordable low-income housing. Private
investors (such as banks, corporations) buy the tax credits from the
affordable housing developer. The
affordable housing developer then uses these proceeds called equity (usually
in combination with other financing) to construct or rehabilitate affordable
housing. Investors receive a
federal tax credit over a 10-year term.
Because developers of
affordable housing must often piece together various forms of financing, the
LIHTC has become a critical piece of overall project financing.
State Housing Finance Agencies develop plans, called Qualified
Allocation Plans (QAP), describing how the credits will be allocated to
projects (setting priorities and scoring for projects).
Developers should review the plans to see what the state and local
priorities are before submitting an application.
Developers should be aware that the process is very competitive.
Additionally, many states have now created state tax credit programs
that operate much like the federal program and provides another source of
funds for housing development.
The federal government sets basic long-term affordability requirements on projects. Under LIHTC, at least 20 percent of the units must be reserved for households earning less than 50 percent of the area median income or at least 40 percent of the units must be reserved for households earning up to 60% of area median income. LIHTC projects are required to by federal rules to accept applications from households with Section 8 vouchers, provided the household meets other tenant screening criteria.
Federal Home Loan Bank
Federal law requires each of
the 12 District Federal Home Loan Banks to establish an Affordable Housing
Program (AHP) under which the District Bank provides low-cost funds to member
saving institutions for below-market loans or grants for affordable housing
activities. Member banks then
provide grants and below market loans to organizations for the purchase,
construction, and/or rehabilitation of rental housing.
At least 20 percent of the units must be occupied and affordable to
very low-income households. Member
banks file applications with the FHLB on behalf of community organizations in
April and October. The AHP is
funded by 10 percent of the Federal Home Loan Bank's net income or $100
million, whichever is greater.
In addition, the Federal Home
Loan Bank offers a loan program called the Community Investment Program (CIP).
This provides long term funding at fixed rates to develop rental
housing (including acquisition, rehabilitation, and construction) or finance
first-time home purchases for families and individuals with incomes up to 115
percent of the area’s median income. Fixed
rate loans are available at favorable rates for up to a term of 20 years, and
are available continuously.
McKinney/Vento Homeless Assistance Continuum
of Care
Since the mid 1990s, HUD’s
homeless programs have been made available through the Continuum of Care
approach – that is a local or state network or system designed to coordinate
efforts to address homelessness. The
Continuum of Care approach is intended to help communities develop the
capacity to envision, organize, and plan comprehensive and long-term solutions
to addressing the problem of homelessness in their community.
This comprehensive approach encourages communities to prioritize gaps
in the housing and services available for homeless people and develop
long-term strategies and action plans to address these gaps using HUD
McKinney/Vento funds as well as other housing and service resources.
There are three McKinney/Vento programs (SHP, S+C, and S8 Mod Rehab
SRO) available through the McKinney/Vento Homeless Assistance national
competition announced each year in HUD’s Notice of Funding Availability (SuperNOFA).
The
Supportive Housing Program (SHP)
The SHP
program provides supportive housing and/or supportive services to homeless
persons. The SHP awards grants
through a national competition to government entities and non-profit
organizations. SHP funding can be
used to create transitional housing (temporary housing and services for up to
24 months); create permanent supportive housing for people with disabilities;
or provide supportive services not in conjunction with SHP-funded housing.
Eligible activities for use of SHP funds include:
§ Acquisition of structures for supportive housing or to provide supportive services;
§ Rehabilitation of structures for supportive housing or to provide supportive services;
§ New construction of buildings for supportive housing where there is a lack of appropriate units that could be rehabilitated or the new construction costs substantially less than rehabilitation;
§ Leasing of structures for supportive housing or to provide supportive services;
§ Operating costs of supportive housing; and
§ Supportive services.
The Shelter
Plus Care (S+C) program provides rental assistance funding for homeless
persons with disabilities, primarily those with mental illness, chronic
problems with alcohol and/or drugs, and AIDS or related diseases.
Only government agencies and PHAs are eligible to apply through the
SuperNOFA national competition. The
funds provided for rental assistance must be matched dollar-for-dollar by in
kind services to help participants maintain their housing.
S+C funds four types of rental assistance:
§
Tenant-based rental assistance (TRA) provides grant
funding for a five-year contract term. Participants
reside in housing of their choice though grant recipients may require
participants to live in a specific area in order to facilitate coordination of
supportive services.
§
Sponsor-based rental assistance (SRA) provides grant
funding for a term of five years through contracts between a grant recipient
and a sponsor organization. Sponsors
may be a non-profit organization or community mental health agency established
as a public non-profit. Participants
reside in housing owned or leased by the project sponsor.
§
Project-based rental assistance (PRA) provides grants for
a term of either five or ten years through contracts between grant recipients
and owners of existing structures with units that will be leased to
participants. Rental assistance
grants are for 10 years only if the owner agrees to complete rehabilitation on
the units to be leased within 12 months of the grant agreement.
§
Single Room Occupancy Dwellings (SRO) provides grants for
rental assistance for a contract term of ten years in connection with moderate
rehabilitation of single room occupancy housing units.
Starting in
1999, in response to large demands for renewal funding by existing S+C
programs, Congress established a separate set-aside account to fund all
eligible renewal S+C programs for one year.
The
Section 8 Moderate Rehabilitation Program for Single Room Occupancy (SRO)
Dwellings for Homeless Individuals
The Section 8
SRO program provides public housing authorities and non-profit organizations
rental assistance in the development of Single Room Occupancy Dwellings (SROs)
for homeless individuals. SRO
projects are awarded Section 8 project-based rent subsidies for up to ten
years — a long-term commitment which helps the project sponsor obtain other
financing necessary to develop the project.
SRO projects must select tenants who qualify as homeless under HUD
rules. Other Section 8 tenant
selection rules also apply to the Section 8 SRO program.
Funds are awarded through periodic national competitions.
Private non-profits must contract with a PHA to administer the subsidy.
Section 811
The Section 811 Program
(formerly the Section 202 program for the elderly and disabled) was authorized
as a separate program for people with disabilities in the early 1990s.
Section 811 provides capital grants and project rental assistance
contracts to non-profit-sponsored housing developments for people with
disabilities. 25 percent of the
Section 811 funds are also used for tenant-based rental assistance (through
the Section 8 Mainstream Program for Persons with Disabilities).
Section 811 provides 100% of the development costs that do not have to
be repaid if the project remains available to very low-income people with
disabilities for 40 years. Funds
can be used to acquire, rehabilitate, or construct new housing.
Developers can use a variety of structure types, including multifamily
housing complexes, condominiums, cooperatives, and group homes.
Each HUD region receives an allocation of Section 811 funds annually,
which are made available to nonprofit organizations through a national
competition announced in a HUD Notice of Funding Availability.
Because of limited funding ($217 million in FY 01), the Section 811
program is extremely competitive.
Projects for Transition from Homelessness (PATH)
This federally funded program is administered by the federal Center for Mental Health Services through grants to state mental health agencies. These state agencies provide PATH funded services to homeless people with mental illness primarily through local or regional mental health service providers. PATH funds can be used for outreach, screening, diagnostic treatment, habilitation, rehabilitation, community mental health services, case management, supportive and supervisory services in residential settings, and other housing-related services.
Rural Housing Programs
Section 502 Program
County
offices administer Section 502 funds. This
program finances the purchase, construction or rehabilitation of
owner-occupied single-family homes. Eligible
houses must be modest in cost, size, and design, and can include mobile homes.
Eligible applicants must meet low or very-low income criteria.
The 2001 budget from the USDA allocated $1.3 billion to this program.
Section 504 Program
The Section
504 program provides loans or grants to rural elderly or disabled very
low-income homeowners. Grants must
be used for emergency repairs to water and sanitary sewer systems, wiring,
structural supports, and roofs. Unlike
grants, loans may be used for cosmetic repairs.
There was $30 million available for the low-income home repair
grants in 2001, leaving $40 million for loans.
Section 515 Program
Section 515 funds are federal funds available through the Rural Housing and Community Development Services and allocated to states on a formula basis and awarded competitively. The Section 515 program provides low interest loans to finance affordable multifamily housing or congregate housing for families, elders, and people with disabilities who have very low, low, or moderate incomes. It can only be used in RHCDS-eligible communities — generally communities with populations of up to 10,000 or in non-urban communities with populations up to 20,000. Section 515 received $120 million was allocated from the USDA (for Section 515) in 2001.