A new program through the U.S. Department of Housing and Urban Development aims to change that reality in the Springs, and in 22 other less-than-integrated metropolitan areas. But it won’t be easy.
In fact, HUD, under Housing Secretary Ben Carson, fought in the district court of Washington, D.C., to delay the mandatory implementation of its own program, known as Small Area Fair Market Rent (SAFMR), by two years saying housing authorities needed time to prepare. The judge ruled against HUD in December, and the program, which was approved in the Obama era, went into effect on Jan. 1. It must be fully implemented by April 1.
At the federal and local levels, this has caused a scramble — change doesn’t come easy and the new program rewrites the rules for the nation’s largest housing subsidy.
But Chad Wright, executive director of the Colorado Springs Housing Authority, says uncertainty is only part of his problem. After years of cutbacks that have led to deferred maintenance in the city’s government-owned housing, rounds of layoffs in his office, and implementing every penny-pinching innovation he could think of (from redoing schedules to paperless data management), he’s expecting the federal budget to bring more cutbacks.
Meanwhile, the (closed) waiting list for Section 8 housing (with 2,290 vouchers) has over 1,500 names on it. The city’s homeless shelters are packed, hundreds are living on the streets and the city is struggling with a headline-grabbing affordable housing crunch that’s unlikely to be eased any time soon.
But this new Section 8 program, which comes with added complexity that HUD acknowledges will add costs, doesn’t come with any extra money.
“We talk about getting up every day, leaving some blood on the wall to accomplish our mission,” Wright says. “We’ll keep doing that — it’s what we do ... but, as we say back home, it’s a rough row to hoe.”
The SAFMR program is really just a new way of calculating a housing subsidy. HUD traditionally calculates fair market rents (FMRs) annually for entire metropolitan areas. In most cities, the FMR is the cost of the 40th percentile of apartments in the area, though in the 23 metro areas previously mentioned (the Springs included), it’s long been set at the 50th percentile in an effort to create more choice. For the math-challenged, that’s the price at which half the apartments are more expensive and half are less expensive. In 2017, for instance, FMR for a Springs two-bedroom apartment was $950.
The 50th percentile program hasn’t been effective at integration, however, because existing Section 8 landlords simply raised rents. SAFMR replaces that program.
Here’s how it works: Those lucky enough to literally win the Section 8 lottery (one must hustle to get one of the limited spots on the waiting list annually, and then be selected at random from the list), pay about 30 percent of their own income toward their rent, with the voucher covering the rest. That’s after a family finds a landlord willing to accept a voucher, which brings with it government inspections.
SAFMR adds a twist. Rather than setting FMRs based on rents in an entire metro area, HUD will set FMRs for ZIP codes. What that means is that in swanky 80906, the Broadmoor area, a two-bedroom FMR is $1,180. But in 80909, where the Knob Hill neighborhood is located, a two-bedroom FMR is only $870.
There have been pilots of the program in seven areas around the country. A study found that while SAFMR did integrate voucher holders, it also reduced the overall number of housing units available to them. The federal government expects (perhaps optimistically) that the program will be cost neutral because while some voucher holders will get higher subsidies, others will get less.
What’s not clear, however, is what might happen in a city like the Springs, where the rental market is tight. A landlord that’s suddenly receiving a voucher worth less, for instance, could simply kick out the tenants. And finding new housing could be difficult.
Laura Nelson, executive director of the Apartment Association of Southern Colorado, says that there are fewer apartments in the Springs than in other metro areas — they make up less than 25 percent of the housing stock compared to 40 or 50 percent in Denver, she says. And some areas (particularly the southeast and the north) have more apartments than others.
Part of the problem is the challenge of building multifamily — she points to the Broadmoor Bluffs neighborhood’s strident resistance to the low-income apartments known as The Ridge that were scheduled to be finished in June 2018 originally, but haven’t even broken ground due to their challenges. And that’s just one of many issues, including a reduction in the value of tax credits, that’s likely to depress the building of affordable housing.
Nelson’s data shows, meanwhile, that the city’s rental vacancy rates stood at 5.4 percent in the third quarter of 2017 and the median rent on a two-bedroom, one-bathroom has sky-rocketed from $685 in the third quarter of 2012 to over $972 in third quarter of 2017. While partisans in the state legislature squabble over what to do about the state’s affordable housing shortage (Democrats want more social programs and subsidies while Republicans want tax cuts), a new report by the Bell Policy Center found that while housing prices have risen sharply, “When adjusted for inflation, average weekly wages [in Colorado] have only risen $33 since 2000.”
And then there’s the fact that not all landlords take vouchers, though the local Apartment Association has a committee that acts as a go-between for government voucher holders and large management companies that accept them. (The committee originally only helped veterans with specialized vouchers, but is now open to all such program participants.)
Nelson, by the way, thinks SAFMR is a great idea, because she says vouchers currently aren’t worth enough to cover rent in most of the city.
“With the market the way it is right now,” she says, “it’s a very hard sell to [tell a landlord], ‘Take this voucher, subject yourself to [government] inspections, take a risk on someone who may or may not have bad credit ... and, by the way, you’re going to get paid less by this person than by someone who may call tomorrow.”
From Wright’s perspective, however, SAFMR is a great unknown in a sea of misery.
“How is that going to impact our administration? Are we going to have to restructure our department?” he asks.
Wright says he wants to keep an open mind, but the funds he uses to maintain his traditional public housing (706 government-owned housing units, a separate program from Section 8) have been cut by about 50 percent since 2000. The buildings are deteriorating. Meanwhile, HUD only pays 76 percent of his administration costs, and he’s been warned it could be as little as 70 percent in 2018.
And if the existing Section 8 vouchers end up costing more under the SAFMR program? Well, when people earn too much to stay in the program or violate a rule and get kicked out, he may simply not pass that voucher on to the next family. There’s only so much money to go around.
“I think it’s a noble concept,” he says of SAFMR, “but we’re going to have to pay attention to, not just the concept, but how it interacts with everything else.”
So, would it seem like a more noble concept if it came with funding?
“Well,” Wright says, laughing, “it wouldn’t hurt.”