HUD Proposes to Overhaul Rents, Impose Work Requirements on HUD-Assisted Households
The Trump administration has long signaled through its budget proposals that it aims to raise the bar for federal assistance, in large part through expanding work requirements. HUD recently released legislative text proposing sweeping HUD rent reforms. Entitled the “Making Affordable Housing Work Act of 2018,” its proposals include rent increases on certain households and the ability for local housing authorities and owners to impose work requirements.
HUD’s proposal follows an executive order signed by President Trump directing federal agencies to expand work requirements for low-income Americans receiving Medicaid, food stamps, public housing benefits, and welfare. The agencies are supposed to issue recommendations to the White House within 90 days.
HUD’s proposed legislation has generated swift backlash from industry groups. It’s important to note that for the rent reforms to be enacted, a bill would need to be introduced and passed by Congress, then signed by the president. This proposed legislative text issued by HUD currently hasn’t been introduced in Congress. But the proposal includes draft legislation authored by Republican Representative Dennis Ross of Florida who has circulated his draft bill, on which a House subcommittee hearing was recently held.
If enacted, these changes would affect public housing, Section 8, project-based rental assistance, Section 202 properties for the elderly, and Section 811 properties for disabled tenants.
Currently, most HUD-assisted households pay 30 percent of their adjusted income as rent, although the minimum rent that a household could pay is $50 per month, even if that is more than 30 percent of the household’s monthly income.
HUD proposes that most families, with some exceptions, would instead have to pay 35 percent of their gross income or 35 percent of the amount earned by working at least 15 hours a week for four weeks at federal minimum wage, whichever is higher. Based on the current federal minimum wage, the mandatory minimum would be $150, rounded down, per month in rent. This is three times higher than the current minimum rent that housing providers may apply to families. The bill would also increase rents for households with high medical or child care expenses by eliminating these income deductions. Household contributions would be based on gross income.
HUD’s proposal would allow for a hardship exemption, but affordable housing advocates are skeptical that the waiver process would be enough to protect the millions of renters who would experience rent increases. They also point out that although the draft bill purports to maintain the same hardship exemptions as the current law, HUD hasn’t yet complied with the Housing Opportunity Through Modernization Act (HOTMA) of 2016, the bipartisan law that requires HUD to certify that public housing agencies (PHAs) and owners are complying with hardship exemption requirements.
Elderly and Disabled Households
Under HUD’s proposal, changes would also be made to the rent structures for Section 202 Housing for the Elderly and Section 811 Housing for Persons with Disabilities programs. Households headed by the elderly or persons with disabilities would pay 30 percent of the household’s monthly gross income, or a $50 minimum rent, whichever is greater. Currently, most elderly households are required to pay at least $25 per month on rent, whereas disabled households don’t have a minimum requirement.
For current HUD tenants, this change in rent would be phased in over six years. To qualify as an elderly or disabled family for the purposes of calculating rent, all adult family members must be at least 65 (not 62) or have a disability except for a caregiver.
Alternative Rent Structures
HUD’s bill would give the HUD secretary the authority to impose even higher rents through alternative rent structures and de facto time limits. PHAs and housing providers would be allowed to establish alternative rent structures, including but not limited to tiered rents, where rents are calculated differently based on different income brackets; stepped rents, where rents would systematically increase over time; and timed escrow.
PHAs and owners could also request their own form of alternative rent structure under the proposal. Affordable housing advocates point out that these alternative structures have the potential to significantly increase rents on low-income households. And allowing PHAs to set their own rent rules would result in a more complicated and fragmented system that would create challenges for households moving across jurisdictional boundaries and over which HUD would be challenged to provide oversight.
HUD’s proposal would give public housing agencies and project-based Section 8 owners the option to impose work requirements. It states that a PHA or owner may establish minimum work requirements for individuals or families, excluding persons at least 65 years of age, persons with disabilities, elderly and disabled families, and such other individuals or families as defined through HUD regulation. A PHA or owner that imposes work requirements would be exempt from imposing the community service and self-sufficiency requirements otherwise required by HUD. HUD would publish regulations establishing criteria regarding the population that may be subject to work requirements; the maximum number of hours per week that a PHA or owner may require; the definition of work, including forms of employment or employment-related activities that would satisfy any work requirement of the PHA or owner; and other HUD-imposed criteria.
Household Income Reviews
According to the proposal, income recertifications would be done every three years. The proposed bill states that review of family income shall be made in the case of all families, upon the initial provision of housing assistance for the family; and every three years thereafter. Currently, only reviews for households on fixed incomes are required on a three-year basis.
Housing advocates believe this would have the effect of locking households into higher rents, even if their incomes decline. A family with any adult younger than 65 who isn’t considered disabled could request an interim reexamination only if their income decreases by 20 percent and not 10 percent as Congress recently required.
Members of Congress Raise Concerns
In response to HUD’s proposals, some members of Congress have sent letters to HUD Secretary Ben Carson expressing their concerns. In a joint letter, Senators Kamala Harris (CA) and Dianne Feinstein (CA) wrote, “These proposals would leave even more low-income people without stable housing, making it harder for them to achieve upward economic mobility, and live with dignity.” They expressed concerns about their constituents in California, where high rents have left more than half of residents in Los Angeles, Riverside, and San Diego cost-burdened. The letter also includes questions for Dr. Carson regarding HUD’s decision-making process related to the proposed changes and the potential impacts on low-income families.
In a separate letter, Senator Tina Smith (D-MN) stated that the proposed changes would impact 4.1 million households nationally, 72,400 of which reside in her home state of Minnesota. “Under current budget levels there is already a lack of funding to address the shortage of affordable housing in this country,” wrote Ms. Smith. “Your proposal would only exacerbate an already troublesome situation.”
And Representative Adriano Espaillat (D-NY) led the Democratic members of the New York City congressional delegation in sending a letter in opposition to the Trump proposal. The letter states, “This proposal will force tenants to choose between basic nutrition, access to health care, and any semblance of financial self-sufficiency. These are real, heartbreaking decisions that parents, grandparents, and those responsible for dependents will have to take into consideration when setting a weekly or monthly budget in the face of even greater financial restrictions because of this proposal.”