More About Will Fischer

Will Fischer

Fischer is a Senior Policy Analyst, focusing on federal low-income housing programs, including Section 8 vouchers, public housing, and the Low-Income Housing Tax Credit.

Full bio and recent public appearances | Research archive at CBPP.org


Helping Renters Afford Their Homes

July 16, 2014 at 4:31 pm

Today’s New York Times “Room for Debate” forum asks “Should Housing Policy Support Renters More?”  It’s an important discussion since, as we explain in this chart book, federal housing policy is imbalanced in two ways.  It favors homeowners over renters, and it targets a disproportionate share of subsidies on higher-income households (see chart).

This is the case even though, as Henry Cisneros, former Secretary of the Department of Housing and Urban Development, points out, “the primary focus of federal housing policy should be to help those most in need.”  Need among renters is rising.  As MacArthur Foundation president Julia Stasch notes, “increasing rents, stagnant wages and inadequate federal support have made rental housing less affordable for more people.”  Low-income renters — including veterans, seniors, people with disabilities, and working families — are far likelier than homeowners and higher income households to need assistance to keep a roof over their heads and make ends meet.

Three ongoing policy debates offer opportunities to move in this direction:

  • Most immediately, Congress should provide more resources in 2015 funding bills to restore Housing Choice Vouchers and other low-income rental assistance that was cut as a result of sequestration in 2013.  Those cuts prevented thousands of low-income Americans from receiving the assistance they need to escape homelessness and housing instability, both of which have been linked to developmental, health, and education problems in children.
  • If tax reform moves forward, Congress should replace the mortgage interest deduction with a less-expensive, better-targeted credit that would trim subsidies for higher-income families while expanding them for middle- and low-income homeowners.  It should also use some of the savings from this reform to fund a new renters’ tax credit that would address part of the unmet need for housing assistance among the lowest-income renters.
  • If Congress reforms the housing finance system, it should use new financing fees for robust funding — like that provided in the reform bill that the Senate Banking Committee approved in May 2014 — to develop and rehabilitate affordable rental housing through the National Housing Trust Fund.

House Restriction on Housing Vouchers Would Harm Low-Income Residents of Oil and Gas Boomtowns

June 19, 2014 at 8:23 am

The House adopted an amendment offered by Rep. Aaron Schock (R-IL) to limit subsidies in the Housing Choice Voucher program.  The amendment, attached to the House 2015 funding bill for the Departments of Transportation and Housing and Urban Development (HUD), would weaken state and local housing agencies’ ability to adapt to rental markets in individual communities.  Some of its worst effects would be felt in places with rapidly growing oil and gas industries, where families, elderly people, and people with disabilities could face displacement or other serious hardship.  The Senate, which is considering its version of the bill this week, should reject any effort to add such a restriction.

In the voucher program, families pay 30 percent of their income toward rent for a modest unit of their choice, and the voucher covers the rest up to a cap called a payment standard.  HUD generally sets the “fair market rent” (FMR) based on market rents for an entire county or metropolitan area, even though these areas may contain many rental submarkets, and it must rely on data that’s often several years old.  As a result, FMRs are typically above or below market rents in parts of the areas they cover and are slow to adjust to rapid shifts in the housing market.

Recognizing this, Congress long allowed agencies to set payment standards from 90 to 110 percent of the FMR.  Agencies can also apply to set area-wide payment standards above 110 percent, but they must submit rigorous data showing that a higher standard is needed to cover local rents and that, without it, families couldn’t use their vouchers or would have to use them in high-poverty areas.  (Research shows that living in high-poverty neighborhoods can adversely affect children’s health, education, and long-term economic prospects.)

The Schock amendment would revoke HUD’s authority to approve state and local agencies’ requests to set area-wide payment standards above 120 percent of the FMR during 2015 and would suspend existing standards above that level.  In recent years, HUD has approved new payment standards under this authority in 13 counties, 12 of which are in parts of North Dakota and Pennsylvania with booming energy industries.

When oil and gas activity surges, workers fill rental units and drive up rents.  In the core of North Dakota’s oil and gas region, rents rose quickly to as much as double their pre-boom level.  If housing agencies in these areas could not adjust payment standards adequately, low-income people with vouchers would struggle to use them.  And households already relying on vouchers could be forced out of their homes when their leases expire.  Seniors and people with disabilities on fixed incomes would be particularly vulnerable.

In proposing his amendment, Rep. Schock expressed concern about high payment standards in Chicago.  But those standards are permitted under HUD’s “Moving to Work” demonstration and would likely be unaffected by Schock’s amendment.  His amendment would, however, do considerable harm in other parts of the country.

The voucher program cannot function effectively without flexibility to set adequate, market-based payment standards.  Congress and HUD have wisely set some limits on this flexibility, requiring strong evidence to support large payment standard increases.  Congress should leave those carefully designed rules in place rather than replacing them with the Schock amendment’s arbitrary cap.

Tax-Credit Bill Would Help Low-Income Families Facing Higher Rents

April 17, 2014 at 2:48 pm

House Ways and Means Committee member Charles Rangel (D-NY) has introduced legislation to establish a new federal tax credit to help low-income renters afford housing.  As we’ve explained, a renters’ credit along these lines would be a valuable tool to address low-income families’ mounting housing needs.

As the graph shows, the typical or median rent has risen much faster than inflation over the last decade, while renters’ median income has fallen in inflation-adjusted terms.

In fact, in 90 cities around the country, a median-income resident would have to pay more than 30 percent of his or her income to afford the median rent, the New York Times reports.  (The federal government and many private-sector landlords and lenders consider housing unaffordable if it exceeds 30 percent of household income.)

As a result, families with incomes well below the median must pay high and growing shares of their income for rent or live in substandard, overcrowded, or unstable housing arrangements.  In 2011, 8.5 million families with incomes under half of the local median received no rental assistance and either paid more than half of their income for housing or lived in severely substandard conditions, according to the Department of Housing and Urban Development — an increase of more than 40 percent since 2007.

And Department of Education data show that 1.17 million school-age children were homeless during the 2011-2012 school year.

Despite these needs, the federal government provides much more help to higher-income homeowners, through tax subsidies like the mortgage interest deduction, than to low-income renters.  Due to funding limitations, Housing Choice Vouchers and other low-income rental assistance programs reach fewer than one in four eligible families.

The Rangel proposal would help address that imbalance by giving states about $5.8 billion in annual tax credits to distribute among low-income renters based on federal income eligibility rules and state policy priorities.  We estimated last year that a credit similar to the Rangel proposal (but with added provisions to ensure that most of its benefits go to the neediest families), capped at $5 billion, would help 1.2 million households, reducing their rent by an average of $400 a month.

The renters’ credit would complement the Low-Income Housing Tax Credit (LIHTC), which Representative Rangel helped enact in 1986.  LIHTC is an effective subsidy for building and rehabilitating affordable housing but doesn’t typically make housing affordable to the poorest Americans by itself.  A renters’ credit could help these households afford rents in developments subsidized through LIHTC and in other buildings.

If the President and Congress move forward on tax reform, they should use savings from scaling back other tax expenditures to establish a renters’ credit along the lines that Representative Rangel proposes.

Obama Plan to Raise Rents on Rural Poor is the Wrong Way to Save Money

April 11, 2014 at 12:30 pm

About 42,000 extremely poor families — 15 percent of those assisted through the Agriculture Department’s (USDA) rural rental assistance program — could face rent increases of up to $600 a year under a proposal in President Obama’s 2015 budget.

Today, families with rural rental assistance must pay 30 percent of their income for rent and utilities.  The President’s proposal would require property owners to charge families a minimum of $50 a month — even if this exceeds 30 percent of their income.  Many of those who would be affected are especially vulnerable to hardship:  64 percent of households with USDA rental assistance have a head (or the head’s spouse) who is elderly or has a disability, and 135,000 children live in low-income families receiving such assistance.

USDA budget documents say that one goal of the proposal is to “encourage financial responsibility in tenants, increasing their opportunity for success on the path to homeownership.”  But there is no evidence that requiring destitute families to pay $50 a month helps them get back on their feet.  To the contrary, a growing body of research shows that extreme poverty — which the USDA proposal would exacerbate — does long-term damage to children’s neural development and education and employment prospects.

A second goal is to save money.  USDA estimates that the policy will reduce program costs by $5 million in 2015 and $20 million annually in later years.  But policymakers could surely find better ways to save $20 million a year than raising rents on some of the most vulnerable people in rural America.

USDA points out that some households with rental assistance through the Department of Housing and Urban Development (HUD) must pay $50 minimum rents.  But no major HUD program imposes a program-wide $50 minimum rent like USDA has proposed.  HUD’s supportive housing programs for the elderly and people with disabilities do not charge a minimum, while the Section 8 Project-Based Rental Assistance program has a $25 minimum rent and state and local agencies administering Housing Choice Vouchers and Public Housing can set the minimum below $50 or have no minimum at all.

USDA has also claimed that a proposed exemption for families who would face hardship from minimum rents — modeled on similar exemptions in HUD programs — would minimize any adverse consequences.  Tony Hernandez, the Administrator of USDA’s Rural Housing Service, told a House Appropriations subcommittee that households with incomes of $2,000 a year “probably would not have to pay because they would be exempted because of the hardship clause.”

But experience in the HUD programs indicates that very few would likely be exempted.  As we’ve noted, the HUD hardship policies have had little impact, partly because they require tenants — many of whom have physical or mental disabilities or very low education levels — to seek out exemptions.  A 2010 HUD study found that 82 percent of state and local housing agencies that chose to impose minimum rents exempted less than 1 percent of affected households.  (Moreover, the minimum rent proposed by USDA would fall almost exclusively on families with incomes close to or below $2,000, so if most of those families were exempted, the policy’s savings would largely disappear.)

Families facing hardship might have an even harder time obtaining exemptions in the USDA rental assistance program, where small rural property owners with limited administrative capacity would be responsible for implementing the hardship policy.  The best way to protect these families would be to reject the President’s proposal.

Ryan Budget Mischaracterizes Housing Vouchers, Then Sets the Stage to Cut Them

April 4, 2014 at 11:02 am

House Budget Committee Chairman Paul Ryan used a faulty number to argue that “Section 8” Housing Choice Voucher program costs have risen excessively.  His budget documents also float a proposed expansion of the Moving to Work (MTW) demonstration that could lay the groundwork for deep, harmful cuts in the voucher program in years to come.  That program, which helps 2.1 million low-income families rent modest units of their choice in the private market, is just beginning to recover from the loss of 70,000 vouchers due to sequestration budget cuts last year.

Rental vouchers sharply reduce homelessness (see chart) and other hardships, lift more than a million people out of poverty, and help families move to safer, less poor neighborhoods, research shows.  These effects, in turn, are closely linked to educational, developmental, and health benefits that can improve children’s long-term outcomes.

Ryan’s budget claims that voucher spending grew by an “explosive” 80 percent from 2005 to 2013.  That’s simply incorrect.  Voucher expenditures rose by 20 to 30 percent over this period, driven largely by rising market rents and congressional decisions to add vouchers to assist homeless veterans and to replace other rental assistance (such as public housing that was demolished, which was funded through a different budget account).  The average inflation-adjusted cost of a voucher is lower today than it was in 2005.

The Ryan budget calls for changes in housing assistance and says that such changes could include expanding MTW, a deregulation demonstration project that now includes 39 of the nearly 4,000 state and local agencies that administer vouchers or public housing.  MTW allows waivers of most laws and regulations governing the voucher and public housing programs and converts voucher funding — and sometimes public housing operating subsidies — to a block grant.

MTW expansion could weaken protections for vulnerable families and cause fewer needy households to receive assistance.  (These risks would be lower if Congress added new safeguards to MTW, but the Ryan budget documents make no mention of such safeguards.)  The Government Accountability Office and the Department of Housing and Urban Development’s (HUD) Inspector General have raised serious doubts about expansion, based on concerns that HUD has not adequately evaluated and monitored the existing demonstration.

Most significantly, a major expansion of MTW block grants would raise the odds of future voucher and public housing funding reductions.  Congress has cut funding deeply over time for housing block grant programs such as HOME, Community Development Block Grants, and the Public Housing Capital Fund, as well as many block grants in other areas.

Two features make block grant programs especially vulnerable to cuts.  First, unlike the current voucher and public housing operating fund formulas, block grants typically don’t account for factors such as the number of families assisted or the cost of assistance.  As a result, it’s more difficult to make a compelling case that policymakers should maintain current nominal funding levels, let alone ensure that funding at least keeps pace with inflation.  Second, because block grants provide broad flexibility in how state or local officials use the funds, federal policymakers can cut funding and claim no harm will ensue, while leaving the tough decisions about how to actually make the cuts to state and local agencies.

The Ryan budget cuts $791 billion over the next ten years from non-defense discretionary programs, the budget category that includes most low-income housing programs.  The budget does not specify which discretionary programs would lose funding, but if policymakers expand MTW to the point that block grants provide the bulk of voucher and public housing funds, it would increase the likelihood of sizable cuts to the voucher and public housing programs — an outcome that would likely lead to more homelessness and housing instability among the most vulnerable Americans.