Utilizing HCVs to Address Racial Inequities in Rental Housing
This piece is part of our blog post series, Policy Actions for Racial Equity (PARE), which explores the many ways housing policies contribute and have contributed to racial disparities in our country.
Watch: A Quick Video Intro by Steven Swann
HUD’s Housing Choice Voucher (HCV) program, also known as the Section 8 program, was enacted in 1974 as a component of the United States Housing and Community Development Act. It was designed to help very low-income families afford housing in areas of higher opportunity, as well as to reduce residential concentrations of poverty. The HCV program offers rental assistance to eligible households through state and local public housing authorities (PHAs) in two forms: portable tenant-based vouchers and location-specific project-based vouchers.
The program targets families in deep poverty by requiring that 75 percent of households entering a PHA’s HCV program have incomes no greater than 30 percent of the area median income (AMI). Both tenant-based and project-based vouchers provide a maximum rental assistance that is generally the lesser of the payment standard (maximum monthly assistance payment for a family assisted in the HCV program) or the gross market-rate rent for the unit, minus 30 percent of the family’s monthly adjusted income.
The HCV program is the largest federal rental assistance program, helping over 2 million low-income households afford market-rate rental housing. By allowing voucher holders to choose their own units on the private market, it also has the potential to allow low-income households to move to higher-opportunity neighborhoods with better access to higher quality educational resources, economic opportunities and essential services.
However, the mismatch between the supply of and demand for HCV Program, along with persistent barriers to voucher utilization in jurisdictions across the U.S., limits the program’s role in addressing housing affordability challenges facing low-income renter households, especially Black, Indigenous and other people of color (BIPOC), who continue to face significant racial inequities in our housing system. Addressing the mismatch between the supply of and demand for HCV program, by expanding housing vouchers to everyone who needs them, can help address persistent racial inequities in our housing system and move us towards making housing a right in America.
This blog post explores how the insufficiency of the HCV program’s funding and barriers to voucher utilization place vouchers out of reach for many low-income BIPOC in need of rental assistance, standing between them and accessing quality affordable housing. It also outlines steps that can be taken to remedy these issues and better maximize the potential of the HCV program to achieve its designated goals.
The mismatch between supply and demand
While HUD’s HCV program plays a significant role in addressing housing affordability and financial insecurity challenges, especially those facing low-income BIPOC, it consistently falls well short of the total need for rental assistance. Congress routinely underfunds the HCV program, such that only one in five households who qualify for federal rental assistance receives it, and most PHAs have long HCV waiting lists and many PHAs have closed lists. This mismatch between the demand for HCVs and available supply disproportionality impacts BIPOC renter households, especially Black renter households who face persistent racial disparities in housing, homelessness, and poverty.
Enterprise’s analysis of U.S. Census Bureau’s 2019 American Community Survey (ACS) data finds that nearly a quarter of all Black renter households were both severely cost burdened (spending more than half their income on housing) and had extremely low incomes (earning less than 30 percent of their AMI). Our analysis also shows that this share is the highest among any racial/ethnic group, and larger even than the share of all white renters who were severely cost burdened (21 percent). Furthermore, the Covid-19 pandemic’s economic fallout, which has hit Black workers especially hard, is expected to worsen low-income Black renter household’s affordability and housing instability challenges.
In addition to facing racial inequities in housing, BIPOC continue to be over-represented among people experiencing homelessness. For example, Black Americans comprised less than 12.5 percent of the U.S. population in 2019, but accounted for nearly 40 percent of the population experiencing homelessness. While the HCV program has helped mitigate our homelessness challenge, the program’s funding shortages continue to be a barrier to realizing HCVs’ full potential of addressing homelessness and housing insecurity, especially for BIPOC Americans who face racial disparities in homelessness.
Furthermore, BIPOC continue to face racial disparities in poverty. In 2019, the poverty rates among Black and Hispanic Americans were nearly 19 and 16 percent, respectively, compared to less than 7 percent for their non-Hispanic white counterparts. Research from Columbia University projects that making HCVs available for all eligible renter households could move 9.3 million people out of poverty. Such a policy change would also narrow racial disparities in poverty by disproportionately lifting BIPOC renter households out of poverty.
Barriers to HCV utilization
Even when eligible renter households receive HCVs, they still need to find landlords who are willing to accept their housing vouchers. Federal law does not prohibit landlords from discriminating against prospective tenants based on their source of income (SOI), including using non-wage income like HCVs to pay rent. The lack of federal SOI protection for HCV holders has led to a wide variation in housing voucher denial rates. Since Black tenants make up a large share of HCV holders (48 percent in 2017), the inconsistency in housing voucher approvals often disproportionately hurts low-income Black renter households.
A 2018 study highlights that in the absence of SOI protections, landlords could use their “gut feelings” to screen potential tenants and ensure that they are the “right” or “good” tenants. Such practices can mask racial biases among landlords, as well as result in discriminatory tenant selection processes that hurt low-income BIPOC. Due to the lack of SOI protections at the federal level, a number of state and local governments, such as the city of Denver and New York state, have adopted SOI protections that prohibit landlords from rejecting tenants using housing vouchers.
A 2018 study from the Urban Institute, which examined landlord acceptance of HCV in five jurisdictions across the U.S., suggests that housing markets with local SOI protections have lower HCV denial rates, compared to those without. This means that enacting a federal SOI protection can help more low-income families, including low-income BIPOC families, utilize their housing vouchers. However, SOI protection laws are only helpful when paired with effective enforcement processes to ensure landlord compliance.
In addition to the challenges induced by the lack of universal SOI protections, the discretion given to each HCV administrator to determine its own policies for program operation has often been deployed in ways that disproportionately exclude prospective BIPOC tenants. For example, a state PHA may consider a person’s “criminal background” in vetting HCV applications without taking into consideration factors like the nature and severity of the offense. This process can often prevent justice-involved applicants from accessing much needed rental subsidies.
Since BIPOC are disproportionately represented in the American criminal justice system, these policies and practices inordinately concentrate impacts on low-income BIPOC households. While the Fair Housing Act prohibits housing discrimination on the basis of race, such facially race-neutral housing policies and practices often result in racially skewed outcomes for voucher applications. Furthermore, denying justice-involved individuals access to rental subsidy can significantly contribute to cycles of incarceration and homelessness that are difficult to break.
As well, there are a number of reasons for the lack of success in using vouchers to secure housing. These include high security deposits, limited supplies of low-cost units that meet minimum quality standards, limits on the maximum rent that vouchers will cover, locational constraints within the jurisdiction of the voucher-issuing PHA, and short windows for low-income households to secure an adequate unit.
While being legally compelled to honor source of income protections, landlords can also be positively encouraged to participate in the HCV program. A program in Marin County, California used a combination of security deposit assistance, property damage protection, vacancy loss insurance, a customer service hotline, and landlord workshops as incentives to facilitate landlord participation and produce a twofold increase in the rate of housing success experienced by voucher holders.
Recommendations for utilizing HCVs to tackle racial inequities in housing
There are several steps that can be taken to boost the HCV program’s ability to address the persistent housing challenges facing low-income BIPOC renter households:
- Make HUD’s HCVs available to all eligible households—a policy proposal that is part of the Biden-Harris administration’s housing agenda and a policy recommendation in Enterprise’s 2021 Housing Playbook—to address racial disparities in housing insecurity and poverty.
- Enact SOI protections on the federal level—a policy proposal that is also part of the Biden-Harris administration’s housing agenda and a policy recommendation in Enterprise’s 2021 Housing Playbook, to address barriers to HCV utilization—especially in higher-opportunity areas that can help low-income BIPOC households access opportunity and attain upward mobility.
- Remove barriers to HCV utilization imposed by HCV administrators, such as allowing discretion regarding criminal history, including:
- Adopting reasonably short “lookback periods” that are focused on recent activities;
- Using convictions rather than arrests as proof of criminal activity;
- Narrowly defining the types of criminal activity that warrant denial; and
- Allowing more leeway to consider mitigating circumstances.
- Strengthen financial incentives and remove perceived disincentives, for landlords—particularly in low-poverty neighborhoods—to increase landlord willingness to take vouchers.
We encourage all who believe in creating a just society to read, discuss, and share the PARE blog series as we learn and act to address the impacts of housing policies on racial equity in America. We also invite you to join us in this conversation, by suggesting additional topics and sharing resources for how we can advocate for greater racial equity. If you’d like to offer feedback on our body of work, please reach out to the Public Policy team. You can also check out our blog and subscribe to our daily and bi-weekly policy newsletters for more information on Enterprise’s federal, state, and local policy advocacy and racial equity work.