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

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Senior Director for Housing Policy and Research

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.