May 3, 2005


Full Report: PDF

View Related Reports

If you cannot access the files through the links, right-click on the underlined text, click "Save Link As," download to your directory, and open the document in Adobe Acrobat Reader.

The State and Local Housing Flexibility Act of 2005, proposed by HUD and introduced in Congress in April,[1] would make sweeping changes in federal housing policy.  Among other things, the proposed legislation would convert the Section 8 housing voucher program into a block grant, eliminate the requirement that rents be affordable to public housing residents and voucher-holders, and give HUD authority to waive virtually any statutory provision under an expanded “Moving to Work” (MTW) program.

In place of the current statutory rules, HUD proposes to substitute yet-to-be-developed performance and funding standards that could be used to determine the amount of funding each agency receives and even whether an agency continues to administer its own housing voucher program.  HUD also would have unlimited discretion under the proposed MTW program to determine which agencies would be eligible for sweeping waivers for their public housing and voucher programs.

 In sum, the bill would erase the current statutory shape of the public housing and Section 8 voucher programs and replace it with a framework to be determined later by HUD, subject to the approval only of the Office of Management and Budget.

 At first blush, the increased local discretion promised by the proposed legislation may be attractive to public housing agencies (PHAs).  Many PHAs believe that HUD’s current rules micromanage PHA operations and unduly constrain their ability to make the best use of available resources to respond to local housing needs.  Eliminating the legislative foundation for the public housing and Section 8 voucher programs would, some PHAs may believe, lead to enhanced local autonomy that would enable them to serve their communities and deal with the possibility of shrinking federal resources.

 But there are many reasons to conclude that HUD’s proposal, if enacted, would in fact impair the ability of PHAs to meet community needs.


The proposed HUD bill appears to promise greater autonomy for PHAs.  But the relief from HUD mandates would come in exchange for greater HUD discretion to shift funding and set programmatic priorities.  The lack of specific program rules will increase the likelihood of substantial reductions in future funding due to an inability to quantify the consequences of funding cuts and the rationale that PHAs can make programmatic changes that will generate savings to offset funding reductions.  PHAs could well end up with fewer resources and less real ability to meet their communities’ needs.  If the voucher program is no longer considered to be successful, it will be difficult to garner additional resources to rebuild it should federal priorities change in the future.

An alternative approach to deregulation would be to work within the existing system to identify the specific statutory provisions and HUD regulations that are most burdensome and to propose changes that fix these particular problems.  Under this approach, statutory and regulatory changes would be made to streamline program administration and strengthen predictability of funding and program structure, while maintaining the core structure of the public housing and voucher programs — a deep rental subsidy that covers the difference between the costs of housing and what low-income families can afford to pay.  This is, after all, what makes public housing and the Section 8 programs unique.

Replacing this core model with a formless housing grant targeted on families with incomes at or below 60 percent of the area median income would start to blur the distinctions between these programs and the HOME block grant, which largely fits this same description.  The forced merger of HOME and voucher funding could be a real risk, as illustrated by the Administration’s proposal this year to merge the Community Development Block Grant with 17 other community development programs and cut funding for the merged programs by 30 percent on the grounds that the programs are duplicative.  It is quite possible that such a merger would also transfer administration of the combined block grant to the fewer than 700 state and local entities that administer HOME funds, rather than the approximately 2,500 agencies that administer the voucher program.

To ensure the strongest possible basis for maintaining adequate funding levels for public housing and the Section 8 voucher program, the core structure of the program needs to be maintained.  To strengthen funding and programmatic predictability for PHAs, HUD’s discretion needs to be reduced, not increased, with a streamlined set of rules set by statute or regulation to minimize annual changes.  The State and Local Housing Flexibility Act of 2005 would substantially undermine both of these core objectives.

End Notes:

[1] HUD’s proposal has been introduced as S. 771 in the Senate by Senator Allard (R-CO) and as H.R. 1999 in the House by Rep. Gary Miller (R-Diamond Bar CA).

[2] HUD, “The Flexible Voucher Program: Why A New Approach to Housing Subsidy Is Needed,” May 18, 2004, p. 13, available on the internet at  HUD requested $54 million less for voucher program administrative fees in 2005 than the level appropriated in 2004.

[3] See Jim Horney and Richard Kogan, “Assessing The Administration’s Five-Year Appropriation "Caps,” revised March 1, 2005, available on the internet at

[4]  “Regulatory Impact Analysis of ‘Revisions to the Public Housing Operating Fund Program,’ (FR-4874-P-01),” available on the internet at