Invest but Reform: Streamline Administration of the Housing Choice Voucher Program

Bruce Katz and
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University
Margery Austin Turner

September 30, 2013

The Section 8 Housing Choice Voucher program, the federal government’s primary tool for addressing the housing needs of low-income renters, is administered by thousands of local public housing agencies (PHAs), most of which serve individual cities, towns, or counties. This balkanized system seriously undermines the potential of the housing voucher program while at the same time raising administrative costs. The U.S. Department of Housing and Urban Development (HUD) should replace the current system by competitively awarding the operation of the voucher program to one well-qualified organization or consortium that will administer the program throughout an entire metropolitan area. In the near term, HUD can and should more vigorously encourage the formation of regional consortiums, mandate regional administration in metros where large shares of eligible households are served by failing PHAs, and strengthen existing performance standards to create incentives for voluntary regionalization.

In the wake of the Great Recession and amid the ongoing fiscal crisis, cash-strapped states and local governments must find new ways of delivering services and programs and the federal government must explore cost-saving innovations in essential safety-net programs. The administration of the housing voucher program appears ripe for re-invention and competition. Therefore, we propose streamlining Section 8 housing voucher administration by shifting governance of the program to one organization or consortium at the metropolitan level through a competitive process.

Although the arguments against the current system of balkanized local administration of the voucher program are strong, there is no single, obvious alternative that makes sense for every metropolitan region. Ideally, a metropolitan housing agency would administer the program region-wide, but few metro areas in the United States today have regional housing agencies, and building this capacity everywhere would be costly and slow. However, several other types of organizations could potentially administer vouchers effectively at a regional scale, with the best choice differing from one metro area to the next depending on their particular circumstances.

In some metros, a single PHA might have the capacity to administer the voucher program region-wide, taking over the vouchers for other PHAs in the region, which would continue to administer the public housing program. Alternatively, a region’s various PHAs might join together in a formal consortium, eliminating administrative overlap and improving program performance by establishing a common set of forms and procedures across their individual jurisdictions. Despite administrative challenges in current HUD rules, four formal consortiums already exist in Northwest Ohio, Pima County (AZ), Covington (KY), and, intriguingly, across state lines in The Dalles (OR) and Dallesport (WA).

At present, many states administer the federal housing voucher program in areas where there is no local agency (mostly rural counties and small towns) and in areas that overlap with the jurisdiction of one or more local PHAs. Some states, including densely populated Massachusetts and New Jersey, administer voucher programs in metropolitan areas also served by many smaller PHAs. State administration in metro areas offers a number of potential advantages, including the ability to maintain a consolidated waiting list for the state as a whole or for major geographic sub-regions; flexibility for recipients to move without confronting portability barriers; the capacity to shift assistance between sub-areas to better match the distribution of needy households and adjust for effects of portability flows; and, if states are the sole administrators of housing vouchers in a metro area, the potential to improve landlord outreach and relations.

Non-profit housing counseling or social service agencies offer another option. A number of PHAs have contracted with non-profit agencies to administer some elements of the voucher program and to provide enhanced housing counseling and mobility assistance. For example, in the MTO program, which was designed to help residents of public and assisted housing projects in high-poverty neighborhoods move to low-poverty neighborhoods anywhere in their metropolitan region, non-profit partners were responsible for landlord outreach and recruitment, mobility counseling and assistance, and post-move supportive services. The participating non-profits differed from site to site, but their activities were regional in scope and integrated non-housing supportive services and self-sufficiency strategies with the housing assistance.

In some metropolitan areas, for-profit firms may also offer a viable alternative for administering the voucher program regionally. Some states already subcontract administrative functions to for-profit and non-profit entities, and some local housing agencies contract out some or all administrative functions. HUD and local PHAs have also frequently relied on for-profit administrators to handle troubled PHA voucher programs. In Baltimore, for example, a special allocation of housing vouchers mandated by a litigation settlement is administered regionally by a for-profit firm, which has responsibility for all aspects of conventional program operations as well as mobility counseling and post-move supports.

Given the diversity of potentially capable administrative entities, shifting the housing voucher program to regional governance in metro areas should be accomplished through a HUD-administered competitive process. Such a process would allow HUD to ensure that all for-profit and non-profit contractors adhere to the same standards for access to records and procedural rights that apply to government agencies, and meet obligations to pursue programmatic goals and broader objectives of the program.