“Stepping Forward” May be a Step Backward for Many
Proposal to Raise Rent May Make Affordable Housing Programs Out of Reach
Here and below is a letter that I sent yesterday to Julian Castro, Secretary of the Department of Housing and Urban Development (HUD). In the letter I request that HUD adopt new emergency administrative rules for Public Housing Authorities, which would immediately apply to our own Seattle Housing Authority (SHA), when using their Moving to Work (MTW) authority to implement a flat rent policy based on unit size rather than income. In addition, I’m asking HUD to require SHA to conduct a fair housing assessment to determine the potentially discriminatory impact of its proposed “Stepping Forward” program.
The “Stepping Forward” program would affect “work-able” tenants who live in SHA-owned housing as well as “work-able” tenants who live in private or non-profit housing but pay a reduced rent because they participate in an SHA program. Families working fulltime will be forced to leave the program if they cannot increase their income. SHA predicts that families will eventually need to earn $16 an hour in year 6 of the plan and $22-$26 per hour in subsequent years to afford rent at SHA.
In brief, MTW is a program that was designed to grant PHAs more flexibility to create programs that increase self-sufficiency and expand housing choices for low-income people. It appears that these objectives may not be achievable using policies that increase rent regardless of income in cities like Seattle where there is a high cost of living and little available affordable housing stock.
Prior HUD directives lead me to believe that SHA has an obligation to conduct an assessment of the fair housing impacts of its proposed rent plan before initiating their “Stepping Forward” program. SHA stated at a recent public meeting that it has conducted no assessment and has no concerns about the potential impediments to fair housing that could arise from this policy.
On Monday, September 22, at 9:30 am, SHA will be coming to the City Council to answer Councilmembers’ questions about the proposal. Jonathan Grant of the Tenants Union will also be on hand to talk about the work they are doing with residents of SHA housing and tenants who participate in SHA programs. If you are interested, you can watch here.
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September 18, 2014
Secretary Julian Castro
US Department of Housing and Urban Development (HUD)
451 7th Street S.W., Room 10000
Washington, DC 20410
Dear Secretary Castro,
I am writing to express my deep concern about the Seattle Housing Authority’s (SHA) proposed “Stepping Forward” program. The program creates a flat rent program that, regardless of income, significantly increases rent overtime and does not decrease rent if income decreases. The increases in income are so high that, at some point in the program, impacted families will need to earn as much as $20 an hour or more to afford their public housing or Section 8 rent.
My concerns are twofold. First, SHA’s policy fails to consider Seattle’s housing market where rents are among the nation’s highest and available affordable family housing is scarce. Second, SHA has not conducted any assessment of the possible fair housing impacts of its proposal. The proposal could have a significant disparate impact on families, immigrants, refugees, and other protected groups. Because of these concerns, my letter to you today contains two requests of HUD.
Request 1. Issuance of new emergency administrative rules for Moving to Work (MTW) Public Housing Authorities (PHAs)
MTW was established to grant PHAs flexibility for the purpose of creating local programs that, in addition to using Federal dollars more efficiently, also: a) help residents find employment and increase self-sufficiency and b) expand housing choices for low-income people. Under this program, SHA may set policy that differs from federal regulations. SHA is now seeking to use this flexibility by moving to a stepped rent approach rather than an income based approach. When success is measured by the objectives of the MTW program: a) increasing self-sufficiency and b) expanding housing choices for low-income people, I have serious concerns that this approach will succeed in Seattle where compared to other cities, rents are exceptionally high and there is a high cost of living.
HUD has evidence that, in areas with high housing costs, this approach would not result in increased self-sufficiency and expanded housing choices for low income people. For instance, the Housing Authority of Tulare County, a small rural county in California, implemented a similar approach to SHA’s proposal. Staff members reported that this program was successful in their county “because of the low cost of living, which makes it easier to find reasonably priced units and to transition from assisted housing to paying market rents.” (HUD’s 2010 Report to Congress on the MTW Program.) According to that same report, this approach is perceived as one that would not be viable in a community with high housing costs where even residents who greatly increased their income would still struggle to transition to the private housing market.
In Seattle, there are very few affordable housing units available. This is particularly true for those earning below 50% of Area Medium Income (AMI). According to recent Seattle data, “nearly 75 percent of rental housing is unaffordable for very low-income (under 50% AMI) households.” (Housing Seattle, a 2011 report by the Seattle Planning Commission) As the graph below shows, there are only about 56 available apartments for every 100 families who earn 50% AMI, or about $15 an hour.
This affordability crisis in Seattle is worse for families needing a two or three bedroom apartment. SHA reports that 70% of families impacted by this policy will need a 2 or 3 bedroom apartment. But, few of these apartments are available at an affordable rent. For example:
In 2009, just 7% of Seattle rental apartments had two bedrooms and were affordable to families at or below 80 percent of Area Median Income (AMI) only 1 percent had three-plus bedrooms and were affordable at 80 percent AMI. These numbers have probably worsened significantly since 2009; they also don’t capture the challenge for those with incomes far lower than 80 percent AMI.
A 2014 Seattle Planning Commission Report recognized this challenge and the fact that “income-restricted family-sized housing units play a critical role in enabling households with low incomes to access housing in Seattle” and called for affordable housing programs to “include a strong priority for families with children.”
Families working fulltime will be forced to leave the program if they cannot increase their income. SHA predicts that families will eventually need to earn $16 an hour in year 6 of the plan and $22-$26 per hour in subsequent years to afford rent at SHA. If families cannot earn these high wages, they will be evicted or asked to move. With no affordable housing available in Seattle, these families will most likely end up homeless and back on the SHA waiting list to again wait for a needed subsidy. This creates a revolving door of homelessness and instability. On the other hand, SHA participants earning more than $50,000 per year could choose, if they found it difficult to find affordable market rate housing, to stay at SHA indefinitely under the flat rent program. This is not the intention of the MTW program – self-sufficiency and housing choice are its goals.
Finally, there is no clear evidence that these type of stepped rent programs are more successful at increasing income and employment than policies that continue to link income and rent. For example, the Urban Institute examined practices of MTW housing authorities and concluded that:
There is no clear relationship between the local approach to rent rule changes and the magnitude of reported changes on employment and income levels. In other words, MTW HAs that continued to set rents on the basis of income, making only modest changes in the size or timing of rent adjustments, were just as likely to report substantial employment gains as HAs that completely detached rents from incomes, or that implemented intensive programs of case management and support services.
Therefore, the potential negative consequences from not basing rent on income far outweigh the possible gains. As a result SHA should not implement this policy because of the risks and lack of potential gain for families.
Based on these concerns, I request that HUD issue new emergency administrative rules for PHAs proposing policies to increase rent regardless of income. These rules should clarify that these PHAs must perform a community housing needs and capacity study. In those instances where PHAs find there is little available affordable housing stock to meet the needs of housing authority residents and participants, coupled with a high cost of living, those PHAs should not be permitted to implement a flat rent policy based on unit size rather than income.
Request 2: Require SHA to conduct a fair housing assessment before implementation of its proposed “Stepping Forward” program.
The MTW program allows PHAs to be exempted from certain federal rules and regulations. However, there is no exemption from fair housing requirements. HUD reminded PHAs in the MTW program of these obligations in a 2001 notice. SHA also certified in Attachment B of its Moving to Work agreement that it would affirmatively further fair housing and conduct this type of assessment. Under federal fair housing law and regulations and its MTW plan, SHA is required to:
1. Examine programs or proposed programs;
2. Identify any impediments to fair housing choice within those programs;
3. Address impediments in a reasonable fashion in view of the resources available;
4. Work with local jurisdictions to implement any of the jurisdiction’s initiatives to affirmatively further fair housing that require PHA involvement; and
5. Maintain records reflecting these analyses and actions.
SHA stated, at a recent public meeting, that it has conducted no assessment and has no concerns about the potential impediments to fair housing that could arise from this policy. Nor has SHA produced a proposal to conduct an assessment of the fair housing impacts of its proposed rent plan.
This issue must be addressed. Many of the families impacted by this policy are immigrants and refugees (about 25%), single female headed households or families of color. Additionally, there are families that contain a person with a disability that may be subject to this policy. Without conducting the required assessment, SHA has no way of knowing the impediments to fair housing created by this proposal or the potential discriminatory effect of this policy.
SHA may not be intentionally discriminating against protected groups, but their motivation is not what matters – it is the effect. For fair housing issues, the “[e]ffect, not motivation, is the touchstone because a thoughtless housing practice can be as unfair to minority rights as a willful scheme.”
In closing, I reiterate my concern that SHA’s proposed “Stepping Forward” program uses flexibility granted to PHAs under MTW in such a way that was unintended by Congress or HUD and will not further the objectives of the MTW program to encourage employment and increase self-sufficiency and expand housing choices for low-income people. I request HUD issue new emergency rules for PHAs with little available housing stock available in their communities and I request that HUD require SHA to conduct a fair housing assessment before implementation of its proposed “Stepping Forward” program. Thank you for your consideration.
Seattle City Councilmember Nick Licata
CC: Representative Jim McDermott
Senator Patty Murray
Senator Maria Cantwell
Edward B. Murray, Mayor
Seattle City Council
David A. Montoya, Inspector General, Office of Inspector General
Bill Block, Region X HUD Director
Andrew Lofton, SHA Executive Director
Sara Pratt, HUD Fair Housing and Equal Opportunity Deputy Assistant Secretary for Enforcement