The Department of Housing and Urban Development (HUD) announced this week that it will increase the worth of housing subsidies for low-income residents of Alameda County by 33 percent. The announcement comes after a coalition of East Bay housing agencies petitioned HUD to re-calculate the subsidy using more recent data about the cost of rental housing in the East Bay, saying the previous estimate was too low and did not reflect actual rents.
The subsidy increase will apply to Section 8 vouchers, subsidies funded by the federal government and administered by city and county-based housing agencies to help low-income renters secure stable housing.
In August, HUD released its projected “Fair Market Rent,” the official name for the subsidy calculations, for fiscal year 2016. The subsidy for studio apartments was $1,037 per-month and one-bedroom apartments were listed at $1,249. Now the subsidies will be worth $1,380 and $1,663, for studios and one-bedrooms respectively.
Ron Dion, director of the Housing Authority for the County of Alameda (HACA), said the decision to increase the subsidy is a direct result of city and county agencies appealing the original calculations and providing HUD with new cost-of-housing data collected at the expense of the local agencies.
“It’s indicative of how broken the HUD system is,” Dion said. HUD’s original calculations relied on data from 2009 to 2013, omitting the rapid increase in rental rates in the Bay Area in the past two years.
“If the average Oakland resident had to move into a market-rate unit they would be spending 70 percent of their income on housing,” said Representative Barbara Lee (CA-13), emphasizing the need for subsidized housing in Oakland, where median rent increased by 20 percent from 2014 to 2015. Lee personally urged HUD Secretary Julian Castro to reevaluate the data. She also serves on the House Budget and Appropriations committees, where she said she hopes she can fight for more federal investment in affordable housing.
The Section 8 program allows recipients to use their voucher on any unit in the rental market, but landlords must be willing to accept it. If the voucher is worth less than the apartment’s monthly rent, the recipient must make up the difference, which can lead to a more complicated monthly payment process.
New Section 8 vouchers in Oakland were largely unused in 2015 because the federal subsidy attached to them was significantly less than the going monthly rent. In October, according to the Oakland Housing Authority, only 19 percent of new voucher recipients had secured housing using the Section 8 system.
“We have a number of clients who come in with Section 8 vouchers about to expire because they haven’t been able to find a unit,” said Michele Byrd, the director of Housing and Community Development in Oakland. “With the rise in the rents, landlords are less inclined to take Section 8 vouchers.”
Byrd said the increase in the subsidy could be an incentive for landlords to accept more Section 8 tenants.
HUD’s decision to increase the subsidy will only affect fiscal year 2016, though the data compiled by local housing agencies will be used to calculate fair market rent for 2017 and 2018. In 2019, the data will expire.
If HUD does not adjust their calculation process, Dion said, the local agencies may have to go through another appeal process and fund the collection of a new data set for fair market rent in 2019.