National Housing Law Project Housing Law Bulletin

More than a year and a half after adoption of the Moving to Work (MTW) demonstration in the FY 1996 HUD Appropriations Act, HUD announced that well managed housing authorities in 18 states will participate in the demonstration.¹

The demonstration will test locally designed methods for cost-efficient ways of delivering housing assistance to families transitioning from welfare to work. MTW demonstration sites must offer only "reasonable rental policies," and are no longer required to comply with federal requirements for rents not to exceed 30 percent of the household’s adjusted income. Other federal protections will also be eliminated in the three-year demonstration.

HUD Secretary Cuomo, in announcing the awards, said that freedom from regulation will have the dual benefits of freeing well run housing authorities to assist residents in getting jobs and moving toward economic independence and to foster more efficient administration of both public housing developments and Section 8 subsidies.

Although applicants were selected at least partially on the basis of their proposed plans of action, HUD has not finally agreed to all elements of those plans. HUD and the PHAs will now enter a phase of negotiations to establish final plans setting out how the demonstration will be implemented.

High performing PHAs of varying sizes have been selected for the demonstration (see boxed list at the end of this article), in some instances only selected developments will be part of the demonstration.

A few examples of the proposed plans are briefly described below.²

The Birmingham, Alabama, Housing Authority will pool operating subsidy, modernization and drug elimination funding to broaden its Family Self-Sufficiency program. The program will emphasize pre-employment skills development and other job activities. In addition to benefitting Temporary Assistance to Needy Families (TANF) recipients and employed residents, the program will benefit underemployed residents. An 18-month disregard for earned income would be permitted.

The Cambridge, Massachusetts, Housing Authority intends to create a "fungible block grant that would allow locally-based planning, asset management, and project-based budgeting." The housing authority will allow up to a quarter of the residents in each development to be above 50 percent of area median income. If approved, its plan would adopt ceiling rents and earned income exclusions to bring about a greater income mix.

At developments serving homeless families in Boston and very low-income families in Worcester County, the Massachusetts Department of Housing and Community Development will convert Section 8 certificates into flat monthly stipends, but will place a ceiling on the amount that may be devoted to housing costs. Increases in family income will not reduce the stipend. MTW advisors will provide housing counseling and assist families in locating employment and other services.

In Delaware, the state housing authority’s proposal is designed to increase funding to assist families. The state proposes to match program savings (achieved in part by a reduced need for operating subsidies as a result of renting to working and higher income tenants) of $900,000 and use the pooled funds to provide housing assistance and supportive services to additional families. Initial rents are proposed to be set at 35 percent of adjusted income, with most ceiling rents set at $120 monthly. Differences between the ceiling rent and what the family would pay at 35 percent of its adjusted income will be escrowed in a resident account for their later use.

The Keene, New Hampshire, Housing Authority proposes a rent structure in which, for the first two years, a family’s rent would be the greater of $125, 30 percent of adjusted income, or the welfare-allowed rent. During the second year, the family would not be required to report income. In years three and four, the rent would be 45 percent of Fair Market Rent and, thereafter, 65 percent of FMR. The PHA would have discretion to grant a family an extension at any step along the continuum.

Among the initiatives proposed by the Lawrence, Kansas, Housing Authority is "vouchering out" half the units in a 127-unit public housing development, using the market-rate rentals to support MTW services.

Los Angeles County will restrict its program to four developments for a total of 50 families who are either current residents or on the waiting list for housing in Monterey Park. Half will be working families and half assistance recipients. Each family would be required to enroll in the Family Self-Sufficiency program. Rents would graduate from 20 percent of adjusted income in the first year to 30 percent in the second and third years. Rents could be increased to up to 40 percent of income thereafter if a family fails to comply with the Family Self-Sufficiency plan.

The focus of the Louisville, Kentucky, Housing Authority is to create mixed-income environments through a range of strategies, including use of the Low-Income Housing Tax Credit, acquisition of market-rate properties to house a small number of MTW participants, and leasing units from private landlords on a long-term basis.

The Minneapolis Housing Authority will partner with Fannie Mae and other lenders for a homeownership demonstration in which participants will be given five years of Section 8 assistance. Eligible applicants would be required to have been employed for a year and earn from $16,000 to $28,000 annually.

The San Diego Housing Commission proposes to serve 74 families recruited from the public housing and Section 8 waiting lists. Participants would be required to come up with a career plan with the assistance of a case manager and community organizations. Flat rents are proposed for public housing ($372 for a two-bedroom unit and $432 for a three-bedroom unit). A flat subsidy is proposed for Section 8 ($276 for a two-bedroom unit and $468 for three bedrooms).

The San Mateo County (California) Housing Authority proposes to combine some housing authority functions into the county’s housing office, surrendering the function of determining eligibility for housing to the human services agency and transferring certain PHA staff to that agency. The proposed rent structure includes voucher payments at 80 percent of FMR and the escrowing for later use by the family of 75 percent of rent increases from earned income and an equivalent amount of rent increases resulting from the income of fathers returning to the household. These rent increases would be deferred for two years.

The Seattle Housing Authority plans to partner with the Seattle Jobs Initiative (SJI), dedicating $1.5 million for two-year rental subsidies for individuals in SJI training programs.

The Tampa, Florida, Housing Authority plans to phase in a flat rent based on market rent for current residents who opt not to participate in MTW self-sufficiency programs.

The Vancouver, Washington, Housing Authority plans to set rents at 35 percent of adjusted income in order to reduce dependence on federal operating subsidies and to "more reasonably reflect the private market."

The selected PHAs and HUD are now poised to enter a period of intensive negotiation to determine the final form of each agency’s MTW demonstration. Although the statute generally limits resident participation to a pre-submission public hearing, residents in the selected cities should obtain copies of the plans and make their voices heard as MTW proposals are being finalized.³

1. Sec. 204 of Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996, enacted as part of Pub. L. No. 104-134, 104th Cong., 2d Sess. (signed Apr. 26, 1996) (also known as the Omnibus Appropriations Act for Fiscal Year 1996 and the Balanced Budget Downpayment Act II.) See HUD FY 1996 Appropriations Act (H.R. 3019) Contains Important Substantive Changes, 26 HOUS. L. BULL. 66 (May 1996).
2. These descriptions are excerpted from an attachment to a HUD News Release, HUD No. 97-248, "Cuomo Announces Plan to Help Residents of HUD-Assisted Housing in 18 States Get Jobs and Help Improve Housing Authority Operations" (Oct. 30, 1997). The attachment to the Release is titled "Moving to Work Demonstration Application Ranking and Summary Information, October 27, 1997."
3. See Pub. L. No. 104-134, note 1, supra, § 204((c)(2).