Congressman José E. Serrano

Representing the 15th District of New York

Congressman Serrano Opposes HUD Rule That Would Cut Section 8 Vouchers for Many Bronx Residents

Aug 15, 2016
Press Release

NYC Delegation Urges HUD Secretary Castro to Reconsider Small Area Fair Market Rents (“SAFMRs”) Proposal

WASHINGTON, DC – Today, Congressman José E. Serrano joined with other Members of the New York City Congressional delegation to oppose an effort by U.S. Department of Housing and Urban Development (HUD) to use a Small Area Fair Market Rents (“SAFMRs”) formula in New York City that would increase the rent burden of Housing Choice Voucher tenants in NYC.  This proposed change would increase the rent of many Section 8 voucher recipients in the Bronx by hundreds of dollars per month. In a letter to Secretary Castro, led by Senator Schumer and Congresswoman Velázquez, the group warns of the proposal’s impact in NYC, shows support for the comments that New York City housing organizations have sent HUD, and requests the inclusion of  their recommendations in the adoption of a final rule.

“Any proposal by HUD has to take into consideration the reality of the NYC housing market and particular needs of City tenants,” said Congressman Serrano. “While the Small Area Fair Market Rents programs has been successful in other states, it would have a severely negative impact in the Bronx and throughout New York City.  For those who rely on Housing Choice Vouchers, these proposed changes will make it significantly more difficult to find affordable housing.  I urge Secretary Castro and the U.S. Department of Housing to prevent this rule from taking effect in NYC until it incorporates the recommendations of the City’s housing organizations and takes into account the needs of communities like the Bronx.”

The proposed rule, in its current form, would cause many Housing Choice Voucher families to pay more out of their own pockets for rent by reducing the amount provided by their voucher.  This forces them to choose between paying a higher rent they can’t afford and leaving their place in a tight housing market. The estimated average of additional monthly cost to tenants in the Bronx would be $218. Unlike other cities where similar pilot programs have been successful, NYC has a vacancy rate of only 3.45 percent. In addition, NYC lacks the space/infrastructure to build new housing for the families looking to relocate into high opportunity neighborhoods.   It is estimated that some 72 percent of voucher households in the Bronx will be negatively affected by these changes. 

The full text of the letter:

The Honorable Julian Castro

Secretary

U.S. Department of Housing and Urban Development

451 7th Street S.W.

Washington, D.C. 20410

Dear Secretary Castro:

We write to you on a matter of pressing concern in the administration of the Housing Choice Voucher (“HCV”) program in New York City.  The Department of Housing and Urban Development’s (“the Department”) recent proposal to use Small Area Fair Market Rents (“SAFMRs”) in New York City is well intentioned, but we are worried the proposal is likely to result in unfavorable outcomes for a number of New York City’s tenants and families who currently participate in the HCV program. 

The Department’s proposal seeks to use SAFMRs in New York City, and other select metropolitan areas around the country, to provide tenants with a more effective means to move into neighborhoods of higher opportunity.  Under the proposal, the Department will calculate Fair Market Rents (“FMRs”) by ZIP Code, instead of calculating FMRs as a single metropolitan area FMR, in order to more accurately reflect housing sub-markets within a metropolitan region.  By calculating FMRs by ZIP Code, the Department hopes that Small Area FMRs will afford HCV tenants and families with a subsidy adequate enough to make higher opportunity neighborhoods more accessible. 

We appreciate the Department’s desire to encourage and enhance outcomes and opportunities for tenants and families, and the proposal may work well in some localities.  However, in the high-cost, extremely low vacancy area of New York City, the proposal is likely to negatively impact a majority of tenants and families participating in the program. 

In New York City, the local housing agencies estimate that rental assistance payments would decrease for roughly 56,606 HCV tenants because of the Department’s proposal.  This means, that within 13 to 24 months of the final rule taking effect, these individuals and families will be expected to move to a higher-income neighborhood, be forced to re-negotiate with their landlord for a lower rent, or assume a significantly higher rent burden in order to stay in their home. 

For those tenants and families facing a decrease in their monthly rental assistance payments that may choose to move, these individuals and families are likely to face limited rental options and encounter significant hardship in finding new housing due to the City’s extremely low vacancy rate, which currently stands at 3.45%.  Some may face financial barriers to moving such as an inability to afford a larger security deposit or associated moving costs.  Others may decide to stay in their home, choosing instead to remain close to social, family, or professional networks in their neighborhoods. 

For those tenants and families who choose to stay in their homes, the change to SAFMR will likely result in a reduced voucher subsidy.  It is unlikely that landlords will accept lower rents, which will lead many existing tenants and families to face a significantly higher rent burden just to stay in their home.  One estimate anticipates that in some ZIP Codes around the City the average rent burden will rise by as much as $403 per month. Further, lowered voucher subsidies may drive some landlords who currently accept vouchers to leave the Department’s program all together, resulting in displacement of current voucher households and a further reduction of rental units affordable to those individuals and families who need them the most. 

At the other end of the spectrum, rental markets across the five boroughs where SAFMRs will be greater than currently published FMR levels, the net result would likely be an increase in per capita spending for each unit of HCV assistance.  At a time when budget authority is already insufficient to support the existing number of New York City tenants and families participating in the program, the rise in the subsidy cost per household is likely to further reduce the number of tenants and families that can be assisted by the program overall. 

Any final rule adopted by the Department must limit the harm to those existing tenants and families currently participating in the HCV program.  In an extremely tight rental market like New York City, the final rule should not force those individuals and families most in need of rental assistance to choose between facing a higher rent burden and leaving their home.  In response to the Department’s request for public comment, a number of New York City’s housing agencies, tenant-based organizations, and housing experts have all submitted a number of forthright and constructive ideas and recommendations for improving the Department’s proposal.  We urge the Department to review each and every-one of those ideas carefully and include their recommendations in adoption of the final rule to ensure New York City HCV tenants and families are not significantly impacted by a substantial and abrupt decrease in FMRs.  

Providing low-income individuals and families with more housing options, especially in high-opportunity neighborhoods is something we should all strive to achieve with the HCV program.  But program changes should not be implemented that will negatively impact New York City individuals and families who choose not to or who are unable to move.    

Sincerely Yours,

***

 

Congressman José E. Serrano has represented The Bronx in Congress since 1990.