Without enough housing vouchers, what can cities and states do?

In late October, San Francisco opened its waiting list for housing choice vouchers for the first time in a decade, prompting tens of thousands of people to apply for a spot on a 6,500-person roster. Phoenix and Arlington, Virginia, similarly opened their waiting lists after several years on hold, adding thousands of people despite having a limited number of vouchers to distribute. 

It’s a common problem. Housing choice vouchers distributed by the U.S. Department of Housing and Urban Development give low-income renters financial assistance to help pay for privately owned rental housing. The program can significantly improve the lives of recipients, but many households will wait years before receiving their vouchers, often bouncing between temporary housing options while their quality of life diminishes. 

So while the voucher program is helpful for those it successfully reaches, it falls short of supporting all renters navigating the affordable housing crisis, according to Sara Kimberlin, executive director and senior research scholar at the Stanford Center on Poverty and Inequality. 

“When we have programs that have spending caps or when there are waitlists, we effectively have a policy that says, ‘We recognize that you have an affordability challenge and you need help, but we're not going to help you because we don't have the resources available,’” she said during a Monday webinar hosted by Fed Communities. But there are a variety of strategies state and local governments can explore to reach those left out of the federal program. 

Take, for example, tax credits for renters. 

Tax credits give governments flexibility to target specific populations, such as the elderly or people with disabilities. Officials can tailor benefits, including how much recipients receive, the income requirements and whether the credit is refundable, which allows households that don’t earn enough to owe taxes to receive the credit as cash. 

Tax credits in general have proved to be an effective way to deliver assistance to many people at once, Kimberlin noted. “We saw this in a very compelling way with the pandemic-era stimulus payments and with the expanded child tax credit,” she said. “We saw lots of resources delivered directly to individuals throughout the country via the tax system [and] refundable tax credits.”

The tax system already offers substantial tax benefits for homeowners through initiatives like mortgage interest deduction, “but little to nothing specifically for renters,” Kimberlin said.

Some states already provide rental tax credits based on age or disability, while others have benefits that reach a broader range of people. In Connecticut, for example, renters who are over 65 or disabled can receive up to $700 in a rebate, and a program in Maryland provides up to $1,000 in credit for renters. The Hawaii legislature is considering a bill that would expand its current credit to $200 for households earning less than $20,000. 

Tax credits also relieve the administrative burdens the voucher program imposes on local housing authorities and landlords, Kimberlin added. 

Plus, property owners won’t necessarily know which tenants are receiving tax credits to help with housing costs. That addresses one of the major challenges tied to the federal housing voucher program: Landlords are often reluctant to participate, according to webinar panelist Ingrid Gould Ellen, a professor of urban policy and planning at the New York University Wagner Graduate School of Public Service. In addition to any unfounded prejudice against low-income households that qualify for vouchers, landlords are also wary of the regulatory hoops they need to jump through—including home inspections—before they can participate in the housing voucher program.

Landlord buy-in is key because voucher recipients only have a certain amount of time to find a home that will accept the benefit. In 2019, Gould Ellen and her colleagues conducted a study that found that after waiting an average of two and a half years to receive vouchers, two in five families were unable to find a landlord that would accept the vouchers, and ended up returning the vouchers to the local housing authority. That same year, only 26% of Black voucher recipients signed leases within 60 days of receiving their voucher, Gould Ellen said, compared to 39% of their white counterparts. 

“And we suspect that the voucher lease-up rates have fallen since 2019 given the tightness of the rental market,” she added.

While there are flaws to the housing voucher program, it's still a powerful tool in keeping people housed, and incremental changes could expand the program to better serve those who need it. 

Many cities and states don’t have laws that prevent property owners from rejecting tenants who use vouchers, so source-of-income discrimination laws could make a difference in the success of a jurisdiction’s voucher success rates, Gould Ellen said. Local housing authorities could also consider virtual home inspections, such as those conducted during the pandemic, as a way to speed up the inspection processes. That approach, however, has some risk, as it would be more difficult to ensure that voucher recipients are renting safe, quality housing. 

A more radical approach would be for state and local governments to implement direct cash assistance programs that allow recipients to spend their allocation on anything, not just housing—an approach some communities are already exploring. Similar to tax credits, such assistance is a way to help tenants without putting additional administrative burdens on local housing authorities or landlords, Ellen Gould said.

None of these approaches is a silver bullet for the affordable housing crisis, the speakers noted, but having them work in concert makes each more powerful. 

“Renters have different needs at different times,” Kimberlin said, “so I think it's helpful to talk about different kinds of approaches.”