Could this COVID program help reduce the California housing crisis?
Section 8 vouchers have been one of the federal government’s landmark responses to unaffordable housing for half a century. But too often in California, families sit on a waitlist for years only to see their once-golden ticket expire before they can find a home.
A fresh batch of emergency vouchers became available last year to address growing housing insecurity during the deadly COVID-19 pandemic — and local and federal officials watching their rollout believe the new vouchers’ features already offer some promising solutions to a broken system.
Housing choice vouchers, added in 1974 to Section 8 of the federal Housing Act of 1937, allow low-income tenants to pay only 30% of their income toward rent and utilities while Uncle Sam shoulders the rest. These vouchers have helped pay rent for more than 300,000 households in California this year, totaling $1.9 billion in assistance.
But only one in four needy households get help, and the vouchers end up passing through multiple families’ hands before turning into a rent check because many landlords reject them.
The new set of vouchers released in May 2021 came with looser rules and more generous incentives to help persuade landlords to take them. Instead of any low-income household, these vouchers target people who are homeless, at risk of homelessness or fleeing domestic violence — typically considered the most challenging groups to house.
Sweetening the deal for landlords is critical to the strategy, according to the U.S. Department of Housing and Urban Development. Federal and local officials told CalMatters that signing bonuses and heftier security deposits are ways to overcome property owners’ wariness toward the program.
Yet in some of the state’s tightest rental markets, such as Los Angeles, landlord reluctance still remains a crucial hurdle, despite recent state laws intended to make finding an apartment easier for voucher recipients.
“The reality is that landlords have so many choices right now on the open market,” said Chris Contreras, chief program officer for Brilliant Corners, a San Francisco-based nonprofit housing services provider that helps voucher holders find apartments. “It really is the market forces in many ways diluting what we’re able to do.”
In just more than a year, California has used about a third of the 17,000 new vouchers it received from the feds, worth more than $400 million. Smaller cities, including Redding and San Luis Obispo, turned nearly all of their vouchers into leases — while other cities, including Los Angeles, still have more than 3,000 families waiting to find a home.
The U.S. Department of Housing and Urban Development says under the emergency voucher program, it’s taking an average of 75 days to sign a lease in California and 70 days nationwide. Although HUD officials were unable to provide a comparable timeline for the traditional Section 8 program, making it difficult to evaluate the emergency voucher program more broadly, they like what they see.
“I would say that the emergency housing vouchers, in some ways, came with some of the features that we would like to see reflected in all of our voucher programs,” said Richard Cho, a senior adviser with HUD.
Success in San Luis Obispo
What sets the new vouchers apart is the additional $3,500 per voucher received by public housing authorities, which they can pool together and spend on landlord bonuses, tenant preparedness, housing search help and other services.
Of the $11.6 million spent by California housing agencies on services so far, $2.7 million went to landlord bonuses, $2.5 million to housing search assistance and $3.3 million to security deposits, application fees and other costs.
In data reported to HUD so far, California is spending a greater share of its extra dollars cajoling landlords than the nationwide average. The state received nearly a quarter of the country’s allotment of emergency vouchers, and so far accounts for 45% of the money spent on landlord incentives.
It’s unclear yet whether any one form of assistance worked better than another, especially in tight rental markets. However, the additional resources were key to getting people into apartments in 12 housing authorities across the country, including San Francisco and Santa Barbara, surveyed by the Urban Institute for a forthcoming study. But discrimination and lack of available units remain key barriers, the study found.
“Landlord incentives are really what’s enabling access to the private market with these vouchers,” said Samantha Batko, an Urban Institute researcher who led the study.
That was key in San Luis Obispo, a more affluent Central Coast city of about 50,000 people with a rental vacancy rate of less than 2%, according to RentCafe, an apartment listing service. The local housing authority used all 156 vouchers it got from the feds and received 40 more vouchers this spring. The bulk of the vouchers went toward people experiencing homelessness.
The housing authority offered landlords who had never before accepted a voucher a sign-on bonus of $4,000, while also offering $1,000 for a landlord already in their system, plus as much as $3,000 for new property managers. The incentive drew 41 new owners. The authority also offered as much as $7,500 for property damage, which has only been used twice so far.
“We’ve learned landlords really want that back-end insurance, but very few people actually use it,” said Elaine Archer, the authority’s director of housing management.
Emergency vouchers can be used for units with slightly higher rents — with limits set by the federal government based on local rent averages. That opened up a swath of the housing market previously unavailable to voucher holders. In San Luis Obispo, a voucher could pay $1,720 a month for a one-bedroom, up from $1,575.
Case management was also a federal requirement — and key to getting especially needy tenants paired with the necessary documents and willing landlords. While Uncle Sam guarantees that voucher recipients will pay the rent, landlords are often hesitant about their lack of rental history and solid references. A recent study of the Section 8 program in Los Angeles found that traditional voucher holders who were homeless were slightly more successful in finding a unit than those who were already housed, in part because they came with case managers.
“We’re going to stick with this person,” said Devon McQuade, associate director of 5Cities Homeless Coalition in San Luis Obispo. “It’s not just, ‘Go find housing and, you know, good luck from there.’”
Despite state law, discrimination persists
One secret ingredient to San Luis Obispo’s quick lease-up? Giving out way more vouchers than it had. The housing authority offered the promise of housing to around 600 households, but officials knew that most vouchers would not actually be used. Only 40% of families who get off the Section 8 waitlist usually find a unit to rent, and these vouchers had a short expiration date, Archer said.
Mitchell Friedeck, 35, got a voucher last summer while shuttling between relatives’ homes, tent campsites and a homeless shelter in San Luis Obispo with his three kids, who are 3, 4 and 8. After a separation from his wife and the pandemic’s heavy toll on his local publishing and ad sales business, he transitioned to being a stay-at-home dad and became homeless for more than a year.
“There was a lot of dust and dirt,” he recalls. “Cleaning every day the tent, the feet, cold showers… It was just a nightmare.”
Friedeck tried to apply to more than 100 properties over four months with his voucher, to no avail. He said no one called him back, and most landlords asked him to show a 650 credit score, which he didn’t have, and earn three times the rent. (Under state law, a landlord can only require a voucher holder to make three times their portion of the rent, not the entire rent.)
“They flat out would tell me, ‘You’re not going to qualify,’” he said. “I felt hopeless and helpless.”
Giving out more vouchers than the feds can fund — knowing that many won’t be used — isn’t an uncommon practice, according to experts. But it’s especially disheartening to advocates who helped pass a state law in 2019 barring landlords from rejecting vouchers. Refusing tenants based on their “source of income” is now a form of housing discrimination similar to denying someone a rental based on their race or disability.
“We should be doing things to change that reality, and now we have the tools,” said Sasha Harnden, a public policy advocate at Inner City Law Center in Los Angeles who helped draft the law.
“It may be appropriate to talk about incentives at some point,” he added. “But what we’ve not seen is really robust enforcement of the law that prohibits refusing the vouchers in the first place, and that seems like a natural starting point.”
The state’s Department of Fair Employment and Housing is in charge of enforcing the anti-discrimination law, but doesn’t dedicate full-time staff to the effort. The agency depends largely on complaints from tenants; it received just 82 statewide in 2020, the first year the law went into effect.
The state sent 20 letters to landlords in 2021 and 37 so far this year, warning them to take down apartment listings that say “No Section 8.” The department also mediated at least one settlement — between Fair Housing Advocates of Northern California and the owners of a Marin County apartment complex that had said it would not rent to voucher recipients.
But proving discrimination is tough, especially when landlords are still allowed to deny a voucher recipient based on other factors, such as credit history or a criminal background, or ask for rents higher than what the voucher program pays.
“We don’t want to be so aggressive that we alienate every landlord, so we have to do this horrible dance,” said Jack Lahey, homeless services director at Community Action Partnership of San Luis Obispo, which connected Friedeck with a voucher.
This year, state lawmakers considered two bills that would prohibit landlords from conducting credit checks as part of the tenant screening process if an applicant is a voucher recipient — a measure many housing authorities said could help clients avoid the onerous application costs that come with an unsuccessful housing search.
Both bills faced stiff landlord opposition and were tabled this spring.
‘Up against a wall’
Despite the promise of signing bonuses and other incentives, many landlords remain unswayed. And some of California’s largest housing authorities are taking longer than the rest of the state to house their emergency voucher recipients.
Nowhere is the challenge more acute than in Los Angeles, whose city housing authority received more than 3,300 emergency vouchers, the biggest grant in the state and second only to New York City in the nation.
As of this month, only 207 of those vouchers were in use — 6% of the vouchers given to the agency, according to HUD data. Thousands of other recipients are still searching for a unit. In a late July statement, the Housing Authority of the City of Los Angeles said updated numbers show the city has leased 325 units.
Local housing authorities and advocates blame intense competition for a slim supply of low-rent units — among tenants not receiving aid, thousands of traditional Section 8 voucher holders and now the thousands of new emergency voucher recipients receiving aid from the city housing agency, the county housing authority and smaller housing authorities across Los Angeles County.
“We’re coming up against a wall of available units at our price point,” said Carlos VanNatter, director of Section 8 for the Housing Authority of the City of Los Angeles.
Los Angeles’ rental vacancy rate was just more than 4% in June, according to RentCafe. For emergency voucher holders and other local homeless placement programs, VanNatter’s agency offers landlords $2,500 for each recipient that moves into a unit, plus funding to repair a unit in advance of a HUD inspection, VanNatter said. In addition, the Los Angeles Homeless Services Authority can provide a security deposit of as much as twice the monthly rent.
Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles, said many property owners “don’t want to touch” any voucher programs, particularly those run by the larger housing authorities.
Landlords continue to hold suspicions about tenants who hold vouchers, driven by anecdotes from fellow property owners, he said. With plenty of potential tenants, they don’t want to wade through the paperwork of the voucher program. And they’re unwilling to wait, Yukelson said, for a housing authority to conduct an inspection — sometimes losing a month or two of rent — before a tenant moves in.
“There’s just not enough money put on the table for people to jump for it,” Yukelson said. “If I had a vacant unit and had 20 people show up — there’s a bunch of people begging to rent my apartment — why deal with all the administrative burdens?”
VanNatter said it’s difficult to tell just how effective the incentives will be, but he’s wary of overusing them.
“Landlords are smart, they’re trying to optimize dollars,” he said. “Would it help if we provide more money in these incentives? But it almost seems like we’re just throwing this money out there.”
The San Diego Housing Commission, operating in a city with an even slimmer 3% rental vacancy rate, has used nearly 80% of its 480 emergency vouchers. It boasts similar landlord incentives and housing search services as Los Angeles, as well as an initiative using local funds to pay landlords who have vacant units as they identify tenants. That allows the housing authority to reserve units for voucher holders.
There were also staffing and administrative reasons the emergency voucher program started slowly in Los Angeles, VanNatter said.
Asked to explain the differing emergency voucher leasing rates across the state, HUD officials attributed the challenges to local rental markets. They also pointed out that in jurisdictions such as Los Angeles, emergency vouchers have been prioritized for those who are currently homeless, who can face greater barriers and take longer finding a unit than those deemed “at risk.”
But federal officials said they remain optimistic the vouchers will ultimately be used up in time. Housing authorities must finish distributing them by fall 2023.
Friedeck, in San Luis Obispo, eventually found a landlord willing to rent to his family, with the help of the housing authority. He is now paying $205 a month while the feds cover the rest of the $1,800 rent for his two-bedroom apartment in Nipomo.
“It’s still a transition for me and I’m working my way up, but now I can reclaim my business and I can reclaim myself and my foundation for my kids,” he said.
Helen Miller, who manages the 18-unit apartment complex where Friedeck lives, said she and her mother used to have mostly Section 8 tenants until the housing authority stopped covering the cost of tenant damages years ago.
According to Archer, from the housing authority, multiple elderly and disabled tenants fell behind on rent during the pandemic and the emergency vouchers offered a solution. Miller said five tenants now pay with the vouchers, and she and her mother receive about $400 more a month than they normally would get for the unit, which was priced below market rent.
“We gave them a chance and it’s been working out so far,” she said. “All these people need is a leg up. And it was a good feeling knowing Mitchell’s kids have a bed to sleep in.”