RENT REFORM: THE TIERED SUBSIDY TABLE

The Housing Authority of the County of San Mateo

Moving To Work (MTW) SummitFebruary 4-5, 2014Washington DC

Question: What if you could . . .

More accurately predict your maximum HAP expenditures each year?

Question: What if you could . . .

Adjust your per unit voucher costs (during budget cuts), without holding back vouchers?

Question: What if you could . . .

Significantly control your HAP budget during an exploding rental market?

Question: What if you could . . .

Reach underserved populations in your community due to HAP savings

Control per unit costs to the point that you would be able to over lease and potentially earn additional administrative fees

Question: What if you could . . .

Better utilize staff time

Increase program integrity

Control program costs

With The Tiered Subsidy Table (TST) you CAN potentially . . .

Answer:

• Predict your agency’s maximum HAP expenditures each year

• Adjust your per unit costs without holding back vouchers

• Control your HAP costs during an exploding rental market

• Reach underserved populations due to HAP savings

• Earn additional administrative fees through over leasing

With The Tiered Subsidy Table (TST) you CAN potentially . . .

Answer:

• Better utilize staff time

• Increase program integrity

• Control program costs

AND:

• Provide participants with the information they need to make informed and smart housing choices

The HACSM TST Rent Reform Program

In this presentation we’ll discuss the following:

Key Objectives and Critical Success Factors

Development of the TSTUsing the TST as a communication and

education toolLessons LearnedHACSM Outcomes

MTW Program GoalsSan Mateo County (SMC) Priorities

Administrative Efficiency

Increased Housing Choice

Increase Self-Sufficiency of Program Participants

Increase TimelinessDecrease ComplexityIncrease Housing

OpportunitiesIncrease Self-Sufficiency

of ParticipantsSeek additional avenues

for providing housing assistance in SMC

Key Objectives

Community engagement through an extensive stakeholder process Partner organizations Legal advocates Current residents and

participants Current property owners HACSM staff

Community respect and resulting trust

Open Communication

Creation of a system that is intuitive and easy for the end user

Critical Success Factors

The Agency’s HAP Budget and the TST

Development and monitoring ofthe HAP budget and TST

• Original TST design based on the FMR and then current participant’s rent

• Cost neutral implementationoParticipant rent burden vs Affordability of the Housing

Authority

• Underlying motivation included developing a system where the system itself built in a participant’s desire to increase financial self-sufficiency without penalty

Development of the TST

“The Challenges”

Contract rents on the open market

Status quo and resistance to change

Program simplification and demystification

Development of the TST

Analysis

Agency budget

The participant’s status Voucher size vs. unit size

rented

% of AAI paid for tenant rent portion

Implementation impact analysis

Market trends

Development of the TST

Analysis of Potential Negative Impacts

Increased tenant rent burden

Increased cost to HACSMTechnology challengesImplementation and

transition challenges

Development of the TST

The TST is based on three factors:

The family’s annual adjusted income

The family’s voucher size

The agency’s HAP budget

HOW DOES IT WORK?

The TST

Determining the Tenant Rent Portion

Essential Components

o Voucher Sizeo Unit Sizeo Tenant’s annual adjusted incomeo Maximum Subsidy (based on TST)o Contract Rent (rent reasonable)

The Tiered Subsidy Table (TST)

Calculation Process: AAI and Tenant Rent

The Traditional ProcessStep 1 Step 2 Step 3

Factors included in Annual Adjusted Income and TTP

Calc

7 Potential Factors to determine HAP

Factors to determine Tenant Rent Portion

Employment Income Negotiated Contract Rent (including 40% affordability test)

Contract Rent

Asset Income Mixed Family Proration (minus) HAP

Excluded Income * Payment Standards Tenant Rent Portion

Child Care Expenses* Voucher Bedroom Size (Based on HA subisdy standards)

Medical or Disablility Expenses * Unit Size to be rented

Deduction for Minor/Dependent * Utility Allowance

Deduction for Eld/Dis Household Tenant TTP (30% of AAI)

Annual Adjusted Income (AAI) HAP

AAI divided by 12 (Monthly Adj Income)

Monthly Adjusted Income x 30%

Total Tenant Payment (TTP)

Traditional HCV Process

* Note: These areas/items are noted for being confusing, error prone, and oftentimes responsible for delays in the lease up process.

Calculation Process: AAI and Tenant Rent

The TST Rent Calculation Process

Step 1 Step 2 Step 3

Factors included in Annual Adjusted Income Calculation

2 Factors to Determine Tiered Subsidy

Factors to Determine Tenant Rent Portion and HAP

Employment Income Annual Adjusted Income Contract Rent

Asset Income Voucher Bedroom Size (minus ) Tiered Subsidy

Excluded Income Maximum Tiered Subsidy Tenant Rent Portion

Child Care Exp

Medical or Disability Exp

Deduction for Eld/Dis Household

Deduction for Minor/Dependents

Annual Adjusted Income

The HACSM Tiered Subsidy Table (TST) Process

Note:

For Mixed Family Households, the "Maximum Tiered Subsidy" amount is prorated based on the ratio of eligible to ineligible household members.

All families are required to pay at least $50 towards their rent. Based on this policy, in Step 3, if the Tenant Rent Portion is less than $50, their rent is automatically set to $50 and the HAP is adjusted accordingly.

Determining the Tenant Rent Portion

Example #1: (2 Bedroom unit) Housing Authority maximum subsidy: $1,000

The Contract Rent = $1400 (the rent that the owner is requesting) To figure out your rent,

$1400 (Contract Rent) - $1000 (HA Maximum Subsidy)

$400 (Your portion)

In this example: Your Portion = $400 Housing Authority Portion = $1000

 Please read entire document before completing form. Fill in all blanks below. Type or print clearly.  Voucher Number  ---- SAMPLE ---- 1. Insert unit size in number of bedrooms. (This is the number of bedrooms for which the Family qualifies, and is used in determining the amount of assistance to be paid on behalf of the Family to the owner.) 

1. Unit Size 

22. Subsidy Amount: a) Maximum subsidy based on voucher size listed in box 1. b) b) Maximum subsidy if unit rented is a bedroom size smaller than the voucher size in box 1.

2a                                    2b

       $1,000 $825

Tenant Rent Portion Determination

Example #2: (2 Bedroom unit) Housing Authority maximum subsidy: $1,000

The Contract Rent = $935 To figure out your rent, $935 (Contract Rent)

- $1000 (HA Maximum Subsidy) (-) $65 Because the Contract Rent is less than the Maximum subsidy from the HA, then you would be responsible to pay the $50 minimum rent.

In this example: Your Portion = $50 Housing Authority Portion = $885

 Please read entire document before completing form. Fill in all blanks below. Type or print clearly.  Voucher Number  ---- SAMPLE ---- 1. Insert unit size in number of bedrooms. (This is the number of bedrooms for which the Family qualifies, and is used in determining the amount of assistance to be paid on behalf of the Family to the owner.) 

1. Unit Size 

22. Subsidy Amount: a) Maximum subsidy based on voucher size listed in box 1. b) b) Maximum subsidy if unit rented is a bedroom size smaller than the voucher size in box 1.

2a                                    2b

       $1,000 $825

Communication ToolAbility to have a fact-based

discussionRemoval of the appearance of

“red tape” and/or unequal treatment

Education ToolProviding participants with the

information they need to make informed choices

Personal decision-makingPersonal empowermentIncreased self-sufficiency

Using the TST as a

tool

Lessons Learned

Keys ingredients for successful outcomes:Agency reputation in the community The political will of the agencyCommunity trust in agency’s integrityDetailed work plans, including software

conversion requirementsInternal staff understanding and buy-in Education of community partners and HUD

Field office

Outcomes

Simplification of: The program for the

end user The rent calculation

process The lease up process

Program Integrity Reduction in errors

Cost Saving Day-to-day

expenditures Staff Time

TST

Outcomes

Increased self-sufficiency

Change in Paradigms Staff – participant

relationship

Community perception of “Section 8”

Beginning of a change in view of “Section 8” participants

Increased collaboration with community For example:

Landlords who do not increase rent, or who choose to lower the rent, once they learn that the tenant would be responsible for the increase - - - not “the government”

Outcomes

Decreased time from homelessness to stable housing

Increase Self-Sufficiency

HAP savings used to implement other programs (CORA, Service League, HIP)

Outcomes

As of December 2013: Over 90% of

households pay less than 50% of AAI

Over 60% pay less than 40%

Over 30% pay less than 20%

Over 95% of participants are renting units that match their voucher size

Data from FY13 MTW Report

Contact Information

For additional information, contact:

Jennifer Rainwater, Planning and Program Innovation Manager650-802-5045jrainwater@smchousing.org