News Release

REFORM TO SECTION 8 AIMS TO HELP FAMILIES ACHIEVE SELF-SUFFICIENCY
Public Housing Authorities To Gain Local Control to Serve More Families

WASHINGTON - The sweeping reform of the nation's rental assistance voucher program announced in HUD's 2005 proposed budget is designed to help public housing authorities (PHAs) enable more low-income families to transition to self-sufficiency while reducing the number of families on long waiting lists around the country.

"Today families must wait years to receive a voucher," said HUD Assistant Secretary Michael Liu. "Our reforms are intended to create innovative solutions for those Americans in need of housing assistance."

The new Flexible Voucher Program (FVP) will allow PHAs to assist the 1.9 million families the Section 8 program currently assists and potentially serve more families. Under FVP, PHAs will continue to receive direct funding from HUD to administer the program, but with added flexibility and less "red tape" to encourage PHAs to manage effective programs.

FVP shifts the rental assistance program from a unit-based distribution system to a dollar-based system to give PHAs the freedom to adjust their programs to address the changing needs of their communities and better control increasing voucher costs. The average cost for each voucher has increased at an alarming rate - 23% in the last two years alone.

FVP will allow PHAs to set rents using local rental market data rather than HUD's Fair Market Rent (FMR) data, which is estimated, imprecise and often lags behind market fluctuations. Giving PHAs the authority and incentive to pay no more than true market rents will allow PHAs to maximize their funding and serve more families. Currently HUD gives PHAs a specific number of vouchers they distribute to qualified families. This puts a cap on the number of families a PHA can assist. With a dollar-based program, PHAs can use their funding to design programs to serve more families based on local needs - as was done prior to shifting to a unit-based program in 1999.

In addition, the FVP will reward housing authorities that are good managers through performance-based incentives while holding PHAs accountable for poor performance.

Housing authorities that utilize existing self-sufficiency mechanisms, such as the Voucher Homeownership Program, or develop others to promote higher levels of income and employment that will transition families out of the program will be rewarded with additional fees for administering the program. Transitioning families off of assistance will not only improve their lives, but will also help serve families currently unassisted on long waiting lists in many communities.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

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THE FLEXIBLE VOUCHER PROGRAM
RENTAL ASSISTANCE REFORM FOR THE FUTURE

In its fiscal year 2005 budget, HUD has proposed to Congress sweeping reform of the Housing Choice Voucher Program, also known as Section 8 assistance. The Flexible Voucher Program (FVP) reforms are designed to help Public Housing Authorities (PHAs) transition more low-income families through the program to self-sufficiency - reducing the number of families on long waiting lists around the country.

HUD is proposing a new dollar-based grant program that will better manage costs, continue to serve at least 1.9 million families or more and provide the PHAs a more efficient and effective program.

HUD's current system serves 1.9 million families. However, there are no incentives for families to move off the program to self-sufficiency. FVP will serve at least 1.9 million families or more, and provides incentives to PHAs to help more families achieve self-sufficiency.

LOCAL FLEXIBILITY

• PHAs will receive direct funding from HUD to administer the grant.
• PHAs will receive a fixed grant amount, but will have more flexibility in determining how best to spend their money.
• PHAs will have the authority to determine local fair market rents (FMR) immediately to adapt to local market changes. FMRs are currently set by HUD in Washington and often do not reflect accurate market conditions.
• HUD's Moving to Work program, a successful pilot program, has offered PHAs many of the same flexibilities proposed by FVP.

RESULTS

• HUD's new FVP will continue to serve at least 1.9 million families, the same number of families that are currently being served.
• FVP is designed to serve more people by encouraging self-sufficiency and HUD will monitor PHA results.
• HUD will give incentives to PHAs that help transition families out of the program on to self-sufficiency.

CONTROLLING COSTS

• Two-thirds of HUD's current budget goes towards rental assistance.
• The Section 8 program is unsustainable at current growth levels - per voucher costs have increased at alarming rates of 23% in the last two years.
• The time for reform is now.
• PHA staffs will be relieved of the administrative burden of the current system thereby allowing them to focus on helping more residents achieve self-sufficiency.