Vouchers Are More Costly than PHA Reform, Study Says

A recent report by the Center on Policy and Budget Priorities (CPBP) claims that reforming public housing is less costly than increasing the number of rental assistance vouchers.

CPBP, a Washington, D.C.-based nonprofit think tank, found that the cost of modernization and operating subsidies is 8 percent less than the price of providing replacement vouchers to individuals.

The CPBP report, “Preserving Safe, High-Quality Public Housing Should Be a Priority of Federal Housing Policy,” also found that certain public housing sites would be better off converting to a project-based voucher system. And the public housing authorities (PHAs) operating the converted sites could mortgage them to finance modernization.

“Converting a public housing development to project-based vouchers would allow housing agencies to borrow more (and/or on better terms) than they could if a building remained in the public housing program,” say the report's authors, Will Fischer and Barbara Sard. “Lenders would likely perceive the stream of subsidies from project-based vouchers as more reliable because Congress has provided adequate funding more consistently for vouchers than for public housing,” they argue.

The author's views on PHA reform have been well received by industry professionals. For example, assisted housing consultant A.J. Johnson says that “public housing can serve the elderly, the disabled, and households with members who have special needs, in a way that vouchers cannot.”

PHAs are more likely to convert to a voucher system in areas with higher market-rate rents, because they can obtain more money through vouchers than through government subsidies. For example, in San Diego, a voucher nets $10,500 annually, whereas a PHA receives on average only $2,500 a year per unit in operating and capital subsidies.

“Having a system of project-based voucher assistance is a good idea where a local PHA has the power to assign a percentage of its vouchers to a privately operated assisted housing site,” Johnson says. “However, promoting public housing is definitely more cost-efficient than increasing the number of vouchers. The CBPP report reflects my own thinking on the topic, which goes back to the 1990s, when industry professionals opposed the government's push to replace housing production with more Section 8 vouchers.”

EDITOR'S NOTE: To get a copy of the report, go to the Center on Policy and Budget Priorities' Web site at http://www.cbpp.org, click on “Areas of Research, and scroll down to “Housing.” Or go directly to http://www.cbpp.org/pubs/housing.htm.

Insider Sources

Will Fischer and Barbara Sard:Center on Policy and Budget Priorities, 820 1st St. NE, Ste. 510, Washington, DC 20002; (202) 408-1080.

A.J. Johnson:A.J. Johnson Consulting Services, Inc., 3521 Frances Berkeley, Williamsburg, VA 23188; (757) 259-9920; ajjohn@cox.net.