HUD Announces More Than 19,000 New Housing Choice Vouchers

HUD recently announced the awarding of more than 19,000 new Housing Choice Vouchers to almost 2,000 Public Housing Agencies (PHAs) across the country. This will be the most expansive allocation of flexible new rental assistance in 20 years.

One level deeper: The American Rescue Plan and Fiscal Year (FY) 2022 budget collectively provided nearly 100,000 new Housing Choice Vouchers, including the more than 19,000 vouchers recently announced. In June, HUD announced $43 million in FY21 funding to fund approximately 4,000 new incremental housing vouchers, or “Stability Vouchers,” focused on people experiencing unsheltered homelessness, including in rural areas.

The American Rescue Plan also included $5 billion to create housing and services for people experiencing or at risk of homelessness, and provided tens-of-billions of dollars for Emergency Rental Assistance, which improved housing stability for over 6 million unique households, including 700,000 HUD-assisted households.

Currently, the Biden administration is calling for an additional increase to the program. The President’s Fiscal Year 2023 HUD Budget requests $1.6 billion for an additional 200,000 new housing vouchers. This would be the largest one-year increase in vouchers since the program was authorized in 1974.

What you need to know: The tax credit law bars owners and managers from turning away applicants because they hold Housing Choice Vouchers. Although many tax credit managers know this, some managers still believe it’s okay to limit the number of voucher residents they rent to at any time, to reduce the potential administrative burdens. Although it may be legal to limit the number of voucher residents at a conventional site, you can’t do this at a tax credit site.

However, don’t assume that an applicant who has a Section 8 voucher is automatically eligible to occupy a low-income unit at your tax credit site. This is a common assumption tax credit managers make. In some cases, households eligible for Housing Choice Vouchers may have household income above your tax credit housing income limits.

For example, some of your tax credit units may have to rent to households at 40 percent of area median gross income (AMGI), but a voucher holder may be at 50 percent of AMGI. Or a voucher holder whose income met your tax credit income limits when he received his voucher two years ago may now have income that exceeds the limit. Once a person is accepted into the Housing Choice Voucher program, he may stay eligible for Section 8 assistance even if his income later increases to above 50 percent of AMGI.

Voucher holders’ eligibility for assistance is based on their ability to pay the local fair market rent, a factor that isn’t considered in determining tax credit eligibility. Therefore, if you assume a voucher holder is automatically eligible, you could rent to an over-income household, resulting in an ineligible unit and possible tax credit recapture.