Shelter Partnership

By Steve Renahan, Senior Policy Advisor

The proposed Section 8 Savings Act (SESA) contains many worthy proposals.  It also includes a change that would result in many extremely low-income households remaining homeless or at-risk of homelessness for longer periods of time.

Currently, 75 percent of admissions to the Section 8 tenant-based Voucher program and 40 percent of admissions to project-based Section 8 and public housing units must be households with incomes at or below 30% of Area Median Income (AMI) in the local area.  SESA would broaden these targets to include households with incomes at or below 30% of AMI or the federal poverty level, whichever is higher.

Backers of this change claim that housing authorities would have greater flexibility to target working-poor families and that the change would generate savings for the federal budget.

Of course, for every higher-income household admitted under a policy of “flexibility,” a lower-income household in greater need would wait longer.  And naturally such a policy would save money; higher income households require less subsidy.  But the purpose of the Section 8 and public housing programs is not to save money by leasing to higher-income households, rather it is to serve the poorest of the poor.

Immediate Impact if SESA Becomes Law

In areas with relatively high AMIs, there would be little impact.  For example, in Los Angeles County, there would be no change for households composed of one to five members, because the current federal poverty level is below 30% of AMI.  For households of six or more members, the poverty level is higher than 30% of AMI, so more of these large households would qualify.

In areas of the country with relatively low AMIs, the federal poverty level is more likely to be higher than 30% AMI, so the SESA change would have greater impact.  In these typically rural areas and high-poverty urban areas without balancing affluent households, there would be immediate winners and losers:

Potential Longer Term Impact if SESA Becomes Law

An initiative is under way to correct the statute governing the definition of the federal poverty level to more accurately reflect real costs of living.  Should this become law, the poverty level would increase significantly, so the change proposed in SESA would greatly expand the number of households that qualify for the income targeting preference, resulting in longer waits for affordable housing for those who currently qualify under the existing definition, in effect gutting the original intent of the income targeting rule.