The purpose of this report is to provide the Commission and the public with a summary update of the Housing Authority’s Section 8 Housing Choice Voucher (HCV) program utilization and outlook for the program into 2021. The HCV program is the Authority’s largest rental assistance program funded by the U.S. Department of Housing and Urban Development (HUD) for low-income individuals and families to provide safe and decent affordable housing. Program participants pay 30 percent of their monthly adjusted gross income towards rent to a private landlord of their choice and the HCV program pays the remaining balance of the rent to the landlord.

Funded on a calendar year basis, the Authority’s 2020 grant award from HUD was in the amount of $36,428,538. When added to $1,902,599 of remaining, unspent prior-year grant funds, the Authority has a total of $38,378,723 of Section 8 HCV funds available for 2020 to support our current allocation of 2,598 vouchers.

The successful administration of the program relies on adequate funding from Congress to support the number of vouchers available to be issued and those currently leased, and is also affected by local market forces not immediately identified by HUD’s assessment of the South Coast rental market.

In August of 2019, HUD published Fair Market Rents (FMR) for the South Coast which did not accurately reflect the quickly rising rental rates in our area. As a result of this and the positive result from the first rent survey conducted by the UCSB Department of Economics in 2017, the Authority took the proactive step of again contracting with USCB in 2019 to conduct another rent study that was submitted to HUD. As a result of this study, HUD published revised FMR numbers which reflected a 12% increase over its initially published FMRs. The result was a larger HAP budget for 2020 and the Authority’s ability to better compete and attract landlords to the program.

The Housing Authority leased up the new Johnson Court complex with 16 Project Based vouchers for veterans and is in the process of completing lease up at the Gardens on Hope with 89 project based vouchers. An additional 112 vouchers have been leased up in 2020 through July, with a total HAP expense of approximately $ 21.9 million of the $38.3 million available funding for 2020 in housing assistance payments.

While the Housing Authority has been successful with its lease up numbers to date, there are other factors that create the need to continue the current course. At the end of 2019, it was expected that both new projects, Gardens on Hope and Johnson Court, would be fully leased by February or March of 2020; as a result, issuance of new vouchers was suspended in 2020 to avoid the possibility of overspending and causing HUD to put the agency in shortfall status. Due to numerous unforeseen construction delays and the limitations imposed on staff as a result of the pandemic, lease up for Gardens on Hope has taken much longer than expected resulting in underutilized vouchers and HAP dollars. In order to maximize both, staff began scheduling eligibility appointments in July with the goal of leasing up an anticipated 120 vouchers by year end. This will result in unit months leased at 98.1% utilized and the budget will be 97.4% utilized, thus maximizing the use of vouchers for 2020 and placing the Authority in a good position for 2021.

Exhibit A is a summary report of the lease-up progress from January 1, 2020 through August 31, 2020.

Click here for Exhibit A