FY 1998 - 2003 Strategic Plan
Strategic Objective #4

Reduce the isolation of low-income groups within a community or geographical area

Introduction

Another facet of the agency's commitment to broader housing affordability is working to create housing opportunities for low-income citizens. This spatial deconcentration is accomplished through the use of tenant-based rental certificates and vouchers and the revitalization of deteriorated neighborhoods.

To ensure housing opportunities are available, the Department conducts periodic compliance and complaint investigations of recipients receiving Federal financial assistance. When violations of the Fair Housing Law are revealed, the Department enters into voluntary compliance agreements with such recipients until a remedy has been achieved.

The Department desires to recruit large numbers of private landlords to participate in the Section 8 housing program and convince citizens where Section 8 residences reside to see the Section 8 program as a positive addition to their neighborhood rather than a negative.

Strategies

Public and Indian Housing

Create income diversity in traditional public housing through rent incentives to retain/attract working families and encourage families to move to work or better work.

Mechanisms such as ceiling rents will permit PHAs to retain and attract working families by setting ceiling rents that reflect market value. Through the use of earned income disregards, PHAs will create work incentives for newly-employed families by allowing them to retain more of their incomes as they meet the "costs" of transitioning from welfare to work. The use of site-based waiting lists, where they can be implemented in full compliance with all fair housing laws, will increase public housing's attractiveness to working families by permitting them to choose where they live.

Replace the worst public housing with less dense, economically integrated communities. This is the basic strategy behind the HOPE VI program, which has been a catalyst for the transformation of some of the country's worst public housing developments. In addition, mixed finance development mechanisms also create mixed income communities. In keeping with the transformation of public housing and a reinvented HUD, financing partnerships are formed with residents, housing professionals, local governments, for-profit and not-for-profit organizations to form mixed-income communities.

Provide additional replacement housing resources through portable Section 8 vouchers. Section 8 is the only program that enables work-ready families to move to where the jobs are located in the growth sectors of metropolitan economies. Movement of families throughout the metropolitan area will support families' efforts to transition from welfare to work.

Improve the Section 8 tenant-based assistance program to increase private owner participation and portability throughout the metropolitan area. One such strategy is the proposed merger of the certificate and voucher programs. The merged program will be easier for HUD, PHAs, and private owners to administer. Other proposed legislative changes would make permanent program reforms that have been included in recent appropriations acts such as ending "endless lease" and "take one, take all".

Other strategies are covered by other strategic objectives, such as: encouraging the middle class to stay in central cities through homeownership incentives and increasing public safety.

Community Planning and Development

Since the Community Development Block Grant program covers not only the poor, but moderate income families as well (80% of median income of the area), it would have less tendency to concentrate the poor in large low-income housing projects than would programs which are restricted to serving the very poor. A majority of CDBG housing projects involve homeowner rehabilitation, rather than funding large scale housing projects.

The HOME Program is providing opportunities for both renters and owners in a variety of locations through tenant based rental assistance, assistance to new homebuyers, and location of projects. Seventy eight percent of HOME units are located in census tracts with poverty rates of less than 40%. New homebuyers receiving assistance are located in tracts with poverty rates under 20%, as are new construction rental projects.

The Department's Homeownership Zones initiative also addresses this objective by attempting to attract homeowners with a variety of incomes, as well as by providing a comprehensive approach to neighborhood revitalization.

All CPD programs, CDBG, HOME, Youthbuild, EZs and ECs, and homeless programs include an element of empowerment which helps the poor achieve a degree of upward mobility. Many Family Self-Sufficiency programs in public housing and Section 8 are funded under the CDBG program. Both temporary and permanent jobs for low and moderate income persons are created under CPD programs. To the extent that the incomes of families receiving services under these programs are improved, they would have increased opportunity for residential freedom of choice.

Finally, many cities such as Baltimore, Detroit, Cleveland and Boston have gone through an important renaissance and urban revitalization, assisted through CPD programs. This should have the secondary impact of making the city a more attractive place for persons of all incomes and reducing income concentration.

Housing

Although Housing has no stated program to reduce the concentration of subsidized housing/preservation of assisted housing in suburbs (like PIH demolitions), expiring subsidy contracts and prepayments may produce this result. However, these would be due to financial or market decisions by owners and not due to specific Housing initiatives; nonetheless, counseling for persons relocated would help to deter reconcentration.

Single Family counseling grants go to providers of comprehensive counseling services who are also capable of doing fair housing counseling. More importantly, cooperative agreements under the counseling program permit non­profits to sponsor homebuying and homeownership classes conducted by Single Family staff. These classes educate first time buyers in the opportunities and responsibilities of homeownership and allow underserved populations a greater opportunity to purchase where they wish.

Mixed Income Communities

In keeping with the transformation of public housing and a reinvented HUD, partnerships are formed with residents, housing professionals, local governments, for-profit and not-for-profit organizations to form mixed-income communities.

Housing's new Multifamily mixed income program underwriting procedures are only applicable where FHA credit enhancement is combined with PIH HOPE VI funds to finance a mixed income community on an old public housing site (see section on HOPE VI).

Program Evaluation

Among the Department's recent efforts to develop policy and standards with regard to this objective are a study on "The Location and Racial Composition of Public Housing in the United States" and a report to Congress on "Promoting Choice in HUD's Rental Assistance Programs." Other recent or on-going work on this objective include the Moving to Opportunity Demonstration, and a major study of housing discrimination. These are important baselines for assessing future performance to achieve this objective.

PD&R will continue to conduct studies related to performance measurement. Currently underway is the Moving to Opportunity Demonstration, which will show the effects of deconcentration. Also underway is an assessment of the effects of public housing desegregation efforts. PD&R expects to begin a major study of housing discrimination, which will show progress in eliminating barriers to deconcentration.

Linkage to HUD 2020: Management Reform Plan

Handled by both Housing and PIH, financial documentation for the Section 8 rental assistance voucher program has been neither centralized nor easy to obtain. A key element to improving Section 8 processing is the creation of a Section 8 Financial Processing Center for both Housing and PIH. Currently, Housing and PIH have two very distinct methods for processing payments: Housing uses a monthly voucher system based on actual subsidy needs, while PIH uses an annual budget projection, with adjustments made upon receipt of year-end statements. Unifying these processes will benefit both business lines. Functions will include budgeting, payment scheduling, contract reservations and revisions, financial statement revisions, rent calculations and income verification.

PIH will also consolidate special (non-funded) applications and processes for its unique programs in a single Special Applications Center. Those applications are: demolition/disposition, designated housing, and 5(h) homeownership. Consolidating these discrete functions will maximize staff effectiveness and increase program accountability. Consolidation will also eliminate current duplication of efforts in the field. The center will standardize application processing and use staff specifically trained for evaluating and processing these applications.

For other reforms which will impact on this objective, see the Linkage Section under Objective #3.

External Factors

The revitalization of neighborhoods is discussed in detail under Strategic Objective #1. Community revitalization, however, will not necessarily reduce isolation of income groups, unless there is an explicit and successful effort to attract residents with a variety of incomes. In part because of factors, such as high taxes, high rates of crime, poor schools, and density, many people do not wish to live in central cities. These factors, over which HUD has little control, thus greatly affect its ability to promote economic integration. This is a sensitive issue: not only do inner city minorities fear that they are going to be displaced by white middle class by a process of "gentrification" but many suburban communities oppose those with rental assistance moving into their neighborhoods.

Through tenant-based rental certificates and vouchers, persons of low-income are provided with the opportunity to move to better neighborhoods. Many prefer to remain at, in or near Central Cities. The final choice remains with the individual. Rents and factors related to housing production in more affluent neighborhoods tend to be higher than elsewhere. Assisting households to live in less impacted neighborhoods, whether through a supply or demand side subsidy, costs more than simply providing housing assistance. The desire to subsidize more units, rather than to provide units in a variety of neighborhoods, is an external factors related to this objective.

The political landscape also is a key external factor. Section 8 tends to be administered by jurisdiction-based housing agencies. This can impose administrative barriers to people who wish to move from high poverty areas in one jurisdiction to low poverty areas elsewhere.

Please see also the section on External Factors under Objective #1.

How annual performance goals support the achievement of this objective

Defining annual performance goals for this objective is particularly difficult. We can utilize census data to measure the percent of Section 8 families (with children) who are living in low poverty census tracts. However, as discussed under External Factors, the choice remains with the individual. We can measure amount of counseling and number of revitalization projects completed, but ultimately, outputs will define our level of commitment, but not achievement. Measures of our success would include the number of low-income and minority families participating in the Departmental Regional Opportunity Counseling Program located outside areas of high poverty and minority concentration. As HUD's strategic planning process evolves, we will continue to address this issue.

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