(C) Daily Kos This story was originally published by Daily Kos and is unaltered. . . . . . . . . . . Section 8 must be reformed. [1] ['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.'] Date: 2024-07-02 We all know housing prices have risen astronomically during/since Covid and wages have not kept pace in a lot of metro areas. The approximate waitlist time for a Section 8 applicant is 10 years. Affordable housing mandates and related development is not happening fast enough; a large part of the problem is developers being able to buy their way out of the requirement for ‘affordable’ units in new multifamily construction. Here in MA there’s a mandate that communities on an MBTA (transit) line must build a certain amount of affordable housing on or near the transit line, and some towns are fighting back by claiming it will bring more “riffraff” into the area, or playing games with zoning to “prevent” compliance which they can do as the transit authority only owns the immediate track/station properties. The definition of ‘affordable’ can also be a bit of a mystery. Affordable based on neighborhood median income? City? State? What entity is overseeing compliance? I’m sure that some of these ‘affordable’ units that do not have income-restriction guiderails are snapped up for rental purposes. The Section 8 guidelines were instituted in the 1970’s and have been largely unchanged since then. While the program works precisely as designed for individuals who can’t work or are only employed part-time, it has not kept pace with the meteoric rise in rental housing costs and the shrinking middle class/growing working poor. The Federal poverty index should also be revisited (indexed to COL in a given area?). Too many people are working full-time hours yet still unable to afford housing in certain areas without the subsidy, but the rules are outdated. HUD’s own guidelines state that the program gives preference to families or individuals that are paying more than 50% of their income in rent, and yet situations can arise once someone is in the program that results in them still paying 50% or more. The current guidelines use a Gross Income figure that is not used by any other agency. HUD uses the Social Security Gross Wages figure of Form W-2. By contrast IRS, SNAP, utility assistance, loan servicers et al use Adjusted Gross Income which can be far lower than the Social Security Gross Wages figure. If they don’t use a W-2, paystubs showing taxable gross income are sufficient (although taxes—being mandatory--should not enter into income calculations at all; only an employee’s net take-home pay should be used). The Social Security Wages figure includes not only any pre-tax deductions (health insurance, 401K, etc) but also the employer’s Social Security contribution of 6.2%. This 6.2% is never seen by the employee at all—and generally people are not even aware of it--yet it can quickly artificially inflate the Gross Income figure past the Section 8 cutoff if someone is working enough hours. In this way Section 8 essentially encourages people to stay below a certain hours-worked threshold and even turn down a promotion to full-time work which would let them climb out of a financial hole (or even step down from fulltime). It’s a vicious cycle; working fulltime means that your income is inflated, but fulltime hours are needed in order to pay for rent, utilities and everything else. The process for annual recertification for our local HUD entity takes four paystubs from a tenant and attempts to project income for the next year...which, especially for a job in retail or an adjacent hourly-wage industry, isn’t always accurate. Any overtime and/or holidays worked over those four pay periods is then assumed to be constant (so if any of those paystubs include a holiday, projected monthly wages are inflated). The agency chooses the recertification period, not the tenant, and it can be a chore to get it changed. The annual recertification is supposed to take place once a year on the date of the lease but this doesn’t always happen (last year we got recertification-paperwork requests three times, none of which coincided with the lease start date). They do not use a W-2 for recertification, even though that is the defining statement of income. When we first discovered that my income was being overestimated, we asked about using a W-2 and were told “oh we can’t use that” and yet this year were hassled for our W-2’s before anyone thinks about filing taxes and before they were actually issued! Mandatory payroll deductions such as health insurance and union dues should not be counted as income. Union employers generally require dues to be paid as a condition of employment; health insurance coverage in some states is mandatory, and penalties in some states for not carrying an employer’s health plan (if eligible) can be substantial. I didn’t know for a full year after being promoted to full-time that I was eligible for my employer’s plan because a manager never informed either me or the union when they were supposed to; the penalty for that was equal to over six months of premiums and I believe I also had to reimburse the state for the months I was receiving subsidized insurance while being eligible for employer coverage (I’m on the company plan now; it took five minutes once I figured out how to get the paperwork). While voluntary, 401K contributions should not be counted toward income unless and until a withdrawal is made. Depending on the employer plan, you may not be able to withdraw at all before a certain age. Even if it is technically possible to withdraw early, the penalties and taxes are a deterrent. In effect, HUD seems to be discouraging those in the Section 8 system who may have the ability to hold a 401K and save for retirement to not do so; they seem to want you to think that it’s counted as income anyway, so why should one even bother tying it up? The current system is overburdened, yet by design doesn’t let people easily save up enough money to be able to get out of the system (which would reduce HUD’s burdens—allowing them to more easily assist those who genuinely need the limited funds--and I’m sure there are people in the system who truly want to get out of it). Perhaps some form of ‘rent-to-own’ to gradually bring one out of the Section 8 system; as a tenant’s income rises, they can leverage that and a good payment history to get into affordable housing outside of the program (or if they have a good history with a private landlord, the ability to stay in their current housing). The program needs to be reformed, and I think I’ve covered some of the areas that should be looked at although I don’t know how reforms should be handled. We need to lift people out of poverty, not use the right of shelter as a tool to keep them down. [END] --- [1] Url: https://www.dailykos.com/stories/2024/7/2/2228935/-Section-8-must-be-reformed?pm_campaign=front_page&pm_source=more_community&pm_medium=web Published and (C) by Daily Kos Content appears here under this condition or license: Site content may be used for any purpose without permission unless otherwise specified. via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/dailykos/