Federal Programs for Addressing Low-Income Housing Needs

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Abstract

Housing costs constitute the single biggest expenditure in most family budgets, and many low-income families have difficulty finding housing they can reasonably afford. Although most family-strengthening and community change initiatives recognize the urgency of the housing problems facing low-income families, they often have difficulty figuring out how to constructively address them. Federal housing programs are numerous and confusing, implementation is balkanized, funding falls woefully short of needs, and policy debates often focus on narrow technical issues. This primer demystifies federal rental assistance programs and provides the most current information available on how many (and who) they serve and how their scale is changing. It also summarizes key challenges facing housing policy today and in the coming years—challenges that may create opportunities for federal, state, and local engagement and innovation.

Understanding the Basics

The federal government began building subsidized housing during the New Deal, and in the decades since, a complex tangle of federal programs has evolved to tackle the housing needs of low-income renters. Today, federal housing programs fall into three basic categories: (1) programs that provide deep, gapfilling rent subsidies, earmarked either for particular buildings or for individual households; (2) tax credits that produce new housing with moderate (belowmarket) rent levels; and (3) block grants that provide flexible support for local affordable housing initiatives. Understanding all three program types—and the people and properties they serve—is essential for identifying community-level opportunities to strengthen, expand, or supplement affordable housing options.

The most generous and reliable support for lowincome households comes from federal housing programs that provide deep, gap-filling rent subsidies. These programs all pay the difference between a rent contribution that is considered affordable—currently set at 30 percent of monthly income—and the actual rent for a house or apartment. Families receive this kind of “gap-filling” subsidy if they live in public housing (owned and managed by a local public housing agency) or in privately owned developments that have long-term subsidy contracts with the federal Department of Housing and Urban Development (HUD). In both cases, the subsidy is “project based”— attached to the house or apartment; if the family moves, it loses its subsidy.

Production of these deeply subsidized rental projects occurred in two overlapping phases. During the first phase, extending from the 1930s through the early 1970s, the federal government contracted with local public housing agencies (PHAs) to build and manage properties, providing funds to cover both capital and operating costs. In effect, these contracts required the PHAs to maintain the affordability of public housing units in perpetuity. During the second phase, extending from the 1960s to the early 1980s, the federal government executed contracts directly with for-profit and nonprofit housing developers, rather than with PHAs. The terms of contracts generally guaranteed subsidies and imposed affordability restrictions for up to 30-year terms.

Gap-filling subsidies are also available in the form of federal housing vouchers, which allow families to rent regular homes and apartments on the private market. Again, a family contributes 30 percent of its monthly income and the federal government pays the rest, up to a locally determined maximum. Vouchers are unique among federal housing assistance programs in that they are “tenant based” rather than project based, allowing the recipient rather than the developer to decide where the low-income household will live. Voucher recipients can even receive their assistance in one jurisdiction and take it to another as they search for housing that best meets their needs.

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