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June 2015 Policy Study, Number 15-6

   

The Nanny State Is Expanding And Private-Property Rights Are Decreasing

   

Section 8 Overview

   

 

According to U.S. Department of Housing and Urban Development (HUD), having “affordable” housing is a desirable social good which must be managed and provided by the Federal government.  So the nanny state steps in to alter the market by offering building incentives and requirements for low-income properties, in addition to direct subsidizes to tenants through the Housing Choice Vouchers (HCV) program, better known as Section 8.

 

The Housing Choice Vouchers program is controlled by local (generally city or county based) public housing agencies (PHAs).  The money for vouchers comes from taxpayers – after being routed through HUD.[9]  Once an individual applies for a Section 8 voucher and receives it, he or she then finds a residence and owner who will accept Section 8.  Typically there are more applicants for Section 8 than money available to pay their rent.  Waiting lists in many areas are long.  And typically there are more holders of Section 8 vouchers than there are owners willing to accept them.  Both the individual application process and the owner’s requirements for providing a Section 8 property are significant and onerous.

 

The PHA pays the rent directly to the landlord.  The amount paid is determined by the applicant’s income and family size and typical local housing costs.  Any rent charged by the landlord above the allowed voucher amount is then paid by the tenant directly.  The general requirement for acceptance into the Section 8 program is that annual income must not exceed 50 percent of the median income for the specific area.  Further, 75 percent of the vouchers by law must be given to people with incomes less than 30 percent of the median.[10]  The voucher holder must still pay 30 percent of their annual income in rent, so they have some personal commitment to supporting themselves.

 

Based upon the median income of Iowans and those living in Dubuque (city and county), the amount of rent each category of applicant should be able to pay is as follows:

 

Median Household Income Comparisons With Government-Determined "Fair" Rent

Dubuque City

Dubuque County

State of Iowa

Median Household Income, 2009 - 2013

$44,599

$51,475

$51,843

Fifty Percent of Median Income

$22,300

$25,738

$25,922

Amount of "Fair" Rent to be Paid per month

$557

$643

$648

Thirty Percent of Median Income

$13,380

$15,443

$15,553

Amount of "Fair" Rent to be Paid per Month

$334

$386

$389

Source:  Dubuque (city) Iowa, Quickfacts.census.gov/qfd/states/19/1922395.html

 

New voucher recipients who currently live in the area where their voucher was issued may rent a property anywhere, either in that town or anywhere in the U.S. they choose to move.  People receiving a voucher from an area where they do not currently live must move to and live in that area for the first 12 months but may then move anywhere in the U.S., still able to use the voucher.

 

Wait lists for Section 8 vouchers are common and often long.  Therefore local PHAs are officially allowed by HUD to establish “local preferences” for priority applicants.  These preferences can include those who are currently homeless or living in substandard housing, those paying more than 50 percent of their income for their current housing, and those involuntarily displaced.  These PHAs are also theoretically allowed to use other local preferences to “reflect the housing needs and priorities” of their community.[11]

 

   

 

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