What’s a Section 8 housing subsidy, and what’s the need for them like in Denver?

DHA and local agencies across the country administer the federal government’s biggest low-income housing assistance program

The Denver Housing Authority's headquarters in the La Alma/Lincoln Park neighborhood. Sept. 16, 2020.

The Denver Housing Authority's headquarters in the La Alma/Lincoln Park neighborhood. Sept. 16, 2020.

Kevin J. Beaty/Denverite
Donna Bryson. (Kevin J. Beaty/Denverite)

Here’s are some numbers that illustrate Denver’s housing crisis: Nearly 23,000 people entered a lottery for federal rent subsidies conducted last week by the Denver Housing Authority. Last year, after a similar number of entries, fewer than 1,000 people were given new subsidies.

Recipients of the subsidies under what is known as the Section 8 or housing choice voucher program must meet income limits and other requirements and pay 30 percent of their income toward rent. (It’s named after a section of federal housing legislation that has its roots in Depression-era efforts to house low-income  Americans.) The federal government pays the difference directly to landlords. Local agencies such as DHA administer the U.S. Department of Housing and Urban Development program across the country.

This year’s Denver lottery entry period started September 17 and closed the next day. Loretta Owens, the Denver Housing Authority’s housing choice director, said her online lottery system had braced for “high impact.”

DHA’s Section 8 lottery has been online for more than a decade, operating around-the-clock so that people could enter any hour of the day over the two days it is open.

In the end, this year’s entries totaled 22,908, under the 23,388 last year.

DHA could not say how many winners will be drawn from this year’s lottery. Last year, approximately 1,800 names were drawn from the 23,388 entrants. Of those 1,800 lottery winners, 883 new vouchers were issued. Some of the 1,800 whose numbers were drawn in the lottery were not eligible because they earned too much ​(this year, for example, a family of four cannot make more than $40,000 a year) or had certain crimes on their records. Federal rules prohibit the distribution of vouchers to people who have manufactured or produced methamphetamine on federally assisted housing premises or who are sex offenders.

Owens said some people were unable to find housing even with vouchers, or declined a voucher after finding other housing.

Mary Anna Thompson entered the lottery three times before her number was drawn. That was nine years ago, when Thompson was living in a transitional housing program. She’d moved from Florida to Colorado, where she had long wanted to live, and found that her salary as a nurse did not cover the cost of housing.

Thompson was unable to find a landlord who would take her voucher. It was only last year that a law went into effect in Denver banning landlords from refusing to rent to people who relied on Section 8. Gov. Jared Polis signed a similar statewide ban into law this July.

Thompson ended up surrendering her Section 8 voucher and taking a City Park West apartment where she has lived since, utilizing a different affordable housing program. She had been on a wait list for the apartment for three years.

Thompson is an activist with the advocacy group Denver Homeless Out Loud. She said she advises people experiencing homelessness to get on as many housing wait lists as they can as well as enter voucher lotteries. Navigating wait lists and lotteries can be difficult for people without transportation or an address, she said. Thompson found shelter in hotels and transitional programs until she finally got an apartment.

“I still consider myself so fortunate I was never on the street,” Thompson said, adding she worried about “all these people nowadays in a tent and being swept all the time.”

John Martin has tenants who pay the full rent on their own as well as those who get subsidies in the seven buildings he manages, one of which he owns, in the Denver area.

Accepting Section 8 vouchers means Martin must fill out forms to send to housing authorities, undergo periodic government inspection of the apartments to be rented, and other steps that can delay payment. But once he overcomes those hurdles, he can count on steady payments from the government.

“The landlord’s going to get the rent,” said Martin, who has been renting apartments for 17 years.

Some landlords may want to avoid the red tape. But Martin said that over the years, he’s gotten to know case workers and inspectors and has seen that they want to make the relationship work.

“They want to get it done,” Martin said.

While Martin said he has seen that mental illness and substance abuse can play a role in an individual’s struggles to stay housed, it’s clear to him that housing insecurity “is also a wage growth problem. The rent goes up and up, but the wages don’t.”

According to city data, median income in Denver grew less than 10 percent a year between 2005 and 2018, while rents started growing faster in 2010 and grew about 13 percent a year between 2015 and 2018.

The median rent for a two-bedroom apartment in Denver in August was $1,342, down slightly from July, continuing a trend that the online real estate company Apartment List has reported since the coronavirus led to an economic slowdown. That would eat up 40 percent of the income of a family of four earning the $40,000 limit to qualify for a Section 8 voucher. The federal government says a family spending more than 30 percent of its income on housing is cost-burdened, meaning it might struggle to afford food, clothing, medical care and other necessities after paying the rent.

The city, citing the most recent figures available, estimates more than 110,000 Denver households were housing cost-burdened in 2016.

Section 8 is the federal government’s biggest low-income housing assistance program. But an estimated three out of four people who are eligible for the housing subsidies are not served because of budget constraints.  HUD acknowledges that in many parts of the country, agencies administering the program have long wait lists that can be hard to keep updated as applicants move or change phone numbers or their family circumstances change. The Denver Housing Authority moved to a lottery instead of a wait list because of the challenge of keeping a list up to date.

“I don’t know that there’s really any good way to hand out this scarce resource,” said Oriana Sanchez, a Denver-based developer of affordable housing.

Sanchez used to be a property manager, and said that from that vantage point she had seen Section 8 vouchers help people pull themselves out of poverty.

“I used to call it in my property management days the golden ticket,” Sanchez said, adding that a voucher “could help someone be able to go to school … to not have to choose between paying the rent or buying groceries.”

“It affords you the peace of mind and the time to do whatever is is you need to do to better your life,” Sanchez said.

For developers, another federal program, low-income housing tax credits, is key. Developers who are awarded tax credits sell them to investors for cash they can use to build, allowing them to borrow less and, because those costs are lighter, charge less in rent. As a project manager for BlueLine Development, Sanchez also has been able to use what are known as project based Section 8 vouchers to pay for utilities or repairs at apartment complexes.

“From the development side, the tax credit program would be the biggest, most productive program that they’ve had in place for us to build,” Sanchez said. “From the tenants’ perspective, Section 8 has helped the most people.”

Both programs have been part of the political debate as elections near. Sanchez is hopeful that could lead to more funding.

“Anything’s possible. I will keep advocating for that,” she said.

“There are certainly those in Congress on both sides of the aisle that really see the benefits of the low-income housing tax credit program and the subsidizing of the voucher program,” Sanchez added.

Peter LiFari, who heads the housing authority in neighboring Adams County, said the pandemic has underlined the need for a better funded Section 8 program. He said if more people had been receiving subsidies, which can be adjusted as incomes decline, there would have been less need to have ramped up emergency rental assistance during the COVID-19 outbreak.

“The voucher program is a COVID-19 fighter,” LiFari said. “The program has just tremendous power and value if we would invest in it.

“We’re keeping people housed, we’re flexing with their income based on the economy” with Section 8, LiFari added. “And landlords are directly benefiting.”

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