Feature
by Tony Ucciferri
In December 2002, the San Francisco Housing Authority (SFHA) approached the San Francisco Apartment Association (SFAA) to explore the possibility of taking a more active role in renting units to families who were receiving Section 8 rental subsidies. Landlords would rent their units to such families, and the SFHA would ensure they received reasonable rent. In many cases, the SFHA was able to dramatically increase rents for units long restricted by the San Francisco Rent Ordinance, which does not govern rents for the Section 8 Program as long as they are below the applicable payment standard. At the time, the payment standard was high enough to enable families with Section 8 subsidies to compete in the private rental market. Thousands of units were leased in three short years through a coordinated effort with the SFAA. In addition, the requirement that the rent on all Section 8-assisted units be comparable to unassisted, private-market rental units ensured that owners would benefit tremendously from participating in the program.
Payment standards are based on the HUD-published Fair Market Rents (FMRs). Each October, HUD issues new FMRs, and housing authorities are authorized to set the payment standard at 90% to 110% of the FMR. This new payment standard then determines the maximum subsidy a family can receive for Section 8 assistance. In San Francisco, an owner can charge rent on a Section 8 unit that does not exceed the payment standard, plus any annual adjustment in rents permitted by the Rent Ordinance. As always, this rent must be comparable to private, unassisted units in the rental market.
With the bust of the dot-com boom came a drastic reduction in rents and an increase in San Francisco vacancy rates. Owners were soon scrambling to fill units in every corner of the city. The FMRs were equally affected by this bust and reduction in private rental market-rents. Since FMRs are determined by polling those living in private housing who recently moved, the surveys began showing reductions in rents and, as a result, reductions in the FMRs. In November 2003, for the first time in years, the FMRs went down. The following year, they were reduced even more. In fact, as a result of the cooling of San Francisco's rental market, the FMRs have been reduced 14% to 16%.
This reduction in the FMRs has translated into a corresponding reduction in the maximum subsidy for families whose rents are over the new payment standard from October 1, 2004. For example, a family who rented a $2,808 three-bedroom home in 2002 is now limited to a subsidy that cannot exceed $2,261. The additional rent burden from the reduction of the subsidy between the 2002 and 2005 levels is transferred to the family. In this example, the family paid $400 for their part of the rent in 2002, but now must pay $947. This $547 reduction in the maximum subsidy is transferred directly to the family's rent portion.
Section 8 families typically pay no more than 30% of their income in rent. However, due to this drastic reduction in the FMRs, the requirement that the SFHA re-evaluate the rent level for all assisted housing has been triggered. At the anniversary of each lease, the SFHA will now evaluate the rent and adjust it either up or down or leave it as is. For a family faced with a drastic increase, a reduction in the unit rent to one comparable to the rental price for an unassisted unit may not necessarily relieve the additional financial burden. As long as the unit rent is above the new FMR/Payment Standard, the family will have to pay additional rent above and beyond their typical 30% of income share.
Having been the beneficiaries of a strong market, whereby the SFHA's Section 8 Program stepped up and adjusted owner rents to a level they would not soon see under the limitations of the Rent Ordinance, it is now time to give back to the families who made this possible. If you are renting a unit to a family whose rent is above the new payment standard, please take a moment to contact the SFHA and seek an adjustment to a more reasonable rent that will not burden and possibly displace the family. The bigger price tag in many cases is forcing families to move to less expensive accommodations. In turn, renting out your unit will incur costs for you and may result in a lower rent given the current soft rental market.
The Section 8 Program is committed to working with the SFAA and the community to ensure a fair return on an owner's rental unit. We recognize the swings in the rental market and its alternating benefits to owner and tenant through time. A partnership in this effort means that we can rely on each other to do the right thing with the changes in the market. We are committed to doing the right thing for you when the market is strong. Join us in doing the right thing for low-income families now that the market is not.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Tony Ucciferri is acting administrator of the San Francisco Housing Authority's Section 8 Program. He can be reached at 415-751-3283. Copyright © 2005 by the San Francisco Apartment Magazine. All rights reserved.