Subsidies were meant to cap poor people’s rent payments at 30% of income. In Boise, they don’t

BOISE – Forty years ago, Congress created a program to help people who were too poor to rent safe housing find places to live. The new federal housing vouchers would pay part of the rent for an apartment or house in the private market.

Today, more than 2,500 households in Ada County depend on vouchers. But many pour far more of their modest incomes into rent than Congress originally intended.

Congress in 1969 defined affordable housing as costing no more than 25% of a low-income household’s rent, according to a study of rent burdens by the Pew Charitable Trusts. In 1981, Congress boosted that to 30%. That’s been the recognized standard since. If your household earns $20,000 per year, no more than $6,000 of that should go toward rent, so you still have money for food and other living costs. If you pay more, you’re considered rent-burdened.

But the nation’s costliest program for helping low-income people, known as housing choice vouchers, has a little-known hole that can force tenants to pay far more than 30% of their incomes toward rent. According to the executive director of the local housing authorities serving Boise and Ada County, tenants sometimes pay twice that much or more.

Multiple federal programs continue to use the 30%-of-income standard to target low-income renters. For example, a tax credit that developers can take to help make the development of low-income apartments economically feasible requires gross rents not to exceed 30% of the income of renters, and those renters must earn no more than 60% of the local median income.

Consider someone earning $41,160 a year, which the U.S. Department of Housing and Urban Development says is 60% of the Boise area’s 2024 median income of $69,115 for a single person. That person should pay no more than $1,029 a month in rent. A household of four earning $58,800 (60% of the $98,700 HUD says is the area’s median income for a household that size) should pay no more than $1,470.

The truth about what tenants pay

The 30% standard has led to a common misconception that renters who use housing vouchers pay just 30% of their income for rent and the voucher covers the rest.

The truth is that voucher holders can be required to pay up to 40% of their incomes to rent during their vouchers’ first year, depending on the rent. And after the first year, a landlord can raise the rent beyond the 40%-of-income cap.

Deanna Watson, executive director of the Boise City/Ada County Housing Authorities, told the Idaho Statesman by phone that she once came across a housing choice voucher holder who was paying 70% of the tenant’s income to rent.

“I hate to tell you how late into my career I was before I realized once the landlord has completed that first annual lease, they often go to a month-to-month lease, and they can raise the rent to where the tenant portion is going to be 48%, or 57%, or more,” Watson said.

Watson said the idea of the voucher program, established in 1983, originally was that tenants who had their rent raised too far above 30% of their income could move to another, more affordable rental. That is the idea behind the housing choice voucher, also known as Section 8 vouchers (a reference to Section 8 of the Housing Act of 1937, passed during the Great Depression).

“But that doesn’t factor in when there is no other place,” Watson said. “Plus now I have my cost of moving, security deposits and hassle.”

Federal government appropriates funding, but is it enough?

Every year, HUD establishes the fair market rents for each region across the country, drawing upon the Census Bureau’s annual American Community Survey. For the 2023 fiscal year that ended Sept. 30, HUD boosted the fair market rent in Idaho by 9% on average.

Today’s fair market rents in Boise are $993 for a studio, $1,139 for a one-bedroom, $1,388 for a two-bedroom, $1,956 for a three-bedroom and $2,298 for a four bedroom. These rents represent the cost of a “moderately priced” home in a local housing market, HUD says.

For that $20,000-per-year single person 30%, or $500 a month, in rent for a one-bedroom, the subsidy would contribute up to $639, totaling $1,139. But rentals seeking tenants today often are costlier. Zumper, an apartment listing service, pegged the average price of Boise one-bedrooms advertised on its site at $1,370 in May.

Each year, Congress appropriates money for HUD to give to all 3,100 public housing agencies in the country for housing vouchers and other aid. Congress approved $32 billion for tenant assistance for fiscal 2024, which began Oct. 1.

HUD allows the housing authorities to set payment amounts for vouchers based on rent levels between 90% and 110% of the official fair-market rents. Watson said the Boise/Ada County Housing Authorities – there are two, Boise’s and Ada County’s, but they operate as one under a city-county agreement – have set its payments in recent years at the maximum 110%.

Watson said it is unfortunate that funding for housing agencies is not determined by the needs of a community.

“A reasonable person would think that funding for rental assistance would be tied to poverty rates in the area, rental levels in the area, and homeless numbers in the area,” she said. “They don’t look at any of that.”

The poverty rate in Boise was 11% in 2022, according to the American Community Survey. Watson estimated 17,000 to 18,000 local people in poverty are renters, but the local housing authorities have only 2,500 vouchers to give out at a time. She said that is consistent with the national average: Local housing authorities only have enough funding to assist around 22% of the people eligible for vouchers.

How voucher holders end up paying 70% of their income in rent

In the first year of a lease, a voucher holder cannot pay more than 40% of the voucher holder’s income in rent. Although they usually hope to just pay 30%, sometimes rents are too high for that.

“Some of the time, (a renter) might find a place that works for them, but the rent is a little bit higher than the combined 30% of their income and our subsidy,” Watson said. “They may go from wanting to pay 30% of their income to paying 37% because it is closer to their workplace or other factors. The 40% cap allows them to make that decision.”

After a one-year lease is up, however, a landlord can raise the rent beyond the combined 40% of income and a voucher’s subsidy.

One renter with a voucher, Watson said, lived in a low-income apartment building that was financed partly with low-income housing tax credits, another federal program. After the first year there, the rent increased to a level that required the tenant to pay 70% of income to rent, she said.

After the first year, the housing authorities can’t increase the amount they pay for a tenant’s rent above the original amount. Any rent increases would be left on the tenant, Watson said.

Watson said in a “reasonable housing market,” a tenant could leave after the first year if a rent increase was too much. But in Boise, there are too few landlords who accept vouchers and are willing to work with low-income tenants and the housing authorities to ensure the rent fits the available subsidy and the 30% to 40% income requirements, Watson said.

“In this market, a lot of people are saying, ‘I can’t afford to stay and I can’t afford to move,’ ” Watson said.

How to apply for a housing voucher

ProPublica, a national nonprofit news outlet, has published a step-by-step guide to applying for a voucher. Search for “What You Need to Know About How Section 8 Really Works” at ProPublica.org.