Housing vouchers fail the Bay Area

Feb 28, 2017

 

Eva Castillo* thinks of herself as a strong person. She was raised in the Sunnydale projects in San Francisco, sharing a bedroom with three brothers. Now, she works construction — often as the only woman on the job. But when she was evicted, she says she felt truly helpless for the first time in her life.

“I ain’t never been in this situation before,” she says. “I've been working ever since I've been eight — and it feels like I’m working for nothing.”

Castillo has been in homeless limbo ever since the eviction, a year ago. She and her four teenage daughters are scattered now, crashing at five different places.

“You don't know what tomorrow's going to hold, having to figure out where you're going to sleep at and all those things — it’s stressful.”

Castillo was evicted not through any fault of her own, but because she was using Section 8 vouchers to help pay her rent, and her landlord decided to leave the program. So, after eight years in her home in the Bayview district of San Francisco, Castillo and her daughters moved out.

The way the Section 8 program works is voucher-holders pay what they can afford — about 30 percent of their income — and then the voucher pays the rest. The local housing authority, along with Castillo’s landlord, decided the fair market rate for her three-bedroom spot was $2,800. Castillo makes pretty good money, so she paid $2,500. Then the voucher picks up the difference, in this case, the remaining $300.

But the thing is, anyone who knows San Francisco real estate knows you can find someone willing to pay more than $2,800 for a three bedroom these days — even in a less-fancy neighborhood like The Bayview. Castillo’s landlord knew she could get more from her property, so she quit the program. And because so many other landlords are opting out too, Castillo's having a hard time finding anywhere to go.

“I find myself looking further and further out. I'm looking in Brentwood now,” says Castillo. "My whole life is out here [in San Francisco], my work...”

Because Castillo can’t find anyone to take her voucher in San Francisco, she’s going to have to transfer her registration to wherever she’ll move. It’s called “porting” — it’s a little bureaucratic shuffle that takes about two weeks. But that means that whenever she gets close to landing a place, she has to ask the landlord to wait. She says several houses have slipped through her fingers because the landlords have gone with a tenant that’s ready to move in right now.

In fact, just last night, a place she was hopeful about fell through.

Since I first met Castillo, six months ago, her voucher has expired. So, now she’s looking for a place she can afford without assistance. She thinks it’s doable, since it’s just for her and her youngest. But if this had happened when her daughters were all kids, she doesn’t know what she’d do.

Castillo says she feels like she did everything right and still collapsed into homelessness. And the story is the same all around her.

“Everybody that I grew up with is either on drugs, living in another county or another state,” she says. “Because California is too rich for us poor people to be too poor.”

The Promise of Section 8 reform

The Section 8 program has never been big enough to subsidize everyone that qualifies to be on it. But in the past, if you won that lottery, you were safe. The program was a good deal for landlords with property in low-rent districts. But in today’s Bay Area housing market, low-rent districts are quickly getting bid up.

Eric Johnson, the director of the Oakland Housing Authority, says Section 8 participation in gentrifying neighborhoods has “dropped to nothing.”

Those are neighborhoods like The Bayview, or in Johnson’s city — Oakland — the ones around Lake Merritt. Johnson says housing prices in the Bay Area have escalated so quickly, the vouchers haven’t kept pace. But it’s not just that they’re lagging; the way the federal government calculates fair rental prices is so flawed that in 2015, Oakland’s voucher values actually went down.

“In the most rapidly increasing rental market in the country,” says Johnson, “they say your rents have gone down 3 percent. That kind of insanity has got to stop.”

That happened because the calculations were based on national averages… from three years ago.

 

“All that plays into a program that, in my view, is really in a state of crisis,” Johnson adds.

 

Johnson is on a mission to reform Section 8. He’s the head of the Oakland administration, but it’s a national program: Johnson works under the Department of Housing and Urban Development. To zoom out: across the country just over two million households receive vouchers, at a cost of $20 billion a year. The funding fluctuates, but over the decades it’s basically hung on. Section 8 has replaced public housing as the major federal low-income housing program.

One of the main reasons people like it, is that it’s also an investment in the private sector. Johnson puts it succinctly: “People make money off it.”

With vouchers, landlords make a bigger profit renting to poor people than they would if they could only charge what those people can afford. So the government’s idea was it’s a win-win.

“You had one side of the aisle that liked it because it was providing housing to families, it was making housing affordable, so they supported it for that reason,” says Johnson. “And on one side of the aisle they supported it because property owners liked it. Because it was a guaranteed source of income and it was a good program…But, the world changes.”

The program has gotten more expensive for the government to fund. For a lot of complicated reasons, average rental prices have been driven up way beyond just the actual bare-bones cost of sheltering people. It means property owners can make bigger profits today, and if Section 8 doesn’t subsidize the same profits, property owners opt for the private market — like Eva Castillo’s landlord did.

Some people argue this is why vouchers are ultimately more expensive than government-owned public housing. Advocates of “socialized housing”— as they call it in places like the Netherlands and Singapore — say the beauty of it is there’s no dealing with the craziness of the private market. The rent from tenants and the government subsidy just has to add up to the actual cost of housing people — not all that and a profit for landlords.

But to Eric Johnson, working with the private market is actually the upside of the voucher system. That’s because the industries involved lobby for it and keep it politically viable. Nobody lobbies for public housing, and that’s why he doesn’t see flipping back to that system as an option.

“If we were to flip, I would be really cautious about that if it was dependent on the federal government writing a check to keep the units livable,” says Johnson. “Because the history in this country is that's not going to happen.

Johnson thinks the best thing to do is work with what we’ve got and improve the Section 8 program. His city, Oakland, is one of a bunch in the country that are special experimental cities, which means they get to pilot reforms that might get adopted across the country.

If the reforms work here in Oakland, Eric Johnson says, “we're going to go pound the hill and say, 'Let everyone have these opportunities.'”

 

But Will Landlords Bite?

 

The point of the reforms is to hang on to more landlords. First of all, the Oakland Housing Authority (OHA) will now make inspections risk-based by easing up on landlords with good records and targeting those that need attention. Second, OHA will begin loaning landlords the money to make improvements, in order for their property to qualify for the program.

 

East Oakland landlord Mario Andrews says he can already feel the power dynamic changing. Historically, OHA inspectors would “find things that the tenant doesn’t have a problem with, that no one has a problem with but that they have a technical problem with,” says Andrews. “But since the market increased – since Section 8 is having a problem with landlords – they’re backing off all of that and they’re much more reasonable now.”

The housing authority will also start to automatically approve rent increases when they go up, instead of requiring landlords to request them themselves. Lastly, the biggest change is that prices will be determined by local data, not by administrators in Washington.

Mario Andrews says he appreciates these hassles being eased but he wasn’t about to leave the program. It’s working for him. His East Oakland neighborhood isn’t gentrifying, so his voucher-holding tenants are still a more reliable source of income than private market renters.

Andrews says getting his non-voucher tenants to pay their rent on the first is not easy.

 

“You have to call them, text them, remind them and at a certain point you only have so much energy – so you get it when you get it.”

Over the years Andrews’ tenants without vouchers have racked up a lot of overdue debt with him — he’s evicted people that owe him as much as five months rent. He doesn’t bother with the court process if he can avoid it, so that money is usually lost.

Andrews says it’s hard to reconcile the landlord business with his belief that everybody deserves shelter.

 

“It does present its challenges because you do want to treat people above and beyond,” says Andrews. “But, trust me, I've had tenants who mistake kindness for weakness… It makes your Christianity difficult.”

Section 8 doesn't function or fail because landlords are either saints or greedy price-gougers. They just need to make enough money that they’re not losing out compared to the private market, or else they’ll take their business elsewhere. But that’s getting more and more expensive for the government to sustain. If and when Mario Andrews' neighborhood gentrifies, there will be a lot more money to lose.

*Name was changed to protect her employment status.

This story is part of KALW's series about preserving the Bay Area's affordable housing. Much of the housing debate focuses on new developments. But what can be done to help people who already live here? The series explores some possible answers.