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How Chicago Can Get People into Better Neighborhoods with Housing Vouchers

Allowing more expensive vouchers in central neighborhoods could benefit recipients without costing more money overall.

David Westbrook, photographed in 2017 at his mother’s house on the South Side, where he and his children had been living during a years-long wait on the CHA’s voucher list.   Photo: Terrence Antonio James/Chicago Tribune

In the middle of May, the Metropolitan Planning Council (MPC) released a “roadmap for the Chicago region,” a follow-up to last year’s study examining the costs of the city’s long-standing patterns of segregation. The report contains plenty of concrete policy suggestions, like a progressive real estate transfer tax and a capped fare system for low-income transit riders. And one proposal would use the city’s housing-voucher system to combat segregation head-on: a recommendation that the Chicago Housing Authority raise its Exception Payment Standard (EPS) to 200 percent in certain community areas.

The EPS allows voucher-holders, who traditionally cluster on the South and West Sides, move into “mobility areas,” where there’s less poverty and violent crime. At the moment, the highest allowable EPS is 150 percent of Fair Market Rent (FMR)—in 2018, that came out to $1770 for a two-bedroom apartment.

The MPC’s recommendation to raise that ceiling is based on a new report from the Policy Research Collaborative (PRC) at Roosevelt University. The report shows that, within a set of eight centrally located community areas, relatively few apartments will be available to people with a voucher under the current EPS. For example, at 150% of FMR, only 28 percent of two-bedroom apartments are available in Lake View. Prospects dim the closer you get to the center of the city: on the Near North Side, that number drops to 3 percent, and in the Loop itself it’s zero.

In a well-known study from 2015, researchers showed that the children of voucher-holders living in wealthier neighborhoods fared better, on average, than their peers in college attendance and future earnings. So it matters that most vouchers aren’t sufficient for finding housing in places like the Loop and Lake View, some of the city’s richest community areas. “Neighborhoods like these have better schools, more access to transportation. All of those taken together make those neighborhoods quite desirable,” said Barlow, director of the PRC and lead contributor to the report. “And with that desirability comes, often, a lack of affordability.”

The report’s solution: expanding the allowable EPS to 175 and 200 percent in four neighborhoods each. In Lake View, a shift from 150 percent to 175—$1770 to $2065—more than doubles the number of two-bedroom apartments available to voucher-holders, from 28 to 57 percent.

The current EPS of 150 percent was implemented after backlash against the “supervoucher” program, which let the CHA subsidize vouchers up to 300 percent of fair market rent. But where a HUD audit found that the CHA “lacked documentation that its policy… was reasonable and cost effective,” the PRC recommendation is based on relatively simple logic—increasing payment standards is, in some places, the only way to ensure that voucher-holders can choose to live there. Barlow said that PRC presented an early version of the findings to CHA, and they were “cooperative, engaged and supportive.” (He also consulted with the agency on two recent shifts in policy: The increase in allowable payment standards to people with disabilities, and the decision to calculate EPS eligibility by community area instead of census tract.)

Another Chicago-related paper with interesting implications for housing voucher research also came out this past month, written by Peter Ganong, an assistant professor at the University of Chicago’s Harris School, and Robert Collinson, a PhD student at NYU. Their research studies the effects of two different natural experiments relating to vouchers as they relate to neighborhood quality and rent prices. (It’s a reworked version of an earlier paper from 2014, with some slightly different conclusions.)

In the first of the experiments, they take a look at what happens when the subsidy standard for vouchers rises across an entire metropolitan area. The FMR used to calculate voucher subsidy amounts tend to change quite drastically when new Census data becomes available every ten years; Ganong and Collinson used the 2005 “rebenchmarking” to see how landlords and voucher-holders would respond to a large-scale, uniform rent increase. The answer: a $1 increase in the rent ceiling causes almost no discernible increase in neighborhood quality—for instance, poverty rates of the places where voucher-holders live are virtually unchanged—but it does cause voucher rents to increase by nearly half a dollar. Or, as the authors put it, “uniform increases in the rent ceiling appear to benefit landlords and not tenants.”

If a blanket increase doesn’t appear to help low-income renters, the second natural experiment they examine looks at a more promising tilted-ceiling model. In that case, Ganong and Collinson studied the effect of a policy that HUD recently implemented in 24 metro areas across the country (not including Chicago). Known as the Small Area Fair Market Rent Rule, it ties voucher subsidies to the fair market rent for individual ZIP codes. The measure tilts the rent ceiling for an area, lowering it in low-income neighborhoods and raising it in wealthier ones. For this paper, Ganong and Collinson took a look at how the policy has played out in Dallas, which implemented the rule a few years earlier than the rest of the country after a 2011 court order. The results: under a tilted rent ceiling, voucher-holders tend to move to wealthier, less violent neighborhoods where there’s more employment. Interestingly, the policy also appears to have been budget-neutral—that is, it didn’t cost more for the Dallas Housing Authority to help people move into those places.

CHA’s EPS already resemble this tilted ceiling model, and the PRC’s proposal would tilt it even further. That might help voucher-holders move out of the South and West Side neighborhoods where they tend to cluster; about 80 percent of voucher-holders live in non-mobility areas.

But, as Barlow is quick to point out, simply trying to shift voucher-holders into “better” neighborhoods misses the point of housing policy that’s supposed to let them choose where to live. Part of the reason segregation takes place has to do with lack of available housing in other places, but there are other, less easily quantifiable reasons why voucher-holders may stay in a place like South Shore—the nearby presence of family and friends, good restaurants and a nature sanctuary, or perhaps a desire to avoid the everyday racism that often comes with living in a rich white neighborhood.

On Barlow’s view, well-crafted housing policy sees to it that people with vouchers can opt to live in the Loop, but also that those who decide to stay in South Shore have access to a grocery store and good schools. “You need to ensure that residents who have chosen to live there…that you afford them the access that they need to various different amenities,” he said. “These discussions about equity need to be a lot more than just empty rhetoric.”

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