of the Section 8 Existing
Housing Program in New York City
A CHPC Research
III: The Housing
The adequacy of any housing assistance
program is ultimately dependent on the quality of the housing it provides
to its targeted group of beneficiaries. Its adequacy can be measured not
only in terms of the physical condition and amenities of the housing but
also by the level of rents that must be paid by tenants and by the quality
of the neighborhood environment residents can expect. The program's effectiveness
at promoting broader social goals, such as the stimulation of new housing
production, the preservation of existing housing, its contribution to community
redevelopment efforts, and its furtherance of fair housing goals are also
The Section 8 Existing Housing
program has been attacked and promoted on all of these grounds. Two of the
most persistent criticisms are that it does not provide adequate housing
to residents, either because the housing isn't available or because the subsidies
are too low, and that it doesn't stimulate additions to the housing supply.
Promoters of the program often tout its potential to promote racial and economic
integration. An objective review of the program's operation in New York City
during the past twenty years, however, suggests that its shortcomings are
not as serious as its detractors fear or its successes as dramatic as its
most ardent supporters would hope.
Housing Quality and Rents
Since the private market can provide
housing of virtually any quality for which there exists effective demand,
the quality provided through the Section 8 Existing Housing program is ultimately
a function of the subsidized rent levels available through it. From the inception
of the program, skeptics have voiced concern that the rent levels permitted
would not be sufficient for tenants to secure apartments of adequate quality.
It is no surprise, then, that the rent-setting process has been one of the
most hotly contested issues of the program.
In the Section 8 certificate program,
families may rent apartments at prices up to the Fair Market Rent level.  The
FMR is determined annually by HUD through a variety of surveys, including
a direct dialing telephone survey of recent movers within each PHA's market
area.  Originally, it was set at the median
(50th percentile) of rents for apartments of various sizes. In an effort
of Housing & Urban Development
to diminish the cost of the program
to the federal government, the FMR was reduced to the 45th percentile in
1987 and to the 40th percentile in 1996. Despite the reductions in its statutory
base, the FMR for a two-bedroom apartment in New York City, now $817 per
month, has increased at a 6.3 percent annual rate since 1976. This rate of
increase exceeds that for the median apartment rent in the city as well as
the legally permissible rate of rent stabilization increases over the same
The major innovation of the Section
8 voucher program was to permit participants to lease apartments at rents
above the payment standard  providing they
were willing to pay the difference out of their own incomes. If they pay
less than the payment standard, they receive a reduction in their out-of-pocket
contribution equal to the difference. There are no limitations on the percentage
of voucher families who may pay rents in excess of the payment standard.
This provision was promoted as a means of giving participants a greater latitude
in housing and neighborhood choice, but some saw it as a deliberate erosion
of the 30 percent of income standard for tenant out-of-pocket contributions.
Source: New York City
As of 1996 rents paid by all households
in NYCHA's Section 8 program were substantially below the FMR maximums. The
amount by which the FMRs exceeded the rent actually paid ranged from a high
of $291 per month for tenants in four-bedroom apartments to $192 for those
in two-bedroom apartments. Those rent figures are for the Section 8 population
as a whole, however, and exaggerate the generosity of the FMR. Over two-thirds
of Section 8 tenants live in rent-stabilized or controlled buildings or in
housing where the rents are set by some other regulatory process. The rents
may have borne a much closer resemblance to the FMR when the apartments were
initially rented but fell below as FMR increases outpaced the increases permitted
by state or local regulatory authorities.
Some insight into the rents paid
by new Section 8 households can be derived from tabulations made by the Department
of City Planning (DCP) and from Housing Authority and HPD records. According
to DCP's tabulations, new Section 8 certificate renters paid an average of
$181.50 per room per month between October 1994 and September 1995, which
works out to an average of about $817 for a four and one-half room, two bedroom
apartment. This rent is almost precisely the FMR for a unit of that size.
The average rent of new Section 8 voucher renters was $148.72 per room, or
about $669 per month for a two bedroom apartment. The 1995 voucher rents
were skewed downward because over 90 percent of voucher renters that year
were movers--homeless families. In the previous year, the rents paid by certificate
and voucher holders were nearly identical.
It is usually assumed that in place
certificate and voucher users pay lower rents than those who move into new
apartments because the city's rent regulations keep the rents of continuously
inhabited apartments low. A sample of rents paid by in place and mover Section
8 certificate users for 1995 shows that to be no longer true, if it ever
was. For instance in the Bronx
Source: CHPC & NYC
Department of City Planning
in place certificate users paid
an average of $191 per room per month, compared to $177 per room for movers.
In Queens, the figures were $190 and $184, respectively. For voucher users,
the gap was even wider. This inversion of the conventional pattern is probably
related to changes that have occurred in the tenant pool served by the program.
The vast majority of Section 8 participants who use their certificates or
vouchers to "move" are now homeless families; they are less likely
to be accepted into desirable buildings and cannot afford, under the voucher
program, to pay more than 30 percent of their incomes for rent. The 40 percent
of income rent burden preference, meanwhile, probably skews the Section 8
pool toward low-income, working families who pay relatively high rents and
who tend to use the subsidies to lower their rent burden in place.
Since federal regulations require
the issuing PHA to inspect each apartment a Section 8 tenant wishes to rent
before a lease is signed, and to inspect them at least annually thereafter,
all apartments in the program by definition meet federal Housing Quality
Standards. Concern has sometimes been expressed that PHA's, in an effort
to raise success rates, can be lax in applying the HQS. It is difficult to
compare the relative effectiveness of housing programs if that argument is
accepted, however, since public agencies could have analogous incentives
for laxity in enforcing maintenance standards in other forms of assisted
housing as well. 
According to the 1994 HUD New York
City sample cited in Chapter I, about 22 percent of the unsuccessful participants
reported that no landlords they approached agreed to an inspection (it is
likely that many of those landlords knew that the unit did not meet HQS).
Only 1 percent reported that all the apartments they looked at failed to
pass inspection, but over 20 percent complained that no inspection had been
performed. It is possible, however, that many respondents confused the outcome
of those inspections. About one-third of the apartments inspected by in-place
users required repairs before they were approved, and most landlords were
willing to make them. In general, the results are roughly consistent with
the incidence of substandard housing in New York City.
The Section 8 FMR rent levels in
New York City are ultimately a delicate policy matter. Rent limits set too
high could reduce the incentive for certificate and voucher holders to search
thoroughly, causing the program to be more expensive than it needs to be.
If they are set too low, holders could be forced to concentrate in marginal
housing in poverty impacted neighborhoods. Moreover, there is an equity constraint:
the program should not subsidize beneficiaries to such an extent that they
are able to inhabit better housing than those whose incomes make them ineligible
for the program. At a 30 percent rent/income ratio, the current FMR for a
two bedroom apartment is equivalent to the rent affordable to an unsubsidized
family of four earning 75 to 80 percent of the area median income. Program
rents much higher would put ineligible, moderate-income households at a disadvantage
in the marketplace, undermining the incentives for economic self-sufficiency
and potentially causing resentment among the unassisted population.
Apartment Sizes and Housing
The average size of apartment rented
through the Section 8 program has gradually increased along with the size
of the typical participating family. From 1985 through 1995 the average size
of families renting apartments through NYCHA's Section 8 program increased
from 2.07 members to 2.79 members. During this time the total number of leased
apartments that contained two or more bedrooms increased from 42.5 percent
to 54.6 percent. Apartments containing two or more bedrooms accounted for
almost three-quarters of all additional units leased in the past two years. 
The growing size of families assisted
through the program and the increasing size of the apartments they inhabit  is
primarily a function of federal income targets and preference criteria. Homeless
families in the city's shelter system usually consist of a mother and one
or two children, and average about 2.9 members. Other very low-income families
with extremely high rent burdens also tend to be comprised of single women
with children. Elderly households, which typically have only one or two members,
are not a preference category.
Close to 90 percent of NYCHA Section
8 tenants live in private, unassisted housing and over 60 percent live in
buildings covered by the city's rent stabilization or rent control laws.
Federal law prohibits the use of tenant-based vouchers in public and most
other types of federally assisted housing, but neither federal nor state
law prohibits their use in housing that is assisted through state or local
programs or that is subject to local rent controls. The vast majority of
HPD's Section 8 tenants are also covered by rent stabilization, as most of
the city's housing rehabilitation programs impose that control.
Many studies of tenant-based rent
subsidies over the years have hypothesized or confirmed the existence of
a Section 8 "submarket," a particular group of landlords or developments
that accept participating tenants while most other property owners do not.  In
New York City this submarket was supposedly comprised of sophisticated owners
of state- or city-assisted housing, such as Mitchell-Lama projects, or of
large scale owners of low-income housing who could develop an expertise in
dealing with the program's regulations.
If a distinct Section 8 submarket
ever existed in New York City, recent experience suggests that it is becoming
far less restrictive. Although the total number of landlords renting to Section
8 tenants and the number of new landlords entering the program had been building
slowly but steadily through 1988, landlord participation has expanded dramatically
since. Between 1983 and 1988 the total number of landlords participating
in the program increased by 1,121. Since 1988, the number has increased by
13,719 and now exceeds 25,000.
The dramatic increase in the number
of city landlords participating in the program is reflected in an equally
dramatic change in the type of housing rented by Section 8 tenants. Between
1985 and 1995 the proportion of NYCHA's Section 8 tenants who lived in one-
to five-family houses rose from only 9 percent to 25 percent. Since 1993
nearly half of the increase in NYCHA's Section 8 rentals have been in one-
to five-family houses.
There are probably several related
reasons for this dramatic change in Section 8 participant access to housing.
The EARP/Section 8 program provides significant financial incentives to all
owners, but they may be particularly meaningful to small property owners.
Most apartments in buildings under six units are not rent regulated, so rents
in small buildings can approach the FMR.  Moreover,
most of those rent payments are guaranteed by NYCHA or HPD, thus mitigating
the collection problems that commonly plague small owners in low-income areas.
The increased outreach to landlords associated with the EARP program, as
well as the direct placement efforts of Department of Homeless Services and
non-profit Tier II shelter personnel, have also played an important part.
Escalating market rents during
the past decade may also have contributed to higher rent burdens among working,
low-income families already living in small buildings or two- and three-family
houses. Therefore, more such families may be qualifying for Section 8 under
the 50 percent of income preference and using the subsidies in place. The
change in the housing types accessible to Section 8 renters, at any rate,
does not appear to be related to a change in the types of neighborhoods movers
with certificates or vouchers find accessible.
Residence Patterns of Section
The concentration of poor and minority
households into segregated ghettos has been one of the most pernicious byproducts
of project-based federal housing programs. Social scientists have gathered
a mounting body of evidence that undue concentrations of poor families into
isolated, homogeneous communities reduces their opportunities for social
mobility and intensifies social problems.  Efforts
to disperse public and other subsidized housing have met with intense political
resistance and minimal success. Consequently, fair housing activists and
poverty researchers have long supported tenant-based housing assistance as
a means of dispersing poor and minority households into the broader population
without creating focal points for opposition.
Unfortunately, there has been little
evidence to date that the Section 8 Existing Housing program has contributed
much to the deconcentration of inner-city poverty. Most studies have found
that there is little movement of low-income, minority Section 8 renters from
the neighborhoods in which they previously lived.  Racial
discrimination, inadequate fair market rents, and a well-defined Section
8 submarket, as well as renters' attachments to their existing neighborhoods,
have been cited as reasons.
Historically, the residence pattern
of Section 8 renters in New York City has conformed to the experience elsewhere.
Through 1985, black Section 8 tenants in the city were actually more concentrated
into a handful of neighborhoods than were black low-income families generally.
Nearly 65 percent of black Section 8 tenants were located in just ten of
the city's 59 community board districts. Hispanic Section 8 tenants were
even more concentrated in ten community boards, although those neighborhoods
were somewhat less poverty impacted.
Despite the dramatic change in
the number and type of buildings in which Section 8 renters can be found,
there has been virtually no dispersion of tenants into new neighborhoods
associated with it. Although attachment to neighborhoods and ethnicity appears
to play a part in militating against dispersion, the evidence strongly suggests
that FMR levels do not facilitate the migration of poor Section 8 households
out of poor neighborhoods.
In the Bronx, for example, 2,359
families used Section 8 certificates or vouchers to move to new apartments
between October of 1993 and September of 1995.  About
75 percent of these movers were homeless families relocated from Tier II
shelters through the EARP/Section 8 program. About 32 percent of the movers
located into Community Boards 5 through 7, compared to 56 percent of all
Section 8 movers in the Bronx from
Source: CHPC & Department
of City Planning
1976 through 1985. However, the
proportion locating in Community Boards 1 through 4 rose from 18 percent
between 1976 and 1985 to 54 percent between 1994 and 1995. Those communities
are among the poorest in the city, and the increase is probably attributable
both to the low rents and the substantial housing rehabilitation activity
sponsored by the city in recent years.
Only 14 percent of the movers settled
in Community Boards 8 through 12, which are predominantly middle-income,
low-density areas of the Bronx. Through 1985 nearly 45 percent of Bronx Section
8 movers had found apartments within those community boards. The proportion
fell even within mostly black and Hispanic middle-income sections, such as
Community Boards 9 and 12, indicating that rent levels, rather than racial
or ethnic bias, were the principal barrier.
A similar pattern is evident in
Queens, although the residence pattern of Section 8 movers is somewhat blurred
by the borough's rapidly transforming ethnic mix. In Community Board 11,
however, a primarily white, Asian and affluent section of the borough, only
two Section 8 movers rented apartments between October 1993 and September
1995. During the same period only nine Section 8 movers found apartments
in Community Board 13, which encompasses a number of predominantly black,
middle-income neighborhoods. These patterns again indicate that the FMR level
is not sufficient for allowing certificate and voucher holders to obtain
Source: CHPC & Department
of City Planning
those neighborhoods (which is not
to suggest that racial or class bias would not be a barrier if FMR levels
To the degree that Section 8 is
ineffective in deconcentrating inner-city poverty, its usefulness as a housing
preservation tool may be enhanced. The inability of tenants to pay the rents
required to maintain apartments in good repair is the fundamental cause of
low-income housing disinvestment and abandonment. If tenant-based rent subsidies
allow a substantial share of residents in low-income neighborhoods to pay
economic rents, the financial condition of the private low-income housing
stock may be enhanced.
Unfortunately, up to date information
on the location of Section 8 tenants in New York City is unavailable on a
community board or census tract basis. The Housing Authority, however, has
provided a count of all NYCHA Section 8 tenants by zip code. In zip code
10033, in Central Harlem, there were 1,010 NYCHA Section 8 renters, representing
about 7 percent of all households residing in private rental housing within
the tract. More than 40 percent of residents living in census tracts comprising
the zip code have incomes that place them below the poverty line, and as
of 1990, the average rent/income burden was approximately 45 percent. In
tracts such as this, Section 8 rent subsidies may provide an important support
for the cash flow of housing operators and hence help to stave off disinvestment
Even larger percentages of renters
receive NYCHA Section 8 certificates in certain zip codes in Brooklyn and
the Bronx. In zip code 10453 in the Bronx, for example, 2,561 renters or
13 percent of all renters receive rent subsidies from the Housing Authority.
In Brooklyn zip code 11235, 2,081 renters, or approximately 10 percent of
the total, receive them. The stabilizing effect of these rent subsidies is
in addition to that contributed by HPD's Section 8 program, which is more
explicitly preservation oriented. As previously mentioned, HPD-issued certificates
and vouchers are often used to cushion the rent increases for low-income
tenants resulting from publicly subsidized rehabilitation of private buildings.
These rehabilitations are widely considered to be a crucial ingredient of
the city's neighborhood preservation effort.
Even in low-income communities
of the city, however, it is rare for more than a small percentage of tenants
in private housing to be assisted with Section 8 certificates or vouchers.
There are approximately 650,000 families in the city eligible for Section
8 assistance, but less than 100,000 receive rent subsidies. While Section
8 could be an important factor in stabilizing the private housing stock in
high-poverty neighborhoods, it is clear that its full potential has been
far from realized.
Tenant Mobility and Moving To
Resident mobility out of inner-city
neighborhoods has never been an explicit goal of the Section 8 program. Federal
regulations governing the program are geared toward preventing public housing
authorities from "steering" Section 8 tenants to particular location
choices. Other terms of the program, however, may reinforce the tendency
of Section 8 renters, like other renters, to remain in neighborhoods with
which they are already familiar. The program, for example, does not provide
payments for brokers' fees, security deposits, or moving expenses, so long-distance
moves, particularly to suburban locations where rents are high and other
fees may be common, are inhibited.
Until 1992 Section 8 rent certificates
were valid only within the jurisdiction of the issuing PHA or within contiguous
metropolitan statistical areas. Since their introduction in 1983, however,
Section 8 vouchers were portable anywhere within the United States. Consequently,
what little intra- or inter-state mobility occurred was mostly among holders
of vouchers. In 1993 certificates were also made nationally portable.
Through 1992 only about .5 percent
of Section 8 certificates and vouchers issued by NYCHA were used by the recipients
to move outside the boundaries of New York City. Given the constraints of
the certificate program and their proximity to the city, it is not surprising
that over three-quarters of out-of-city Section 8 movers relocated in New
Jersey, Connecticut or other parts of New York State. Since the portability
rules were liberalized, however, there has been a somewhat startling increase
in the number of certificate and voucher holders who use them to make long-distance
moves. In the past several years, the number using NYCHA-issued certificates
or vouchers in Florida has increased from 23 to 116 and in North Carolina
from 4 to 65. There have been no thorough studies of long-distance Section
8 movers conducted by HUD or independent social scientists, but an informal
analysis done by NYCHA indicates that there have been no dramatic changes
in the employment status or incomes of those who used its certificates or
vouchers to make long-distance moves.
During the late 1980s research
on participants in Chicago's Gautreaux program, conducted by James E. Rosenbaum
of Northeastern University, rekindled interest in the potential mobility
benefits of tenant-based rent subsidies. The Gautreaux program was initiated
as part of the resolution of a fair housing suit against the Chicago Housing
Authority and involves a coordinated effort to relocate minority public housing
residents to predominantly white sections of Chicago and its surrounding
suburbs. Families relocated are provided with Section 8 rent subsidies and
are given intensive mobility counseling and assistance through several fair
housing organizations in the Chicago area. Rosenbaum found a significant
decrease in welfare dependency among a sample of relocated families as well
as improved educational achievement among their children.
Rosenbaum's intriguing findings
prompted Congress to establish the Moving to Opportunity (MTO) demonstration
program in 1992. Emphasizing poverty deconcentration rather than racial desegregation,
the MTO program received an appropriation of $20 million in Section 8 rental
assistance for 1992 and $50 million for 1993. Additional funds were provided
for non-profit organizations who would provide intensive mobility counseling
to participating families. Eligibility was limited to very low-income families
with children under 18 residing in public or Section 8 project-based housing
in neighborhoods where at least 40 percent of households were poor; the families
were required to relocate in neighborhoods where no more than 10 percent
of families were poor. Sixteen of the 21 eligible large cities applied for
MTO funding, and New York City was one of the five to be selected.
New York's MTO program was administered
by NYCHA with the Northern Manhattan Improvement Corporation as the non-profit
providing mobility counseling and relocation services. NYCHA targeted 33
housing projects containing 14,850 potentially eligible households for initial
participation in the program, and outreach efforts began in August 1994.
By the end of 1996, 1,489 families had applied for the program. Of those,
361 families were issued certificates or vouchers; 224 were randomly assigned
to an "Experimental Group" and 137 to a "Comparison" or
control group.  The Experimental Group produced 64 rentals (a 29 percent
success rate) and the Comparison group 26 rentals (19 percent).
The relatively high quality of
public and assisted housing in the city may have contributed to the lack
of interest in the program. NYCHA also reports that many families hesitated
because federal regulations prohibited the agency from giving participants
priority for public housing units if they were uncomfortable in their new
communities and sought to return. Consistent with the experience in other
cities, fear of crime was a major impetus for those who enrolled; 48 percent
of NYCHA's applicants reported being crime victims in the prior six months,
compared to 6 percent of all public housing residents.
The MTO program provoked vehement
racial and class antagonisms in one participating city, Baltimore. Perhaps
because of its proximity to the Capitol and location within the district
of an influential member of the Housing subcommittee, Congress terminated
the program in 1996.
To Last Chapter
1: The Program | Chapter 2: The Tenants | Chapter 3: The
Housing | Epilogue
The New York City Rent Guidelines Board has converted this CHPC report to
an electronic format and posted it on its web site. We do so to inform the
public and the housing community, and further the debate on rent-subsidized
housing. The Rent Guidelines Board did not participate in this study and
does not necessarily agree with the findings of this report. The report is
solely a production of the Citizen's Housing and Planning Council.
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are permitted to exceed the FMR if the tenant is willing to pay the excess.
The law limits the percentage to which exception can apply to 10 percent
of a PHA's incremental units.
market area for which New York City's FMR is calculated includes the city
as well as Rockland, and Putnam counties, which probably has the effect of
raising the level over what it would be if only the five boroughs were included.
are authorized to establish their own payment standards, which may not be
less than 80 percent of the FMR. NYCHA maintained the payment standard at
the same level as the FMR until 1993; it has subsequently been set somewhat
below the FMR.
regulations allow PHAs to discontinue payments to landlords for noncompliance
with quality standards and permit the family to move to a unit that meets
them. In addition, Section 8 units in New York City are covered by the state
and city housing maintenance code and tenants can avail themselves of the
enforcement mechanisms associated with it.
had limited flexibility to adjust or to accommodate a changing size mix.
For certificate allocations, federal funding was provided in dollar amounts
with limitations on the range of units a PHA may assist with it. Voucher
allocations did not have such limits and so were more flexible. Beginning
in 1993 HUD began providing certificate allocations, as well as voucher allocations,
in dollar terms only.
8 certificates are issued for an apartment of a size appropriate to the particular
family. PHAs are permitted to set their own occupancy standards, but they
must be consistent with the Space and Security standards of the HQS. Those
criteria require that the dwelling unit contain at least one bedroom or living/sleeping
room for each two persons. Persons of opposite sex, other than husband and
wife or very young children, are not required to share the same bedroom.
A family may rent an apartment larger than what is stated on the certificate
if the rent is no higher than the FMR for an apartment of appropriate size.
submarket was reinforced by a federal requirement known as the "take-one,
take-all rule." This regulation prohibited property owners from refusing
to rent to a Section 8 applicant without good cause, if they had previously
leased to other holders of certificates or vouchers. This was believed to
inhibit many landlords from leasing apartments to any Section 8 tenants for
fear that they would experience legal problems if they screened out any future
Section 8 applicants and because they could lose the ability to manage their
tenant mix. The take-one, take-all rule was suspended in 1996 and would be
repealed permanently under federal housing legislation pending at the time
of this writing.
FMRs, along with their annual inflation adjustments, thus perform a rent-regulating
function in this housing stock.
formulations of the concentration theory can be found in the works of E.
Franklin Frazier and Kenneth Clark. The most influential contemporary articulation
of the poverty concentration theory was made by William Julius Wilson in
The Truly Disadvantaged. Important empirical work supporting the theory has
been done by Jonathan Crane and Susan E. Mayer, among others. The most comprehensive
contemporary study of the deleterious effects of racial segregation has been
written by James Massey and Nancy E. Denton.
The most notable exception is the Gautreaux program, which was implemented
as part of a settlement of a racial discrimination suit against the city
of Chicago. The effects of this program, which utilizes Section 8 subsidies
to relocate public housing tenants into racially and economically diverse
communities, has been studied extensively by James E. Rosenbaum.
Data used in the following analysis were compiled by CHPC from census track
tabulations supplied by the Department of City Planning, and include both
certificates and vouchers issued by NYCHA and HPD. The data are for federal
fiscal years, however, and so are not directly comparable to other figures
presented throughout this report.
In keeping with the demonstration purpose of the program, MTO applicants
who have been certified as eligible are randomly assigned to one of three
groups: (1) An Experimental Group, where members must use their Section 8
certificates or vouchers to move to a low-poverty census tract; (2) A Comparison
Group, free to use certificates or vouchers to move to any neighborhood;
(3) A Stationary Group, where Section 8 assistance is not available and moving
is not required.