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To:	Contra Costa County Housing Authority Board of Commissioners
From:	Joseph Villarreal, Housing Authority
Date:	September 15, 2015

Contra

Costa

County

Subject:

CONGRESSIONAL LETTER TO HUD CONCERNING THE HOUSING CHOICE VOUCHER ADMINISTRATIVE FEE FORMULA

Action of Board On: 09/15/2015

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, Commissioner
Candace Andersen, Commissioner
Mary N. Piepho, Commissioner
Karen Mitchoff, Commissioner

ABSENT:

Federal D. Glover, Commissioner
Fay Nathaniel, Commissioner
Aqueela Bowie, Commissioner

Contact:

925-957-8028

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: September 15, 2015
,

BY:	, Deputy

RECOMMENDATIONS

ACCEPT report on the September 2, 2015, letter to the U.S. Department of Housing and Urban Development from twenty members of the California Congressional delegation concerning the administrative fee formula for the housing choice voucher program.

BACKGROUND

On April 8, 2015, HUD released a “Final Draft Report” entitled, Housing Choice Voucher Program Administrative Fee Study. On June 26, 2015, HUD published a notice in the Federal Register seeking public comment on the variables identified by the study as impacting administrative fee costs, how HUD might use these study findings to develop a new administrative fee formula and any other issues that may arise with the development and implementation of a new administrative fee formula.

BACKGROUND (CONT'D)

The study is the first analysis of voucher administrative costs since the late 1980’s. Not surprisingly, the study found that public housing authorities (PHAs) “have been significantly underfunded to run the HCV program.” For the past several years, administrative fee funding from Congress resulted in PHAs receiving less than the amount for which PHAs are eligible under the fee formula. For example, in FY15, PHAs received about 75% of the formula amount. The formula is based on the Fair Market Rent (FMR), “with no documented connection to what it costs to administer the HCV program.”

The study predicts that 92% of PHAs would have had greater administrative fees if the study’s proposed new fee formula had been in place and funded between July 2013 and June 2014. The proposed formula is based on seven factors that the authors determined drive the variation in costs of administering the voucher program. Two of the factors, program size and wages, explain 35% of the cost variation. The five other “cost drivers” explaining an additional 30% of the cost variation are health insurance, percentage of households with earned income, new admissions rate, number of voucher holders in high-rent neighborhoods, and percentage of voucher holders living more than 60 miles from the PHA’s headquarters.

What is surprising about the study is that it describes only 63% of the costs associated with the operation of the PHAs studied. The missing data appears to have a disproportionate and negative impact on PHAs in urban areas with higher costs of living. In California alone, 39 PHAs would lose funding under the proposed formula. This represents 28% of all declining PHAs in the United States. HACCC would lose 9% of its voucher administrative funding if the proposed rule is implemented.

As part of the California Association of Housing Authorities, HACCC partnered with PHAs throughout the State to ask members of the California Congressional delegation to oppose this new formula. Part of the result of our efforts is the letter attached to this Board Order. Twenty Congressional members have signed on asking HUD to revisit their study. Signer include Congressman Mark DeSaulnier and Congressman Mike Thompson. At this point, HUD has not published or formally responded to the comments it has received. Staff will update the Board on this matter after HUD responds to comments.

FISCAL IMPACT

The Housing Authority (HACCC) faces a 9% cut in voucher administrative fees if the U.S. Department of Housing and Urban Development's (HUD) recently proposed administrative fee formula is implemented. The proposed funding cut would be effective January 1, 2017.

CONSEQUENCE OF NEGATIVE ACTION