26 State-funded rental assistance

This chapter addresses HB854’s requirement to propose recommendations for “a Virginia rent subsidy program to work in conjunction with the federal Housing Choice Voucher program.”


Major takeaways in this chapter include:

  • A new state-funded rental assistance program would build on proven strategies to reduce housing instability and increase opportunities for low-income households.
  • Over 300,000 low-income renters in Virginia are cost-burdened—a challenge faced disproportionately by Black, brown, and senior households.
  • Current federal rental assistance and the supply of affordable rentals in Virginia still pale in comparison to the need thousands of low-income individuals and families have for housing assistance.
  • Stakeholders recommend a statewide rental assistance program that prioritizes Virginians below 50 percent of their Area Median Income and those experiencing housing instability, reduces barriers to assistance that often leave Virginians behind in federal assistance programs, focuses on equity and efficiency, and ensures resident success through choice, mobility counseling, and landlord involvement.

26.1 Background

HB854 requested the SAG to:

“. . . consider the following proposals as well as other proposals it considers advisable during the course of its analysis and deliberations: . . . a Virginia rent subsidy program to work in conjunction with the federal Housing Choice Voucher program . . .”

The subgroup initially divided into two panels focused separately on rental assistance for permanent supportive housing (PSH) and a general rental assistance program (i.e., strictly assistance based on household income). The panel quickly realized that the complexity of PSH and initiatives already underway to assess statewide PSH needs required dedicated attention beyond the scope of this study. Therefore, a single subgroup addressed a state-funded rental assistance program.

The need for PSH units and rental assistance remains high. Organizations addressing this demand are supported by a range of programs:

  • Department of Housing and Community Development (DHCD)
    • Affordable and Special Needs Housing (ASNH)
  • Department of Behavioral Health and Developmental Services (DBHDS)
    • State Rental Assistance Program (SRAP)
    • Permanent Supportive Housing - Serious Mental Illness (PSH-SMI)
  • Other sources
    • Section 811 Project Rental Assistance Program
    • “Mainstream” Housing Choice Vouchers
    • Auxiliary Grant Supportive Housing
    • Continuums of Care Rental Assistance

This state-funded rental assistance proposal concentrates on households making less than 30 percent area median income (AMI), which are extremely low-income households (ELI). The Technical Assistance Council notes that households that often need supportive housing are also ELI households.43 A state-funded rental assistance program dedicated to ELI households can assist households that would benefit from PSH and those that do not need PSH.

26.2 Rationale

Rental assistance is a nationally-recognized best practice to help low-income households remain stably housed at a time when wages are stagnating, the wealth gap is widening, and rents are rising.44 45

Rental assistance covers a portion of a household’s rent to prevent eviction and homelessness, which do not just harm those evicted and experiencing homeless but ultimately exact long-term costs to communities and local governments.

Federal rental assistance

The Housing Choice Voucher program (Section 8), created in 1974, is designed to help low-income families move from impoverished neighborhoods to neighborhoods of opportunity. The program assists qualified families to afford the cost of housing in the private market.

In Virginia, federal Housing Choice Vouchers (HCVs) are administered by Virginia Housing (through local agency partners) and public housing authorities (PHAs), which receive HCV allocations directly from the U.S. Department of Housing and Urban Development (HUD).

State rental assistance

State-funded programs have existed since 1966, when Massachusetts became the first to implement a rental assistance program, predating the federal Section 8 Housing Choice Voucher Program. Programs such as the Massachusetts Rental Voucher Program (MRVP) and the recent D.C. Flexible Rent Subsidy Program (D.C. Flex) offer valuable lessons for the design and implementation of a Virginia rental assistance program.

In the Commonwealth, DBHDS operates two relatively small and targeted rental assistance programs for persons with more complex needs: State Rental Assistance Program (SRAP) and Permanent Supportive Housing - Serious Mental Illness (PSH-SMI). These initiatives are reviewed in more detail in Chapter 21.

Need for rental assistance

Three out of four families who are eligible for housing assistance do not receive federal rental assistance.46 The demand far exceeds the supply that has been appropriated by Congress. When funding runs out, long waiting lists close and often remain closed for years. Emergency rental assistance in Virginia has helped to stabilize thousands of households during the COVID-19 pandemic, but even before the pandemic low income renters were often one missed paycheck away from housing instability.

In 2017, roughly 400,000 low-income renter households in Virginia were cost-burdened. In 2020, about 106,000 Virginia households received federal housing assistance47 and an additional 86,600 lived in Low-Income Housing Tax Credit (LIHTC) apartments.48 A Virginia rental assistance program could help close the substantial gap in assistance for low-income households.

26.3 Findings

26.3.1 Renter cost burden in Virginia

Comprehensive Housing Affordability Strategy (CHAS) data are calculated by the U.S. Census Bureau and are based on the American Community Survey (ACS). The U.S. Department of Housing and Urban Development (HUD) disseuminates this data to local governments and other organizations to help them understand the extent of housing problems and needs in their community. A large portion of this data focuses on cost-burdened households.

The most recent data release was on August 25, 2020 for the 2013-2017 5-year estimate period.

Income levels used by CHAS and other affordability data:

  • Low-income (LI) is defined as above 50 percent but below 80 percent AMI.
  • Very low-income (VLI) is defined as above 30 percent but below 50 percent AMI.
  • Extremely low-income (ELI) is defined as below or equal to 30 percent area median income (AMI)

Major takeaways

Cost burden is highest among renters with the lowest incomes.

Nearly half a million renter households (45 percent) in Virginia are cost burdened. ELI renter households are disproportionately cost-burdened; 85 percent are cost-burdened and 65 percent are severely cost-burdened. The majority (80 percent) of VLI renter households are cost-burdened, and almost half of LI renter households are cost-burdened.

While the total share of renters with cost burden in Virginia has remained largely unchanged since 2010, National Low Income Housing Coalition (NLIHC) research indicates that ELI households who were severely cost-burdened rose to 71 percent in 2019, compared to 62 percent in 2017.

Virginian renters of color have higher cost burden

  • Over half of Hispanic, Black, and American Indian renter households in Virginia are cost-burdened.
  • One in four Hispanic and Black renter households in Virginia are severely cost-burdened.
  • The number of Hispanic and Black renter households that are cost-burdened has been on the rise since 2010.

26.3.2 Publicly supported rental homes in Virginia

The Public and Affordable Housing Research Corporation (PAHRC) provides a snapshot of each state’s publicly supported rental housing, often funded by multiple sources from different levels of government. Preservation of publicly supported rental housing with affordability restrictions due to expire over the next 30 years is also a priority.

Click here to view PAHRC’s 2021 Preservation Profile for Virginia.

Major takeaways

  • PAHRC estimates that in 2020 there were 125,020 rental units supported by public subsidy in Virginia.
  • The majority (66 percent) of affordable rental housing units are supported by LIHTC.
  • Nearly 5,000 existing publicly supported rental housing units (four percent of the total) are at risk of expiring affordability restrictions in the next five years.
  • Over half (52 percent) of existing publicly supported rental housing units that have affordability restrictions expiring in the next five years (2,489) are also assisted by Section 8 contracts.
  • PAHRC estimates that there is a 157,087 unit shortage of rentals affordable and available to ELI renters.

26.3.3 Available and affordable rental homes in Virginia

NLIHC annually analyzes the availability of rental housing that is affordable to ELI and other income groups. The analysis presents either a surplus or deficit of housing that is affordable to these income groups.

Click here to view NLIHC’s profile for Virginia from their latest “The Gap” report.

Major takeaways

Virginia has a deficit of nearly 300,000 affordable and available units for households at or below 50 percent AMI. This includes a deficit of 148,720 for ELI households and 149,300 for VLI households.

For every 100 ELI households, there are only 39 available units that are affordable and available to them. Only 63 units are affordable and available for every 100 VLI households.

26.3.4 Virginia public housing authority housing stock and waitlists

The PHA survey conducted for this report, which collected information on waitlists for affordable housing programs run by PHAs in Virginia, is described in Chapter 9. Important considerations from that survey for this chapter are below.

Major takeaways

  • There is a deficit of 40,718 units and 32,498 rental assistance vouchers across 32 localities in Virginia.
  • Public housing has 16,270 applicants on waiting lists across the 22 PHAs, with the majority of public housing applications open.
  • LIHTC housing has 7,278 applicants on waiting lists, with ten PHAs having open applications and three opening applications in the next one to four years.
  • Voucher programs have 32,498 applicants on waiting lists, with the majority having open applications as of April 2021.

26.3.5 Profile of public housing residents and HCV recipients

HUD collects information on public housing residents and Housing Choice Voucher recipients using Form 50058, a module within the reporting system used by public housing authorities. HUD uses Form 50058 data to produce a Resident Characteristics Report (RCR) summarizing general information on households living in public housing or receiving either tenant- or project-based vouchers.

Information on Virginia’s public housing residents and HCV recipients is available on the following dashboard:

FIGURE 26.1: Profile of public housing residents and HCV recipients

Regional variations do exist among residents and recipients, but the publicly available data does not allow for a comprehensive breakdown between PHAs and localities.

HUD provides additional information on households that use housing assistance programs through its Picture of Subsidized Households dataset.

Major takeaways

  • The majority of project-based voucher recipients in Virginia have an average annual income of $13,415 and contribute an average of $315 of their monthly income toward housing. Thirty-seven percent of households are female-headed households with children. The majority of recipients (82 percent) are Black.
  • Tenant-based voucher recipients have a slightly higher average annual income of $14,964 and on average pay $352 of their monthly income toward housing costs. Forty-two percent of households are female-headed households with children and 73 percent of recipients are Black.

26.3.6 Lessons learned from other rental assistance programs

NLIHC maintains a database of State and Locally Funded Rental Housing Programs that was regularly updated before the COVID-19 pandemic. NLIHC staff identified in the updated database five statewide tenant-based rental subsidy programs that serve the general population. NLIHC provided the subgroup with an extensive list of programs across the nation that involve state-funded long-term rental assistance.

General takeaways

The following are high-level recommendations noted by NLIHC for state rental assistance programs.

  • Most successful programs have a permanent source of funding rather than annual appropriations.
  • Tenant-based assistance can be deployed more quickly than project-based assistance.
  • Programs are more adaptable to state-level needs when not tied to federal HCV. Connecticut has been able to work within the confines of the federal HCV model by allowing for more flexibility in how it is administered at the state-level, including the use of third-party administrators instead of PHAs, waiving citizenship requirements at the state-level, and offering greater flexibility on criminal background checks.
  • Only four states (Connecticut, Hawaii, Massachusetts, and New Jersey) and the District of Columbia have long-term state-funded rental assistance programs that serve populations based on income. Some of these programs have additional targeting and eligibility requirements (e.g., 75 percent of participants must be ELI, persons experiencing homelessness or at risk of homelessness, etc.). The majority of these programs are modeled after the federal HCV program. A state-level department or authority administers most of these programs.
  • Time-limited vouchers are unwise because households are unable to improve their wages without significant time invested in workforce development, education, and other commitments. Even after improvements in employment, sustained stability requires a longer timeline.
  • Setting priorities and preferences for voucher applicants can be difficult because explaining and verifying criteria can be difficult.

Policy takeaways

Specific lessons regarding policy design include the following four takeaways.

  • Programmatic changes (e.g., payment standard levels and utility allowances) are politically and financially difficult to implement. Policymakers should endeavor to make appropriate decisions during the initial design phase.
  • Opportunities exist to leverage the knowledge base of Section 8 administrators and beneficiaries. These organizations and individuals should be engaged throughout the design of development of a state rental assistance program.
  • Virginia should consider flexibility and reasonable accommodations built into initial policy design to account for unknown market conditions and household needs in the future.
  • Program administrators highly recommend the development of an administrative plan for state rental assistance programs written in accessible, plain language.

The Massachusetts Rental Voucher Program Administrative Plan (PDF) is a useful example of a plain-language guidebook.

Funding takeaways

The following are relevant examples and lessons from other states for funding their rental assistance programs.

  • The District of Columbia’s Local Rent Supplement Program (LRSP) uses its Housing Production Trust Fund, which is permanently funded through deed and recordation taxes.
  • New Jersey’s program blends both trust fund funding and appropriations.
  • It is important to contextualize the high cost of providing rental assistance by providing an estimate of the number of households served or impacted by rental assistance. State long-term funding builds confidence in the program (i.e., budget in two- to three-year cycles).
  • Disbursement of funds takes time; necessary phases include applicant selection and screening and time for participants to find units, and/or for projects to be constructed.
  • Connecticut’s Rental Assistance Program administrator recommends that general income-based assistance programs be tied to education and support; workforce development and education programs increase wages.

Provisions and standards takeaways

Additional lessons for program standards and best practices include the following four takeaways.

  • Most programs use the 30 percent payment standard, but some are flexible (between 25 to 40 percent) depending on the household type and/or income.
  • Vouchers must be tracked at the tenant/household level to inform spending and policy decisions.
  • Electronic access to state databases is essential to verify income for quality assurance. (Examples include TANF, unemployment benefits, and Medicaid.)
  • Centralized online applications improve usability for applicants and agencies.

26.4 Recommendations

The state-funded rental assistance program subgroup met four times in early 2021 to discuss the potential design of an initiative to work in conjunction with the federal Housing Choice Voucher program. The subgroup made the following recommendations—based on member input and consultation with national experts—to the full HB854 SAG and steering committee.

Recommendation 1

Develop a rental assistance program based on the federal Housing Choice Voucher program, with expanded eligibility, flexibility, and increased efficiencies.

A rental assistance program modeled after the federal program reduces the time and effort required to develop and implement new guidance and rules. The current program is effective in providing households with assistance, but there are areas of the program that can be more efficient and modifications to eligibility requirements that would ensure all Virginia residents can access assistance.

The subgroup recommends that the program should:

  • Include both tenant-based and project-based vouchers to allow for flexibility in meeting household needs: allocate voucher type based on federal standards (up to 20 percent of total vouchers may be project-based), but monitor demand for project-based vouchers and allow for the ability to modify allocation in response to demand,
  • Use existing HUD income limits based on AMI and household size to maintain consistency across affordable housing programs,
  • Consider an administrative structure that is commensurate with the scale of the program (options include overlaying over the existing HCV administrative structure, etc.),
  • Allow for assistance regardless of immigration status, housing authority debt status, eviction record, and criminal background to ensure that households most in need receive assistance49,
  • Allow funding to be used towards security deposits and application fees, and
  • Use HUD’s updated housing quality standards (NSPIRE) and allow for administrators to contract home inspections to qualified contractors.

Recommendation 2

Target households making 50 percent AMI or below, with the majority of allocation for households at or below 30 percent AMI.

Most of the cost-burdened renter households in Virginia are those earning 50 percent AMI or below. The federal program is inadequate to meet these substantial needs. Households at or below 30 percent AMI often have supportive housing needs which can put further pressure on household finances. Development of a state-funded rental assistance program should consider dedicating annual voucher allocation (both project- and tenant-based) to serve persons with supportive housing needs.50

The subgroup recommends that the program should:

  • Allocate the majority of vouchers to ELI households,
  • Vouchers intended to support persons experiencing homelessness or at-risk of homelessness should be coordinated through the Continuum of Care and Balance of State Local Planning Group in each area of Virginia to ensure effective prioritization of vouchers and coordination with existing efforts and local resources,
  • Prioritize households most in need as identified by the Continuum of Care and Balance of State Local Planning Group’s established Coordinated Entry/Centralized Assessment prioritization process, and
  • Require smaller percentage of income dedicated toward rent for ELI households (rather than the standard 30 percent), which would allow for greater savings and spending on necessities like food and transportation.

Recommendation 3

Implement a statewide program at-scale.

Rental assistance is a proven method to reduce homelessness and to eliminate the obstacles many low-income households face on a daily basis.

Rental assistance expands opportunities for low-income families.

The Center on Budget and Policy Priorities conducted a literature review on the benefits of rental assistance.51 Overall, rental assistance is a major tool for bringing people out of poverty and increasing opportunities for better economic and personal well-being.

Based on their findings, rental assistance has been found to:

  • Reduce the share of families living in shelters or experiencing homelessness by 75 percent,
  • Reduce the share of families living in overcrowded housing by more than half,
  • Lift three million people above the poverty line in 2018—a significant share of which were seniors and children,
  • Increase positive outcomes for young children—allowing families to move to lower-poverty neighborhoods, and
  • Improve health outcomes for children and adults by reducing the stress caused by homelessness and housing instability that can exacerbate chronic health conditions.

This subgroup believes there is no need for a pilot program to demonstrate the effectiveness of rental assistance in Virginia. The scale of the program is largely dependent on funding levels, which must also consider administrative costs. An effective and efficient program requires additional training, staff, and systems.

Funding example for statewide rental assistance program:

The Massachusetts Rental Voucher Program (MRVP) received $100 million through a budget allocation in fiscal year 2019, providing an average assistance of $922 per voucher per month to 8,535 households in the same fiscal year.52 The MRVP projects that the fiscal year 2020 administrative fees will be $5,393,770 out of its total projected spending of $114,981,967—a five percent share. The budget allocates about one percent to supportive services subsidy.

The subgroup recommends that the program should:

  • Use a stepped implementation process at the regional-level to work out program issues,
  • Allocate funding towards administration and additional support services for special needs populations (e.g., seniors, persons with disabilities, victims of domestic violence, etc.),
  • Consider equity and cost-effectiveness when developing a program at-scale, and
  • Use the following broad estimates on households assisted and costs (Table 26.1) to make a decision on program scale.
TABLE 26.1: Possible funding scenarios for new state-funded rental assistance program
Scenario Scale Description Households served Cost range
1 Targeted: Homeless Addresses the needs of all special needs households identified by Point-in-Time counts. Prioritizes households most-in-need who are experiencing homelessness. No rental assistance is provided for households that are not experiencing homelessness or at risk of homelessness. 4551 $73M to $85M 
2 Targeted: ELI Covers 50 percent of special needs households in both metropolitan and rural areas, while also providing assistance to several thousand ELI households.  9844 $112M to $134M
3 Targeted: ELI-VLI Widens previous scenario to VLI households currently paying more thah half of their income on rent (severely cost-burdened). 13080 $154M to $185M
4 Targeted: Homeless and ELI-VLI Maximizes assistance by addressing the needs of all special needs households and a portion of cost-burdened of ELI and VLI households. 16700 $216M to $258M

Investing in rental assistance would reduce the total public and private costs of evictions.

These projected cost ranges—from $73 million to $258 million per year—are significantly lower than recent estimates for the total immediate and downstream costs of evictions in Virginia. According to the RVA Eviction Lab at VCU, the total cost of the 70,600 evictions across the state in 2018 is between $483 million and $1.26 billion.53

Recommendation 4

Ensure resident success through choice, mobility counseling, and landlord outreach/incentives.

While many rental assistance program recipients may want to stay within their existing communities, some may want to relocate to areas where they can take advantage of new economic and educational opportunities. However, many low-income households face obstacles in finding and securing housing in these areas.

The newly enacted source of income protection for Virginia allows recipients to use rental assistance wherever they choose without being legally denied housing solely because they have a voucher.54 Assistance throughout the process can also expand recipients’ options of where to live; this includes help with searching for housing, understanding their rights as tenants, and navigating issues in a new neighborhood or between landlords and tenants.

The subgroup recommends that the program should:

  • Take into account the expansion of mobility counseling programs with funding levels,
  • Require administrators within metropolitan areas to provide mobility counseling,
  • Incentivize the use of Small Area Fair Market Rents for public housing authorities in metropolitan areas (e.g., priority allocation for metropolitan public housing authorities using SAFMR),
  • Address portability of tenant-based assistance across housing authority service areas, and
  • Consider additional landlord incentives beyond the Communities of Opportunity Tax Credit for the acceptance of vouchers.