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Rents vary more by neighborhood than by city, and housing-assistance funding should reflect that.

Say someone gave you a gift card for $50 to buy food at any grocery store of your choice. You could take it to Aldi and clean up with a pile of boxed and frozen dinners. Or, you could take it to Whole Foods and buy approximately one bundle of asparagus. Unless your fridge is already heavily stocked, you’re probably going to hit the Aldi, even if that means bringing home a haul of cheap, sub-quality food.

Such is the dilemma of the Section 8 housing-voucher program, which assists people with low incomes by giving them coupons that cover a portion of their rents. For a number of reasons, those vouchers are most frequently used in neighborhoods where poverty is fiercest and rent is cheapest. Using vouchers in higher-rent communities is a non-starter for many low-income tenants because that would mean extra housing expenses they’d have to cover out of pocket.

This dynamic has not helped the problem of concentrated poverty and economic and racial segregation in neighborhoods. This endures, in part, because the U.S. Department of Housing and Urban Development’s voucher program is currently determined by a formula that considers rent prices across an entire metro. Since rents can vary wildly within a city depending on the neighborhood you’re apartment-hunting in, a voucher could be too high or too low. Which is why HUD is now planning to expand a program that would base its formula on rents across zip codes instead of across cities.

For a city like Washington, D.C., which has some of the highest rents anywhere, that would mean that voucher tenants could search from a wider expanse of communities (putting NIMBYism to the side for a moment, of course).  

                                                                                                                                                                 (Zumper)

The benefit here is that low-income families who want to live in neighborhoods where there’s less poverty, less violence, and more upward-mobility opportunities have better chances to access them. Equally important, neighborhoods where white families and high-middle-income households are concentrated actually get to live with and learn from a more racially and socially diverse palette of neighbors. In other words, there’s better integration.  

As it stands, only 20 percent of overall families in the voucher program live in neighborhoods where fewer than 10 percent of residents are poor, according to a report from the Center on Budget and Policy Priorities. The current formula based on metro-wide rents may even have exacerbated the poverty problem: The CBPP report states that voucher holders in the nation's 50 largest metropolitan areas became more concentrated in impoverished neighborhoods between 2000 and 2010. Meanwhile, recent studies show that children who grow up in higher-income neighborhoods end up with brighter future economic prospects.

The new zip code-based formula, called “small-area fair market rents,” or SAMFRs, is already being tested in a few cities, including Dallas, Texas, where it began in 2010 as part of a civil-rights lawsuit settlement. That case was brought by the affordable housing nonprofit Inclusive Communities Project, a name you might recognize from my colleague Kriston Capps’ writing on the fair housing case currently pending before the U.S. Supreme Court. The organization has been working for years to reverse the trend of clustering low-income housing into economically and racially segregated neighborhoods.

When the researchers Robert A. Collinson and Peter Ganong tracked the outcomes of this program in Dallas they found that, “Three years after the shift to SAFMRs in Dallas, people who used vouchers to move lived in neighborhoods with 17 percent less violent crime, and poverty rates 2 percentage points lower, than they would have lived in under metro-level FMRs.“

The new HUD proposal on SAMFRs seeks to expand the new neighborhood-based voucher formula to more areas, particularly those with the widest dollar disparities between market-rate housing costs and what vouchers can cover. Low-income-housing advocates are on board with this, but with the understanding that it won’t solve all affordable-housing concerns. The new voucher system is no fix for racial discrimination, nor for higher-income households working to keep poorer families out of their communities—NIMBYism.

HUD would also have to make sure that lower-valued vouchers for less-expensive zip codes won’t reach so low that they put even lower-cost apartments out of reach for poor families. The CBPP recommends phasing in the system in those neighborhoods that face steep voucher-value declines. HUD is required by statute to update the voucher program every October, and its current proposal is now open for public comment.    

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