As Raleigh’s Housing Crisis Worsens, Its Housing Authority Is Having Trouble Convincing Landlords to Participate in Its Section 8 Program | Wake County | Indy Week

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As Raleigh’s Housing Crisis Worsens, Its Housing Authority Is Having Trouble Convincing Landlords to Participate in Its Section 8 Program



A few months ago, Carleigh Walters (not her real name) was one of more than eight thousand Raleighites looking for help from the Raleigh Housing Authority, the agency responsible for providing safe, affordable housing to low-income residents.

Walters, fifty-four, has two kids, five grandkids, and works at a Raleigh hotel, cleaning rooms. She's been incarcerated and homeless, and a victim of domestic violence. "I own nothing," she says.

In May, however, her luck appeared to change. After three years on a waiting list, Walters received a Section 8 housing voucher for $724 per month. She had sixty days to find a landlord willing to accept it. She called dozens of places that advertised Section 8 housing and paid three separate application fees, each totaling between $50 and $75. Each landlord denied her application.

"They all want application fees, eight-hundred-dollar security deposits, first month's rent. Who has money for that?" she asks.

Then fortune favored her again. She'd been renting a room in a house in Southeast Raleigh. After watching her struggle to find a place that would accept her voucher, her landlord decided to renovate a two-bedroom house he owned in South Raleigh to make it eligible for Section 8. He set the rent at $850 a month; they agreed she'd cover the difference between that and her voucher.

Walters submitted her paperwork and waited for the housing authority to schedule an inspection and determine whether or not the landlord's rent was reasonable. Then things went sideways.

In June, Walters received an email informing her that RHA's voucher would only cover $443 a month, meaning she would be on the hook for an additional $407. The amount changed, she learned, because of a U.S. Department of Housing and Urban Development rule requiring her to contribute at least 30 percent of her income toward rent.

Then in July, more bad news: RHA's rent-reasonable assessment determined that $850 was too much. It told the landlord he had to knock the rent down to $712 a month for the property to remain eligible for a Section 8 voucher.

After years of waiting and months of paperwork and inspections, Walters suddenly needed to either find somewhere else to live or convince her landlord to take a financial hit that he thought was crazy, considering that a house two doors away had recently sold for $425,000.

This sort of bureaucratic nightmare isn't unusual. The difficulties RHA's Section 8 tenants and their landlords run into can often be traced back to policies or rules handed down from Washington or promulgated by RHA itself. For many participants, navigating this red tape can prove to be frustrating, leaving voucher holders confused and some landlords wondering if it's worth the hassle.

"You have HUD guidelines, and then you have the RHA's guidelines that they've added on," says Octavia Rainey, a Southeast Raleigh community activist. "RHA compounds guidelines with more guidelines."

RHA argues that it has many satisfied participants, though it admits that demand and staffing shortages can prolong the Section 8 process. But in the midst of an affordable housing crisis—Raleigh needs more than thirty-five thousand units for extremely and very low-income families just to meet an existing need, according to the Low Income Housing Coalition—and with a waiting list measured in years, the authority can't afford to drive Section 8 landlords away.

That appears to be happening. In fact, even as demand has increased, the number of Section 8 landlords has fallen—from 870 in 2016, to 850 in 2017, to 840 in 2018.

As one landlord puts it: "Too often, I hear the blame being placed on greedy landlords. This may be true in some cases, but the vast majority of complaints I hear are in reference to the Raleigh Housing Authority itself."

RHA has fourteen staff members and currently helps house more than thirty-eight hundred families. The authority's website estimates a three-to-seven-year wait for housing assistance.

Voucher recipients have two months to find a landlord willing to participate in the Section 8 program, with the option for a one-month extension. If they're successful, and if their house passes inspection, RHA will determine the amount a Section 8 landlord can charge, a process known as rent reasonableness.

This is a common source of irritation for Section 8 landlords.

One landlord who has participated in Raleigh's Section 8 program for more than three years says he has repeatedly asked RHA how it determines rent reasonableness, but his requests for an explanation were denied. That wasn't the case at Wake County's housing authority, he adds.

"I asked Wake for its data, and they just gave me the spreadsheet with the rent-reasonable formula," he says. He asked not to be identified because he has numerous rental properties throughout the city and says he worries about RHA's retribution.

In response to the INDY's questions, RHA provided an overview of its rent-reasonable process. Using a HUD formula, it assigns a property points based on location, size, type, quality, age of the unit, amenities, maintenance, and utilities provided by the owner. The authority then adds up those points and identifies comparable units in similar zip codes. If a landlord's rent exceeds what the RHA sees as reasonable, the agency will ask the landlord to lower the rent, even if the amount is below fair market value. RHA points out that HUD rules restrict Section 8 rents to between 90 percent and 110 percent of fair market value.

"As a federally funded rental assistance program," RHA told the INDY in a statement, "we and all other participants are subject to the guidelines that are in place. As the owner of the property, it's completely the landlord's choice to be subject to that or to rent exclusively in the market without vouchers."

The guaranteed monthly payment from RHA is an incentive for landlords to accept less than market value. But growing frustration over what landlords see as a lack of real estate acumen within RHA is driving some of them out of the Section 8 market in Raleigh.

"For a while, we were open to accepting RHA vouchers on any properties," says one landlord, who also asked not to be identified. "But we are not accepting RHA vouchers anymore. We are happy to accept Wake housing authority vouchers, but it's too much of a pain to work with RHA."

Walters's landlord shared similar sentiments. His real estate partner was working with a local voucher holder to rent a two-bedroom home in East Raleigh for $850, he says. But RHA conducted its rent-reasonableness analysis by comparing a single-family detached home in East Raleigh to two separate zip codes throughout Wake County, including a townhome in Knightdale. After weeks of back and forth, RHA determined that the two-bedroom house was worth $685.

"Can you find a two-bedroom apartment to rent for six-eighty-five? I doubt it," the landlord says. (His partner did end up renting to the Section 8 tenant. Other than the loss of $165 in monthly rent, the arrangement is working well.)

Another sore spot among some Section 8 landlords are the restrictions on rent increases. RHA limits increases to one per year and requires landlords to submit a request no more than ninety days and no fewer than sixty days prior to a tenant's recertification date. If a landlord misses that window, he or she cannot ask for a rent increase for an additional year.

Landlords complain that RHA will not clarify how much of an increase it is willing to approve. "We learned that in order to get the most, you have to overshoot. It's a game," one says. "Wake's housing authority doesn't have these hurdles and arbitrary nonsense." Wake's authority permits a 3 percent increase each year.

Asked about this complaint, RHA said in a statement: "We do not restrict the requested increase amount because we will only be able to give [an increase] based on the rent-reasonableness test."

Essentially, RHA says it can't specify how much of an increase it will approve until it conducts another rent-reasonable analysis.

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