Massachusetts Developmental Disabilities Council

Department of Housing and Community Development

Line Item	Description	FY01	FY02	FY03	FY04	FY05	H1 for FY06
7004-9030	AHVP Rent Vouchers	4,000,000	3,000,000	3,000,000	2,300,000	2,300,000	2,300,000

The Department of Housing and Community Development (DHCD)[1] was created to expand affordable housing, combat poverty and help localities plan the development and renewal of their communities. State operating funds support: 49,000 units of public housing, run by 254 local housing authorities; 3 rent subsidy programs that serve about 5,400 households; 2 homelessness prevention programs; an interest subsidy program for about 6,000 units of private rental housing that were developed in the 1970s; and DHCD planning and management assistance to cities and towns.

In addition, DHCD relies on state capital budget funds and federal funds to renew aging public housing; make grants and loans to municipalities, developers, and nonprofit agencies for housing, community, and economic development projects and programs; provide Section 8 rental assistance to 20,000 households; and support housing programs that serve homeless and antipoverty programs, including fuel assistance and weatherization. People with disabilities who meet income eligibility guidelines rely on numerous DHCD programs. The Alternative Housing Voucher Program (AHVP)-covered here-specifically funds transitional rental assistance for non-elderly disabled people under the age of 60.

FY05 OVERVIEW

Overall, the state operating budget for DHCD in FY05 remains at half (53%) the level provided in FY01. Even when increases since FY01 in state capital spending for DHCD programs are factored in, state funding for DHCD remains 13% below FY01 levels, without adjusting for inflation. The decline reflects both funding cuts for ongoing programs and the failure to make new housing commitments as payments on 15-year funding contracts for housing begun in the 1980s expire. However, after four successive years of funding cuts, the FY05 budget did include small funding increases or level funding for most programs.

According to the 2000 Census, 10% of all Massachusetts households have severe housing needs, with incomes at or below 50% of the area median income and housing costs that absorb more than 50% of their monthly income. Much of the problem stems from the state's continued high housing costs. A full-time worker in Massachusetts needs to earn $21 an hour to afford the going rent for a two-bedroom apartment and only pay 30% of his or her monthly income. The shortage in affordable housing for people with disabilities is even more acute and is repeatedly identified as one of the most significant barriers to independent living and reduced reliance on facility-based care.

While state spending on housing fell between FY01-FY05, increases in federal funding between FY01-FY04 helped to cushion the blow and enabled the state to shift some clients from state-funded to federally-funded programs. However, we are now entering a period of declining federal support, so the outlook going forward is rather gloomy. Steady cuts in state funding-including a 31% cut in rental assistance-combined with recent federal cuts, have left many households unable to obtain needed assistance or shelter.

H1 FOR FY06 OVERVIEW

The administration does not propose the needed funding boost for housing assistance to persons with disabilities in FY06. However, the allocation would be level with that of FY05, not a cut.

Line Item Analysis

Account:      Alternative Housing Voucher Program (AHVP)

Line Item:   7004-9030

The Alternative Housing Voucher Program (AHVP) account funds transitional rental assistance for non-elderly disabled people under the age of 60. AHVP began in FY96 in response to concerns of residents in what was known as the state's Chapter 667 public housing program for the elderly and disabled. Overall, the program was serving a rising percentage of non-elderly disabled tenants because of the lack of alternative subsidized housing options for this population. Many elderly residents wanted a policy that would reserve most units for elderly tenants only. Many non-elderly disabled tenants indicated a desire for other housing choices as well, including conventional apartments on the private market, rather than segregated housing.

Together, the two groups developed a proposal, enacted in law in 1995, that served two purposes. First, it reserved 86.5% of each community's Chapter 667 housing for elderly residents, with the remaining 13.5% for non-elderly disabled households. Second, to help non-elderly disabled households who wanted to leave Chapter 667 housing or were on long waiting lists for other assistance, the law also created AHVP as a new rent subsidy program. AHVP's objective is to enable non-elderly disabled households to afford housing temporarily until other subsidy options become available.

AHVP was initially funded at $4 million in FY96, a level deemed sufficient to support 800 households. However, rising rents in subsequent years made it difficult for voucher holders to find units. After several years of underleasing, DHCD increased both the subsidy and rent levels allowed. Leasing rates then rose to the authorized level of 800.

According to advocates[2]-AHVP has proven to be a cost-effective resource, costing an average of $570 per month or $6,840 per year per person. These costs are far lower than those for housing people in homeless shelters, hospitals, or nursing homes.

Line Item	Description	FY01	FY02	FY03	FY04	FY05	H1 for FY06
7004-9030	AHVP Rent Vouchers	4,000,000	3,000,000	3,000,000	2,300,000	2,300,000	2,300,000

FY01-FY05 Impact

In FY02 and FY03, after years of level funding AHVP at $4 million, the account was cut by 25% to $3 million. DHCD was forced to take a number of steps to stay within the program budget, including freezing the re-issuance of AHVP vouchers, raising the tenant's share of rent to 25% of income (30% if heat was included), and encouraging housing authorities to give AHVP voucher holders priority when Section 8 or Massachusetts Rental Voucher Program (MRVP, the state's program that is similar to Section 8) vouchers became available. By January 2003, the number of AHVP voucher holders had fallen to 519.

In FY04, hoping that DHCD could continue to shift AHVP voucher holders to the Section 8 program, the legislature cut the AHVP account even further to $2.3 million. Compounding the problem, in early 2004, the federal Department of Housing and Urban Development (HUD) started cutting Section 8 funding, making it increasingly hard to justify using this scarce resource on transfers from AHVP.

In FY05, the account was level-funded, providing enough money to support 300-350 of the 800 intended households. However, because DHCD did not lift the freeze on re-issuance of vouchers as current voucher holders leave the program, no one new may enroll. AHVP was assisting only 238 households as of January 2005.

FY06 Needs

Advocates have called for increasing AHVP funding back to $4 million in FY06, noting that it would take $5.5 million to fully fund the program (and serve 800 households). Massachusetts is continuing to experience significant homelessness among individuals with disabilities and cuts in federal Section 8 vouchers make AHVP an increasingly important resource.

H1 for FY06 Recommendations

H1 recommends level funding the AHVP account at $2.3 million and renaming the program Transitional Rental Assistance.