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With new rental vouchers, better neighborhoods now more affordable

The U.S. allowance now factors rent based on zip code, instead of the average in a large metropolitan area. Housing advocates say this should be a pathway out of poverty for thousands of families.

Rhonda Washington outside her home in the Northeast. A recent change to the Housing Choice Voucher Program, formerly known as Section 8, could mean more people moving into “higher opportunity” neighborhoods or out to the suburbs.
Rhonda Washington outside her home in the Northeast. A recent change to the Housing Choice Voucher Program, formerly known as Section 8, could mean more people moving into “higher opportunity” neighborhoods or out to the suburbs.Read moreTOM GRALISH / Staff photographer

A newly instituted federal housing policy could make it easier for people on rental assistance to move into higher-income neighborhoods in Philadelphia and the suburbs.

Until now, the amount of money that housing authorities paid for rent was based on the average rent in a massive metropolitan area, encompassing Philadelphia, its surrounding towns, Camden and Wilmington.

So a person living in Strawberry Mansion received roughly the same as someone in Chestnut Hill or Swarthmore (about $1,266 in 2018).

Now, vouchers will be based on the market average for specific zip codes, which housing advocates envision as a pathway out of poverty for thousands of families. The new rates also make apartments — if available — more affordable in Philadelphia's pricier suburban counties.

"Philadelphia is one of those cities that is growing, virtually, block by block, so we want to make sure the rents we're paying are at the same competitive range as the market," said Kelvin Jeremiah, CEO of the Philadelphia Housing Authority. "This will remove a significant barrier so that, to the extent a family has an opportunity to rent an apartment in Fairmount or in Center City or in Chestnut Hill, they will now be given a higher subsidy to do so."

The reform, known as Small Area Fair Market Rent, affects those enrolled in the Housing Choice Voucher Program, formerly known as Section 8. It was mandated in 24 metropolitan regions by HUD under President Barack Obama but lagged in court before going into effect last month.

Rhonda Washington knows the impact a significant move can have on a family. She and her three children, 16, 20 and 27, left Nicetown last year for a four-bedroom in the Northeast through a PHA mobility program. About 300 of the 19,000 families enrolled in the voucher program relocated to "higher opportunity" neighborhoods.

"We never went outside" in Nicetown, Washington said. "My kids couldn't go out for walks without being afraid of getting shot, getting into a fight." She pulled her son and daughters from public school when they were younger and enrolled them in a cyber charter so they could attend class at home.

When PHA took Washington to visit the Northeast brick rowhouse, in a development of manicured green lawns and pink magnolia trees, she was skeptical. When she saw the $1,650 rent for the four-bedroom — more than double the Nicetown cost — she sensed a scam. Washington, who works as a case manager for people with disabilities, saved up enough to double her contribution to $736; her voucher is worth $914. The family moved in last October.

The key to more stories like Washington's will be finding available spaces in those "higher opportunity" neighborhoods and landlords willing to rent to tenants with vouchers. With no new money coming in and the number of vouchers remaining the same, rental subsidies have dropped in lower-income neighborhoods to align with the market and make up for increases in more-affluent zip codes.

"People will choose to live where they want to live," Ira Goldstein of the Reinvestment Fund said. "And landlords will choose to accept a voucher or not, but one of the impediments has been landlords arguing the rents have not been high enough to make it work. This addresses that."

But some housing experts worry that the new rates could mean a decline in the availability of apartments.

"It will ultimately hurt tenants," said Walter Lapidus, owner of Anchor Realty, which manages 900 units in Philadelphia, 100 of which are funded by vouchers. "The neighborhoods that PHA wants them to move to, I don't think there will be enough landlords accepting vouchers there. And if landlords in other neighborhoods feel like they're taking a cut on the rent because of new rules, they will be more likely to not pursue Section 8 [renters]."

Lapidus said he's seen the landlords he works with renting to fewer voucher tenants over the years because of extra work involved and a strong rental market. It typically takes longer for a person with a voucher to move into a unit because of required inspections, paperwork and other red tape, he said.

Philadelphia has a law that prohibits landlords from rejecting a client solely based on source of income, but investigating and proving discrimination can be difficult.

Suburban migration?

By the numbers, the changes would make it much easier to rent in traditionally sought-after suburban towns. The payment for a two-bedroom in Blue Bell increased from $1,392 to $1,925. In Malvern, a two-bedroom voucher increases from $1,140 to $1,722.

Suburban counties typically don't have laws prohibiting discrimination based on source of income. Tenants are often responsible for first and last month's rent plus a security deposit. That expense could be prohibitive in neighborhoods where rents are high.

Moving out of county, called "porting," also comes with complications. In some cases, the housing authority where the tenant moves issues their voucher. In others, the sending-county is billed. If an agreement can't be reached, sometimes the person can't move at all.

"It's probably more likely that you'll see mobility within the city than from the city to the counties," said Goldstein, of the Reinvestment Fund. "There may be some increased interest around transit hubs."

Depending on the town, it could be less affordable to move to the suburbs. Take Delaware County, for instance, where about 500 Philadelphia families with vouchers have moved in the last two decades. In two-thirds of the county's zip codes, the rent the housing authority will pay dropped.

Lawrence Hartley, executive director of the Delaware County Housing Authority, worries what that will mean for voucher holders there. The new rates will be phased in gradually for existing tenants but people who move in neighborhoods where the rate paid has decreased could be on the hook to pay more. That would happen at the same time HUD is proposing a rent increase, he said.

Chester County, conversely, saw an increase in what the housing authority will pay in more than half of its 53 zip codes. That could mean more movement within the county, said its executive director, Dale Gravett.

"The payment standards are much higher in some areas, so a family could move to one of those areas and find affordable housing where before you could not," Gravett said. "We'll see what happens; there's a lot of uncertainty out there right now." Gravett has also heard from landlords who want to drive up rent, given the increased payments. He estimates that the authority will spend $300,000 on increases to existing leases this year.

In Montgomery County, 10 percent of voucher holders already live in the "highest opportunity" zip codes, said Joel Johnson, director of the housing authority there. He doesn't anticipate much out-of-county migration.

"People with vouchers in Philadelphia were already moving here before, and I don't think this program would increase that," Johnson said. "I think there are challenges on the ground relative to down payments and public transportation access. Some of the most expensive zip codes in Montgomery County don't have, necessarily, public transit."

For Washington, the move to the Northeast neighborhood known as Modena Park has had an immediate impact. The family takes every opportunity to go on walks around their development. Her daughter wants to enroll in 11th grade at the neighborhood school. Washington recently got a promotion, which she attributes, in part, to feeling less stressed at home.

"I didn't even know this place existed," said Washington, who grew up in South Philadelphia. "Coming home every day, it makes me want to do better. I think you have to be in a good environment in order to do better."