RD745 - The Virginia Housing Stability Fund Model Program Guidelines – Submitted Pursuant to Budget Item 114 N.

Executive Summary:

Nearly 300,000 low-income Virginia renter households occupied a home that was not affordable to them in 2017, and the numbers have only increased over the last 5 years. Approximately 29% of all Virginias are cost-burdened, meaning they pay more than 30% of their income on rent. While extremely low-income and very low-income households most urgently need affordable rental housing, an increasing number of low-income renter households are also struggling with rising rents.

The Federal Housing Choice Voucher program is designed to alleviate these problems by giving tenants a voucher that they can use on the open market to rent an otherwise unaffordable home. The tenant pays 30% of their income towards rent and utilities, and the voucher pays the rest. However, there is a significant need for more vouchers at the federal level. Waiting lists are extremely long, and only one out of every four households that is eligible for a voucher actually receives one. While some states have a state-level rental assistance program that is similar to the federal Housing Choice Voucher program, Virginia does not have such a program.

Item 114N of Chapter 2 of the 2022 Acts of Assembly, Special Session I directs the Department of Housing and Community Development to convene a stakeholder workgroup which will develop model program guidelines for the Virginia Housing Stability Fund. The Fund would provide state-funded, long-term rental assistance for lower-income, cost-burdened Virginians. Based on suggestions from stakeholders, the Virginia Housing Stability Fund should:

• Prioritize housing stability, reducing homelessness, landlord participation, housing mobility, housing choice, creating resource-rich communities, reducing administrative burdens, increasing housing stock and production of units for underserved populations, and the transition to unsubsidized housing when feasible;

• Utilize direct to tenant payments to decrease administrative burdens on landlords and increase autonomy and flexibility for tenants;

• Equally fund both project-based and tenant-based vouchers to increase the number of affordable units available;

• Provide funding for a wide range of housing expenses;

• Update the payment standard and Fair Market Rent calculation to better reflect rental markets;

• Be implemented on a statewide basis by a state agency with appropriate jurisdiction;

• Make the proper up front investments in software, human resources, and other infrastructure to ensure a successful program.

With these recommendations, the Virginia Housing Stability Fund can be a wellfunctioning program that funds affordable housing construction, reduces barriers to landlord participation, and actively promotes mobility and housing choice for tenants.