Douglas Quattrochi – Doug
Matthew Charette – Matt
Doug: Interest. We’re going to talk a little bit about subsidies, and then we’re going to talk about the Hayman and construction upgrades, and water is going to be the bridge between those two.
Subsidy Alphabet Soup is part of the MassLandlords repertoire. In this section, we’re going to talk about what subsidies are. The idea is that if you know what Section 8 is, you don’t need to be afraid of it when someone applies with a Section 8 voucher. We’re going to talk about all these acronyms or technically they’re called initialisms, a lot of them that we hear in Massachusetts.
I’m going to go through some of the big ones: Section 8, MRVP, HUD, VASH, RAFT, HomeBASE and at the end, we’re going to talk about Subsidy Administration.
A subsidy is a form of financial aid or support given to a particular economic sector. It could be farms, it could be renters, to promote economic and/or social policy. In Massachusetts, we have a particular set of laws here that make our situation different from pretty much every other state in the country. You can’t decline to rent to someone because you don’t like that they receive public assistance because you don’t want to participate in the public assistance program requirement, because you don’t want inspection. You can’t decline to rent to someone because of that, but you can reject them for other reasons.
We’re going to talk about what that means in the discrimination context here but let me just give you an example here. If someone shows up with a Section 8 voucher and they say I want to rent your apartment, you can’t say I don’t accept Section 8. You can’t say I don’t want an inspection. You can’t say I only do one to month agreements since Section 8 requires a lease.” But you can say, “I require a first, last security to move in and I know that your particular program doesn’t pay security or last month’s rent, and you told me that your bank balance is not adequate to pay those move-in money, so let me know when you have that, and we’ll talk again.” You reject them for business reason not because of the Section 8 reasons. Does that make sense?
Doug: All right, good. I want you to know how subsidies work, I want you to learn how to screen with subsidized applicant here, so you find the best records for your unit. My longest renter ever was a Section 8 renter because it’s hard sometimes to find housing if you got a voucher. There’s a little bit of a mystique associated with it, and really ensure equal housing opportunity for all.
There is a whole bunch of acronyms here in Massachusetts that we have to deal with. I just want to kind of pick them apart slowly, starting with the big one: Section 8. Officially, Section 8 of the Housing Act of 1937, as amended. This is an old program that’s been running for a long time.
The Federal Government pays money essentially directly to private landlords. There are two types of rent payments: there is the so-called project-based Section 8 where payment is going to go to a unit regardless of who lives in there. That’s the origin of the phrase, the Project. Then there is a mobile voucher where payment is going to go to an occupant regardless of which unit they picked to live in.
Two different perspectives. Though with restrictions on those general definitions, there’s a lot more nuance to it than that, but I think that’s kind of the high-level takeaway for us here. If you’re an established landlord, you should know that you can get project-based vouchers. You can have units that are approved for that subsidy regardless of who happens to occupy as long as they meet their income requirements and so on.
The part that we most commonly talk about here is this mobile component that’s officially called the Housing Choice Voucher Program (HCVP). That’s the same as Section 8. It’s just part of it; it’s not the project part of it. That’s the way landlord most commonly see Section 8. It says Housing Choice Voucher. They get the voucher. They can pick which housing they want to live in.
An applicant will call you and say, “Hey, do you take Section 8?” The answer is…
Audience: Of course I do.
Doug: Of course I do! Very good. You cannot say, “I don’t take Section 8.” If you will do, you will get in big trouble. You’ll also be really unfair. The reason renters live with this question is because lots of landlords, not the people in this room, but lots of landlord say, “I don’t take Section 8.” The renters are sick and tired of getting through the application process only to find some discriminatory landlords is not going to give them a fair shot.
Section 8 is tricky because you’re not going to screen on income. You might say, “Hey, you can’t afford this apartment,” but that’s what Section 8 is for. It guarantees that the renter is going to pay less than a third of their income to rent, so they’re going to meet an 3X rent ratio, but be careful if you have higher rent ratios, right? I don’t know if that’s been tested or not.
If you apply it across the board and everyone who rents this luxury penthouse needs a 5X rent ratio. That’s probably going to fly. You can probably stick to that, but if you use a 3X, which is kind of the standard that we recommended, Section 8 is going to guarantee that they won’t pay more than a third of their income to rent, so they’ll pass that income screen, provided the rent is reasonable. This is where the inspections come in and we’ll talk about that, but provided that the rent you’re asking for is reasonable and you’re not trying to milk Uncle Sam for all the subsidy’s worth, that’ what the program will do.
You still want to screen on credit if that’s what you do—on criminal, on their eviction history, on their housing stability, on how long they had their sources of income. Anything that you do for a normal renter besides income, you’re still going to screen with Section 8. We’ll talk about that a little more later, but I’ll just say the program does screen criminal, but that’s only to determine federal eligibility. It has nothing to do with your criminal checks for your rental housing, for your business. So somebody says I already got a criminal screen, so yes, but I have to do my own.
You do want to get proof of that subsidy from the administrator. This is a little frustrating. They’re not going to tell you any numbers generally. They don’t know what the actual rent payment is going to be because they haven’t evaluated your rent reasonableness yet, but you can get proof. The subsidy administrator is going to issue a later basically that says, “Hey, Future Landlord, this person is a part of our program and we want you to give them air consideration.”
Here’s the process. The renter is going to apply on your normal rental application; same thing you do for every person. you give them the same tour, same phone screen, same everything. You’re going to screen them all pretty normal less that income section, like I said, and you’re going to approve that renter by signing this letter to the subsidy administrator.
The letter can be confusing, depending on which administrator is doing it. It might sound like you’re saying, “I’m interested in learning more.” You’re saying the renter is approved if you sign anything on administrator letterhead. The administrator is going to schedule an inspection of your apartment and you’re going to have to fix what they say is needed, and the administrator is going to reinspect if you have to make changes or they’ll just pass you the first time.
Then you’re going to sign your normal lease, normal, what do you do for anyone. It can be month to month. It’s going to be a lease because they did all this trouble. They went out and inspected your unit and that cost them and everything. They want to make sure the renter is housed for a while, so you sign a normal lease. After you signed a Housing Assistance Payment, rider, the HAP, there ae some administrators that use HAP in their title. That refers to this Housing Assistance Payment.
Now this Housing Assistance Payment is what I call magic secret math like we don’t really know. The administrators know it works, but we don’t really how it works and we won’t know and the renter won’t know.
The program is going to calculate based on the renter’s declared income and on your rent level, on the condition of your apartment what is being paid by whom. The amount is going to vary, so if you’re in downtown Worcester, that’s going to be different from Northern Worcester County, different from Boston.
The apartment condition is going to matter. If you got vintage green bathtubs, you’re going to score lower on your apartment quality than someone who has just done a new renovation. Also dependent on I mentioned income and the renter’s household size.
I’ll just take a brief tangent here. Some people think it’s a law that you can’t have two kids, a boy and a girl, sharing a bedroom or whatever. That’s not a law. That’s an entitlement that if the renter has a boy and a girl, siblings of certain ages, they’re entitled to extra bedrooms for their rent reasonableness. It comes from this. It doesn’t mean you can’t put them together. It just means that if they want a three-bedroom, they might be entitled to it if they got a boy and a girl.
All right, we’re going to go to this lease signing. Generally in person; it can be done over mail, but it’s on paper. It’s still on paper, right? It’s on paper. Actually interestingly, there’s a chance of I don’t know if it’s been made public yet, but there’s a chance of some really good feedback right to HUD coming up, so we’re going to try to say, “Hey, you should have electronic leases because that’s convenient, but you’re basically going to find out at lease signing who pays what, and then this housing assistance payment addendum is pretty standard. You’ll agree to that as well.
All right, let’s go to Section 8. The Federal portion of rent is guaranteed. That’s a pro; with less risk. We’re going to take the rider here, the cons. The lease rider says, “If there is a shutdown, you can’t evict the renter because we haven’t paid our part of the Federal rent. You’re going to grant the government an indefinite interest-free loan.”
Audience: Who does that?
Doug: That’s not great.
Doug: Specially because shutdowns tend to happen.
Audience: Yes [laughter]
Doug: But let’s go back to the pros. Assuming things are normal, that’s guaranteed and even if there is a shutdown, they would pay all the rent afterwards. You’re going to get direct deposit for free; that’s pretty convenient. You’re going to help someone. Obviously, they’re going to get a better home than they can afford on their own, and you will have a longer average tenancy. It’s hard for renters to find a landlord who will take Section 8. I think anecdotally, you might get twice what you might normally see, so if your average tenancy is about 18 months, you might get 3 years out of that.
Back on the con side. These subsidy administrators, no offense to anyone in the room, sometimes promise more than they can deliver on. In general, they will say anything that comes up during this tenancy. You call me, I got your back. That’s kind of a sales pitch in a lot of cases. It does happen and some administrators go the extra mile to help you once you got a renter in place and some have special programs designed to fund back continuing case management, but a general Section 8 administrator can’t help you past the point of signing up the renter; you’re on your own there.
You will have to get yearly apartment inspection depending on budget cuts. If your apartment is in good shape, they might waive you every 2 years, but you’re going to have to keep up with that. If the tenant doesn’t comply with the paperwork, their Section 8 might get pulled from them and the program might not tell you, but they’re still going to be your tenant in your building, so you want to have good communication and like I said, screen. Not all Section 8 renters are irresponsible and uncommunicative, but if you get one that is, and this subsidy is going to lapse somehow, you could have a real serious problem. You will have generally speaking longer vacancy waiting for that inspection to happen and that paperwork.
If you search our site, we got an article about how one renter here in Worcester who went to the ER because she thought she was getting kicked out of her old place and the new place hadn’t leased up yet. A question or comment there?
Rich: I have a question. Has anybody had an experience or you know the answer, if a tenant somehow pulls off the Section 8 program mid-lease, is that possible? If so, how do we find out about it and what we do about it?
Doug: We have an administrator here who is going to talk in a minute. In general, Section 8 like that is possible, I think. They tried to time it with the releasing, so it shouldn’t happen but it’s possible. How do you find out about, I mean you got to watch your bank account. You have to reconcile and when the payment doesn’t arrive on the first like it should, that might be your only clue that something is wrong.
Doug: Comment, Rob?
Rob: Yes. I got a Section 8 for many years, and they’ve gotten much better at communication. You get a letter. You get a letter. Just make sure you have a proper mailing address that you give to them and not a bogus one because you don’t want your tenant to know where you live. Give them the right information and they’ll send you a letter; at least they have for me.
Rich: Free. That’s perfect.
Doug: Do you mind to share which administrator? Is it a Worcester one or is it?
Rob: Yes, so I’ve dealt with the housing people, Section 8 housing on Belmont. RCAP.
Doug: Worcester Housing Authority and RCAP?
Rob: Yes, RCAP.
Doug: You get letters from both?
Rob: Yes, and Friendly House.
Doug: Okay, good. Good to know. I’m glad. My slides are sometimes tainted by experience from elsewhere, so it sounds like maybe Worcester is not so bad off.
Rob: I think my experience again, but just one more quick point. When you say to stay on top of the tenant regarding their program, I have found that they want to be on that program and they don’t want to be let go of this, so they want to be part of this as much as you want to continue to receive your income. They’re scared to death of losing it.
Doug: Yes, all right.
Rich: It means they’re going to [crosstalk 0:13:46]
Doug: I agree, so most renters would bend over backwards to make sure they comply and do all their paperwork. I agree. Other comments? Bill?
Bill: Yes, I wouldn’t depend upon doing a background.
Doug: Of course not. Don’t depend on that. Do your background check.
Bill: Yes, I have one where supposedly you do a background and I did my own and they had an active case where they owed $5,000 to their previous landlord.
Doug: Right. Yes, as I mentioned, do your own screens.
Bill: The person in Section 8 said, “Oh, no. We don’t have to screen. We don’t have to [crosstalk 0:14:20]”
Doug: That’s right. As I said, you’re on your own. The administrator might promise things that they can’t deliver on. Yes, because they’re trying to lease up. Mike, comment?
Mike: In a hypothetical situation, I’m sure this has never happened to anybody. The tenant wants to rent your apartment. The voucher is only good up to $1,200 or so, but if you have your rent, mark it at $1,400. The tenant offers to pay the extra $200 alongside. Can they do that?
Doug: No, they cannot.
Mike: That’s what I thought.
Doug: No side deals. You cannot have any kind of side, even for if they’re into labor and snow clearing and landscape or anything like that. Now it doesn’t mean that the administrator can’t waive up to that higher rent, but you can’t have them do on the side. Dave?
Dave: One of my screening questions is, “Can you afford the rent that’s on the ad?” Is that a fair question?
Doug: Well, I guess it’s fair, but we recommend as our best practices is ask what are your sources of income, kind of assume that someone who is applying for an apartment thinks that they can afford it. If you ask can you afford it, I would guess probably about 100 percent of your answer is going to be yes.
Dave: Well, someone coming in with a Section 8 voucher, they don’t know what they can afford. It’s been my experience. It’s true.
Dave: It’s not true.
Doug: No, this has been one of my complaints with HUD is that math is magic, and they haven’t been told necessarily. Also the rent reasonableness standards vary by attributions, so they’re shopping in a couple of places. They don’t know what’s reasonable for this area or that. They don’t know when the program is going to kick in, so it is very difficult. Assume that they get Section 8, that the program is going to take care of it. Rich, comment? Question?
Rich: Is it valid to go by what their current setup is now, if they’re paying $1,200 somewhere else and their portion is $400. Is it reasonable to assume that they’re going to pay [unintelligible 0:16:30] loosely based on that? I’ve had a good experience with that. I don’t know what other people had.
Doug: So, you’re saying if the renter is currently renting at $1,200 and they’re paying $400 as their share, assume that that’s going to apply to your new unit?
Rich: Yes, sure. Mine is $1,400, and maybe their share is going to be $500, or something like that.
Doug: Yes. I mean there is no reason that that would work out that way.
Dave: That’s not true.
Dave: People from Boston all the time are calling, looking for nicer housing, better school, and the Section 8 will not offer that much. They will stay in Boston at a much higher rate than to send people out here in the school system of Worcester County.
Doug: Yes. When he gets to the point of talking about the subsidy administrator a letter proof of the subsidy, you can look on HUD for the fair market rent for your metro region, match it in, and you will see two bedroom is going to be whatever it is, $1,450. Then call the subsidy administrator and say, “Hey, I’m asking $1,600 for this two-bedroom. Is this going to pass the rent reasonableness we’re going to [unintelligible 0:17:35] here? Then they might say no, then problem solved. Mike?
Mike: What I’ve been doing on the topic of rent reasonableness is when I get a call from a Section 8 tenant, I’ll ask them how much is their voucher worth, they usually don’t know. I’ll say this apartment rents for this much money. You need to call your administrator or the person you’re dealing with, say they will pay it and then call me back.
Doug: That sounds like good advice. Let me bring up the subsidy administrator here who is with us tonight. We’re going to talk more about Section 8, but this is specific set sight for veterans, people who serve our country, get a little bit of extra help.
We have with us here Matt Charette. Matt, would you like to walk us through, maybe take some more questions from the audience and explain kind of how the VASH program works.
Matt: Sure. Thank you, Doug. Anyways, first I’d like to start off by saying thank you for inviting me here. Thank you, Doug, for helping coordinate this and everyone in attendance. I’d also like to ask how many people in the room have served in the Armed Forces of the United States? Can we give a round of applause for all of them?
Matt: How many people in this room have a family, friend, loved one that has served or is serving? It seems like the military has touched a lot of people here. To go on some points about my specific program that works with veterans that have been homeless or currently homeless, so we don’t do a lot with the math. We work with the Housing and Urban Development Department. It’s a combination of the VA working with HUD to get veterans into a Section 8 program, so it’s the same kind of rules and nuances.
To speak on some of the questions that you guys had for the fair market rent and everything, that’s kind of what the guidelines that HUD will be using to say how much an apartment should cost in a certain area, so Boston rates are higher because the cost of living is higher up there. They’re pretty much set on those numbers.
The rent for veterans might change depending on their income status. In Massachusetts technically, all the veterans that are eligible for Section 8 vouchers are basically also eligible for Chapter 115, so their portion of the rent might increase or decrease based on their eligibility for Chapter 115 and other things, so about my program specifically.
We have case managers and peer support specialists that help out veterans locate apartments and stay in their apartments, so if a veteran is working with you, if you decide to lease up a veteran with a Section 8 voucher, they have not only their nuances and social supports, they also have the case manager that can help them out, navigate some systems, and if somebody is going to go into a crisis or stress out about things, we can help them brainstorm and seek out other resources so that they can make sure that they are good tenants, so that they can continue to pay their rent on time.
That being said, if you guys start noticing because as case management goes through the stages, we’ll see them less as they’re becoming more independent because our whole goal is to help the veterans become independent, so that two, two and a half years, hopefully that veteran still has the voucher, but they don’t need myself or any other social workers or peers to kind of be there with them.
That’s not to say that somebody might need extra support going on. We will go and see a veteran even if they’re discharged from case management completely, or if the landlord contacts us and say, “Hey, Joe hasn’t been returning my calls,” or, “Joe is a little late on the rent. Can you check on him?”
Then we check on Joe, and maybe Joe just had an experience or it’s a tough month because Memorial Day is coming up and he’s remembering his friends that didn’t come back with him, or she’s not remembering the friends that came back. As things change, we can be there to kind of help the veterans stay on the course to be housed because our program is helping veterans have long-term stable housing.
Any questions or? That was a lot.
Male Audience 1: Are you working out of the Armory down on Grove Street?
Matt: No. Our office is located on Lake Ave, so we’re at the VA Hospital and Clinic actually.
Male Audience 1: Yes, Lake Ave.
Matt: Yes. Question in the back.
Male Audience 2: I like this site. I’m just wondering how it’s going. I like the extra support for people on Section 8, which is great because Section 8 gives them a little bit of support but not like this sounds like this is a lot more.
Matt: Yes, our program is that we help the veterans locate housing. Once the veteran is found eligible for voucher and he gets a voucher, we help them on the apartment search. We help them get their support. We help them to contact the electric company for the first time, so the veterans that we work with, one particularly I’m working with was homeless in the woods for 10 years.
Matt: He has been outstanding, paying all his bills on time. He guaranteed money from the voucher coming in. What’s that?
Female Audience 1: Was that on the news today?
Matt: I don’t believe that was my veteran, but I know that some veterans struggle with that.
Male Audience 3: Do you do background and criminal checks on these people before?
Matt: We do not believe, but we encourage the veteran to be very honest and forthcoming because sometimes things happened in their lives that were difficult, and that they hadn’t had the smoothest transition back into the civilian world. As a veteran myself, I understand those difficulties, so sometimes they don’t have the good support, so we just try to help them articulate them to the best way possible, so we’re saying, ‘Hey, you got to be honest about this.”
Also, we will provide the veteran and give them the paperwork and have them file the paperwork, so that they can come with the background checks in hand from the state police department, we know where the resources are, the town, to go find and get the queries done. Yes, ma’am?
Female Audience 2: Do you help veterans with housing if they’re not on Section 8?
Matt: All the veterans in our program are actually have VASH Section 8 vouchers, so those are specific vouchers that housing authority has just for eligible veterans. That’s not to say that sometimes we don’t have that veterans that either contact our office that get stuck and have a stuck point and say, “Hey, I don’t know what to do.”
The front desk usually will be like, “I don’t know what to. Just send it over to our office anyway, so the veteran is eligible if they have questions, we’re not going to say, “You’re one of our veterans clique.” You say, “Okay, who’s in the office?” We figure out who can address the issue right where it happens and talk with that veteran.
Male Audience 4: I’ve had very good luck to the point of I’m condo association director. I had a veteran who used to be in one of the units I’m responsible for, and each town has a Veterans’ Affairs officer. Those Veterans Affairs officers can sometimes navigate the complicated stuff that veterans go through.
Matt: Yes, you were talking about the Veterans’ Service officers in the towns. In the town of Worcester, that would be Ed O’Connor and they’re very good resources. Like I said, Chapter 115 is actually out of the Veterans’ Service officer’s office.
Male Audience 4: Each town has one Veterans’ Affairs office, don’t they?
Matt: Yes. It gets a little complicated. Smaller towns, three might share one; more often than not, every town has one. Anyone else? Also, I left [unintelligible 0:26:01]. If anyone is interested, I might be able to stand out there, anybody has follow-up questions and email is up there. If you have one-bedroom, two-bedroom apartments looking to rent to some veterans, you can contact us.
Female Audience 3: Excellent.
Matt: Thank you.
Doug: Thank you very much, Matt, and thank you for demonstrating in person the difference between Section 8 in general, which does not come with case management or dedicated support, and the VASH program, which does and has very active and engaged case managers working with veterans. You want to understand what type of subsidy it is and if they are a veteran, they probably will say, “I have HUD and VASH.”
There’s one last Section 8 type program out there. That’s the Massachusetts Rental Voucher Program, MRVP. The same as Section 8, but it’s Massachusetts funded, the same issues and pros and cons I mentioned before. There’s one difference. It’s inspected upfront and to my knowledge, it’s still not inspected yearly. Is it still just one inspection even good for 30, 40 years? I think it is.
MRVP probably will sometimes get a little bit of a bad reputation because they’re not re-inspected, but you could say someone might apply and say, “I have Section 8,” and you read the paperwork and it’s actually MRVP –similar thing, different funding source.
You should know about HomeBASE that’s awarded to families exiting homeless shelter. It’s a “one and done” payment. It’s not recurring. This is really important. They’re going to get $8,000 through the renter advocate but that could go to furniture. It could go to move them or their family in and out of town. It could go to rent and security deposits.
Because it’s one and done, it’s much less stable than permanent supportive subsidy like Section 8. You need to find out how that money is going to be allocated and work that into basically their move-in money. Screen on income because $8,000 is not really income. That’s like cash in the bank; different. Question?
Male Audience 5: Can people get to HomeBASE as well as Section 8?
Doug: Yes. That’s great if someone gets HomeBASE and Section 8. Now we’re working on advocacy in the City of Worcester here to replace this. I think it should be replaced with kind of insurance product that would be more longer term and doesn’t accept cash disbursement if everything goes well, but that’s story for another day.
What we think you should know about here, Rental Assistance for Families in Transition, RAFT. It’s really only good name and the whole thing. It’s a nice word. If a renter with a kid falls behind, file for eviction quickly. Don’t have a big heart and delay it because once you get that summary process in court, they can become eligible to get up to $4,000 to pay back rent, utilities, fines, whatever it is that’s destabilizing their tenancy.
It gets used a lot in the winter. Don’t delay. Your rent is out of funding at the end of the fiscal year, which for us is March through June, and then it’s refunded in July. If you have a renter with a kid, you can check eligibility online. They might qualify for RAFT; if so, the kindest thing you could do is evict quickly because they will get the money to stay in your apartment.
Well, last thing about income. There are lots of factors that can add to income and if you’re going to screen fairly to really find the best renters, you want to understand Supplemental Security Income, SSI, and Social Security Disability, SSD. Sometimes, you just call it SSDI altogether.
You will understand that Women, Infants, and Children, WIC, which helps new parents, new women afford healthy food and healthcare for their kids. Then the former Food Stamps program, Supplemental Nutrition Assistance Program, SNAP.
These things, if somebody says I get SNAP quicker SSI or SSDI, find out what the value of that subsidy is. It could be substantial. They could afford your entire apartment just on disability, so make sure you understand you’re accounting for that fairly.
Okay, sometimes people say, “I’ve got SMOC,” or, “I’ve got RCAP.” They’re not being precise. These are subsidy administrators. RCAP is an organization here that disburses Section 8 money and might do batch work and might administer RAFT. As long as there is RCAP, you got to find out what subsidy it is that they have underneath. It’s not RCAP. It’s not up there.
All right, just some quick FAQ here.
“Do I have to take Section 8?” As I said, no. You can reject them for an unrelated reason.
“Are Section 8 renters prescreened?” No, not for your purposes. Do your own screening.
“Are subsidized renters riskier?” The answer truthfully is yes unless they’re screened properly. Don’t assume because they presented with a subsidy that HUD presented that their rental application has checked out. Income has to be adequate to pay for the rent and there has to be a subsidy, a permanent subsidy for that.
If they don’t have the ability to pay security deposit, if they have bad credit or criminal history, those are your normal renter risks. It’s not particular to the subsidy, so screen. Just don’t be lulled into a false sense of security is what we’re saying.
All right for further reading, we’ve got a great page. We add to it every time we learn something new, questions are asked, MassLandlords.net/laws/section-8. Tons of information there.