What is "Section 8"?

The Housing and Community Development Act of 1974 amended the United States Housing Act by adding the Section 8 program which provides a subsidy to bridge the gap between a low-income tenant's means and the cost of private housing. Congress designed the program to encourage new housing construction and substantial rehabilitation on one hand, and to utilize existing housing on the other.

What is the difference between the "project-based" Section 8 program and Section 8 "certificates or vouchers"?

Section 8 subsidies are tied to the project in the new construction, substantial rehabilitation, loan management set-aside and the moderate rehabilitation programs. Under the Section 8 certificate and voucher programs, tenants receive the assistance directly in the form of a certificate or voucher and can use the subsidy in any unit meeting the Section 8 rent limits and housing quality standards that is willing to accept them.

What is wrong with converting the whole program to vouchers?

Finding appropriate housing can prove a perilous undertaking for a holder of a Section 8 voucher or certificate. With a Section 8 voucher in hand, a tenant must find:

  1. A landlord willing to do business with a governmental bureaucracy which may prove to be difficult, especially in tight rental markets.
  2. A unit whose rent does not exceed a specified level.
  3. A unit that meets HUD quality standards, or a landlord willing to upgrade or repair the unit so that it does meet those standards.
  4. A unit of the appropriate size for the family.
  5. A unit with special features if the tenant is elderly or disabled.
  6. A unit with project-based services and/or special facilities if those are required. 

Are Section 8 properties the same as "public housing"?

Section 8 properties are not what is commonly referred to as housing projects or "public housing." Section 8 assisted rental properties are owned and managed by private businesses and provide shelter for households with low incomes. Public housing is owned and managed by public housing authorities and receives funding under a different HUD program.

What is a typical Section 8 property like?

There is really no such thing as a "typical" Section 8 property. Section 8 properties look like any other decent, attractive apartment complex and are as diverse in physical appearance as they are in resident mix. Some properties are single apartment buildings, while some are garden apartments, for example. Some are small properties with only a few units and others are very large. A number of Section 8 properties are only for older renters; others are for families and still others have mixed populations. The majority of the residents of properties developed under the Section 8 New Construction and Substantial Rehabilitation Program, however, are elderly and disabled persons.

Is there a real danger of losing affordable housing stock?

Indeed, there is a real danger of losing a number of Section 8-assisted properties if the project-based system is discontinued. Section 8 subsidy contracts will be expiring for more and more properties in the next few years. According to an August 1993 report by the General Accounting Office, Section 8 contracts covering 61 percent of the total Section 8 units were expected to expire within the next five years. This includes several in the greater Los Angeles area. If these contracts are not renewed, these properties and units could be lost from the stock of decent and affordable rental units.

Who is helped by Section 8 assistance?

The Section 8 program is targeted to renters with low incomes who need assistance. Assisted renters generally may not have incomes greater than 50 percent of the area median income. These persons pay no more than 30% of their income for rent and Section 8 subsidies cover the remainder. Section 8 housing has become one of the major supports for low-income elderly and disabled families. Aside from the Section 202 component which is 100 percent dedicated to the elderly and disabled, over 55 percent of the units in the basic Section 8 program are reserved for elderly and displaced persons. Of the total of 890,000 units in the program, about 600,000 units serve elderly and disabled tenants. In many cases, these projects contain specialized facilities and provide services for the elderly and disabled that could not be obtained by these persons in other apartments in the community. At least 20 percent of Section 8 has been allocated to rural areas and there typically is no adequate alternative to this housing for tenants currently assisted.

What is Section 42?

Section 42 refers to the section of the IRS tax code that provides tax credits to investors building affordable housing. Since its creation in 1986, the Low-Income Housing Tax Credit Program has become the most popular method of financing affordable multifamily apartment.

How does Section 42 differ from other rental assistance programs such as Section 8?

Despite the name, tax credit housing is NOT low-income housing. The tax credit program is designed to provide affordable housing for moderate-income households. Section 42 is a tax benefit granted to the owner for a particular rental apartment. The owner is then required to lease that rental apartment to individuals who do not exceed the set maximim income levels. When leasing the apartment, the renter benefits from the program by paying a lower rental amount.

How do prospective residents determine if they are eligible for a low-income tax credit apartment?

Applicants are asked to complete forms that request information regarding income, family size and financial assets. These factors determine eligibility for the program, thereby qualifying them for more affordable rental rates.