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Can you tell us a little bit about your Expanded Housing Choice Initiative?
Our Expanded Housing Choice (EHC) Initiative is closely tied to HUD's Housing Choice Voucher (HCV) program. The HUD program helps provide housing for very low-income families, seniors, historically underserved populations, and people with disabilities. The HCVs are administered in the localities by public housing agencies (PHAs). Those PHAs pay a set subsidy toward the rent. And then, the renter is responsible for the difference between the fair market rent HUD establishes and the subsidy.
The EHC Initiative is a pilot that we're running right now in North Carolina and Texas. It lowers borrowing costs for properties that meet the program eligibility guidelines, which include a commitment to accept housing choice vouchers as a source of income. By accepting the housing choice vouchers, the housing providers receive benefits from both our program and HUD's program. That's the pricing incentive from us; from HUD, it's a steady stream of income and guaranteed rent payments. In exchange for the pricing incentive, the housing provider is committing to accepting HCV renters throughout the loan term. So, it is a life of loan commitment.
What requirements are there for participating in the program?
What we're trying to do is help more renters find stable and affordable housing. The property can't already be required to accept housing choice vouchers. We're not going to incentivize a property that's already participating in a program that requires HCV acceptance. And 20% of the property's units must be at or below the applicable HUD fair market rent or small area fair market rent with the respective PHA payment standard factored in.
We are focused on connecting the HCV renter to the property, so any participating housing providers are required to list their properties or the available units with their respective PHA on AffordableHousing.com.
How are you ensuring providers follow these requirements?
We're engaging the Urban Institute to help monitor the properties, and we are very transparent about that relationship with our partners. The Urban Institute is ensuring that participating properties are, in fact, accepting vouchers.
What's the motivation behind EHC?
The idea behind the pilot is to expand the number of housing providers that accept HCVs and to expand housing options available to voucher holders. Although the HCV program is the federal government's primary program for assisting very low-income families, the elderly, and persons with disabilities to afford decent, safe, and sanitary housing in the private market, there is a pressing need for more property owners to accept voucher holders as many voucher holders return their vouchers because they are unable to secure housing.
Black and Hispanic households make up roughly two-thirds of the voucher holders but only 40% of the renter population. And almost 80% of voucher households are women-led. Property owners that take part in Expanded Housing Choice are building strong, vibrant, resilient communities while fostering more diversity in high-opportunity areas that advance positive outcomes in education, employment, and health. Importantly, communities with more housing opportunities equip property owners with steady income streams, competitive rent payments, and lower turnover vacancy.
What were some challenges you had to overcome to implement the pilot?
There really are a lot of misconceptions in the market about the HCV program. Part of the work we did was with Enterprise Community Partners, and we focused on providing resources to help housing providers get the most out of the EHC and HCV programs. This included developing toolkits to help lenders better understand the many benefits of EHC and HCV and to help housing providers get up and running on the HCV program. In addition, we shared a lot of HUD resources with our customers via our trainings on the EHC website.
How's the market reacted to ECH?
The reception has been really positive. It takes a little while for a new initiative like EHC to get traction. To date, we've signed up five properties, which we're incredibly thrilled about since only a subset of properties are eligible based on the criteria.
We've seen a huge uptick in interest in 2023, and I think we're at an inflection point. Looking at our pipeline, I'm optimistic that we'll continue to sign up some additional properties.
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