Mobility-based housing programs seek to move low-income families to low-poverty neighborhoods

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When Rita Ytzen, a senior program supervisor at the Minneapolis Public Housing Authority (MPHA), discusses her organization’s relatively new initiative to help low-income families with children move to low-poverty areas, she uses words that evoke optimism and fresh starts.

“The hope is that if we can help impoverished people move to areas of greater opportunity, they’ll have access to better schools for their children and a safer environment in which to raise their families,” she says. “We want to help people who want to help themselves. We want to give them a second chance.”

Having the opportunity to live in an area with greater resources is particularly significant considering the sizable body of research that has demonstrated how children can fall behind academically, physically, cognitively, and economically when they live in high-poverty neighborhoods, which frequently have elevated levels of violence, low-performing schools, and low environmental quality.[1] When low-income children move to areas with low poverty rates, however, recent research has found that, depending on the age when the child resettles and the number of years he or she stays in the new surroundings, the economic and educational outcomes can be positive and substantial.

Ytzen hopes to give Minneapolis-based families this chance through the Mobility Program, an initiative announced by MPHA in 2010 that is designed for participants in the federal Section 8 Housing Choice Voucher (HCV) program. The Section 8 HCV program, which is funded by the U.S. Department of Housing and Urban Development (HUD) and administered by housing authorities across the country, provides rental assistance in the form of vouchers that income-qualified recipients use to help cover the costs of renting market-priced housing from participating landlords. (For more on HCVs, see the sidebar below.) Although one of HUD’s long-standing goals for the program is to provide opportunities for individuals and families to move out of high-poverty areas, Section 8 HCV recipients may choose to live in any neighborhood, regardless of its poverty level. In contrast, MPHA’s Mobility Program requires families to move to “non-poverty-impacted” areas of the Twin Cities metropolitan region.[2]

The Metropolitan Council, a policymaking body and planning agency for the seven-county region, has announced a similar initiative that will encourage HCV holders to move to a lower-poverty neighborhood. The program will be administered by the Metropolitan Council’s Housing and Redevelopment Authority (Metro HRA), an entity that oversees the Section 8 HCV program for much of the metro area. The premise behind the new MPHA and Metro HRA programs is that low-income families, particularly those with children, who move to areas of greater opportunity will have better short- and long-term economic, educational, and health outcomes.

“We want to make sure that the families we serve have a full choice in terms of where they live,” says Terri Smith, Metro HRA manager. “Good education, low crime, jobs—these are qualities of areas of opportunity, and we want to ensure that the families we serve have access to them.”

Re-examining Moving to Opportunity

One of the more notable efforts to understand and quantify the effect that moving out of high-poverty neighborhoods has on a family’s economic, employment, and educational attainment was a HUD-sponsored program called Moving to Opportunity (MTO). Starting in 1994, MTO took place in Baltimore, Boston, Chicago, Los Angeles, and New York, and tracked 4,604 volunteer families for 15 years as they lived in different areas of their respective cities. Enrollment of the families took place until 1998.

To be eligible for MTO, families had to earn less than 50 percent of the median income in their metro area, reside in public housing, and have children under the age of 18. The families were randomly assigned to one of three groups: an experimental group, in which each family received a housing voucher to live, for at least a year, in a census tract with a poverty rate below 10 percent; a Section 8 HCV group, in which each family was given a housing voucher to live anywhere it chose without conditions (but still within the parameters of the HCV program); and a control group, in which each family lived in public housing and was not given a voucher. All of the families participating in the study were required to pay 30 percent of their yearly income toward housing.

The initial results of the study, as described in a November 2011 report, were mixed: While adults who were offered housing vouchers and lived in lower-poverty areas experienced an improvement in mental and physical health, the new surroundings did not have significant effects on the earnings and employment rates of adults or grown children. The initial analysis also found that moving to lower-poverty areas had little effect on the educational outcomes for children and teenagers.[3]

Further analysis, however, has revealed significant positive outcomes for a subset of the MTO families. In their May 2015 paper The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment, researchers Raj Chetty, Nathaniel Hendren, and Lawrence F. Katz found that children who moved to low-poverty areas when they were younger than 13 not only earned more in annual wages and attended college at a higher rate but also tended to live in lower-poverty neighborhoods as adults and were less likely to become single parents.[4] Linking previously gathered MTO data to newly available federal income tax data, the paper’s authors found that children who were younger than 13 when their families used the experimental voucher to move to lower-poverty areas had, by the time they were in their mid-twenties, average annual incomes $3,477, or 31 percent, greater than the average annual wage of those in the control group. Extrapolating from that figure, the authors estimate that moving to a low-poverty area at a young age could increase a child’s lifetime earnings by approximately $300,000. Moreover, they found evidence suggesting that the longer a child spends in low-poverty surroundings, especially starting from an early age, the greater the impact. (Conversely, the researchers found negative effects associated with the earnings for children older than 13 at the time of their move; they speculate that the social disruption of a move to a new, unfamiliar neighborhood may be the cause of this outcome.) The authors posit that “providing more Section 8 vouchers . . . may have little effect on children’s outcomes, but providing MTO-type restricted vouchers that require families to move to better (e.g., low-poverty) neighborhoods may be quite valuable.”

Preferences and constraints

When housing vouchers don’t carry a mobility requirement, it appears that only about one-fifth of recipients decide on their own to relocate to low-poverty areas. According to a 2014 report by the Center on Budget and Policy Priorities, HUD administrative data from 2010 and 2011 show that, of the roughly 1 million families with children that used an HCV nationally, 20.2 percent, or about 210,000 families, chose to live in neighborhoods (tracts) with less than a 10 percent poverty rate. About 100,000, or just under 10 percent of HCV-recipient families with children, chose to live in neighborhoods with a poverty rate of at least 40 percent. The median neighborhood poverty rate for all families receiving a voucher was 19.2 percent.[5]

Why aren’t more HCV recipients moving to neighborhoods with lower poverty rates? In their 2014 paper “Living Here Has Changed My Whole Perspective: How Escaping Inner-City Poverty Shapes Neighborhood and Housing Choice,” researchers Jennifer Darrah and Stefanie DeLuca cite two overarching reasons for the low rate of relocation to low-poverty, higher-opportunity areas: individual preferences and structural constraints.[6] The researchers explain that individual preferences reflect a person’s tastes and perceived needs (housing size, perceived school safety and familiarity, etc.), while structural constraints are the legal, societal, or market-based realities that prevent or inhibit a voucher holder from obtaining a housing unit in a desired low-poverty area. Structural constraints can include limited availability of public transportation; discrimination by landlords; scarcity of rental units (including moderately priced ones); and specific administrative policies by public housing authorities (PHAs) that can hinder an HCV recipient from securing housing in a desired area, such as time limits on redeeming a voucher and portability restrictions on using vouchers in areas outside the service boundaries of the issuing PHA.

Despite these factors, HUD requires PHAs to inform new voucher recipients of the benefits associated with areas of low poverty and to improve voucher holders’ access to those neighborhoods. The agency stresses that PHAs should learn more about the location of high- and low-poverty areas, recruit owners of rental units in low-poverty areas to participate in the HCV program, and inform and encourage families to consider moving from impoverished communities to low-poverty areas.[7]

A closer look at Twin Cities initiatives

Up and running: MPHA’s Mobility Program

Like the MTO program, the Mobility program in Minneapolis seeks to move families from areas with high poverty rates to areas with lower poverty rates, including areas outside the City of Minneapolis, MPHA’s nominal administrative boundary. However, the Mobility program applies a different poverty-rate threshold. Program participants must move to a neighborhood with a poverty rate lower than 40 percent, which the MPHA defines as “non-poverty impacted.” To be eligible for the program, an HCV program participant (or his or her spouse) must live in a neighborhood with a poverty rate greater than 40 percent; be employed, in a job training program, or enrolled in school; and have children living at home. Families agree, at the risk of voiding their voucher, to live in non-poverty-impacted areas for three years. And rather than having 90–120 days to locate housing and redeem their HCVs, the timeframe during which participants in the regular HCV program in Minneapolis have to use their vouchers (or risk forfeiting the voucher), participants in the Mobility Program have 120–180 days. Since finding housing in an unfamiliar area can be a daunting experience for participants who may lack the resources necessary to locate and secure an appropriate dwelling, MPHA case managers assist Mobility program participants in the search.

The program also includes pre- and post-move counseling for the families. During the application process, participants take an assessment of their personal and family goals. Does an applicant need a vehicle, for instance, or to obtain a GED? MPHA will link applicants to appropriate information or resources so they can work toward achieving stated goals after they move to their new homes. Ytzen says that the needs of an applicant drive how often MPHA case managers will meet with the voucher holder; at a minimum, the housing authority strives for two consultations per year.

“We’re looking for people who have taken these first steps forward in changing their circumstances,” she says.

Although MPHA’s Mobility Program was announced in 2010, only 25 of the program’s allotted 75 slots are currently filled.[8] Ytzen believes that the lengthy design phase of the program, which began after its announcement and took about 18 months, and turnover in three key staff positions are largely responsible for the program’s slow uptake.

“But the program is indeed active and enrolling more families,” she explains. “In fact, we have seven more in the pipeline now.”

In development: Metro HRA’s Mobility Counseling Program

Earlier this year, Metro HRA announced the creation of its own program to help Section 8 HCV recipients move out of areas of concentrated poverty and into areas of opportunity. According to Terri Smith, the HRA manager, the Mobility Counseling Program is part of the Metropolitan Council’s broader goal of pursuing equity among residents within its seven-county regional boundary.[9]

As of mid-2015, much of the program’s details remain in development, including who specifically will be eligible, where they will be encouraged to live, and for how long. But Smith notes that the program will have at least five components: landlord recruitment, participant recruitment, pre-move counseling, housing search assistance, and post-move counseling.

According to Smith, although Metro HRA already actively recruits property owners to participate in the Section 8 HCV program, the agency will expand its outreach efforts by attending and hosting more informational meetings with landlords in more low-poverty areas. It will also develop print and video materials to help explain the HCV program and enlist additional property owners to rent their dwellings to voucher recipients.

As for pre-move counseling, Smith explains that Metro HRA staff will work with participants on budgeting and financial education training, talk to them about how to be successful renters and neighbors, and help each voucher recipient create an action plan to identify the needs of his or her family. The agency will also work with the program participants to place them in a specific community.

“We’ll provide tours to different areas and show participants the amenities that are available in each community,” she says. “The amount of pre-move counseling really depends on the needs of the family, but we plan to offer a whole gamut of things.”

Smith adds that after program participants have moved, Metro HRA’s counseling services will be perhaps the more important form of assistance, because of the challenges that some people encounter.

“We want to remain connected to participants and help them with any barriers to success they may be facing in their new neighborhood,” she says.

Strategies for success

Counseling is a service that researchers Darrah and DeLuca identify in their 2014 paper as a key strategy for ensuring that HCV recipients settle and continue to reside in low-poverty areas. They conducted scores of interviews with participants in a mobility program operated in the Baltimore area that sought to move more than 2,000 low-income African American families who lived in high-poverty, highly segregated neighborhoods in the City of Baltimore to low-poverty, racially mixed areas in greater Baltimore. The researchers concluded that participation in counseling gradually shifted voucher recipients’ preferences toward qualities associated with low-poverty areas, such as better-performing schools and neighborhood quiet.[10]

Of course, even with counseling, the precise formula for using mobility programs to help families achieve better economic, academic, and health outcomes remains unknown. Below what exact rate of poverty does a neighborhood need to be to produce the best results? How can outcomes for teenagers and adults be improved? And what’s the best way to encourage more HCV recipients, particularly those with young children, to choose low-poverty neighborhoods? These and other questions about mobility-based housing programs merit further study and analysis. As mobility initiatives such as MPHA’s and Metro HRA’s start providing more low-income families with opportunities to leave high-poverty areas, researchers and policymakers will have more opportunities to learn the answers.

How HCVs work The federal government’s Department of Housing and Urban Development (HUD) operates three major programs for assisting low-income households in securing housing: public housing, Section 8 Project-Based Rental Assistance, and the Section 8 HCV program. While the former two programs are place-based, in that they are linked to physical structures that qualified individuals and families can reside in, the latter program is people-based. It endows eligible recipients with the monetary means—a voucher—to secure housing in the private market. Created in the Housing and Community Development Act of 1974, the HCV program is the largest subsidized-housing program operated by the federal government. It provides funding to locally based housing authorities to allocate vouchers to income-eligible residents so they can rent apartments or houses owned by private (i.e., non-governmental) parties. This “free-market” approach empowers voucher recipients to live anywhere within the service area of the housing authority.[*] In general, people receiving these vouchers must pay 30 percent of their adjusted gross income toward rent, a share that affordable housing proponents generally regard as the maximum percentage a household should spend on housing, and the public housing authority (PHA) pays the rest. Each year, the PHA determines voucher payment standards that reflect rent levels for moderately priced dwellings of different sizes within its boundaries—the reasonable costs of two-, three-, or four-bedroom dwellings, for example. PHAs use these standards, which are between 90 percent and 110 percent of the Fair Market Rents that HUD identifies for an area, [**] to calculate the amount that they will pay to subsidize such a dwelling. After a voucher recipient identifies a unit he or she would like to rent, the administering PHA inspects the dwelling for safety and soundness and determines if the rent the owner has set is reasonable for participation in the voucher program. If the rent is deemed reasonable but still exceeds the payment standard, the voucher recipient may still rent the dwelling but must make up the difference. The most a voucher recipient is allowed to pay toward the rent is 40 percent of his or her adjusted monthly income. In all circumstances, the landlord must also be willing to participate in the voucher program. For landlords, participation requires, at minimum, a biennial property inspection to ensure compliance with federally mandated housing quality standards. In general, to qualify for a voucher, an applicant’s household income cannot exceed 50 percent of the median income for the county or metro region in which he or she chooses to live (although eligibility can include those earning up to 80 percent of median income). PHAs are required by law to provide 75 percent of their vouchers to applicants whose incomes do not exceed 30 percent of the area median income. The area median income, which varies by location, is published annually by HUD. According to utilization data from 2013 published by the Center for Budget and Policy Priorities, 2.1 million households nationally, or a total of about 5 million people, used Section 8 HCVs. Roughly 19,300 of these households were in the Twin Cities metro region, which comprises the service areas of 11 different PHAs. The Minneapolis Public Housing Authority (MPHA) served approximately 4,700 of these voucher recipients and the Metropolitan Council Housing and Redevelopment Authority (Metro HRA) helped about 6,000. (More recent data from the two entities show that these figures rose in 2015 to approximately 5,000 for MPHA and 6,300 for Metro HRA.) The 11 PHAs in the Twin Cities region paid a total of more than $153 million in 2013 to property owners who participated in the Section 8 HCV program. [*] Voucher recipients are generally permitted to “port” to areas covered by other housing authorities, but some housing authorities may first require recipients to live within their boundaries for a specified period of time, such as 12 months. To learn more about this option, visit hud.gov. [**] Fair Market Rent is defined as the 40th percentile of rental costs in a specific area.