Rental Housing: Information on Low-Income Veterans' Housing Conditions and Participation in HUD's Programs
Released: 2007-08-17T00:00:00

Letter

Background

According to Census data, in 2005 an estimated 21.9 million households, or 20 percent of the 111.1 million households nationwide, were “veteran households”—that is, they had at least one member who was a military veteran. As figure 1 shows, most veteran households—about 80 percent— owned their own homes, a significantly higher percentage than was the case for other (nonveteran) households.

Census data also show that renter households were more likely to be low income than were owner-occupied households. In 2005, an estimated 36.8 million households nationwide rented homes, including about 4.3 million veteran households. Approximately 66 percent of renter households were low income; in contrast, 32 percent of homeowners were low income. Many of these households must rent because they lack sufficient income and savings to purchase a home. Furthermore, studies by HUD and others have noted the difficulties many renters face in finding a place with affordable rents because growth in household incomes has not kept pace with rising rents in many markets.

VA, through a variety of programs, provides federal assistance to veterans who are homeless, and also provides homeownership assistance, but does not provide rental assistance. One of the agency’s largest programs for homeless veterans is the Homeless Providers Grant and Per Diem (GPD) program, which provides funding to nonprofit and public agencies to help temporarily shelter veterans. GPD funding can be used for purposes such as paying for the construction or renovation of transitional housing and reimbursing local agencies for operating the program. In fiscal year 2005, the GPD program spent about $67 million and had about 8,000 beds that were available to homeless veterans. VA also administers eight other programs for outreach and treatment of homeless veterans. In addition to its homelessness programs, VA provides a variety of programs, services, and benefits to veterans and their families. Included among them are pension payments, disability payments, health care services, training and education allowances, and burial expenses. The VA assists veterans in becoming homeowners through its Home Loan Guaranty program, which offers mortgages with favorable terms, including no down payment, limitations on closing costs, no private mortgage insurance, and easier credit standards to qualify for a loan.

HUD provides rental housing assistance through three major programs— housing choice voucher, public housing, and project-based. In fiscal year 2005, these programs provided rental assistance to about 4.8 million households and paid about $28 billion in rental subsidies. These three programs generally serve low-income households—that is, households with incomes less than or equal to 80 percent of AMI. Most of these programs have targets for households with extremely low incomes— 30 percent or less of AMI. HUD-assisted households generally pay 30 percent of their monthly income, after certain adjustments, toward their unit’s rent. HUD pays the difference between the household’s contribution and the unit’s rent (under the voucher and project-based programs) and the difference between the PHAs’ operating costs and rental receipts for public housing.

The housing choice voucher program provides vouchers that eligible families can use to rent houses or apartments in the private housing market. Voucher holders are responsible for finding suitable housing, which must meet HUD’s housing quality standards. The subsidies in the voucher program are connected to the household (that is, tenant-based), so tenants can use the vouchers in new residences if they move. The approximately 2,500 PHAs that administer the voucher program are responsible for ensuring that tenants meet program eligibility requirements and that tenant subsidies are calculated properly. PHAs also are required to develop written policies and procedures to administer the program consistently with HUD regulations.

The public housing program subsidizes the development, operation, and modernization of government-owned properties and provides units for eligible tenants in these properties. In contrast to the voucher program, the subsidies in the public housing program are connected to specific rental units (that is, project-based), so tenants receive assistance only when they live in these units. Approximately 3,300 PHAs manage the public housing program on behalf of HUD. PHAs are responsible for ensuring tenant eligibility for the program, properly calculating tenant subsidies, and ensuring that their policies and procedures conform to HUD regulations.

Finally, through a variety of project-based programs, HUD provides rent subsidies in the form of multiyear housing assistance payments to private property owners and managers on behalf of eligible tenants. Tenants may apply for admission to these properties with project-based rental assistance contracts. About 22,000 property owners and managers currently participate in the programs and, similar to PHAs, must ensure tenants meet eligibility requirements, calculate subsidies correctly, and develop administrative policies and procedures that are consistent with HUD regulations. For most of these project-based properties, HUD contracts with PBCAs—typically state and local housing agencies—to oversee property management and process requests for payments from property owners. The PBCAs are also responsible for conducting annual management and occupancy reviews, which include reviewing property owners’ tenant selection plans.

HUD rental assistance programs are not entitlements, and as a result, the amount of funding HUD requests and Congress provides annually limits the number of households that these programs can assist. Historically, funding for these programs has not been sufficient to assist all eligible households. Because the demand for rental assistance outstrips available resources, many PHAs and property owners have waiting lists of applicants seeking rental assistance. PHAs and property owners can use a system of preferences for giving certain populations—such as the elderly, veterans, or the homeless—priority in receiving assistance as units or vouchers become available.

In addition to rental assistance, HUD funds a limited number of supportive services programs. The programs offer counseling, education and job training, mental health services, transportation, and child care, among other services. Generally, PHAs and property owners must apply for funding under these programs. Supportive services not funded by HUD can be made available through partnerships between individual properties, local organizations, and other federal agency programs.

HUD administers other programs that help low-income households, including eligible veteran households, obtain access to affordable rental housing. Our review did not focus on these programs because they make up a relatively small percentage of HUD’s funding when compared with the three major rental assistance programs. Further, they are not solely rental assistance programs, but rather serve multiple purposes; for example, the HOME Investment Partnerships Program (HOME) provides formula grants to states and localities to build, acquire, and rehabilitate affordable housing for rent or homeownership. In addition, other federal agencies administer programs that provide forms of rental assistance to eligible populations, such as the Internal Revenue Service’s (IRS) Low- Income Housing Tax Credit program and U.S. Department of Agriculture’s (USDA) Rural Housing Service programs. The tax credit program funds the development of rental units that are restricted to low-income households for a number of years, while USDA’s programs (which are small relative to HUD’s programs) fund the development of low-income rental units or subsidize rents in rural areas.

More Than Half of Low-Income Veteran Renter Households Had Housing Affordability Problems

Based on our analysis of ACS data, an estimated 2.3 million veteran renter households had low incomes in 2005. The numbers of low-income veteran renter households varied considerably by state, as did the percentages of veteran renter households that were low income. In terms of demographic characteristics, we found that a significant proportion of low-income veteran renter households had a veteran member who was elderly or had a disability. In addition, about 56 percent of low-income veteran renter households had problems affording their rents—that is, their housing costs exceeded 30 percent of household income. Finally, a small percentage of low-income veteran renters lived in overcrowded or inadequate housing.

More Than Half of Veteran Renter Households Had Low Incomes

According to our analysis of ACS data, of the 4.3 million veteran households that rented their homes, an estimated 2.3 million, or about 53 percent were low income in 2005. As shown in table 1, the largest share of these 2.3 million households was concentrated in the highest low-income category—that is, 50.1 to 80 percent of AMI—with somewhat small shares in the two lower categories. The table also shows that other renter households (that is, households without a veteran member) were even more likely to be low income than veteran renter households. Specifically, an estimated 22 million, or 68 percent, of the 32.5 million other renter households were low income. Further, the largest share of the 22 million households was concentrated in the lowest income category—that is, 30 percent or less of AMI.

The estimated numbers of low-income veteran renter households in 2005 varied greatly by state, as shown in figure 2. The estimated median number of low-income veteran renters in any state was about 34,000. California had significantly more low-income veteran renter households than any other state—more than 236,000, or about 10 percent of all such households nationwide—followed by Texas with about 142,000, and New York with about 135,000. The states with the smallest number of low-income veteran households were Vermont, Delaware, and Wyoming with less than 6,000 each.

As shown in figure 3, the percentages of veteran renter households that were low income in 2005 also varied considerably by state. Michigan had the highest percentage—about 65 percent of its veteran renter households were low income, while Virginia had the lowest—about 41 percent. Table 8 in appendix II contains more detailed information about the number and percentages of low-income veteran renters in each state and the District of Columbia.

More Than One-Third of Low-Income Veteran Renter Households Were Elderly or Had a Disability

Households with at least one veteran member who was elderly (that is, 62 years of age or older) or had a disability constituted a significant share of all low-income veteran renter households in 2005. Specifically, of the 2.3 million low-income veteran renter households, an estimated 816,000 (36 percent) had a member who was elderly. As shown in table 2, the incomes of these elderly veteran households generally were distributed fairly evenly across the three low-income categories.

In comparison, other (nonveteran) low-income households had a lower percentage of elderly households. About 4 million (18 percent) of the 22 million other low-income renter households were elderly, with most of their income concentrated in the lowest income category.

In 2005, an estimated 887,000, or 39 percent, of low-income veteran renter households had at least one veteran member with a disability. Similar to the elderly veteran renter households, the incomes of these households generally were distributed evenly across the different low-income categories (see table 3). In comparison, an estimated 6.8 million, or 31 percent, of other low-income households had a member with a disability. In marked contrast to veteran renter households with a disability, other such renters had household incomes that were considerably more concentrated in the lowest income category.

In addition to the elderly and disability status of veteran households, we also analyzed information on selected other demographic characteristics—including race and ethnicity—of low-income veteran renter households nationally and at the state level. We include these results in appendix II.

More Than Half of Low- Income Veteran Renters Had Housing Affordability Problems

According to our analysis of ACS data, an estimated 1.3 million low- income veteran households, or about 56 percent of the 2.3 million such households, had rents that exceeded 30 percent of their household income in 2005 (see table 4). These veteran renter households had what HUD terms “moderate” or “severe” problems affording their rent. Specifically, about 31 percent of low-income veteran renter households had moderate affordability problems, and about 26 percent had severe affordability problems. The remainder either paid 30 percent or less of their household income in rent, reported zero income, or did not pay cash rent. In comparison, a higher proportion of other low-income renter households had moderate or severe housing affordability problems. Specifically, of the 22 million other low-income renter households, an estimated 13.9 million, or about 63 percent, had a housing affordability problem, with these households somewhat evenly distributed between those with moderate and severe affordability problems.

The extent of housing affordability problems among low-income veteran renter households varied significantly by state in 2005 (see fig. 4). The median percentage of low-income veteran renters with affordability problems nationwide was 54 percent. California and Nevada had the highest proportions of affordability problems among low-income veteran renter households—about 68 and 70 percent, respectively. North Dakota and Nebraska had the smallest—about 37 and 41 percent, respectively. Table 9 in appendix II contains detailed information on the percentage of low-income veterans with affordability problems by state.

Small Percentage of Low- Income Veteran Renter Households Lived in Inadequate Housing

A relatively small percentage of veteran households lived in overcrowded or substandard housing in 2005. Specifically, an estimated 73,000, or 3 percent, of low-income veteran renter households lived in overcrowded housing—housing with more than one person per room—and less than 18,000, or about 1 percent, lived in severely overcrowded housing— housing with more than one and a half persons per room. In contrast, an estimated 1.5 million, or 7 percent, of other low-income renter households lived in overcrowded housing, and about 423,000, or 2 percent, lived in severely overcrowded housing.

Finally, ACS data indicate that a very small share of low-income veteran renters lived in inadequate housing. ACS provides very limited information about the quality of the housing unit; the survey classifies a unit as inadequate if it lacks complete plumbing or kitchen facilities, or both. In 2005, an estimated 53,000, or 2 percent, of low-income veteran renter households lived in inadequate housing. In comparison, an estimated 334,000, or 2 percent, of other households lived in inadequate housing.

HUD Rental Assistance Programs Do Not Take Veteran Status into Account When Determining Eligibility or Subsidy Amounts

HUD’s rental assistance programs do not take veteran status into account when determining eligibility or calculating subsidy amounts, and HUD does not collect any information identifying whether assisted households have members who are veterans. Veterans can participate in these programs if they meet eligibility requirements. Further, HUD policies generally do not distinguish between income sources that are specific to veterans, such as VA-provided benefits, and other sources of income. Instead, HUD takes into account the type of income, such as whether it is recurring or not. When calculating applicants’ incomes, we found that HUD excludes most types of income and benefits that veterans may receive from VA, with the exception of recurring income, such as veterans’ pension, disability payments, and survivor benefits. Although HUD’s major programs do not take veteran status into account for determining eligibility and subsidy amount, HUD allocated almost 1,800 vouchers that were specifically targeted to formerly homeless veterans in the early 1990s, but the number of vouchers in use has been declining.

HUD’s Rental Assistance Programs Are Not Required to Take Veteran Status into Account

HUD’s major rental assistance programs are not required to take a household’s veteran status into account when determining eligibility and calculating subsidy amounts. Consequently, HUD does not collect any information that identifies the veteran status of assisted households. As with other households, veterans can benefit from HUD rental assistance provided that they meet all of the programs’ income and other eligibility criteria. For example, assisted households must meet U.S. citizenship requirements and, for some of the rental assistance programs, HUD’s criteria for an elderly household or a household with a disability.

In addition to rental assistance, HUD makes available limited supportive services to some assisted households, typically through separate programs, but like rental assistance, none of these supportive services programs take veteran status into account when determining eligibility. An example is HUD’s Multifamily Housing Service Coordinator grant program, which pays for coordinators to assist residents (at properties designated for the elderly and persons with disabilities) in obtaining supportive services from community agencies. (See table 11 in app. III for a description of other programs through which HUD makes supportive services available.) While the programs disregard veteran status, they may provide services to veterans who receive HUD rental assistance. HUD does not collect information identifying veteran households that its supportive services programs serve, but agency officials stated that HUD’s supportive services programs likely assist a small number of veterans because the programs serve a relatively small percentage of all assisted households.

HUD Generally Does Not Distinguish Between Income Sources That Are Veteran-Specific and Other Types of Income Sources

When determining income eligibility and subsidy amounts, HUD generally does not distinguish between income sources that are specific to veterans, such as VA-provided benefits, and other types of income. HUD policies define household income as the anticipated gross annual income of the household, which includes income from all sources received by the family head, spouse, and each additional family member who is 18 years of age or older. Specifically, annual income includes, but is not limited to, wages and salaries, periodic amounts from pensions or death benefits, and unemployment and disability compensation. HUD policies identify 39 separate income sources and benefits that are excluded when determining eligibility and subsidy amounts. These exclusions relate to income that is nonrecurring or sporadic in nature, health care benefits, student financial aid, and assistance from certain employment training and economic self- sufficiency programs.

We found that, based on HUD’s policies on income exclusions, most types of income and benefits that veteran households receive from VA would be excluded when determining eligibility for HUD’s programs and subsidy amounts. (See table 12 in app. IV for a detailed listing of these benefits). Many of the excluded benefits relate to payments that veteran households receive under certain economic self-sufficiency programs or nonrecurring payments such as insurance claims. Of the benefits included, most are associated with recurring or regular sources of income, such as disability compensation, pensions, and survivor death benefits.

Of the 39 exclusions, we found that two income exclusions specifically applied to certain veteran households but, according to HUD, these exclusions are rarely used. These income exclusions are (1) payments made to Vietnam War-era veterans from the Agent Orange Settlement Fund and (2) payments to children of Vietnam War-era veterans who suffer from spina bifida. The two exclusions are identified in federal statutes that are separate from those authorizing the three major rental assistance programs.

HUD Allocated a Limited Number of Vouchers Targeted to Certain Veterans Starting in 1992, but the Number of Vouchers in Use Has Been Declining

Under the Housing and Urban Development-Veterans Affairs Supportive Housing program (HUD-VASH), HUD provides rental assistance vouchers specifically to veterans, but the number of veterans served is extremely small and has been declining in recent years. Established in 1992, HUD- VASH is jointly funded by HUD and VA and offers formerly homeless veterans an opportunity to obtain permanent housing, as well as ongoing case management and supportive services. HUD allocated these special vouchers to selected PHAs that had applied for funding, and VA was responsible for identifying participants based on specific eligibility criteria, including the veteran’s need for treatment of a mental illness or substance abuse disorder. After selecting eligible veterans, VA and the PHA worked together to help the veterans use the vouchers to rent suitable housing, and VA provided ongoing case management, health, and other supportive services.

Under the HUD-VASH initiative, HUD allocated 1,753 vouchers from fiscal years 1992 through 1994. HUD funded these vouchers for 5 years and, if a veteran left the program during this period, the PHA had to reissue the voucher to another eligible veteran. VA officials stated that, after the 5-year period ended, PHAs had the option of continuing to use their allocation of vouchers for HUD-VASH, or could discontinue participation whenever a veteran left the program (that is, the PHA would not provide the voucher to another eligible veteran upon turnover). According to VA and HUD officials, after the 5-year period ended, many PHAs decided not to continue in HUD-VASH after assisted veterans left the program; instead, PHAs exercised the option of providing these vouchers to other households under the housing choice voucher program. As a result, the number of veterans that receive HUD-VASH vouchers has declined. Based on VA data, about 1,000 veterans were in the program as of the end of fiscal year 2006, and this number is likely to decline. Specifically, VA officials estimated that the number of veterans served could drop to 400 because PHAs responsible for more than 600 vouchers have decided not to continue providing these vouchers to other veterans as existing participants leave the program.

Congress permanently authorized HUD-VASH as part of the Homeless Veterans Comprehensive Assistance Act of 2001. Under the act, Congress also authorized HUD to allocate 500 vouchers each fiscal year from 2003 through 2006—a total of 2,000 additional vouchers. In December 2006, Congress extended this authorization through fiscal year 2011—allocating a total of 2,500 vouchers or 500 each year. However, HUD has not requested, and Congress has not appropriated, funds for any of the vouchers authorized from fiscal years 2003 through 2007.

Most Contacted Housing Agencies and Owners of Project- Based Properties Did Not Offer a Veterans’ Preference for Admission to HUD’s Rental Assistance Programs

Less than half of the 41 largest PHAs we contacted employed a veterans’ preference for admission to their public housing or voucher programs, while the 13 largest PBCAs we contacted reported that owners of project- based properties that they oversee generally did not use a veterans’ preference. HUD allows, but does not require, PHAs and property owners to establish preferences to better direct resources to families with the greatest housing needs in their area. HUD does not aggregate information on the extent to which PHAs and property owners use preferences. Our review showed that 29 of the 34 largest PHAs that administered public housing programs in fiscal year 2006 offered preferences and, of these, 14 offered a veterans’ preference. Similarly, 34 of the 40 largest PHAs that administered the housing choice voucher program in fiscal year 2006 offered preferences and, of these, 13 offered a veterans’ preference. Finally, officials from the 13 largest PBCAs told us that, in their experience, owners of project-based properties that they oversee generally did not employ a veterans’ preference when selecting tenants.

Public Housing Agencies and Property Owners May Establish Preferences to Meet Local Needs but Are Not Required to Do So

Currently, HUD’s policies give PHAs and owners of project-based properties the discretion to establish preferences for certain groups when selecting households for housing assistance. Preferences affect only the order of applicants on a waiting list for assistance; they do not determine eligibility for housing assistance. Before 1998, federal law required PHAs and property owners to offer a preference to eligible applicants to their subsidized housing programs who (1) had been involuntarily displaced, (2) were living in substandard housing, or (3) were paying more than half their income for rent. PHAs were required by law to allocate at least 50 percent of their public housing units and 90 percent of their housing choice vouchers to applicants who met these criteria. Similarly, project- based owners had to allocate 70 percent of their units to newly admitted households that met these criteria. The Quality Housing and Work Responsibility Act of 1998 (QHWRA) gave more flexibility to PHAs and project-based property owners to administer their programs, in part by eliminating the mandated housing preferences. Although it gave PHAs and owners more flexibility, QHWRA required that PHAs and owners target assistance to extremely low-income households.

Under QHWRA, PHAs and owners of project-based properties may, but are not required to, establish preferences to better direct resources to those with the greatest housing needs in their areas. PHAs can select applicants on the basis of local preferences provided that their process is consistent with their administrative plan. HUD policy requires PHAs to specify their preferences in their administrative plans, and HUD reviews these preferences to ensure that they conform to nondiscrimination and equal employment opportunity requirements. Similarly, HUD policy allows owners of project-based properties to establish preferences as long as the preferences are specified in their written tenant selection plans.

While HUD requires PHAs and property owners to disclose their preferences in their administrative or tenant selection plans, HUD officials said the department does not compile or systematically track this information because PHAs and property owners are not required to have preferences. However, HUD may examine the use of preferences as part of specific studies or reports. For example, HUD discussed the use of preferences by PHAs in its November 2000 report on the use of discretionary authority in the housing choice voucher program. HUD reported that about 71 percent of the 1,684 PHAs that were reviewed used admission preferences for the housing choice voucher program. Further, the study also found that PHAs offered need-based preferences, as well as other local preferences, including those for households achieving self- sufficiency, but the report did not discuss whether the PHAs used a veterans’ preference.

While HUD’s policies give PHAs the discretion to establish preferences for certain groups when selecting households (including those with veterans) for housing assistance, recent proposed legislation would develop and expand permanent housing opportunities for very low-income veterans. Specifically, legislation introduced in the Senate requires that, among other things, PHAs and states and localities include veterans as a special needs population in their PHA plans and comprehensive housing affordability strategies.

Although Most Contacted PHAs Offered Preferences for Admission to Subsidized Housing, Less Than Half Offered a Veterans’ Preference

Most of the 41 PHAs we contacted used a preference system for admission to their public housing and housing choice voucher programs, but less than half offered a veterans’ preference. As shown in table 5, of the 34 largest PHAs that administered the public housing program, 29 established preferences for admission to the program and 14 used a veterans’ preference. Similarly, of the 40 PHAs that administered the housing choice voucher program, 34 used admission preferences, and 13 employed a preference for veterans. According to PHA officials, the most common preferences used for both programs were for working families, individuals who were unable to work because of age or disability, and individuals who had been involuntarily displaced or were homeless. Of course, veterans could benefit from these admission preferences if they met the criteria.

Some of the PHAs we contacted offered a veterans’ preference because their states required them to do so. Other PHA officials told us they offered a veterans’ preference because they believed it was important to serve the needs of low-income veterans since they had done so much for the well-being of others. PHAs that we contacted that did not offer a veterans’ preference gave various reasons for their decisions. Some officials told us that the PHA did not need a veterans’ preference because veteran applicants generally qualified under other preference categories, such as elderly or disabled. One PHA official we contacted said a veterans’ preference was not needed because of the relatively small number of veterans in the community.

Because PHAs can employ multiple preferences, many of the PHAs that have a preference system weight or rank the preferences they use—that is, they give greater weight to an applicant who falls within a particular category—to determine position on the waiting list. Almost two-thirds of the PHAs we contacted that administer a preference system for their public housing programs weight or rank preferences. Nevertheless, only four of these weighted systems allow for veterans to receive priority over other populations who received other preferences. Similarly, a little more than half of the PHAs who use preferences for their housing choice voucher programs weighted or ranked preferences. But only three of these PHAs gave priority to veterans over other populations that also were eligible to receive a preference. The remaining PHAs that have a preference system for their public housing or housing choice voucher programs told us that they either assigned equal weight to the preferences they offered, or used date and time or a lottery system to determine the order in which they selected applicants from waiting lists.

In a 2004 examination of PHAs’ waiting lists, the National Low Income Housing Coalition found that more than three-quarters of the agencies that it reviewed used preferences for specific categories of applicants to order waiting lists for their public housing and housing choice voucher programs. In addition, the study found that less than one-quarter of the agencies used a veterans’ preference to determine the order of their waiting lists. Specifically, a little less than 25 percent of the PHAs that administered a public housing program had a veterans’ preference, while 20 percent of the PHAs that ran housing choice voucher programs used such a preference. Furthermore, the study found that PHAs most commonly gave preferences to applicants who were employed, involuntarily displaced from previous housing, victims of domestic violence, or residents of the PHA’s jurisdiction.

PBCAs Said That Owners of Project-Based Properties Generally Did Not Use a Veterans’ Preference When Selecting Tenants

According to all of the PBCAs we contacted, owners of project-based properties that they oversee generally did not employ a veterans’ preference when selecting tenants. Ten of the 13 largest PBCAs told us, based on their review of property owners’ tenant selection plans, that owners of project-based properties generally did not employ preferences for any specific population. Officials from the remaining three PBCAs said they were aware of some property owners offering preferences to individuals who had been involuntarily displaced, working families, or those unable to work because of age or disability. However, all the PBCAs we contacted either said that property owners did not use preferences or agreed that the use of preferences, including a veterans’ preference, among owners of properties with project-based assistance was limited. HUD officials to whom we spoke also stated, based on their experience with tenant selection plans, that the use of preferences at project-based properties likely was infrequent.

Although most PBCAs stated that property owners did not generally employ preferences, the use of such preferences can vary significantly even within one PBCA’s portfolio of properties. For example, a PBCA official said that the demand for subsidized housing can influence whether owners use preferences. Properties in communities with a high demand for subsidized housing may need to establish preferences to manage waiting lists, and those in communities with low demand may not need to use preferences.

Veteran Households Were Less Likely to Receive HUD Rental Assistance Than Other Low-Income Households

Our analysis of ACS, HUD, and VA data shows that, in 2005, low-income veteran renter households were less likely to receive rental assistance than other low-income households. An estimated 11 percent of all low-income veteran renter households received HUD rental assistance, compared with 19 percent of other low-income households. Although the reasons for this difference are unclear, various factors—such as different levels of need for affordable housing among veteran and other households—could contribute to the disparity. In 2005, at least 250,000 low-income veteran households received rental assistance under HUD’s programs— representing about 6 percent of all households that received such assistance. The demographic characteristics of these veteran-assisted households differed somewhat from those of other (nonveteran) assisted households; for example, veteran-assisted households were more likely to have a disability compared with other assisted households.

Eleven Percent of All Low- Income Veteran Households Received HUD Rental Assistance Compared with 19 Percent of Other Low-Income Households

Low-income veteran renter households were less likely to receive HUD rental assistance than other households. As shown in table 6, of the total 2.3 million veteran renter households with low incomes, at least 250,000 (or 11 percent) received HUD assistance. In comparison, of the 22 million other renter households with low incomes, 4.1 million (about 19 percent) received HUD assistance. (As noted previously, although HUD is the largest provider of federal rental housing assistance to low-income households, it is not the sole source of such assistance. Thus, these percentages likely understate the actual share of all eligible veteran renter households that receive federal rental assistance.)

The reasons why other households were nearly twice as likely as veteran households to receive HUD assistance are unclear. But, based on our analyses and discussions with agency officials, some potential explanations include (1) differences in the extent of housing needs between veteran and other households, (2) infrequent use of a veterans’ preference by PHAs and property owners, and (3) statutory requirements for targeting extremely low-income households. First, as discussed earlier in this report, although a significant proportion of low-income veteran households face affordability problems, an even larger proportion of other (nonveteran) households face more severe affordability problems. Thus, the level of veteran demand for rental assistance may be lower than that of nonveteran households. Second, and again as discussed earlier in this report, HUD rental assistance programs do not take veteran status into account when determining eligibility, and most PHAs and property owners do not offer a veterans’ preference. As a result, these policy decisions likely focus resources on other types of low-income households with housing needs. Third, although low-income households generally are eligible to receive rental assistance from HUD’s three programs, statute requires that a certain percentage of new program participants must be extremely low income. These targeting requirements may lead to a higher share of HUD rental assistance going to nonveteran households because veteran households generally are less likely to fall within the extremely low-income category.

According to HUD, other federal rental assistance programs (such as IRS’s Low-Income Housing Tax Credit, HUD’s HOME, and USDA’s rental assistance programs) also can provide assistance to veterans. Thus, the share of veterans receiving HUD rental assistance does not reflect the share of veterans that receive some other form of federal rental assistance. Furthermore, according to HUD, veterans may be more likely to receive rental assistance from some of these other programs, in part because these other programs do not target extremely low-income households as do HUD’s voucher, public housing, and project-based programs. However, data are not available to determine the extent to which veterans may be benefiting from other forms of federal rental assistance.

An Estimated 6 Percent of All HUD-Assisted Households Were Veteran Households

In fiscal year 2005, HUD’s rental assistance programs reached an estimated 250,000 low-income veteran households, which constituted approximately 6 percent of all HUD-assisted households. The housing choice voucher program served the largest number of veteran households, followed by the project-based program, and the public housing program (see fig. 5). However, a slightly higher proportion of veteran households participated in the public housing program (6.9 percent) than participated in the voucher (5.7 percent) and project-based (5.2 percent) programs.

Compared with Other Households, Veterans Who Received HUD Assistance Were as Likely to Be Elderly but More Likely to Have a Disability

We found some similarities in the demographic characteristics of veterans and other assisted households we analyzed. For example, compared with other assisted households, HUD-assisted veteran households were as likely to be elderly. Specifically, in fiscal year 2005, about 75,000, or 30 percent, of assisted veteran households were elderly, and about 1.3 million, or 31 percent, of other assisted households were elderly. About 40,000, or 54 percent, of these elderly veteran households received assistance through project-based programs. Public housing provided rental assistance to about 20,000 elderly veteran households and vouchers to about 15,000.

HUD-assisted veteran households were more likely to have a disability. In fiscal year 2005, HUD provided assistance to about 88,000 veteran households with a disability, or about 34 percent of assisted veteran households. In comparison, 1.2 million or 28 percent of other assisted households had a disability. Among veteran households with a disability, about 41,000 (or 46 percent) received assistance from vouchers. Public housing and project-based programs each provided rental assistance to less than one-third of these households with a disability (about 24,000 and 23,000, respectively). Appendix V contains more detailed information about the number and percentages of HUD-assisted veteran households in each state and the District of Columbia.

Agency Comments and Our Evaluation

We provided VA and HUD with a draft of this report for review and comment. In an e-mail from its Office of Congressional and Legislative Affairs, VA agreed with the findings that related to VA and offered no other comments. HUD provided comments in a letter from the Deputy Assistant Secretary for Public Housing and Voucher Programs, Office of Public and Indian Housing; this letter is reprinted in appendix VI.

The Assistant Secretary’s letter states that “HUD objects to the characterization that policies for its three major rental assistance programs generally do not take veteran status into account when determining eligibility or assistance levels” and notes that “HUD cannot mandate that a PHA establish any particular type of preference” for their voucher program. Our report does not state that HUD can mandate preferences for any of the three major rental assistance programs but rather acknowledges that the Quality Housing and Work Responsibility Act of 1998 repealed federally mandated preferences and provided individual PHAs and property owners with the authority to establish preferences, including a veterans’ preference. Furthermore, how veteran/nonveteran status affects eligibility for HUD programs is distinct from whether or not a preference is extended once eligibility has been established. As our report states, our reporting objectives addressed both of these issues: (1) how HUD’s rental assistance programs treat veteran status (that is, whether a person is a veteran or not) and veteran-specific benefits in determining eligibility and subsidy amounts and (2) the extent to which PHAs and property owners participating in HUD’s rental assistance programs establish a veterans’ preference in their administrative and tenant selection plans. In our review of program eligibility policies and regulations and interviews with agency officials, we found no evidence that veteran status is a factor in determining eligibility for HUD’s programs, and HUD’s comment letter did not provide any evidence. Accordingly, we did not change our report in this regard.

Our report states that, in determining eligibility for its programs, HUD generally does not distinguish between income that is specific to veterans and other sources of income. In its comments, HUD stated that the department’s policies exclude specific types of benefits that some veterans may receive, such as health care benefits and income from job training programs. Our report acknowledges that certain types of veteran-specific income sources are considered as income for determining eligibility and subsidy amounts, but notes that it is the type of income that matters— such as whether or not it is recurring—not the source. Our report specifically states that “when calculating applicants’ incomes, HUD excludes most VA-provided benefits, such as payments for training and education or health care services, but includes veterans’ pensions, disability payments, and survivor benefits, which are recurring payments.” Accordingly, we did not change our report in response to HUD’s comment.

HUD also commented on our methodology for estimating the extent of veterans being served in HUD’s programs. Specifically, HUD noted that since information for all veterans in VA’s database may not be complete, our estimate of 250,000 veterans assisted by HUD’s programs in 2005 would be affected. As our report states, we matched data from HUD on program participants with data from VA on living veterans using unique identifying information and used these matched data to estimate the percentage of low-income veteran renter households that receive HUD rental assistance. Our report notes that this could be an underestimate of the actual number of veteran households in the programs because of incomplete or erroneous data in either VA’s or HUD’s databases. In cases where we had incomplete information, such as missing Social Security numbers, we attempted alternate ways of identifying HUD-assisted veteran households, including matching records using both names and date of birth only. We continue to believe that our estimate is a reasonable measure of the extent to which HUD-assisted households are veteran households. However, in response to HUD’s comment, we changed our report to say “at least 250,000” in order to acknowledge the possible undercount.

We are sending copies of this report to interested Members of Congress, the Secretary of Housing and Urban Development, and the Secretary of Veterans Affairs. We also will make copies available to others upon request. In addition, this report will be available at no charge on the GAO Web site at http://www.gao.gov.

Please contact me at (202) 512-8678 or woodd@gao.gov if you or your staff has any questions about this report. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix VII.

Appendix I: Scope and Methodology

The Department of Housing and Urban Development’s (HUD) housing assistance programs in our scope include the three major rental assistance programs—housing choice voucher (voucher), public housing, and project-based programs (including the project-based Section 8, Section 202 Supportive Housing for the Elderly, and Section 811 Supportive Housing for Persons with Disabilities programs).

To determine the income status and demographic and housing characteristics of veteran households, we analyzed data from the U.S. Bureau of the Census’s (Census) 2005 American Community Survey (ACS), which identified households’ veteran status, income, and other demographic characteristics, in conjunction with HUD’s defined income categories: low (80 percent or less of area median income or AMI), very low (50 percent or less of AMI), and extremely low (30 percent or less of AMI).

ACS is an annual survey conducted by Census to obtain current information about the demographic, socioeconomic, and housing characteristics of all U.S. communities nationwide. ACS is scheduled to replace the traditional long-form survey in the decennial census, beginning in 2010. As of January 2005, ACS collected information for 3,141 counties, American Indian reservations, Alaska Native tribal areas, and Hawaiian homelands in the United States.

Using HUD’s income limits for fiscal year 2005, we estimated, by geographic area, the number of veteran households that were in each income category. We also used information on veteran households in ACS to describe their demographics, as well as the cost and quality of their housing. Specifically, we obtained information on the household’s tenure (renter- or owner-occupied), disability status, elderly status, race and ethnicity, housing affordability categories (for example, households that paid 30 percent or less, 30.1 to 50 percent, and more than 50 percent of household income in rent), extent of overcrowding, and indicators of housing quality. Census prepared tabulations of these results based on our specifications.

ACS is the largest household survey in the United States, with an annual sample size of about 3 million addresses. The ACS survey uses probability sampling, which helps ensure the integrity of sample survey results and that they are representative. Because a survey produces estimates of the whole population using only a portion of the population, all survey estimates contain sampling errors. This means that the estimates derived from the sample would be different if the survey had selected another sample. Since each sample could have provided different estimates, we express our confidence in the precision of this sample’s results as 90 percent confidence intervals. This is the interval that would contain the actual population value for 90 percent of the samples that could have been drawn. As a result, we are 90 percent confident that each of the confidence intervals will include the true values in the study population. In this report, instead of providing the upper and lower confidence bounds, we provide margin of error, which is the difference between an estimate and its upper or lower confidence bound. We express margin of error as a percentage (for example, plus or minus 7 percent).

The sample for the 2005 ACS does not contain information on all veterans in the United States. Specifically, the sample design does not include individuals who live in group quarters—which include college dormitories, correctional facilities, and certain types of nursing facilities and hospitals—or homeless individuals. As a result, ACS likely underestimates the number of veterans to the extent that veterans live in group quarters or are homeless.

We assessed the reliability of the data we received from Census by reviewing relevant documentation, interviewing knowledgeable officials, performing electronic testing of the data, and replicating published tables. In addition, we reviewed Census’ quality review process to ensure the completeness and accuracy of the tabulation that Census prepared at our request. We determined that the data are reliable for the purposes of this report.

To determine whether HUD’s rental assistance programs take veteran status into account when determining eligibility and subsidy amount, we reviewed HUD’s policies and regulations for the voucher, public housing, and project-based programs. To assess how these programs treat veteran- specific income and benefits, we reviewed HUD’s policies and regulations that define annual income, which is used to determine eligibility and calculate subsidy amounts. We also interviewed officials from HUD and the Department of Veterans Affairs (VA).

To determine whether public housing agencies (PHA) and property owners participating in HUD’s programs have established a veterans’ preference, we interviewed officials from the 41 largest PHAs that administer the public housing program (34 PHAs) and the voucher program (41 PHAs) and the 13 largest performance-based contract administrators (PBCA) that oversee property management under the project-based rental assistance programs. Specifically, the PHAs and PBCAs that we interviewed were responsible for administering or overseeing more than half of the dollar assistance provided through each of the three programs in fiscal year 2005. However, the information on preferences cannot be statistically generalized to the other PHAs and property owners. We reviewed HUD’s policies and regulations for establishing preferences and obtained information from officials on the extent to which preferences, particularly a veterans’ preference, were used for tenant selection purposes. Additionally, we obtained and analyzed studies by HUD and others on the use of preferences in general.

To determine the extent to which HUD’s rental assistance programs served veteran households in fiscal year 2005, we matched data from HUD on program participants with data from VA on living veterans and used these matched data to estimate the percentage of low-income veteran renter households that received HUD assistance. To determine the extent to which veteran households were served by HUD’s rental assistance programs, we obtained information on households receiving rental assistance from HUD’s administrative databases—Public and Indian Housing Information Center (PIC) and Tenant Rental Assistance Certification System (TRACS), as of September 30, 2005, and information on all living veterans from VA’s Beneficiary Identification and Records Location Subsystem (BIRLS), as of October 1, 2004. We matched data from HUD on program participants with data from VA on living veterans. Specifically, we matched the Social Security numbers, first and last names, and date of birth of the assisted households in PIC and TRACS with the corresponding information for veterans in BIRLS. For the records in PIC and TRACS that were matched to BIRLS, about 65 percent matched on Social Security number, first and last names, and date of birth; about 30 percent matched on Social Security number and some combination of names and date of birth; and about 5 percent matched on names and date of birth only. We used the resulting matched information to determine the number of veteran households that received rental assistance from HUD and the annual subsidy amount that HUD paid to veteran households in 2005. Our totals of HUD-assisted veteran households could underestimate the actual number of veteran households in the programs because of a lack of complete information on all living veterans in the data we obtained from VA. For example, Social Security numbers, which we used to match VA and HUD data, may not have been available for all veterans who served in the 1970s or earlier. However, we attempted to adjust for this by also conducting a match on veterans’ names and dates of birth only. Data entry errors in both VA and HUD systems also could contribute to fewer successful matches.

To assess the reliability of the HUD data from the PIC and TRACS databases, and the VA data from the BIRLS database, we reviewed relevant documentation, interviewed knowledgeable officials, and conducted electronic testing of the data. We determined the data were sufficiently reliable for us to identify veterans who received assistance through HUD rental programs.

For all of our research objectives, we consulted with officials from various housing and veterans groups, including Harvard University’s Joint Center on Housing Studies, the National Low Income Housing Coalition, the National Coalition of Homeless Veterans, the Corporation for Supportive Housing, Vietnam Veterans of America, the American Legion, and Volunteers of America. We also surveyed the literature on these topics.

We conducted our work primarily in Atlanta, Boston, Chicago, Los Angeles, and Washington, D.C., from March 2006 through July 2007 in accordance with generally accepted government auditing standards.

Appendix II: Demographic and Housing Characteristics of Low-Income Veteran Renters

Households with an affordability problem (±9%) (±6%) (±6) (±15%) (±8%) (±8) (±9%) (±4%) (±4) (±10%) (±5%) (±5) (±4%) (±2%) (±2) (±8%) (±5%) (±5) (±11%) (±7%) (±7) (±22%) (±13%) (±13) (±20%) (±12%) (±12) (±5%) (±3%) (±3) (±7%) (±4%) (±4) (±14%) (±7%) (±7) (±14%) (±8%) (±8) (±6%) (±3%) (±3) (±8%) (±4%) (±4) (±10%) (±5%) (±5)

Households with an affordability problem (±9%) (±5%) (±5) (±9%) (±4%) (±4) (±11%) (±6%) (±6) (±14%) (±7%) (±7) (±10%) (±5%) (±5) (±9%) (±5%) (±5) (±7%) (±3%) (±3) (±9%) (±4%) (±4) (±14%) (±8%) (±8) (±7%) (±3%) (±3) (±14%) (±7%) (±7) (±13%) (±6%) (±6) (±11%) (±5%) (±5) (±15%) (±7%) (±7) (±8%) (±5%) (±5) (±16%) (±7%) (±7) (±5%) (±2%) (±2)

Households with an affordability problem (±8%) (±4%) (±4) (±15%) (±8%) (±8) (±5%) (±2%) (±2) (±10%) (±6%) (±6) (±9%) (±4%) (±4) (±5%) (±2%) (±2) (±15%) (±7%) (±7) (±10%) (±6%) (±6) (±18%) (±7%) (±7) (±8%) (±5%) (±5) (±5%) (±2%) (±2) (±17%) (±9%) (±9) (±20%) (±11%) (±11) (±7%) (±3%) (±3) (±5%) (±4%) (±4) (±14%) (±9%) (±9) (±7%) (±3%) (±3)

Households with an affordability problem (±26%) (±13%) (±13) (±1%) (±2%) (±0.6%) (+6%) (+8%) (+3%) (+1%) (+2%) (+1%) (+7%) (+9%) (+4%) (+2%) (+2%) (+1%) (+8%) (+11%) (+4%) (+2%) (+3%) (+1%) (+9%) (+12%) (+5%) (+3%) (+4%) (+2%) (+9%) (+11%) (+4%) (+3%) (+4%) (+2%) (+12%) (+14%) (+6%) (+3%) (+4%) (+1%) (+10%) (+12%) (+5%) (+4%) (+5%) (+2%) (+11%) (+14%) (+5%) (+3%) (+ 4%) (+1%) (+11%) (+15%) (+6%) (+4%) (+5%) (+2%) (+10%) (+14%) (+5%) (+ 4%) (+5%) (+2%) (+10%) (+15%) (+6%) (+4%) (+5%) (+2%) (+9%) (+12%) (+5%) (+3%) (+4%) (+1%) (+12%) (+15%) (+5%) (+ 4%) (+5%) (+2%) (+8%) (+11%) (+5%) (+ 4%) (+5%) (+2%) (+12%) (+16%) (+6%) (+ 4%) (+ 5%) (+2%) (+13%) (+15%) (+5%) (+5%) (+5%) (+2%) (+12%) (+14%) (+5%) (+5%) (+6%) (+2%) (+12%) (+17%) (+5%) (+ 5%) (+6%) (+2%) (+11%) (+12%) (+5%) (+ 4%) (+5%) (+2%) (+13%) (+19%) (+8%) (+ 5%) (+6%) (+3%) (+11%) (+15%) (+6%) (+4%) (+5%) (+2%) (+12%) (+16%) (+6%) (+ 5%) (+6%) (+2%) (+14%) (+5%) (+5%) (+6%) (+3%) (+12%) (+17%) (+6%) (+5%) (+ 6%) (+2%) (+13%) (+19%) (+8%) (+4%) (+5%) (+2%) (+11%) (+15%) (+5%) (+5%) (+ 7%) (+3%) (+15%) (+19%) (+8%) (+5%) (+ 6%) (+2%) (+16%) (+19%) (+7%) (+5%) (+6%) (+2%) (+13%) (+18%) (+6%) (+5%) (+5%) (+2%) (+15%) (+20%) (+7%) (+6%) (+8%) (+3%) (+15%) (+20%) (+8%) (+6%) (+ 8%) (+3%) (+13%) (+16%) (+7%) (+6%) (+7%) (+3%) (+12%) (+16%) (+6%) (+6%) (+ 7%) (+3%) (+13%) (+20%) (+7%) (+5%) (+ 7%) (+3%) (+14%) (+17%) (+4%) (+ 5%) (+6%) (+2%) (+15%) (+21%) (+8%) (+ 5%) (+ 6%) (+19%) (+26%) (+11%) (+7%) (+9%) (+3%) (+17%) (+26%) (+10%) (+6%) (+8%) (+3%) (+18%) (+24%) (+9%) (+ 5%) (+7%) (+3%) (+19%) (+22%) (+7%) (+ 8%) (+ 10%) (+3%) (+15%) (+22%) (+7%) (+7%) (+9%) (+3%) (+19%) (+24%) (+9%) (+8%) (+9%) (+3%) (+19%) (+23%) (+9%) (+6%) (+8%) (+3%) (+16%) (+20%) (+7%) (+7%) (+8%) (+3%) (+15%) (+24%) (+9%) (+6%) (+8%) (+3%) (+17%) (+21%) (+7%) (+7%) (+9%) (+3%) (+22%) (+34%) (+13%) (+7%) (+9%) (+3%) (+19%) (+27%) (+9%) (+7%) (+ 9%) (+3%) (+17%) (+23%) (+9%) (+6%) (+8%) (+3%) (+17%) (+21%) (+8%) (+7%) (+ 8%) (+3%)

Appendix III: Information on HUD’s Supportive Services Programs Available to Veterans

Historically, Congress has recognized the importance of providing supportive services to veterans who are homeless or at risk of becoming homeless. Most of HUD’s rental assistance programs are not required to provide supportive services, with the exception of the Section 202 Supportive Housing for the Elderly and Section 811 Supportive Housing for Persons with Disabilities programs. However, households participating in HUD’s rental assistance programs can receive supportive services, typically through separate programs funded by HUD. Table 11 contains descriptions of these programs.

Appendix IV: HUD’s Policies on Eligibility and Subsidy Amounts with Respect to Veteran-Specific Income and Benefits

When determining eligibility and subsidy amounts under HUD’s rental assistance programs, program administrators generally must calculate a household’s adjusted annual income, or gross income, less any exclusions and deductions. HUD’s policies and statute provide for 39 different types of income exclusions and 5 deductions. When determining income eligibility and subsidy amounts, HUD generally does not distinguish between income sources that are specific to veterans, such as benefits that VA provides and other types of incomes. As table 12 shows, most types of income sources and benefits that veteran households receive from VA would be excluded by HUD when determining eligibility and subsidy amounts. Excluded income sources and benefits generally relate to payments that veteran households receive under certain economic self- sufficiency programs or nonrecurring payments such as insurance claims. Of the benefits included, most are associated with recurring or regular sources of income, such as disability compensation, pensions, and survivor death benefits.

Appendix V: Demographic and Housing Characteristics of HUD-Assisted Low-Income Veteran Renters

Appendix VI: Comments from the Department of Housing and Urban Development

Appendix VII: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the individual named above, Daniel Garcia-Diaz, Assistant Director; Carl Barden; Michelle Bowsky; Mark H. Egger; Cynthia Grant; John T. McGrail; Marc Molino; Josephine Perez; Carl Ramirez; Barbara Roesmann; and Rose M. Schuville made key contributions to this report.