August 10, 2021
By: Josh Leopold (Urban Institute), Mychal Cohen (Urban Institute), Maria Alva, Nat Mammo, Sam Quinney
The COVID-19 pandemic created an unprecedented economic downturn that erased millions of jobs and put many families at risk of eviction and homelessness. Though the eviction moratorium has prevented countless evictions, the pandemic has highlighted how many families are one financial shock away from falling behind on rent and becoming homeless, whether from loss of employment or an unexpected hospital visit. According to a Pew Survey, 41% of households do not have enough savings in the bank or in cash to cover a $2,000 expense.
Flexible rent subsidies are one tool local governments are exploring to help families that are currently housed but remain one shock away from homelessness. A flexible subsidy allows families to decide how much of the subsidy to spend each month, up to their total rent. This flexibility can be particularly valuable for workers whose earnings fluctuate, such as seasonal workers and those in the “gig” economy, who have been especially hard hit this past year.
The Urban Institute, with grant support from the U.S. Department of Housing and Urban Development, surveyed program participants to understand how the program is working. 119 participants were sent the survey, and 74 responded.
DC’s Department of Human Services is currently testing this idea through a four-year pilot program, DC Flex, which gives families $7,200 a year for rent to use whenever they need. This subsidy amount was chosen because it was equal to half of the annual subsidy received by families in DC’s Housing Choice Voucher Program in 2017. The program was designed to fill a niche for families who do not need the case management offered in typical homeless assistance programs but who do need a subsidy to reliably afford rent and avoid homelessness.
The Urban Institute and The Lab @ DC partnered to evaluate the program’s impact on housing stability and participants’ experiences throughout the program’s first year. Our newly released report, supported by the US Department of Housing and Urban Development, suggests other localities seeking to test similar approaches could model their structure after the DC Flex program.
The DC Flex program improved most participants’ financial circumstances
Urban’s qualitative analysis found that DC government conducted extensive planning, and with the support of its capable program administrator, Capital Area Asset Builders, successfully implemented the DC Flex Program. Program participants set up checking and escrow accounts at one of two participating banks and used their DC Flex funds to help pay their monthly rent.
Urban’s survey found that 94% of DC Flex families were satisfied with the program. Most families liked that the program did not require them to meet regularly with a case manager and gave them the flexibility to decide how much rent assistance to use each month. Participants’ only requirements were to attend a program orientation and a financial coaching session and upload documentation that they had paid their rent each month to the program administrator. Many participants reported that the program led to positive changes in their finances, including opening personal checking and savings accounts and establishing or improving their credit scores.
Participating families’ most common suggestions to improve the program were to increase the subsidy amount, allow families to use the subsidy in suburban areas with lower rents, and provide more employment services.
DC Flex provides a good alternative for many families facing housing instability
The Lab @ DC’s first-year results from a randomized evaluation showed that the flexible subsidy did not lower homelessness rates, as neither the treatment nor the comparison group used emergency shelter in significant numbers. The use of other homelessness support programs, particularly Rapid Re-Housing, decreased significantly (29 percentage points) among DC Flex participants relative to the comparison group. This finding suggests a flexible subsidy can reduce reliance on other support services when a family is facing a homelessness crisis, potentially lowering costs long-term.
A review of the DC Flex account data showed 60% of program participants spent the full $7,200 over the course of the year, and others preserved funds for their second year in the program. This result suggests participants use the program’s flexibility to suit their specific financial needs. The Lab’s evaluation will continue through future years of the program.
Now is the time to test new approaches
With the national eviction moratorium set to expire on October 3, 2021, many local governments must prepare for a surge in evictions and families experiencing homelessness. Federal rent assistance funds available through the Emergency Rental Assistance Program provide an opportunity for other states and localities to use flexible subsidy programs to stabilize at-risk households’ housing and financial situations. And, as some states have ceased providing the additional unemployment assistance from the American Rescue Plan Act, there may be even more Americans one financial shock away from homelessness. This is the moment for trying and testing flexible subsidies more broadly, and the DC Flex program is a promising example of how these programs can be structured. (Need rental assistance in DC?)
Localities that test out flexible subsidies will do their residents and housing policymakers a service by rigorously evaluating the program’s impact and participant experience as DC has. Studying further iterations of this subsidy approach, across a range of local contexts will add to our understanding of whether a flexible subsidy can truly be a popular and effective solution to preventing homelessness.
Crossposted from the Urban Wire.