• MC6

Homeless System Response: Shallow Rental Subsidies

The COVID-19 health and economic crises have created an urgent need among communities to pursue innovative financing and project models to prevent and end homelessness and promote housing stability among low-income households. This post provides information on financing options for the development and implementation of shallow rental subsidy programs as one model to support housing stability for low-income individuals and households experiencing economic volatility due to COVID-19.

Shallow Rental Subsidies

A shallow rental subsidy program provides a long-term rental subsidy to participants in order to help them achieve housing stability and prevent homelessness or reentry into homelessness. The subsidies are considered “shallow” compared to traditional “deep” subsidies such as those provided by Housing Choice Vouchers and Permanent Supportive Housing (PSH) because they provide a lower level of assistance, often based on a set monthly amount.

Shallow rental subsidies are particularly effective for recently rehoused or unstably housed households living in high-cost rent environments, those experiencing fluctuations in income and employment, those on housing waitlists, and those on a fixed income that need a small amount of rental assistance but not the level of support provided through Rapid Rehousing (RRH). Emergency Solutions Grants (ESG) or ESG-CV cannot provide permanent funding for a shallow subsidy program but could provide initial funding while a community identifies a permanent funding source. There are a number of other financing options including those described in the examples below.

Following are several factors to consider for establishing a shallow rental subsidy program in your community. Design Considerations for Shallow Subsidy Programs Communities that are interested in developing a shallow rental subsidy program should consider the following elements of program design in order to respond to the distinct needs of the population they intend to serve:

Population of focus: Shallow rental subsidy programs may be designed to respond to the particular needs of a population of focus such as seniors, veterans, persons with significant health or behavioral health needs, or people exiting institutions of care.

The population of focus for the program may be impacted by the funding source and may impact components of program design such as length and amount of assistance provided.

For example, a shallow subsidy program designed for people who are anticipated to increase income should look different in the length and amount of assistance provided from a program designed for fixed-income households that will need assistance indefinitely.

Individuals and households may still be cost burdened while receiving shallow rental subsidy assistance.

Length of assistance: Shallow subsidies may be of indefinite length or may be for a defined term such as up to five years. They are often intended to be available for several years longer than most RRH programs. Projects should consider the population, number of clients they plan to serve, and the amount of assistance that will be provided to help determine the length of the program. Often, these programs provide for eligibility redetermination at certain intervals—for example, the Supportive Services for Veteran Families (SSVF) Shallow Subsidy program requires redetermination every two years with the household eligible for continued assistance, if needed.

Amount of assistance: Shallow subsidy programs often establish a flat rate or fixed subsidy amount, but the method for determining this amount varies across programs. The subsidy amount could be determined through a number of methodologies, including a flat dollar amount (e.g., $200/month per household), a fixed percentage for all households (e.g., 30 percent subsidy of total rent and utility costs per household), or a fixed percentage based on Fair Market Rent (FMR), income, or unit size (e.g., 35 percent subsidy based on FMR).

Additional program services: Shallow rental subsidy programs may be designed to only provide rental subsidy assistance, but many programs offer program participants access to additional housing stabilization services. Examples of such services include housing navigation and placement resources, move-in assistance, “light touch” case management, connections to mainstream resources, and budgeting and money management training.

DC Flexible Rent Subsidy Program, Washington, DC

Funding Source: Local funds. Funding for this pilot program is provided by the DC Department of Human Services (DHS), which partners with the non-profit organization Capital Area Asset Builders (CAAB) to administer the program.

The DC Flexible Rent Subsidy Program (DC Flex) launched as a pilot program in September 2017 to provide shallow, flexible subsidies to assist low-income families in maintaining affordable and stable housing. The goal is to assist families whose income or earnings fluctuate month-to-month and whose situations may not require the deeper subsidies that are offered through other housing voucher programs. DC Flex allocates $7,200 a year to each family via a program-specific bank account for up to four years (the term of the pilot), or longer if the program is continued. The program allows families to decide how much of the subsidy to spend each month, up to their full rent amount.

To be eligible, families must:

  • Earn 30 percent of AMI for DC;

  • Receive income from employment;

  • Have a valid lease in a DC-registered apartment; and

  • Have applied for or received emergency housing or homelessness assistance in the past.

The program does not offer case management or housing search assistance, but families are required to attend at least two one-on-one financial coaching sessions. At the end of each year, the family can withdraw up to $500 of leftover funds for household expenses and, at the end of the program, the family can withdraw any remaining savings.

For more information on the DC Flexible Rent Subsidy Program, please see this article from Urban Institute—Greater DC.