A Stable Home Opens Doors: Encouraging Self-Sufficiency Among Low-Income Families

This blog is the first in a series highlighting local approaches to improve housing choice for low-income families, incentivize family self-sufficiency, and achieve greater cost effectiveness in HUD spending through the Moving to Work demonstration program.

Public housing authorities (PHAs) promote self-sufficiency as part of their Moving to Work (MTW) programs by designing initiatives to assist families to enroll in educational institutions, secure stable employment, and transition from rental subsidy to paying their household’s full housing costs. This blog explores three initiatives that help families reach their goals in areas that can boost their long-term economic and financial outcomes: purchasing a home, starting a small business, and strengthening their educational foundation.

Paving Pathways to First-Time Homeownership—Baltimore, MD

The fifth largest public housing authority in the country, the Housing Authority of Baltimore City (HABC) assists almost 20,000 families through its housing choice voucher and public housing programs. HABC has been promoting homeownership as a path to self-sufficiency since as early as 1994, when the agency developed a homeownership program in collaboration with residents, housing counseling agencies, and lenders. The program was implemented to give families a pathway to “become independent and self-sufficient while building equity in a home of their own.” Today, HABC’s Moving to Work homeownership program offers benefits to its residents, who are supported in their efforts to purchase their first homes; the housing authority, which repurposes vacant housing stock; and local Baltimore neighborhoods that are revitalized and invested in.

HABC’s MTW Homeownership Program was reactivated in FY2020 and modifies HUD’s Section 32 and Section 8 Homeownership programs, two of several resources available to PHAs to help residents become homeowners. Under HABC’s MTW Homeownership program, select scattered site public housing units within Baltimore are available for purchase by eligible housing choice voucher and public housing participants as well as other eligible applicants. Under the program, low-income homebuyers can receive funds for closing costs (matched by HABC up to $5,000 based on household need) as well as apply for non-cash, non-interest bearing second mortgages up to 25% of the after-rehab appraised value of the property. Eligible public housing first time homebuyers may receive up to $10,000 in down payment assistance (participants must complete homeownership counseling from a HUD-certified Housing Counseling Agency). HABC allows for the disposition of its scattered sites to approved community partners who agree to resell the homes to HABC’s public housing residents. In FY2021, HABC added a new component to its program by funding a limited amount of Special Homeownership Vouchers set aside for low-income households who purchase an eligible scattered site home through the program.

As with HUD’s traditional homeownership programs, once families have purchased a home, their homeownership costs are partially subsidized by the housing authority for the length of the program term (10 years or 15 years for 20+ year mortgages). To facilitate the transition out of assisted homeownership, the housing authority added a five-year, decelerated assistance term onto the homeownership program period.

Table 1: HABC MTW Homeownership Program Decelerated Assistance Schedule

Year (after 10- or 15-year homeownership program period)	Household Payment 30% of monthly household income plus…
Year 1	50% of balance of mortgage payment
Year 2	60% of balance of mortgage payment
Year 3	70% of balance of mortgage payment
Year 4	80% of balance of mortgage payment
Year 5	100% of balance of mortgage payment

Source: Housing Authority of Baltimore City Moving to Work Annual Report FY2021

Although there are more potential homebuyers than available, affordable units, five families managed to successfully purchase homes in FY2022. HABC anticipates by the end of FY2024 21 families will have purchased homeownership units under the MTW Homeownership program. The housing authority continues to renovate its scattered site inventory, building the pool of homes eligible for purchase.

Through HABC’s homeownership program, families in Baltimore can access one of the most substantial contributors to wealth for low-income households. Offering an additional five years of decelerated assistance builds a safety net for participants, facilitating their ability to make consistent monthly payments and boosting their chance to successfully build equity. Families partner with the housing authority and trusted community developers, evading predatory lenders that can target vulnerable homebuyers. Programs like HABC’s can also help narrow the racial homeownership gap, while promoting intergenerational wealth building. In 2022, only 3% of homebuyers across the country were Black. In Maryland, 52% of Black households owned their homes, compared to 78% of White households.

Fostering Entrepreneurship—New Haven, CT

Elm City Communities/the Housing Authority of the City of New Haven (ECC/HANH) has been serving residents in New Haven, CT for more than eight decades. The area is experiencing an economic rebound, along with rising home prices and cost burdens and falling vacancy rates. ECC/HANH provided housing assistance to more than 6,100 families in FY2022 and has consistently increased the number of families served each year through its programs. The agency, which joined the MTW program in 2001, aims to help families improve their self-sufficiency by fostering opportunities for entrepreneurship through its Resident-Owned Business initiative. Small businesses are a significant source of income for working families and driver of innovation and economic growth nationwide.

ECC/HANH’s initiative helps New Haven entrepreneurs navigate the bureaucracy of starting a small business and offers them access to critical capital, two challenges that commonly face small business owners. It provides a wide array of business development support. This includes technical assistance, business and financial capacity assessments, business entity formation, development of business plans, bookkeeping, and financial management, and more. The agency dedicated $250,000 in MTW flexible funds to a revolving loan fund. Program participants can apply for loans up to $25,000 if they meet certain eligibility requirements: submission of a business plan and letter of intent for pending contract award options and commitment to enroll in the agency’s Family Self-Sufficiency Program, in which participants work on financial education basics. Participants in the initiative are also given individual assessments and can access databases for Section 3, Minority Business Enterprise, Women Business Enterprise, and other small businesses for potential contract opportunities. One-on-one entrepreneurship consultation and training is available as well as workshops on business basics. To support new business growth without ‘penalizing’ the household with higher rent amounts, the housing authority excludes 100% of net income derived from a resident-owned business in the first year of a resident’s enrollment in the Family Self-Sufficiency Program. In year two, 50% of net income is excluded, and 25% in year three.

Since the program’s inception in FY2011, nine loans have been issued to participating entrepreneurs and an average of 27 households per year have accessed business consultation or technical assistance services. While ECC/HANH anticipated most new businesses generated would be in the construction trades, the five resident-owned businesses actively operating in FY2022 offer a range of services, from professional cleaning to hair service, auto repair, and trucking logistics. One of ECC/HANH’s program participants gained national attention for her company’s success, which has grown from one employee to more than 100. She gave credit to the positive impact that mentorship played in helping her kick start her business, citing help from a fellow female New Haven business owner and ECC/HANH’s executive director, along with a loan from the U.S. Small Business Administration.

Accessing Post-Secondary Education and Career Opportunities—Champaign, IL

The Housing Authority of Champaign County (HACC) serves more than 2,000 households within the largely rural county of Champaign, IL. The housing authority joined the MTW demonstration program in 2010. HACC expanded its ability to provide self-sufficiency services under the Department of Labor’s YouthBuild program in 2020 when the agency received a $1.5 million grant to establish YouthBuild in Champaign County. A subsequent award in 2021 is supporting the program for an additional three years. The partnership HACC has with YouthBuild allows the housing authority’s households to benefit from trainings and educational opportunities available to YouthBuild participants, providing critical tools for their families to work towards self-sufficiency.

YouthBuild provides academic and practical skills training in the construction industry for youth aged 16 to 24 who are disconnected from school and the workforce.  In addition to classroom learning, with a curriculum tailored for youth who did not complete high school, program participants are placed with skilled tradespeople and paid stipends to renovate affordable housing properties. Its cohort design is intended to foster a sense of community and give youth access to skilled vocational trainers and mentors as well as peers with similar backgrounds. HACC dedicates five sponsor-based vouchers per year to the YouthBuild program, and nine households are currently receiving rental assistance through the support of these vouchers. HACC has been approved by HUD to target youth from their assisted households whose lack of education or job engagement has put their family’s rental subsidy at risk, due to HACC’s work requirements for able-bodied households.

In 2022, 122 students, including youth from the community and the housing authority, were served in the YouthBuild program with 100% attaining a credential such as a high school diploma or career certificate. This year, more than 20 housing authority households have taken advantage of YouthBuild training opportunities, including certification training such as OSHA and forklift. HACC household members have also enrolled in the education program offered through YouthBuild to obtain their high school diplomas online.  Champaign County YouthBuild graduates have gone on to postsecondary programs in nursing, gotten accepted to colleges and universities, and been hired at the housing authority.

HACC’s Executive Director attests to YouthBuild’s ability to serve Champaign County youth for whom traditional educational settings haven’t been effective, giving them practical skills to pursue post-secondary education and career opportunities, while helping their families remain stably housed. Their YouthBuild is one of 200 active programs nationwide that expose future jobseekers to the home building industry, a field in need of millions of skilled workers in the coming years.

Conclusion

By receiving federal rental assistance or living in subsidized housing, low-income families are provided with access to a stable, affordable home. This allows them to dedicate time and energy to pursue goals in other aspects of their lives, such as an education or career.

The self-sufficiency initiatives available at the housing authorities in Baltimore, Champaign County, and New Haven demonstrate ways that the Moving to Work program can help assisted households further improve their financial health and the well-being of their families.