Will Lexington make landlords accept housing vouchers? Council to take up controversial issue

As the only shelter for unhoused teens and young adults in Fayette County, Arbor Youth Services has seen a surge in the number of people needing its services over the past several years.

But moving teens off the streets, out of the shelter and into permanent housing is more difficult than ever, said Lori Clemons, executive director of Arbor Youth.

“I had one kid who was in shelter for a year,” Clemons said. The teen had a federal housing voucher, called Housing Choice, formerly known as Section 8, but Arbor Youth could not find a landlord who would take the voucher or the teen.

“We are offering up double deposits to get landlords to rent to some of our clients,” Clemons said. In addition to Housing Choice or Section 8, Arbor Youth has other grant money it can use to pay for rents. But landlords are still weary.

Other homeless providers agree.

Christy Shuffett, executive director of New Beginnings, which helps find services and housing for people with severe mental illness, said the group has lost more than 20 landlords who used to take third-party payments over the past three years. It’s creating a bottleneck in the homeless service provider system. Because people can’t find housing using vouchers, they are staying in shelters or on the street longer.

“I have a waiting list of 57 people,” Shuffett said. “Of those, 26 are homeless. They are living on the street.”

The Lexington-Fayette Urban County Council is set to debate banning source of income for landlords. The ban would prevent landlords from discriminating against someone with a housing voucher or other third-party payments such as other federal funding or even alimony for rental payments.

The council’s Social Services and Public Safety Committee will discuss the ban at an Oct. 10 meeting.

Many landlords strongly oppose the ban, alleging it could lead to a rise in rents. Landlords who don’t want to accept vouchers will increase rents so the property won’t qualify for vouchers, they argue. Others say inspections, which are required in the Housing Choice program, can cause havoc and headaches for landlords and delays in leasing and payment.

The Lexington-Fayette Urban County Housing Authority, which oversees federal housing vouchers, also does not support the ban.

District 10 Councilman David Sevigny, one of the sponsors of the source of income ban, said it’s an issue of fairness and discrimination.

“There is no reason why tenant A’s $1,000 check should be viewed any differently than tenant B’s $1,000 voucher,” Sevigny said. “None at all. That is why I’ve agreed to take this up. Finally, to say that all voucher users are the same, is just like saying that every individual in a class, gender, ethnicity, religion, race are all the same. They just aren’t. To me, that is the definition of discrimination. “

‘Program has been very successful’

The Lexington Housing Authority manages more than 3,500 vouchers that people with low incomes can use to pay rent.

The vast majority of those vouchers — 2,628 — are “moving to work vouchers,” or vouchers for people under the age of 62 with low incomes. The remaining vouchers the authority oversees are connected to certain types of programs, including housing homeless veterans or domestic abuse survivors.

Of the 2,628 vouchers, 2,622 of those are currently under lease — which means people have a 99% success rate in finding housing using those vouchers, said Austin Simms, the executive director of the housing authority.

There are currently 800 landlords in Fayette County that accept federal housing vouchers, Simms said.

The program has also been able to use federal funding to pay landlords $1,000 sign-on bonuses. It can also pay for deposits, which had kept people from being housed in prior years. It has paid out $220,000 in bonuses.

“We think the program has been very successful,” Simms said.

Yet, there are people who have had to return vouchers, Lexington Housing Authority data shows.

Of the 215 vouchers issued between Jan. 1 and July 1, 39 expired, meaning the tenant could not find housing. That means roughly 18% of voucher holders returned the voucher over a six-month period.

Returning a voucher doesn’t mean someone can’t find a place that will take them, Simms said. Some ultimately opt not to use a voucher for a variety of reasons.

The housing authority also provided the Herald-Leader with a map, broken down by zip code, of where those vouchers are used. The map showed voucher use throughout the city.

However, there are large concentrations of voucher users in the north and east sides of Lexington. In the 40511, 40508 and 40505 zip codes, there are nearly 1,330 vouchers used.

Landlords push back

In a letter to the council, Brenda Wells of the Central Kentucky Apartment Association, which includes Fayette County, said many landlords who have participated in the voucher program no longer do so.

“Nearly 70% of those who don’t participate in the Section 8 program have participated in the past. They no longer participate because their experience was not positive,” the letter said.

The voucher program also costs too much for landlords to administer, the letter said. The inspection process alone can cause delays, leading to loss of income.

Jim Burton has more than 100 apartment units in Lexington and Louisville. He used to take vouchers but no longer does because of the administrative headaches of the program, he said.

Burton said the housing authority’s inspection process is haphazard. One inspector can find a problem that means instant repairs while another inspector can see the same issue and not order repairs. If a unit needs repairs or changes, the voucher program does not pay rent for that month. There’s no way for the landlord to recoup that cost, he said.

“If you don’t have an efficient inspection program, then you have losses,” Burton said. “The only way to offset losses is to raise rents and that hurts everybody.”

Simms said the housing authority has worked to make the inspection process more efficient. The housing authority responds within three days of receiving paperwork from the landlord and the tenant. There can be delays because the unit is not ready for inspection, he said.

Simms also countered the authority’s inspectors follow the same guidelines.

“We have three inspectors and certainly there are times, since this is not a science, that one’s evaluation would differ from another but never can their personal opinion override or deviate from (the guidelines),” Simms said.

Rock Daniels owns multiple rental units. He likes the voucher program and still participates. However, he also understands why some landlords can’t do it. The math sometimes doesn’t work.

“All our costs are also going up,” Daniels said. Property taxes are going up, and Daniels said his insurance costs went up by more than 30% percent. Meanwhile, those vouchers have not kept up with the increases.

“The biggest problem with Section 8 is it does not keep up with market rate,” Daniels said. “It’s not landlords not wanting to accept it.“

Joe Marcum had 13 homes in the voucher program years ago, but left the program because of problems with the administration, he said.

“I currently have zero properties because over time I found the program incredibly poorly run, the hassles with administrating it costly and time consuming, and (fair market rents) are now below market rents,” Marcum said.

The U.S. Department of Housing and Urban Development sets the amount of those vouchers by a process called fair market rent, which looks at rents in a certain areas. For example, one-bedroom rentals in Lexington are much higher than similar properties in rural Kentucky counties.

Stuck in shelters and the streets

The number of landlords willing to work with service providers who have housing vouchers or other third-party payment has shrunk since the coronavirus pandemic, multiple service providers said.

New Beginnings has a program where the organization leases apartments for homeless and severely mentally ill people. Since New Beginnings is on the lease, landlords can go to organization if the rent is late.

“We are now down to only two landlords who will work with us,” Shuffett said.

Many larger apartment complexes have been sold to out-of-state companies with different property managers. Many of those complexes that used to take vouchers no longer do so, Shuffet and other service providers said.

“Our goal is to have someone housed in 60 days. Now it’s taking four to six months,” Shuffett said.

Clemons agreed. The amount of time it takes for teens and young adults to find housing and to get out of the shelter has doubled since the coronavirus pandemic. That’s even with Arbor Youth offering to pay twice the deposit amount, she said.

Dylan Schell, regional director of housing and community services for New Vista, said his clients have also experienced delays in finding landlords that will take vouchers or other types of third-party payments. New Vista also helps people with mental illness find housing and provides case management for clients.

“It limits where we can place our clients,” Schell said.

When asked if he had clients able to find rental units on the city’s south side willing to take vouchers, Schell paused.

“In my career? Yes. Lately, no,” Schell said.

Clemons said she, too, has not been able to find landlords on the city’s south side who are willing to take third-party payments. That may be because rents there are higher and therefore don’t qualify for vouchers.

The length of time people stay in Lexington’s homeless system from the point of entry, such as emergency shelter, to when they exit to housing has increased 266% from 2018 to the end of June 2023, according to data provided by the city.

The average length of stay in the homeless system was 27 days for the 2019 fiscal year, or July 1, 2018 to June 30, 2019.

The average length of stay was 131 days for the fiscal year that ended June 30.

Lexington’s Homeless Prevention and Intervention Director Jeff Herron said delays getting people into permanent housing aren’t solely due to problems finding landlords that take third-party payments. There are other factors such as an overall lack of affordable housing in Fayette County, he said.

“The data serves to reinforce the anecdotal evidence coming from providers who are seeing fewer landlords/properties participate in programs and the increasing challenges we face even when rental assistance or other subsidies are available,” Herron said.

Rents don’t climb due to source of income bans

As Lexington takes up the issue, there appears to be movement in Frankfort to stop cities from enacting local or county bans on discrimination of source of income. Louisville is the only city in Kentucky with a source of income ban. Florida passed a similar statewide ban.

Rep. Ryan Dotson, R-Winchester, posted Sept. 27 on Facebook he has pre-filed a bill in Frankfort to do away with local source of income bans.

Dotson said the bill would “safeguard our citizens from being forced to lease their properties to the government for those on assistance programs, unless the property owner chooses to. We need to stop this NOW before it escalates into a mess that we can’t control,” according to his Facebook post.

Beau Revlett, an organizer with the Kentucky Tenants Union, said there’s no evidence rents will go up if the city bans landlords from discriminating against those who use vouchers or other third-party payments. The union has pushed the council to ban discrimination based on source of income.

“Louisville passed a ban on source of income discrimination in December 2020,” Revlett said. “Since then, Louisville’s rent increases have been either less than or barely higher than increases both across the country and in Lexington, depending on the time frames you consider.”

Revlett said studies that looked at states with source of income bans also found no correlation between rent hikes and bans. Seventeen states have passed similar statewide bans. Data on rents is more readily available for nine of those states.

“The big takeaway: There is no relationship between whether a state passed a ban on source of income discrimination and whether, compared to national average rent increases, rents increased faster, slower or at roughly the same rate in the years following its passage,” Revlett said.

Emma Anderson, another organizer for the Kentucky Tenants Union, also said studies show cities and states that ban source of income see the number of landlords and places that take vouchers increase “as much as 12 percentage points,” Anderson said, referring to a 2018 study.

Lakin Dillingham, also a member of the tenants union, said her mother struggled to find a home using a voucher when Dillingham was a child in Knox County. Dillignham and her siblings stayed with grandparents while her mother struggled to find a place to live.

Other people don’t have that luxury. Dillingham said later in life she struggled to maintain housing while in college, sometimes living in her car or occasionally sleeping on someone’s couch. Dillingham, Anderson and several others urged the council to pass the ban on source of income discrimination at a recent council meeting.

“It shouldn’t be left to the poor to take care of the poor,” Dillingham said.