Two Landlord Guys Explain What Sucks About Accepting Section 8 Vouchers

We talked here recently about the upcoming battle over Section 8 vouchers and how that fight may be a big factor in the larger direction of Dallas City Hall and the whole city in the years ahead. I said some progressive council members hope the city will do what it can to make mandatory vouchers go down easier for landlords.

So what would that be? What can City Hall do to help landlords not throw up every time they think about being forced to swallow rental subsidy vouchers from the Dallas Housing Authority?

The Dallas Housing Authority grants rental assistance vouchers based on need. A stubborn problem with the program, however, is that many landlords refuse to accept the vouchers, even when a prospective tenant qualifies on all other grounds.

“I don’t think there is anything that could make us jump up and down for joy over being told we have to do anything.” – Ian Mattingly

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A growing consensus in the city (that means me and people who agree with me) is that Dallas pays a bitter price for being so stubbornly and intractably segregated. If you think segregation is great and makes this a better city, you and I are out of business already.

The progressive wing of the council wants to pass some kind of ordinance that would make it easier for poor and working, law-abiding, minority families to live in areas where there are better schools for their kids. The common thinking has been that we should just make it against the law to discriminate against people because they want to pay most of their rent (they usually have to pay some of it themselves) with a housing voucher.

Landlords, generally speaking, hate the idea. The idea also is not as popular as you might expect among minority elected officials, some of whom view it as draining away their voter base. I said last month the danger ahead is that the landlords in North Dallas, who hate vouchers, will make common cause with southern Dallas leaders, who love them, against the reform element at City Hall, including our very promising new city manager, T.C. Broadnax. Together they could kill the proposed ordinance.

That way, North Dallas goes on not having to desegregate. Southern Dallas goes on resegregating itself. Business as usual.

Last month when I talked to him about it, Dallas City Council member Philip Kingston took issue with my bleakness. He said he doesn’t believe the issue of source-of-income discrimination and vouchers necessarily has to come down to a pitched battle or zero-sum game. There must be measures, he suggested, that would make a source-of-income ordinance less throw-uppy for the landlord class.

Interesting. So I sat down with two landlords, Ian Mattingly of LumaCorp and Matthew E. Haines of The Tangent Group, to ask what could be done to make vouchers more palatable for them. Both have some tenants in their properties who pay with DHA vouchers. Both say voucher tenants tend to be stable customers. Neither one likes the idea of being forced to take vouchers, however.

Mattingly said, “I don’t think there is anything that could make us jump up and down for joy over being told we have to do anything.”

Both guys are white. I told them the public accusation is that they don’t want to want to take vouchers because they are racists. Nobody punched me (my bar for when I’m doing well socially), but they really did not like that.

Haines said, “It bothers me as an owner who’s trying to do this when I hear people turn it into a discussion that really has nothing to do with the issue that needs to be solved.”

Both men said their properties are already occupied by a tenant base that is at least half minority, sometimes more. The idea that there are all-white quasi-affordable apartment complexes somewhere in the city, they said, is nonsense anyway. The apartment universe is already ethnically diverse everywhere, although they concede that rents may impose a certain economic stratification.

So what’s the problem? Why would a new ordinance making it mandatory to accept vouchers be so painful? Is it that they think the ordinance would force them to take on less desirable tenants? When I asked that one, I also did not get punched again. Instead, they told me what the problem is. Or, I should say, the problems.

The Dallas Housing Authority, they said, has a completely paper-based system for processing applications. Haines told me about finding a homeless vet to whom he wanted to rent an apartment. Almost none of the intensive approval process at DHA, he said, can be handled online.

A voucher, they explained, is not money. It is a certificate saying that the landlord may be paid by DHA if he rents a certain type of apartment at a certain rate to the holder of the voucher.

In the case of the homeless vet, who was sleeping outside in temperatures in the teens, once he had shown the voucher to the landlord, he then had to ride buses across town in order to wait in line for hours at DHA to be handed something called a “housing packet,” then ride buses back across town to hand the housing packet to Haines.

Then Haines had to wait for DHA to inspect his rental unit. The total period from when the vet signed his application to when he could actually move in was two and a half months, during which time Haines’ apartment remained empty with no rent paid. He let the vet move in before DHA dotted the last i and crossed the last t on the deal because he couldn't stand to make the guy sleep on the street anymore.He said his loss of income while the unit was empty was about $2,000.

Troy Broussard, CEO of DHA, confirmed to me that there is no online way for the paperwork to be done at present and that tenants and landlords must come to headquarters to get it done. He said DHA hopes to introduce a fully online system by the third quarter of this year. “This system is universal in the private sector [already],” he said, “so a lot of our business partners are excited that we [will be] using this system because they understand it, and they know how it works as well.”

“It bothers me as an owner who’s trying to do this when I hear people turn it into a discussion that really has nothing to do with the issue that needs to be solved.” – Matthew E. Haines

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Mattingly explained to me that he must maintain two separate ledgers for each unit rented with a voucher — one for the cash that the tenant pays and a second for the money from DHA. In addition, federal regulations require a landlord to sign a special lease that allows the federal government to reduce the amount paid under the voucher and requires the landlord to accept that reduced payment for the life of the lease or until the government changes its mind.

There are ways to reduce what Mattingly described as the “frictional costs” of dealing with DHA. On some of his properties, a nonprofit entity called Inclusive Communities Project has agreed to step in and act as middleman. ICP signs the lease with Mattingly, collects money from DHA and pays Mattingly, reducing his paperwork and risk. He says it’s a good deal.

Both men insist they are willing to take vouchers — they’re doing it now — but they also insist it should be their right to decide how many.

Mattingly told me, “We also have to mitigate risk. Like everything else we do, this is one more business risk, so we manage that by limiting the amount of participation we will do at any given property.

“If we have an ordinance, at least the way it has been proposed, I can no longer cap that participation. That’s one more risk I cannot manage. So this does strike directly at the way I do business.”

Both landlords do business or have associates who do business with public housing authorities in the suburbs. They say DHA is unique in the region for its antiquated, slow-as-molasses, analog way of doing business and for its extreme rigidity regarding minor regulations. They describe DHA as more interested in paperwork than in getting people into homes.

That’s their version. They didn’t talk me out of my conviction, which is based on listening to and reading a raft of urban experts in the last few years. I truly believe healthy diversity is the key to the city’s better destiny and that source of income discrimination is the most proximate and pernicious threat to that better destiny.

But, c’mon. How can we even think of enacting new ordinances to push the private sector around if the public sector isn’t up to speed with the 21st century yet? That just seems wrong. Wouldn’t it be a solid gesture of good faith for DHA to get its new slick online system up and running first, and then we crack down on the landlords and tell them they have to accept vouchers?

Some of this reminds me of what I saw in West Dallas when City Hall was trying to paint the Khraish family as demons because they rent to poor people. West Dallas would be so much better off and better able to deal with gentrification now if City Hall had merely shown the Khraishes the respect they so eminently deserved as honest business people.

The silver lining in what I heard, however, was that possible solutions exist to some of these problems. The interposing of ICP in the rental deals, for example, sounds brilliant. The landlord gets his rent. The tenant gets a place to live. ICP gets the acid reflux and the irregular heartbeat. Hey, the headaches have got to go to somebody. You want them?