When Evon’s landlord refused to renew her lease in April 2020, she feared the worst for her family — eviction and homelessness.

That’s because Evon relies on a federal subsidy, commonly known as Section 8, to pay her rent. She knew that finding a new landlord who would accept her housing voucher, and finding a place big enough for her family of five, would be a struggle.

Of the places that do accept Housing Choice Vouchers, the official term for Section 8, many are small, one to three bedrooms. Discrimination by landlords poses an even bigger hurdle; many reject renters in the program outright, while others charge exorbitant fees.

Fighting the eviction and trying to find a landlord who would accept her voucher became practically a full-time job, even as she continued to care for her three daughters and ill mother.

“It was a mess,” she said.

It took her nine months to find a new home. But in February last year, Evon finally moved her family into a two-story, four-bedroom home with a backyard in an upper-middle-class subdivision on the city’s far West Side.

“I thought it was too good to be true,” she said.

The home represents a new kind of Section 8 housing opportunity. It is owned and managed by a for-profit company that purchases homes in “high opportunity” neighborhoods — those with good schools and low crime rates — then rents them exclusively to Section 8 voucher holders.

The Dallas-based company, High Opportunity Neighborhood (HON) Partners, believes it can both turn a profit and combat generational poverty — a lofty goal made possible thanks to a policy change at the U.S. Department of Housing and Urban Development first proposed by former San Antonio Mayor Julián Castro when he led HUD during the Obama administration.

HON has purchased 30 homes in Bexar County and plans to expand. David Williams, HON’s director of policy outreach, emphasized that the company is not a charity. “We make money. We are a business. My partners and I … believe in capitalism.”

From ‘sketchy’ to secure

In the past, HUD’s Section 8 program requires voucher holders to pay 30% of their income toward the cost of rent, with the voucher making up the rest, but only up to a metropolitan area’s “fair market rent,” which often doesn’t even reach an area’s true rental costs.

In San Antonio, that confined most voucher holders to parts of the city with the cheapest rents in often not-so-great neighborhoods. Evon’s 20-year-old daughter said several of the voucher housing options her mom looked at were in “sketchy” areas “that made you feel unsafe.”

The San Antonio Report agreed to withhold Evon’s surname and her children’s names to protect her privacy, but she consented to use her photograph to accompany this article.

Under HUD’s updated policy, which finally launched in 2018 after it was put on hold by the Trump administration, vouchers will cover the fair market rent within the zip code where the home is located, pegging the value of the voucher to the specific rental market within that zip code.

As determined by HUD, the 2022 fair market rent in the San Antonio-New Braunfels metropolitan area is $961 for a one-bedroom home and $1,849 for a four-bedroom — meaning that is the maximum allowed, no matter where the home is located. Breaking down fair market rent by individual zip code means vouchers will cover the higher cost of rent in higher-rent zip codes.

For example, a voucher holder looking for a home in the affluent 78015 zip code, located along the northern edge of Bexar County, would be able to pay up to $1,470 for a one bedroom, giving them a much better chance of actually finding something in that price range in that area.

When the voucher policy changed, entrepreneur Matthew Berke saw an opportunity. He founded HON with the mission to “increase housing equity and help break the cycle of poverty.”

The company began buying homes in neighborhoods where mortgages could be covered by the rent from the now more-valuable Section 8 vouchers.

“Especially for low-income kids, the difference between growing up in one neighborhood and another just a few miles away, can literally impact their average earnings in adulthood,” Williams said.

Beyond a home’s cost, HON uses several tools to determine which houses will fit its model, including the Opportunity Atlas, developed by a team of researchers based at Harvard University. The atlas maps neighborhoods across the country that “offer children the best chance to rise out of poverty,” based on census tract data.

HON also looks at poverty rates, crime rates and other data sources, and seeks insights from local housing authorities, Williams said.

As in most cities, wealthier areas of San Antonio generally have more parks, sidewalks, bus stops and fresh food options, said Rich Acosta, a local affordable housing advocate who works as a real estate agent for HON.

“That’s where we’re planting our families,” Acosta said.

Evon’s daughter said she’s grateful to be planted in a HON-owned home. Typical low-income neighborhoods don’t “give you a chance to be anything more than the next drug dealer on the street or the next person trying to do a [illegal] hustle,” she said, whereas in her new neighborhood, she and her siblings “have more options.”

The quality of the housing itself is better, too, she said. “It’s homier here — it’s a place we can call home.”

HON now owns about 500 properties in Dallas-Fort Worth, Houston, Tampa and Minneapolis, in addition to the 30 homes it owns here.

Williams said HON is currently the only company using this model, “especially at scale in multiple cities,” but would prefer to see other companies enter the market.

“We want competition,” he said. “This isn’t about asking for more government subsidy. There’s already this federal program in place and there’s already the policies that allow housing authorities to make this sustainable for private market actors.”

Bexar County Commissioners have elected to lower the property tax rate saving the average taxpayer four dollars per year.
HON purchases homes in neighborhoods with good schools and low crime rates, offering a greater chance of upward economic mobility for Section 8 families who rent them. Credit: Bria Woods / San Antonio Report

‘Public policy trade-offs’

How local housing authorities choose to implement the expanded voucher program, however, can limit the ability of landlords, including individual property owners and companies like HON, to turn a profit.

If property owners in high-opportunity neighborhoods don’t see a financial benefit to renting to Section 8 voucher holders, those renters will continue to be relegated to lower-income neighborhoods.

“This policy change addresses historic concentrations of poverty by affording clients the choice of zip code where they want to live,” said Lillian Miess Frei, director of public affairs for the Housing Authority of Bexar County, “This has a lasting impact for all [housing choice voucher] clients, especially for families with children, as they can afford to live in school districts with better ratings.”

Bexar County issues 2,050 vouchers and has adopted the new policy by zip code. The San Antonio Housing Authority (SAHA), which issues six times more vouchers than the county, has opted instead to create 10 groups of zip codes that fall into a range of fair market rents.

It does this in order to both simplify the process for families seeking a rental, and to balance the need to fund all 12,000 vouchers, said Brandee Perez, the agency’s chief operating officer. If too much money is spent on vouchers in high-opportunity neighborhoods, SAHA would have to reduce the number of families it can serve.

But grouping zip codes means some landlords might not be able to charge the full small area market rent for their particular zip code.

For example, under the updated voucher policy, rent for a four-bedroom home in Evon’s zip code is $2,530. Under SAHA’s grouping system, though, her voucher would only cover rent up to $2,466. Even though it’s only a difference of $64, voucher holders are not allowed to pay more than 30% of their income, even if it’s $5 or $100.

Grouping zip codes often doesn’t pencil out for HON’s business model, said Williams, since it can’t always get the full fair market rent for a particular zip code.

But he said understands SAHA’s reasoning, and it won’t stop HON from working with the agency. “These are public policy trade-offs that different organizations have to make.”

A waitlist for vouchers

In 2019, SAHA was seeing an uptick in landlords wanting to participate in the voucher program, Perez said. Then the pandemic hit. As the rental market began to tighten — it remains red-hot — SAHA began losing landlords.

Meanwhile, the demand for vouchers remains high.

When SAHA closed its voucher waitlist in 2017, about 50,000 people still on it were told it could be between four to seven years before they could receive one, she said.

To reduce that timeline and give people “a little bit more hope,” as Perez put it, SAHA now opens up the waitlist more frequently, uses a lottery system and caps the list at 5,000. The waitlist is shorter, but the need hasn’t shrunk, she said.

Part of the challenge finding landlords to participate is the stigma associated with voucher holders. Landlords and neighbors often assume that low-income tenants will decrease their property values or bring crime to the neighborhood.

“That’s not the case. Those are myths,” Perez said. “You can have a bad tenant whether they’re on the program or not.”

Acosta, the local housing advocate, notes that under HUD’s updated policy, many landlords could make renting to Section 8 voucher holders profitable. He agrees that discrimination still plays a big role in keeping landlords out of the program.

Many may not even know about the updated policy. But also, because the small area fair market rate is still lower than what landlords can charge, especially in today’s competitive rental market, many landlords simply choose to maximize rent.

That’s where HON’s underlying mission kicks in — it doesn’t need to charge the highest possible rent, just what the voucher allows.

The company also offers tenants referrals to organizations that offer transportation, health and wellness, financial literacy and job training services. Being an advocate for tenants helps keep the company’s turnover rate low, Williams said.

“The vast, vast majority of our tenants have a great experience [and] we have a great experience with them,” he said. “Sometimes we do have folks in the neighborhoods who might be a bit racist … or something [towards a tenant], and we’ll send a lawyer letter over to them and say: ‘Hey, stop it. Our family has as much right to live there as you do.'”

Cities or developers who want to build mixed-income, multifamily affordable housing projects often run into resistance from existing residents. With a voucher model, “once we just buy a single-family home, no one can say: ‘you can’t move in a low-income or Black family.’ You are not allowed to stop us from doing this,” Williams said.

State law prohibits a citywide ban on source-of-income discrimination. But last year, San Antonio City Council, found a workaround to the law, approving a rule that requires new housing projects to accept housing vouchers if they receive city incentives. Under the policy, if a tenant is otherwise not qualified to live at a property, the landlord can still reject them — but it can’t be because of the voucher.

Evon experienced source-of-income discrimination; she sent a letter to City Council in favor of the rule.

“I don’t think it’s fair that those who use government funds to afford their needs should deny others for doing the same thing,” she wrote.

While her housing situation is now stable, Evon is struggling to afford burial expenses for her mother, who passed away in January. Years ago, her mom bought her a barbecue trailer to pursue her long-held passion to open a food truck.

The trailer needs a little work, but Evon said she can finally see a path forward. “I want to … make people happy with my creation of food and make a living by doing so.”

Williams acknowledged that HON’s business model can’t singlehandedly fix the affordable housing crisis or generational poverty — and moving to a high-opportunity neighborhood may not be the best option for all voucher holders — but it does provide another option for families.

“These are folks who are just like anybody else. They just want a roof over their heads, a nice neighborhood and an opportunity for their children,” he said, adding that he hopes more landlords follow HON’s model.

“Whether it’s an individual who owns their own home or a company … when we get more people in this market it provides profit, but also provides opportunity.”

Iris Dimmick

Senior Reporter Iris Dimmick covers public policy pertaining to social issues, ranging from affordable housing and economic disparity to policing reform and workforce development. Contact her at iris@sareport.org