This study evaluates the effects of a rent reform implemented by the Santa Clara County Housing Authority (SCCHA). In 2013, SCCHA used its MTW flexibility to increase the proportion of income that assisted tenants paid toward rent, with the goal of decreasing the costs of housing assistance payments (HAP). SCCHA’s intention was to avoid terminating households, but the policy also offered the opportunity to test whether the rent increase would act as a higher tax on earnings and would negatively affect employment and earnings of work-able HCV recipients. SCCHA initially raised the tenant contribution rate for all HCV households from 30 percent of adjusted income to 35 percent of gross income, then dropped the rate a year later to 32 percent of gross income. SCCHA also stopped exemptions to the two-person per bedroom standard, causing a sudden, sharp decrease in subsidy for 23 percent of its assisted families, usually families with children of different sexes or multigenerational households. Based on a sample of about 15,000 work-able households at SCCHA and three comparison PHAs, the study estimated the impact of SCCHA’s rent increase on employment, earnings, and level of housing subsidies provided. It found that SCCHA’s rent increase did not affect the average of all work-able HCV recipients’ employment and earnings in the four years after rent reform. SCCHA’s HCV recipients increased their employment and earnings, on average, in the four years after rent reform, but the increase was comparable in the comparison communities around the area who were not affected by rent reforms. However, further analysis suggested that the subgroup of families hit by the changed bedroom standard (plus the higher proportion of income paid toward rent) may have earned less than they would have in the absence of rent reform. By increasing rent without affecting average earnings, SCCHA lowered total housing assistance payments and served the same households at a lower cost. It is not known whether assisted households reduced spending, increased debt, and experienced material hardship.

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