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Guaranteed income has become a buzzword in California, as the state struggles to stop people from getting priced out of their homes and landing on the streets.

The latest entity pushing to give cash directly to people in need isn鈥檛 a nonprofit or an uber-progressive politician 鈥� it鈥檚 a massive federal agency not typically known for its innovation.

The U.S. Department of Housing and Urban Development is encouraging local housing authorities to experiment with giving cash directly to renters in pilot programs it wants to follow. It wants to know if this simplified method, which cuts down on red tape and puts more power in tenants鈥� hands, works better than its decades-old approach: a voucher system where money flows from the federal government, to the local housing authority, to the landlord鈥檚 pocket.

If the tests succeed, they could inspire national change.

鈥淭his could be a significant seachange in how HUD implements subsidies,鈥� said Jimar Wilson, vice president of the Southern California market for national housing nonprofit Enterprise Community Partners, which is considering getting involved in the test program.

Advocates say the pilots could help more people find housing by making landlords less likely to discriminate against renters who get federal aid. At least one California housing authority 鈥� in Silicon Valley 鈥� is very interested in participating.

But nobody knows what these programs would look like, and, most importantly, how they would be funded. Despite advocating for guaranteed income pilot programs, HUD says it can鈥檛 use federal money, placing the idea in limbo until funding sources come forward. Santa Clara County鈥檚 housing authority has pushed back on HUD鈥檚 claim that it can鈥檛 use federal money for this purpose.

鈥淗UD doing this and being willing to look at the role of cash aid or direct cash assistance or subsidies in this way is moving in the right direction,鈥� said Jennifer Loving, CEO of Santa Clara County-based nonprofit Destination: Home. 鈥淲hat would make it incredibly perfect is if they were championing new funding for this.鈥�

HUD calling for nonprofits to partner with it on cash-aid pilots, convened to discuss cash aid, and has been hosting monthly virtual meetings on the topic attended by nonprofits and housing authorities around the country.

HUD offered CalMatters an interview with one of the September article鈥檚 co-authors 鈥� then rescinded the offer two days later. Instead, a HUD spokesperson sent an emailed statement that referenced the article, November event and monthly meetings, but failed to address several of CalMatters鈥� questions.

鈥淭he Biden-Harris Administration has made strides to expand, streamline, and strengthen the (Housing Choice Voucher) program including continuing to explore a broad range of actions to improve and expand rental assistance for low-income households,鈥� spokesperson Andra Higgs wrote.

Why give people cash?

The idea of , known as guaranteed income, is . Nonprofits, cities and counties throughout the state have launched dozens of local programs. Even Gov. Gavin Newsom recently to fund a handful of programs testing the idea. this model has helped people become more financially stable.

Philadelphia already is instead of housing vouchers 鈥� a program .

So far, cash aid programs have been limited to scattered, small-scale, temporary pilots that lack the resources to scale up. HUD jumping into the ring marks the first time a federal agency is taking a cohesive look at the model and potentially creating a path for it to influence national policy.

鈥淭hat鈥檚 what鈥檚 exciting about this, the fact that the initial call has come from HUD,鈥� said Alexa Rosenberg, who co-leads Enterprise鈥檚 economic mobility initiatives.

HUD operates the country鈥檚 Housing Choice Voucher program (also known as Section 8), which doles out vouchers to low-income tenants who can鈥檛 afford market-rate rent. The program started in the 1970s as an alternative to place-based subsidized housing. Instead of having to rent an apartment in a building specifically designated as affordable housing, the tenant can use the voucher to pay a portion of the rent at any market-rate property. Payments under the voucher system go directly to the landlord, who first has to pass a housing inspection. Tenants pay 30% of their income toward rent, and the voucher covers the rest.

That system, which is a cornerstone of America鈥檚 subsidized housing program, has a number of problems. People languish for years on waitlists before they get a voucher, and many never get one at all. eligible for rental assistance receives it, according to the Center on Budget and Policy Priorities.

For those tenants lucky enough to score a voucher, : They either can鈥檛 find an apartment that meets HUD鈥檚 requirements or a landlord willing to accept the voucher, according to HUD data. Though California prohibits landlords from discriminating against a potential tenant based on their source of income, .

The direct cash program could eliminate some of those issues. envisions allowing the tenant to inspect their own unit, rather than having to wait for an official inspection from their local housing authority. And the landlord would not have to sign a contract with the housing authority. Instead, the renter would pay the landlord directly, just like any other renter. Advocates say that could help prevent discrimination.

Santa Clara County鈥檚 housing authority is 鈥渧ery interested鈥� in participating, said deputy executive director Angie Garcia-Nguyen. Her team has been attending monthly virtual meetings hosted by HUD.

鈥淲e thought this would be a good opportunity to learn where we have been a barrier in folks achieving housing,鈥� she said.

Margarita Lares, chief programs officer for the Housing Authority of the City of Los Angeles, is less convinced. She worries that without oversight, renters will spend the cash they get from this program on things other than rent 鈥� leaving their landlords in the lurch.

Not everyone within HUD is convinced cash is necessarily the answer, either. The current voucher system is working, said Richard Monocchio, principal deputy assistant secretary of HUD鈥檚 Office of Public and Indian Housing. He called it 鈥渢he best homelessness prevention program of all time.鈥� While he said he has nothing against testing cash aid, he doesn鈥檛 think it will prevent discrimination, and he鈥檚 focused instead on increasing resources for the existing program.

鈥淚 don鈥檛 want to do anything to diminish this program,鈥� he said. 鈥淚 mean, it鈥檚 the largest rental assistance program in history, and it works.鈥�

So, who鈥檚 paying for this?

Santa Clara County鈥檚 main hang-up when it comes to a cash-aid pilot? A lack of money.

to pay for this experiment. Garcia-Nguyen disagrees. She says Santa Clara County, as part of 鈥� which is supposed to fund innovation 鈥� should be allowed to use federal dollars.

Without federal money, Garcia-Nguyen doesn鈥檛 see a way forward. Their average housing voucher payment is $2,200 per month. HUD envisions these pilots lasting up to four years, and experts say each one likely would need a few hundred people in order to demonstrate convincing results.

鈥淲e鈥檙e going to need a lot of money,鈥� Garcia-Nguyen said.

HUD has indicated it will reconsider its position on Moving to Work funds, Garcia-Nguyen said, and now they鈥檙e waiting for the agency鈥檚 final determination.

HUD declined to comment to CalMatters on the funding question.

In the meantime, HUD expects nonprofits to pay for this effort. But so far, none has committed.

鈥淲e haven鈥檛 seen our members jumping at this,鈥� said Amanda Misiko Andere, CEO of Funders Together to End Homelessness, an organization made up of homelessness nonprofits.

Housing organizations generally support the concept of cash aid, but are reluctant to be the first one to throw their hat in the ring, said Jeanne Fekade-Sellassie, executive director of Funders for Housing and Opportunity. Before they commit, they want more details about what the programs will look like.

So far, HUD鈥檚 best bet is likely Enterprise. The national housing nonprofit could act as an umbrella agency that helps coordinate the pilots 鈥� making sure they operate with similar guidelines, setting evaluation metrics and bringing together funders, said Rosenberg.

Enterprise wants a year to plan its approach, pick locations for pilots and identify resources. Just to fund that year of planning, Enterprise will need about $850,000, Roseberg said. After that, she estimates it would cost between $4.7 million and $7.7 million to fund each pilot for between three and five years, plus an additional $2 or $3 million in infrastructure costs. She hopes they launch at least five pilots.

But Enterprise isn鈥檛 committing to anything until it has funding in hand.

What comes next for HUD rent experiment?

Even if these pilot programs get off the ground and succeed 鈥� essentially proving to the federal government that cash payments work 鈥� what happens next is unclear. HUD has promised to watch these pilots carefully and learn from them, and if they work, it could use the data to encourage Congress to fund larger programs where HUD plays a bigger role.

Any overarching change to the way HUD doles out housing assistance also would require Congressional approval, which is no small feat. That could take years, if it happens at all.

But in the meantime, HUD could incorporate the change into its policy in smaller ways. For example, HUD could decide that the roughly 130 members of its Moving to Work program (including Santa Clara County) can give cash directly to renters, Rosenberg said.

Garcia-Nguyen hopes the pilot program will help spark some sort of federal change.

鈥淲ould I see it in my lifetime? I don鈥檛 know,鈥� she said. 鈥淏ut I hope to at least be part of it, part of what helped discover it.鈥�

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