The Obama administration wants the private sector to help rescue public housing.
A Housing and Urban Development Department study released last month found that the nation’s 1.2 million public housing units need more than $25 billion in overdue repairs and major upgrades — a sum that Congress, in a budget-cutting frenzy, is unlikely to approve.
So HUD hopes banks and real estate developers will invest in the low-income homes to help finance the work. The plan would reinforce a frayed safety net, one becoming more critical as millions struggle to find affordable housing amid a foreclosure crisis and a sluggish economy.
“We’re not keeping pace” with badly needed public housing repairs, including crumbling ceilings, bad plumbing or outdated wiring, HUD Assistant Secretary Sandra Henriquez told POLITICO. Henriquez said housing authorities under the plan could secure loans or court investors to help HUD “preserve the public housing stock that has had a 75-year federal investment.”
The proposal, announced last month, needs congressional approval and a $200 million allocation for a pilot program. It is part of what HUD officials call a “comprehensive” White House strategy for subsidized housing and stems from a wide-ranging HUD survey completed in 2010.
Rod Solomon, a public housing analyst who was a HUD deputy assistant secretary for policy under Presidents Bill Clinton and George W. Bush, called it a “groundbreaking” proposal. “It doesn’t mean nobody’s done anything like it, but it’s a substantial advance — and necessary,” he said.
Denise Muha, executive director of the National Leased Housing Association, a private rental housing lobby, said the idea is an offshoot of a similar 2009 HUD proposal to enact sweeping changes in the public housing system. That plan — which included public-private partnerships in running and refurbishing government housing — was criticized as too wide ranging and expensive, and it fell flat in Congress.
Allowing public housing authorities to directly seek private capital for upgrades makes more sense, particularly now that federal dollars are harder to come by, advocates and HUD authorities said.
“The concept is sound — anybody in real estate would agree that it makes sense,” Muha said. “But anytime you’re dealing with the federal government, you should be concerned about the details. … The reality is, all public housing agencies are different in size and sophistication.”
Under the proposal, annual congressional funding for public housing would be restructured into longer-term contracts, guaranteed revenue for, say, 20 years. The housing owners and authorities could then use those contracts for loans to finance upgrades and pay back the money over time. Banks would collect interest on the loan or get access to tax credits.
The American Bankers Association had qualified praise for the “innovative” plan. “While each loan and investment would have to be evaluated individually, we welcome the opportunity for further investment and lending opportunities in our communities and look forward to hearing more about the plan from the administration,” Joseph Pigg, the ABA’s vice president and senior counsel, said in a statement.
As the economic recovery and foreclosure crisis grinds on, the need for government-subsidized housing is soaring. Between 2007 and 2009, the number and percentage of “worst-case needs” — very-low-income renters who either do not receive government aid, paid more than half their income toward rent or both — had the biggest two-year spike since at least 1985, according to HUD statistics.
Even before the recession, most public housing authorities in major U.S. cities had waiting lists that stretch years; others are overwhelmed with demand when even a minuscule portion of a town’s units become available.
In Atlanta last year, after officials announced vacancies in about 200 of the city’s subsidized units, more than 20,000 people stormed the housing authority offices, sparking a near-riot that injured several people.
Linda Couch, of the National Low Income Housing Coalition, said the proposal is a long-overdue step toward dealing with the public housing crisis. “This could be the [solution]. We’re cautious but optimistic,” she said.
But Rep. Ed Royce (R-Calif.), who sits on the House Financial Services Committee, is dubious. The plan, he said, “looks a lot like the ones before it: a public-private partnership backed by the U.S. taxpayers” and advanced by a White House that lacks spending discipline.
“Given this agency’s history of mismanaging programs and our trillion-dollar deficits,” Royce said, “we should be talking about additional cuts before yet another housing program is brought into the conversation.”
The Gazette now offers Facebook Comments on its stories. You must be logged into your Facebook account to add comments. If you do not want your comment to post to your personal page, uncheck the box below the comment. Comments deemed offensive by the moderators will be removed, and commenters who persist may be banned from commenting on the site.