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Public Housing Innovations

4 min read

Our need will be the real creator.


The needs of the public housing portfolio are well documented: annual shortfalls in Congressional funding dating back to the 1980s have contributed to an estimated capital backlog of $70 billion.

Absent Congressional action, the Department of Housing and Urban Development and Public Housing Authorities (PHAs) have had to get creative to maintain properties as both affordable and habitable. The Rental Assistance Demonstration (RAD) program, leveraging private capital, stands out as a truly transformative program.

The many flavors of RAD have enabled the program to reach harder to convert property types and to finance new public housing. Section 202 Supportive Housing for the Elderly has its own RAD flavor shorthanded as RAD for 202 RAC (Project Rental Assistance Contract). In an exciting new twist, historic consultants are working to get all Section 202 projects listed on the National Register of Historic Places for their significance in American history. Doing so would enable properties to claim the Historic Tax Credit and unlock a new financing source.

The number of public housing units was capped at its 1999 levels by Senator Lauch Faircloth (R-NC). There’s good reason to remove or increase that cap, but again, absent Congressional action, the affordable housing industry has demonstrated deft dexterity in working within outdated confines. Over the years, public housing units have fallen below the limits – there are an estimated 170,000 so-called ‘Faircloth units’ scattered across PHAs, and HUD has developed the Faircloth-to-RAD program to put the new units on the Section 8 platform.

Beyond RAD, some PHAs have begun issuing tax-exempt municipal bonds to finance affordable housing. The PHA must first get credit rated, then offer bonds with below market interest rates, backed by the full faith and credit of the housing authority. These tax-exempt bonds are not the same as federal private activity bonds/tax-exempt bonds – offering an entirely new financing source in a scarce resource environment.

I’m excited to see further implementation of the resources already at our disposal, as well as the creation of new pathways. National Housing & Rehabilitation Association has been convening a working group to develop solutions for the unique challenges faced by private landlords in mixed-finance properties. I was struck by the accuracy of exchange between Representative Richie Torres (D-NY) and Secretary Marcia Fudge during a recent HUD Oversight Committee hearing, in which they hypothesized how PHAs might react if they were private landlords:

Rep. Torres: “And so, by way of comparison, imagine telling a private landlord, ‘You’re only going to receive 82 percent of the revenues you need to operate your properties.’ How do you think most landlords would respond to the sudden loss of nearly 20 percent of their revenues?”

Sec. Fudge: “They would not be very happy, certainly. And it would create an environment where they may not even be able to continue to do business in that way.”

But we need not hypothesize. That is the exact predicament in which private landlords find themselves after helping pioneer a new chapter of public housing via public-private partnerships. At its core, this group is concerned with the enduring legacy of HOPE VI and mixed-finance properties. Our focus is primarily on the HOPE VI portfolio where the needs are the most acute, but caution that the structural problems plaguing this portfolio also exist for Choice Neighborhoods and Annual Contributions Contract properties.

Despite having fulfilled their construction and operating deficit guarantees, private owners continue to voluntarily fund operating deficits and capital repairs to keep the properties open. Early RAD Project-Based Rental Assistance (PBRA) adopters are now burdened with inadequately low rents. NH&RA supports the Congressional funding requests that would increase rents at these distressed PBRA assets and is working with HUD to develop pathways to stabilize properties while we await Congressional action.

Beyond immediate financial stabilization, owners need a means by which to reposition or redevelop properties. Private owners currently lack the latitude to push projects forward despite bearing the brunt of the financial strain. 

Collaboration in innovation has stabilized much of the public housing portfolio, and I’m confident that the same methods will lead to new tools to address the rest of the portfolio. NH&RA looks forward to working with our public partners as we seek to implement both broad solutions, which would help the entire housing ecosystem and solutions aimed at the specific needs of private owners. If you are interested in participating in or learning more about the Mixed-Finance Working Group, please contact [email protected].

Kaitlyn Snyder is managing director of National Housing & Rehabilitation Association.