Partnering with Housing Authorities: Public Housing Joint Ventures Present Opportunity

8 min read

For more than 125 years, since Jacob Riis first took photos of New York City tenements, government and the building community have been searching for solutions to provide sufficient housing for people  facing financial challenges and living with disabilities.  Several iterations of housing legislation and initiatives have made this effort, from the Wagner-Steagall Act under President Roosevelt to the HOPE VI program under President Clinton.

Now, we find ourselves in the midst of the newest efforts to solve housing’s greatest challenges. Our modern day approaches value collaboration, with the Choice Neighborhoods Initiative encouraging a holistic look at housing that requires teamwork between federal agencies. The Rental Assistance Demonstration (RAD) program looks to bring the public and private sectors together. In an era of obsession with federal debt and vast income disparity, RAD creates mechanisms to improve and finance housing and neighborhood development.

As these ideas arrive, the policy makers at the Department of Housing and Urban Development (HUD) have reached out for input from those who implement their programs in neighborhoods across the country. The National Housing & Rehabilitation Association has assumed a role as a unique collaborator with HUD in this effort, rallying its membership of developers, managers and financiers from around the country to meet face-to-face with the government officials to discuss the practicality and details of the innovative programs. NH&RA members relish the relationship the association has developed with HUD and the access it provides is a primary motivation for joining the organization.

In February, for the first time ever, NH&RA hosted a Public Housing Joint Venture Symposium in Key Largo, Florida where it convened HUD representatives with more than 100 developers, syndicators, lenders, and other members of the affordable housing community. The one-day event preceded the 2015 NH&RA Annual Meeting.

The Symposium expanded an ongoing conversation between HUD and NH&RA members about improving HUD programs and joint venture development opportunities by inviting in new participants and incorporating fresh perspectives. Event attendees had a unique opportunity to gain insight into the progress and updates to key HUD programs, and were able to voice their concerns and questions to HUD representatives, as well as connect with peer organizations who are working on similar issues. These important dialogues provided HUD officials Greg Byrne, Mindy Turbov, and Susan Wilson with a deeper understanding of what affordable housing developers and owners, public housing authorities, syndicators, lenders, and others need to successfully participate in the programs they oversee.

The event began with a presentation from Mindy Turbov, Director of HUD’s Choice Neighborhoods Initiative. Turbov invited attendees into a dialogue about the evolution of the Choice Neighborhoods Initiative (CNI) program, including CNI’s goals and plans for the future. Kenan Bigby (Trinity Financial, Inc.), Rodger Brown (Preservation of Affordable Housing), Sharon Wilson Géno (Ballard Spahr), and Milt Pratt (The Michaels Organization) joined Turbov on the panel to voice the needs and concerns of professionals engaged in Choice Neighborhoods transactions.

Choice Neighborhoods is based on an Obama Administration philosophy that cabinet departments, in this case HUD, Treasury, Education, Health and Human Services and Transportation, should combine their intellectual and fiscal assets to achieve things they cannot possibly do on their own. It seems like an obvious idea, but it has not been advocated since Franklin Roosevelt brought departments together to create Social Security in 1937. Rather than focus on just constructing housing, CNI encourages the creation of a neighborhood or a “place’” that includes the services—i.e., education and healthcare—to support residents.

While Turbov said CNI is the first neighborhood-oriented program since the Carter administration, the panelists all questioned what is a developer to do in a neighborhood-focused era. The panelists discussed the exorbitant cost of submitting a grant application when so few grants are available, difficulty coordinating all the required aspects of a CNI grant, uncertainty of planning grantees’ likelihood of receiving an implementation grant, and the inconsistent “feedback loop” provided by HUD reviewers.

Turbov said that HUD was still inventing CNI and acknowledged it clashed with other neighborhood programs and did not encourage multifamily development. “What can we do to make this less expensive?” she asked.

“Get housing under control, then add the other neighborhood elements,” Bigby suggested.  “Now you have to plan it all together.”

Another discussion looked at revitalizing and recapitalizing aging HOPE VI properties. HOPE VI was initiated following a HUD 1992 housing survey that indicated affordable housing was relegated to indigent communities that lacked the services to support residents. Rather than local and state housing authorities solely funding rehabilitation, the program encouraged tearing down distressed projects and replacing them with mixed communities developed in collaboration with private partners. One of the elements of the 1992 report was an analysis of what the transition would cost. What is now lost, panelists agreed, was “the audacity to ask for money” from the government.

With a considerable portion of HOPE VI properties approaching year 15 of the tax credit compliance period, the affordable housing community is faced with the challenge of deciding what’s next for these projects. Susan Wilson, HUD Director of Urban Revitalization – HOPE VI Division, and Greg Byrne, HUD RAD Coordinator, joined members Bev Bates (The Community Builders), Claudia Brodie (McCormack Baron Salazar), Orlando Cabrera (Squire Patton Boggs), and Chris Hornig (Klein Hornig) to discuss how to deal with projects that have significant soft debt with accrued interest, whether there is residual value for private owners after year 15, opportunities and challenges involved with working alongside Public Housing Authorities in these efforts, and issues surrounding RAD conversions.

The “elephant in this particular room,” panelists agreed, was the federal deficit and the resultant cuts in Housing Authority funding. “I believe we are not moving quickly enough on an asset that is beyond its useful life,” said Cabrera. “There are 900,000 units that have to be converted very quickly.” He reported that there are a lot of people of influence who do not support the RAD program and want to see public housing remain public and no loss of units when buildings are replaced.

NH&RA has been deeply involved in the RAD discussion since the program’s introduction in 2011. RAD, motivated by an estimated $26 billion in needed maintenance costs for public housing, is an assistance conversion program that allows building operators to permanently shift units from public housing to rent subsidization Section 8 vouchers, providing some consistency to bankers and giving developers a cash flow against which they can leverage public and private debt and equity.

Participants in the NH&RA’s RAD User Group Update joined HUD’s Greg Byrne, who offered his insights into the progress of the RAD program and fielded questions from panelists Jerry Anderson (The Gill Group), Bernie Husser (The Richman Group Affordable Housing Corporation), Lopa Kolluri (Pennrose Properties), and Deborah VanAmerongen (Nixon Peabody). The group discussed HUD’s plan for addressing the backlog of RAD applications (more than 100,000) following the recent decision to lift the cap on the number of RAD units, as well as challenges developers, owners, and other professions are facing when closing RAD deals, including Davis Bacon on second component RAD conversions, environmental/Phase 1 requirements, and solutions for balancing relationships and expectations between private owners and PHAs. Pointing to the lifted RAD cap, Greg Byrne affirmed that, HUD is taking steps to encourage the conversion of all public housing under RAD. There are currently roughly 600,000 units untouched by the program.

Given the enthusiasm for the program, which has such a long roster of waiting requests, one attendee expressed, “I don’t know why I even have to demonstrate that this is right.”

To which outgoing NH&RA president and industry veteran Bernie Husser explained, “This is somewhat similar to the beginning of the HOPE VI world where housing authorities were not used to dealing with investors, lenders, etc. We’re reaching out to many more housing authorities in many more places.”

For the final session of the symposium, Mike Andrews (Home Forward), Efrem Levy (Reno & Cavanaugh), and Sheryl Putnam (Nan McKay & Associates) examined HUD’s proposed rule on demolition and disposition of public housing projects and the conversion of public housing to tenant-based assistance. The panel presented the challenges posed by the rule, such as the potential conflict with fair housing regulations, as well as the rule’s potential benefit of being more predictable and consistent with RAD regulations.

The Symposium made clear that joint venture opportunities with PHAs are encouraging innovations in public housing as well as offering a growing line of business for affordable housing developers, owners, syndicators, lenders, and others. NH&RA will ensure the lines of communication with HUD strengthened at the event remain open as these key programs grow and evolve.

      To find more information about NH&RA events, join the association, or get involved in our RAD Working Group, please contact or (202) 939-1773.

Thom joined National Housing & Rehabilitation Association (NH&RA) in 2004 and currently serves as its as Executive Vice-President and Executive Director. NH&RA is a national trade association and peer-network for affordable housing and tax credit developers and related professionals including: investors, lenders, public agencies and professional advisers. Thom directs the association’s day-to-day operations including legislative and regulatory advocacy, committee activities, conferences and events, publications, financial management and strategic planning. Thom also serves as the Executive Director of the Tennessee Developers Council, a state-wide trade association for affordable housing developers and professionals active in Tennessee. In 2013 he spearheaded the launch of NH&RA's Preservation through Energy Efficiency Project, a major educational initiative supported by the John D. and Catherine T. MacArthur Foundation. Thom also serves on the Board of Directors for International Center for Appropriate & Sustainable Technology (iCAST) as well as the Advisory Board for its ResourceSmart program, a turn-key, cost-effective, green rehab provider for multifamily affordable and market-rate housing communities and nonprofit facilities. Thom is a frequent speaker at affordable housing, sustainable development and tax credit industry events and has been published in a variety of industry journals including Tax Credit Advisor, Independent Banker, and the Novogradac Journal of Tax Credit Housing. Thom also serves as the Associate Publisher of Tax Credit Advisor, a monthly magazine for tax credit and affordable housing professionals and is an Executive Vice-President at Dworbell Inc., a boutique association management and communications firm in Washington, DC. Thom was previously employed at a national lobbying firm focusing on financial services and technology issues. Prior to moving to Washington, Thom worked in media relations in the New York State Assembly and as a research assistant for New Hampshire Governor Jeanne Shaheen. Thom graduated Magna Cum Laude from Tufts University with a double major in Political Science and History.