Future of Public Housing Policy Framework


We, the undersigned, have joined together in the Summit on the Future of Public
Housing to assert that the only effective permanent solution to the challenges confronting
public housing is a new paradigm, based on national goals, and grounded in principles
that provide the resources and appropriate flexibility to preserve and use public housing
assets in ways that benefit and support communities and residents over time.

Particularly in the midst of the unprecedented financial crisis and economic
disruption our nation now confronts, which emanates from dysfunction in the housing
markets, we affirm our belief that decent and affordable housing is a fundamental
building block for healthy families and communities and that promoting it must be at the
center of our national housing policy.

Critical to that goal is a transformed, proactive, and vibrant public housing program that is responsive to local housing needs, addresses the substantial backlog in public housing capital improvements, sustains public housing operations in the future, and enables public housing to be a platform that fosters access to new partners who can bring additional resources and expertise to address the human
service needs of residents.


Therefore, we cannot resign ourselves to the prevailing view that our task is merely to
allocate and manage the scarce resources which the existing program model and politics
provide. We reject the false choices and conflicts that have been forced upon us by
misaligned national priorities and a program structure which no longer adequately
supports our primary and collective mission of providing decent, safe, and affordable
housing.

Rather, a coordinated strategy of fundamental statutory and programmatic
change focused on Reinvestment, New Partnerships, and Institutional Reform is
necessary.

As a foundation for this new public housing paradigm, we have proposed a strategy
with the following interdependent objectives:


• Attract new private and public capital investment to ensure safe, high-quality
housing for residents by eliminating the substantial capital backlog and providing
for future needs.


• Change the program structure to facilitate adequate and reliable revenues,
including offering PHAs the option to transition individual properties to other
program models.

• Maintain our commitment to decent, safe housing at rents affordable to the
current mix of residents for the long term in communities that advance our
nation’s fair housing and civil rights goals.


• Redefine the relationship between HUD and PHAs through sensible regulation
that achieves both accountability and the flexibility to address local conditions.


• Enable PHAs to expand partnerships with others who share our commitment to
serve low-income families, seniors, and persons with disabilities and reframe our
mission in ways that attract partners who can provide access to new resources and
expertise that promote complementary goals, such as service-enriched housing,
responsible environmental stewardship, and economic and educational
opportunities that enhance choice and the quality of life.


I. The Challenge


Since 1937, public housing has been a floor, both literally and figuratively, for tens of
millions of the nation’s most vulnerable people, including seniors on fixed-income,
persons with disabilities, low-wage workers, and families struggling to overcome health,
educational, and other barriers to full participation in our economy and society. However,
the availability, quality, and affordability of this critical resource is threatened by federal
budget cuts, isolation from other potential partners and resources, and an outdated
regulatory system that often focuses more on process than outcomes.


The nation suffered a significant net loss of public housing units between 1995 and
2008. While it has received little public attention compared to the mortgage mess and
declining home values, this hidden housing crisis is no less devastating to the millions of
Americans who call public housing home and for many of whom public housing is the
first rung on the ladder of economic opportunity. The continuing decline in this scarce
affordable housing resource also amounts to a waste of the federal government’s $165
billion investment in the existing public housing infrastructure. The absence of a national
strategy to reinvest in, leverage, and manage these assets has serious social and economic
consequences that undermine the stability of neighborhoods, cities, and rural areas,
including through the loss of construction and other jobs and the inability of businesses in
many communities to attract and support the low-wage workers they need.


II. The Strategy


To achieve our goal, we propose the following strategy of three interdependent
components, including Reinvestment, New Partnerships, and Institutional Reform:


1. Reinvestment: In the next 10 years, eliminate the tens of billions of dollars in public
housing capital backlog, and provide for future needs, by—

  • Ensuring sufficient and timely access to a menu of financing options, including low-income housing tax credits, debt financing, direct grants, and other resources that could become available through new strategic partnerships.
  • Placing revitalized public housing on a sound financial footing by providing for a
    long-term funding structure that funds reasonable operating costs, allows for
    adequate replacement reserves, and provides opportunities to recapitalize to meet
    future needs.
  • Converting some public housing to other affordable housing subsidy models with
    reliable funding, such as project-based vouchers or other project-based assistance
    under Section 8, to access capital and assure long-term affordability for extremely
    low-income households.


Based on the research and data available to us at this time, it is reasonable to estimate
that the backlog of public housing capital investment needs is at least $32 billion.1

Yet, recent annual appropriations for the most part have provided funding to address the
additional repairs that accrue each year, but not enough funding to significantly reduce
the backlog.

Given the scale of this problem, it is hard to see how direct appropriations
alone can remedy the long-term federal disinvestment in public housing, much less
replace units that have been lost.


The good news is that despite federal budget cuts and regulatory obstacles, some
PHAs have joined with private partners to make significant innovations in ways to
preserve, improve, or replace public housing.

Often, this has involved harnessing private resources through low-income housing tax credits, tax-exempt bonds, or other means and integrating them with basic public housing rules that mandate long-term affordability while recognizing investor risks.

Some PHAs are going even further by converting public housing to other forms of subsidy such as project-based vouchers, which have had more stable funding and can be easier to use with private financing.

There are other approaches that some PHAs would like to pursue, including mortgage financing to
leverage the value of their public housing assets and the use of project based Section 8
assistance other than Housing Choice Vouchers.

Our reinvestment strategy is to build on this innovation by providing for a mix of
reinvestment options with a scale and structure to fully address the capital backlog,
stabilize operations with ongoing financial support, and protect and support residents.

These options, which will need to be shaped and funded as necessary to allow for prompt
availability and full effectiveness, will draw on the success of current activities and the
promise of other subsidy models.

They will also incorporate opportunities to promote
investments through the new partnerships strategy, including renovated and enriched
senior/disabled housing and green investments for all public housing developments.


The reinvestment strategy must be coordinated and funded to facilitate fiscally
responsible and realistic staging of a comprehensive effort over the next decade and must
be accompanied by the changes in the federal administrative structure that are necessary
for success.

This strategy will also connect public housing with the broader world of
affordable housing production and preservation. Adopting and implementing market-based
real estate models should help to reduce public housing’s exposure to the vagaries
of the annual federal appropriations process and bring new allies into the fight for
adequate resources.


Finally, the reinvestment strategy must address our shared concern about the loss of
public housing units from the current inventory. There is strong agreement that adequate
funding is critical to achieving the reinvestment strategy and a replacement policy.
However, we struggle with how to develop a replacement policy with broad consensus.

Some argue that a strict adherence to a one-for-one “hard” unit replacement policy is
essential. Others believe that the one-for-one replacement policy must be conditioned on
full funding for the replacement units which can be satisfied by either hard units or tenant
based vouchers. To be sure, this is a critical and complex discussion and even groups
who are naturally allied have nuanced views on this issue. To successfully implement the
reinvestment strategy, it is essential to resolve these difficult issues, consistent with the
foundational and interdependent objectives for this new public housing paradigm,
including advancing our nation’s fair housing and civil rights goals.


2. New Partnerships: Within one year, expand partnerships with entities that share our
commitment to public housing preservation and transformation beginning with the
following:


  • Senior Housing: Over 5 years, redevelop or convert 100,000 public housing units for seniors into high-quality, service-enriched facilities.
  • Green Public Housing: Fully integrate green building standards to rebuild or retrofit all 1.2 million public housing units as part of the reinvestment strategy.

Over the next 10 years, we will raise $10 billion to accomplish these two goals and
generate a return on investment far beyond the scope of the initial capital.

Savings in energy and utilities expenses will reduce costs and improve the long-term viability of our
public housing stock. They can also provide resources for resident and supportive
services by increasing senior and family supports and linking residents to education, job
training and other economic opportunities.

This $10 billion investment may be a component of, or additive to, the public housing reinvestment strategy.

Partnerships are integral to public housing’s future and will make it possible to
achieve the goals set forth while realizing the triple bottom line results of promoting
economic opportunity, environmental sustainability and social equity.

We support systematically integrating partnerships into the planning and delivery of public housing
across the nation to create communities of choice, with the goal that residents have access
to jobs, that families live in healthful environments, that persons with disabilities are
connected to support services, and that the aging population is well cared for. In short,
public housing will, by attracting new resources through partnerships where possible,
strive for a healthier, more equitable and more sustainable future.


Two obvious partnership opportunities have emerged from the inevitable trends
confronting our nation – climate change and the aging of our nation’s population. These
trends, in addition to rising utility costs and impaired health attributable to poor indoor air
quality, require a comprehensive response. While public housing partnerships must
extend far beyond “green” and “gray” to succeed in this framework, they are expounded
upon here as initial strategies that will lead to immediate opportunities. Through these
strategies, public housing can attract the expertise and resources of impacted outside
parties to create mutually beneficial partnerships.

Seniors. Projections forecast that by 2030, approximately 71.5 million people will be
65 and older, representing nearly 20 percent of the total U.S. population.

Meanwhile, one-third of public housing households are headed by a senior. Research has indicated
that seniors prefer to remain within the community as their frailty levels and service
needs increase. Most elderly residents in public housing prefer to age in non-institutional
settings.

Public housing will address this issue by incorporating the social and physical
needs of seniors into its modernization plans and by looking for opportunities to enter
partnerships with organizations that will create resident support programs for the elderly
to enable them to age in their communities. Such programs would align the public
housing strategy with other federal initiatives (e.g., the Deficit Reduction Act and
Administration on Aging) that are working to provide affordable community based living
alternatives to prevent premature institutionalization.

This would create natural partnerships with service providers to coordinate aging in place supports, including, but not limited to, social activities, meals, homemaker services, some health related services, and transportation.

In addition, public housing will create “gray-collar” jobs by training residents as home health assistants, chore-workers and other health care professionals to assist seniors. With their high level of expertise and interest in serving the elderly, AAHSA, NCB Capital Impact, AARP, National Association of Area Agencies on Aging, NASUA, Administration on Aging, National Council on Aging and other organizations would make excellent partners.


Green. Green is integral to a public housing reinvestment strategy. As public housing
agencies address their backlog of repairs and prepare to construct new homes, they must
integrate green methods and materials to achieve lower operating expenses, healthy living
environments and resource conservation. Doing so will create a measurably enhanced
environment for residents through energy efficiency, water conservation and healthy
indoor air quality while cutting greenhouse gas emissions and reducing annual utility
costs estimated at approximately $1.7 billion annually. Healthy, long-lasting building
materials can dramatically reduce costs, while creating safer working conditions for
construction and maintenance personnel, and safer living conditions for residents.

A 2005 New Ecology, Inc. and the Green CDC’s Initiative study entitled “The Costs and
Benefits of Green Affordable Housing” revealed that the first cost premium for green
building was 2.4% of the total development cost, and Enterprise Community Partners’
preliminary cost data from a study of 50 affordable housing developments indicate that
the Green Communities Criteria met by these developments only increased development
costs by 2 - 4% while resulting in expected savings of 20 - 30%.

This cost-effective, benefits-rich reinvestment strategy is also a critical link towards creating a market for education initiatives and to support “green-collar” jobs for public housing residents and
disadvantaged small businesses. The ability to apply green methods and materials on
such a massive scale makes public housing an attractive platform for promoting
innovative financing mechanisms such as the voluntary carbon market in which green
public housing would possess valuable offsets. Organizations such as Enterprise
Community Partners and the U.S. Green Building Council are natural partners who can
provide expertise in critical areas such as green building, advocacy, and raising capital, as
appropriate to each partner organization.


3. Institutional Reform:

As a foundation for the reinvestment and partnership
strategies, reform and rationalize the public housing regulatory structure to make the
fundamental changes necessary to operate in the new paradigm, including:


  • Reliable and adequate operating subsidies to support the public housing reinvestment strategy.
  • Mutual HUD, PHA, and resident accountability and transparency.
  • HUD reorganization to support reinvestment and partnership goals.


PHAs and residents have a shared interest in assuring that the public housing
regulatory structure protects residents. PHAs also need access to the resources and tools
needed to preserve and operate public housing. The purpose of regulation should be to
promote these shared interests and to assure accountability in the use of federal financial
resources. Some aspects of the current regulatory structure divert PHA resources from
sound property management, resident service coordination, addressing properties’
modernization needs, implementing energy-efficiency improvements, and performing
upgrades. As such, the present regulatory regime does residents a disservice and is a
source of frustration for owners.

HUD’s oversight structure also does a disservice to residents and owners. The
Agency’s focus on process compliance; lack of consistent, clear communication with
stakeholders, including not only PHAs and residents but also its own field staff; and the
cacophony of sometimes duplicative regulatory and administrative requirements combine
to distract PHAs from a focus on their primary and most solemn responsibility: the
provision of decent, safe, and sanitary housing.


Fundamental institutional reform is essential to support the proactive transformation
of public housing. To protect tenants while augmenting the ability of PHAs to address
local housing needs, this reform should embody the following interdependent principles:

  • PHA operating subsidy must be adequate, predictable, and reliable.
  • HUD should be reorganized to support investment in public housing.
  • PHAs should be encouraged to enter into partnerships with those who share a commitment to the well-being of public housing residents, such as service providers.
  • PHAs should be assessed for their performance as housing providers, using objective measures to the extent feasible.
  • HUD and PHAs should follow transparent procedures to assure that tenants remain informed and should continue to provide residents with a reasonable opportunity to participate in the decision-making process.
  •   Regulation should not be disproportionate to the resources provided for operating public housing.

III. Conclusion


These days, no one would doubt the importance of housing to the health of our
national economy, or to a family budget. This belief is also embedded in our political
and tax systems through policies we take for granted, such as the mortgage interest
deduction. The federal government has recently taken extraordinary actions to prevent the
collapse of many financial institutions. The phrase “Too Big to Fail” has been used to
justify such interventions, meaning that the failure of some institutions would be so
disruptive and harmful to the nation that the government must prevent it. Without passing
judgment on the wisdom or necessity of those actions, we contend that public housing,
also, is too big and far too important to the health of our nation, to fail. Therefore, we
have proposed our strategy for the Future of Public Housing.


1 The $32 billion estimate is from information shared by the Center on Budget and Policy Priorities and includes funding both to renovate 1.06 million units and to replace 100,000 units. However, others believe that the need may be far in excess of that figure. HUD is also planning to conduct a capital needs assessment.