Creating Opportunities with the Aging Public Housing Portfolio

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The U.S. Department of Housing and Urban Development (HUD) estimates that the shortfall in federal appropriations for the Public Housing Operating and Capital Funds has created a backlog of more than $25 billion in needed physical improvements to the nation’s 1.2 million public housing units, or roughly $24,000 per apartment.

As the public housing stock continues to age and deteriorate, large-scale revitalization becomes more and more critical. According to HUD, failure to address this backlog could lead to the annual loss of 10,000-15,000 units from the public housing inventory.

NH&RA always looks to inform our members of new opportunities. Lately this has been pointing to ways that our network of members can be active in recapitalizing and revitalizing the aging public housing portfolio.

One area where we see potential opportunities is the Rental Assistance Demonstration (RAD) program, in which NH&RA has invested considerable time and resources in collaboration with our members and HUD, to advocate for practical improvements to the program. The RAD program has been covered extensively in Tax Credit Advisor, and this month’s issue has articles on RAD deals currently underway.

To accelerate our advocacy efforts, NH&RA formed our RAD User Group last spring to create a forum in which private-sector and nonprofit participants can share their experiences with RAD and dialogue with HUD. The group has met with HUD officials in April, May, and July so far. This ongoing dialogue has proven beneficial; several of the group’s significant policy recommendations have been considered and implemented by HUD.

For instance, at the May meeting, HUD officials expressed concern about timeliness of the closing process and of the submission of closing packages for the Department’s review. HUD ultimately asked the RAD User Group to assist with simplifying the closing checklist, which the members did in presenting suggestions to the Department in July. The RAD User Group has also made recommendations to HUD about property tax assessments and the coordination of project-based voucher certification issues.

In addition to RAD, other HUD programs (e.g., Choice Neighborhoods, HOPE VI) are equally critical to the public housing revitalization effort. Yet, as with the RAD program, new issues and challenges constantly arise that frequently require new public policy solutions.

For example, our members are navigating challenges with the aging HOPE VI portfolio. New issues and questions are arising as the earliest projects reach the end of their low-income housing tax credit compliance period. Specific questions include: What options are available for these older HOPE VI properties to recapitalize and/or refinance? What role will private joint venture developers play in the new entity? Can existing HOPE VI debt be forgiven so that these properties can be resyndicated with new tax credits and rehabbed? And even if this is possible, what potential issues could arise in these transactions? The for-profit or nonprofit owner/developer and the public housing authority would have to reach agreement, but even if this occurs, will HUD sign off? And what kind of tax or structuring issues might arise?

NH&RA’s Mixed-Finance/Public Housing Revitalization Council and RAD User Group will continue to explore these issues and look for opportunities for our stakeholders to be involved with preserving our nation’s affordable housing stock. If you wish to get involved with these efforts, please contact me ([email protected]) or NH&RA Executive Director Thom Amdur ([email protected]).

Caitlin Geary Jones is Director of Advocacy and Programs at National Housing & Rehabilitation Association