Saving America's Public Housing

Directors Association Warns of Funding Crisis

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Tim Kaiser is executive director of the Public Housing Authorities Directors Association based in Washington, D.C.

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Posted: Wednesday, March 8, 2017 3:50 pm

The U.S. government has created a housing crisis by chronically underfunding public housing for years, according to a recent report by the Public Housing Authorities Directors Association.

As a result, there is a $26 billion backlog of unmet capital needs in America's public housing stock, and local housing authorities are receiving only 70 percent of the operating funds they were promised, the report states.

Having a secure place to live is the first stabilizing step for holding a steady job, maintaining health, or succeeding in school. However, many in America struggle with housing security. For more than a million people in the United States today, public housing is an important safety net.

The U.S. Department of Housing and Urban Development (HUD) has approached housing security by providing a system of dedicated low-rent housing structures, and in recent decades, housing vouchers in a program called Section 8. These approaches have made a difference for millions of people who might otherwise be homeless.

The public housing program exists as a contract between the federal government and the 3,000 public housing authorities (PHAs) in the United States. A PHA's role is to provide decent, safe and sanitary apartments at very low rents, which can be met by even the most low-income households. For its part, the federal government's responsibility is to pay the difference between the revenue brought in by the artificially low rents and the true costs of maintaining the housing units and administering the program. But according to a 2016 report by the Public Housing Authorities Directors Association (PHADA), for many years the government has failed to fill its financial responsibilities.

According to PHADA's report "Saving America’s Public Housing: Why It Matters and What We Can Do" the nation's public housing authorities are receiving approximately 70 percent of the amount they should be receiving by contract.

"This chronic underfunding has created a crisis, in which 250,000 units have already been lost from the program and more are disappearing every year," the report states.

Tim Kaiser, executive director of PHADA, explained that the document was the byproduct of a meeting of 50 housing professionals from around the country at a retreat in late 2015. "We discussed the challenges confronting our industry. These were similar to challenges that others who receive federal funds are experiencing, which is that the feds have cut back significantly for numerous reasons," Kaiser said.

There are two main components to the public housing budget: operating and capital. According to research commissioned by PHADA, "In 2016, the operating fund of $4.5 billion resulted in an 84 percent proration, while the $1.9 billion capital fund was just half of the $3.79 billion needed. There are fewer capital dollars in absolute terms being appropriated now than 20 years ago. The combined total comes to a 70 percent proration in 2016. That is $2.7 billion less than is required. This was the 5th straight year of such a similarly low proration."

The document reports on the problem and presents a proposal for solutions which PHADA calls a “proportionality plan." That means it is based on the principle that, when the federal government only partially funds public housing, housing authorities should be required to comply only partially with certain regulations. The plan calls for the temporary suspension of restrictive and burdensome regulations in years when operating and capital funds fall below a 90 percent proration.

"Public and assisted housing in the last decade has been death by a thousand cuts," Kaiser said. "The capital budget is intended to upgrade buildings, to keep housing safe, sanitary and decent. The problems there are astronomical."

According to HUD estimates, there is a $26 billion backlog of unmet capital needs in America's public housing. "Much of it is 40, 50, 60 years old and in need of significant repairs," Kaiser said. Because of age and deterioration, some housing units are almost beyond repair. It is true that the Section 8 voucher system allows people to live outside public housing "hard units," but that program is more costly to operate. Kaiser pointed out that a significant portion of the public housing population is elderly and/or disabled. "These are precious units," he said.

Kaiser acknowledged that the PHADA report is intended to provoke discussion through its frank assessments and calls to action. For example, it addresses the funding shortage in this way: "It does not take a genius to realize that the program is going to run into the ground by funding that just exceeds two-thirds of the amount the country’s best minds have concluded is needed to manage public housing." If this language from the proposal sounds as though it is taking a strong stand, Kaiser said that was intentional. "There's a lot of frustration because the federal government tries to control decision making of locals," he said.

Kaiser said one problem with the current public housing program is that it is too often one-size-fits-all. As he pointed out, public housing in places like Iowa and Montana are very different from large concentrated urban public housing developments in places like New York or Chicago. Regardless of the housing unit's location, the federal government has contracts and federally derived formulas to fund the operating and capital budgets. As Kaiser acknowledged, "Any federally funded program is always subject to appropriations; it is not an entitlement. But in recent years, the formulas are so inadequately funded we’re getting to a crisis point."

PHADA was interested in more than simply examining the causes of these funding shortages. They wanted to find a way to address them.

Kaiser said their plan allows individual housing authorities to choose from a menu of options that allows them to waive selected regulations to generate income or realize savings in proportion to that housing authority’s funding shortfall. The items housing authorities choose would depend on what works best in their markets and what would have the least adverse effect on public housing residents.

The report includes a proposal for seven specific actions. Local control is at the heart of all of them. "The ideas we advance, if they were to be adopted, would all be optional on the part of the local housing agency, so that's working with residents, leaders, states and cities who are in the best position to know what works best."

All of these choices are designed to be triggered when federal funding drops below a certain percentage of what is required, and will revert to previous levels when funding is returned. In addition, they are all designed to increase revenue, in some cases by charging residents more, in other cases by reducing costs and eliminating regulations.

"When I've talked to our members, many like these ideas, but some do not,” Kaiser said. “Some of these ideas are controversial. Right now in public housing, people who are poor have to pay at least $50 in rent per month."

This plan calls for a proportional increase as one approach. "Some say we are hurting the poor by requiring that. But no. The government was hurting the poor going back to the Clinton administration, by not living up to contracts with local agencies. We're trying to save the program so it is around in 25 to 30 years. Government is not living up to its commitment. These proposals won't have an undue burden. There are hardship exceptions. Nobody would have to implement them, and local public housing authorities would consult with their own local populations before making any decisions. There will be a thorough process in place to protect the resident populations."

Kaiser said one intended use of this report was that members could share solutions with the new administration and Congress in light of the protracted shortfall in public housing funding and Section 8 Administrative Fee funding.

"On a positive note, there's a recognition of the need to cut back on regulations," Kaiser said. He believes the Trump administration's desire to remove what it believes are excessive regulations, and a philosophy of permitting local flexibility, is "a positive stop in the right direction." Kaiser is encouraged by talk of an infrastructure-related stimulus package that would authorize infrastructure spending, some of which might be to upgrade the housing stock.

"That's got a long way to go, to be discussed and debated over the next two years of this congressional session, but it is a recognition of the need for local flexibility, away from one-size-fits-all infrastructure packages," he said.

On the other hand, Kaiser noted, there has been what he calls "lots of talk about significant increases in security and military spending, potentially offset by cutting discretionary domestic programs. That is of great concern because we've been inadequately funded for the better part of a decade." Kaiser believes what he calls "Draconian cuts" would be harmful to the public housing program, as well as other domestic programs reliant on federal funding.

He said the report is circulating in congressional offices and within HUD. But the proposals will not happen without legislation and HUD rule making.

"This is not going to happen overnight,” he said. “We're not under any illusions." However, many of these proposals are not out of line with what is already being considered, he said. For example, the Congressional Budget Office has put out policy options for Congress to consider suggesting raising tenant rents to 35 percent of income.

"The big difference is if there were savings or new revenues generated under the CBO plan, that money would go right back into U.S. Treasury. Our proposal would put savings into preservation of assets, the public housing properties themselves," Kaiser said.

"It is very simple, actually. If the government wants a deep subsidy housing program for low income people then the government needs to provide deep subsidies," Kaiser said. "When the government does not do that, it creates problems."

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