Member

HOUSING AUTHORITY OF THE CITY OF GALVESTON, TEXAS

409 I 765-1900 ~ 77551

Central Office 4700 Broadway

April 19, 2012

Secretary Shaun Donovan U.S. Department of Housing and Urban Development 451 7th Street S.W. Washington , DC 20410

Dear Secretary Donovan,

Through written correspondence and various meetings with HUD department staff, the Galveston Housing Authority (GHA) has alerted your agency to issues surrounding the replacement of public housing units lost to Hurricane Ike in 2008. Specifically, the General Land Office (GLO), which is administering the CDBG Recovery funds that are intended to provide a source for replacement housing in Galveston, has not accepted GHA's various iterations of rebuilding plans for mixed income communities because the State concludes that the plan is not a "financially sound plan". The GLO is now threatening to "consider a number of different options that mayor may not keep the funding in Galveston." The GLO has mandated that GHA provide a plan by April 23rd. GHA will meet this deadline but does not anticipate the plan approved by the GHA Board on April 4th will be an acceptable solution as it is based on the concept of mixed income housing, which GLO has objected to in the past. It appears that GHA and GLO are at an impasse.

Statements by the GLO indicate that the State is of the opinion that public housing can be constructed without GHA as a recognized partner. However, my understanding of the United States Housing Act of 1937 and its implementing regulations preclude any entity other than a public housing agency to develop, acquire or operate public housing except in the mixed finance context, in which case the housing authority would be an integral partner and would execute a mixed finance ACC amendment with HUD to contemplate the structure. Furthermore, Section 392 of the Texas Local Government Code grants GHA exclusive jurisdiction over Galveston as a public housing agency.

Discussions with the GLO also lead me to conclude that it would seek to construct 100% public housing on the three sites, two of which are located in impacted census tracts in Galveston, at the same density as before the hurricane. HUD requires that any rebuilding plan must be done in a manner that furthers fair housing and that meets HUD's Site and Neighborhood Standards. GHA is of the opinion that any plan requiring the rebuilding of traditional public housing at the scale and density necessary to comply with the one-for-one replacement concept described in the Conciliation Agreement would concentrate poverty in violation of these requirements . The

Member Member National Association of Housing Public Housing Authorities

Directors Association Texas Housing Association and Redevelopment Officials (NAHRO)

City of Galveston's Fair Housing Plan has assessed applicable fair housing impediments and the GHA proposed plan is consistent with the product of the Fair Housing Plan.

GHA recognizes HUD's commitment to mixed income housing as a way to strengthen the nation's housing market, meet the need for quality affordable housing, improve the quality of life and build inclusive and sustainable communities free from discrimination. GHA's Board of Commissioners affirms this commitment and is continuing to advocate for mixed income housing in the City of Galveston. You will note that our plans have consistently ensured sufficient numbers of affordable housing units while doing so in a manner that is consistent with HUD requirements and policies. Furthermore, our plan has been developed in conjunction with McCormack Baron Salazar, Inc., a leader in the field of mixed finance public housing redevelopment efforts, and we are confident that our plan is financially sound and reflects the best practices that HUD has encouraged in its various redevelopment initiatives. We believe that GLO's reluctance to approve our plans is due, in part, to its lack of experience with this financing structure and so we believe that your assistance will be helpful in moving us past these obstacles and in helping GLO timely expend the CDBG-R funds it administers.

Specifically, we are respectfully requesting for you to take the following steps to assist us with the crucial redevelopment of our public housing units lost as a result of hurricane Ike:

• Review the status of the CDBG-R funding to determine if it has been disbursed to the State of Texas General Land Office through LOCCS or some other mechanism and block all future drawdowns of funds until this dispute is resolved;

• Approve our request to make the 170 temporary vouchers held by households displaced by Ike permanent vouchers, which would put us in a similar position to a public housing agency that voluntarily demolished and disposed of its units and received tenant protection vouchers as a result of such action ;

• Review and approve our plan of 359 replacement public housing units (including 287 public housing units and 72 project based voucher units) in mixed income communities, which will be developed and interspersed with 288 units of market rate housing and 71 additional tax credit housing units, in addition to 170 housing choice vouchers pursuant to the above request. Together with the 40 replacement units already built, this plan represents 569 replacement units, the same number of units that HUD and the State contemplated in their Conciliation Agreement (although we believe that the 359 additional replacement units meets the objectives of the conciliation agreement since the 170 displaced residents are already being served by the DHAP vouchers) .

• Since the plan involves the construction of public housing units in the context of a mixed­finance plan with CDBG-DR, we are requesting that a joint task force of CPD and PIH be convened to oversee these funds to ensure that the twin objectives of complying with public housing and CDBG-DR standards are met and to ensure that HUD's long held view on best practices with respect to developing public housing views are articulated

through PIH. This joint task force would oversee the negotiation and execution of a sub­recipient agreement in accordance with the plan that we are asking you to approve.

• In response to GLO's repeated threats to build public housing without the participation of GHA, we are asking for HUD to affirmatively state its view that the United States Housing Act of 1937, as amended and its implementing regulations do not permit the development, acquisition and/or operation of public housing without the participation of the public housing agency under an agreement with HUD, through an ACC with funding , authority and jurisdiction over the public housing in question.

• GHA met with local representatives from NAACP, LULAC, Gulf Coast Interfaith, Northside Task Force, and Coalition For Justice and discussed the proposed plan . They have not expressed any major opposition our initiative. However, as you may know, a vocal minority opposes the increase of affordable rental , and indeed any rental , units on the Island. While a component of our plan does include Housing Choice Vouchers, GHA remains committed to replacing as many hard units as is financially feasible and meets the objectives articulated in this letter. Please confirm the Department's opposition to replacement of all remaining 529 public housing units with Housing Choice Vouchers.

GHA is seeking a win-win solution for our residents displaced by Ike, the City of Galveston, housing advocates, the GLO, and HUD. In furtherance of these objectives, I am requesting a meeting with you to further discuss this matter. Thank you so much for your assistance .

..... ,.....--~----

SALlds

Enclosures: Financing Narrative, GHA Plan Summary, Sources and Uses, Exhibit F (all phases)

CC: Betty Massey, Chair, GHA Board of Commissioners

Sandra Henriquez, Assistant Secretary for Public and Indian Housing, HUD

Milan Ozdinec, Deputy Assistant Secretary for Public Housing and Voucher Programs, HUD

Dominique Blom, Deputy Assistant Secretary for Public Housing Investments, HUD

John Trasvina , Assistant Secretary of Fair Housing and Equal Opportunity, HUD

Mercedes Marquez, Assistant Secretary for CPO, HUD

Stan Gimont, Director, CDBG Programs, HUD

Sue Wilson, Director, Urban Revitalization-HOPE VI Division, HUD

Bryan Greene, Deputy General Assistant Secretary, HUD

Helen R. Kanovsky, General Counsel , HUD

Michelle M. Aronowitz, Deputy General Counsel , HUD

Jeanine Worden, Associate General Counsel , HUD

Sara Pratt, Deputy Assistant Secretary for Enforcement and Programs, HUD

Judith Garza, Director Housing Voucher Support Division, HUD

Roma Campanile, Public Housing Revitalization Specialist, HUD

Justin Ormsby, Director Regional Office Ft. Worth , HUD

Dr. Edward Pringle HUD Houston Field Office Director, HUD

Dan Rodriguez, Program Coordinator Houston Office, HUD

Rhoda Nicholson, Public Housing Grant Manager, HUD

Tennille Parker, Asst. Director, Disaster Recovery, HUD

Steve Higginbotham, Sr. Community Planning & Development Specialist, HUD

Richard Baron, McCormack Baron Salazar

Gary Hagood, General Land Office

Heather Lagrone, General Land Office

Jorge Ramirez, General Land Office

Katy Sellers, General Land Office

Louis Arellano, General Land Office

Kelly Crawford , General Land Office

Maureen Mahoney, General Land Office

John Henneberger, Texas Housing Advocate

Maddie Sloan, Texas Appleseed , Texas Housing Advocate

Bob Voelker, General Land Office, Consultant