TRANSFORM RENTAL ASSISTANCE

NALHFA – 2011 Annual Education Conference

David LipsetzUS Dept of Housing and Urban DevelopmentMay 19, 2011

CHEAP PLOY TO CURRY YOUR FAVOR

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AFFORDABLE HOUSING PROGRAMS

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HUD RENTAL ASSISTANCE

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HUD provides direct rental assistance across multiple programs with varying rules and separate administrative structures.

Program Administrators Units Section 8 Housing Choice Vouchers 2,406 2,233,706 Section 8 Project-Based Contract 53 1,189,294Conventional Public Housing 3,123 1,175,244 202 Project Rental Assistance Contract n/a* 102,550 McKinney Supportive** 1,938 87,435

811 Project Rental Assistance Contract n/a* 27,666 Section 8 Moderate Rehabilitation 189 25,037 HOPWA 219 23,862 811 Mainstream Vouchers 203 14,783 HOME Tenant-Based Rental Assistance 134 12,239 Rental Assistance Program n/a* 11,315 Rent Supplement n/a* 9,205

TOTAL 8,265 4,912,336

* HUD administers through its local offices | **The numbers of administrators (grantees) and projects are estimates.

WHAT IS PUBLIC HOUSING?

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• Established by the 1937 Housing Act (Section 9)

• Provides “decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities.”

• 1.178 million units, from single family houses to high-rise apartments.

• Managed by 3,300 local housing authorities.

• Resident Household characteristics and averages:• 2.2 persons• 52% elderly or disabled Head of Household• $13,425 annual income• $315 rent payment• 51% white, 45% black, 4% other• 52% stay less than 5 years

HOW IS PUBLIC HOUSING FUNDED?

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Source Use FY 2011

Capital Fund Develop, finance, and modernize units, and for management improvements $2.50 B

Operating Fund Operate and maintain units $4.77 B

Other Revitalization grants (HOPE VI) $0.20 B

TOTAL $7.47 B

Per Unit Avg.

Federal subsidy $515

Tenant Rent $315

Monthly $830

Federal subsidies allocated to Public Housing Authorities (PHAs) on a per unit basis to cover capital and operating costs. PHAs also receive rent payments directly from tenant’s.

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HUD currently lacks a viable preservation strategy for its 1.2 million units of public housing and for a number of “orphan” programs

• 150,000 public housing units have been lost over the last 15 years

• Remaining units have unmet capital needs of $20 to $30 Billion

PRESERVATION OF PUBLIC HOUSING

SOLUTION: TRANSFORM RENTAL ASSISTANCE

Allow public housing to convert to long-term, property-based contracts.• Replace the Deed of Trust with a Use Agreement• Provide new Project-Based Section 8 Contract Authority• Replace Section 9 rules and regulations with Section 8 rules

and regulations

Benefits• Allows PHA’s to leverage other sources of funds to maintain,

renovate and replace properties (Estimated at $27 Billion)• Encourage flexibility in financing & property use

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CURRENT STATUS

• May 2010: HUD Discussion Draft: Preservation, Enhancement, and Transformation of Rental Assistance Act of 2010 (PETRA)

• December 1, 2010: Representative Ellison introduced H.R. 6468-The Rental Housing Revitalization Act based on feedback to staff discussion draft

• February, 2011: President proposes a Rental Assistance Demonstration in his FY12 budget submission to Congress.

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FY12 RENTAL ASSISTANCE DEMONSTRATION

• FY12 Demonstration built from TRA; Scaled-down version of authorizing legislation • Budgeted: $200 million

• Part of HUD’s larger strategy for rental housing preservation

• Working with stakeholders and Congress to define components

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FY12 RENTAL ASSISTANCE DEMONSTRATION

• 2 inventories included: • Public Housing• Rent Supp, RAP, Mod Rehab (“orphans”)

• 2 tracks: PBRA and PBV• Convert to Section 8 Property-based contract subsidy • Assign Tenant-based Voucher funding to a specific Property

• Resident choice/mobility component on each track• Built into PBVs now• Add to PBRA track with available vouchers

• Admin changes where possible (limited)• PH inventory: Section 18 processing• Waive competition requirements• 2x15-year contracts

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FY12 RENTAL ASSISTANCE DEMONSTRATION

PBRA - No Existing authority to establish new Section 8 contracts for converting property

• Establish authority to convert under MAHRA?

PBV - 20% inventory cap; 25% per project cap; TPVs to convert stock; “turnover vouchers” to support mobility

• Raise inventory and per project caps?• Enhance choice/mobility limitations

• Long-term contracts/affordability controls?• Combine with PH Capital funds at conversion?• Resident engagement/organizing to support conversion?

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TRANSFORMING RENTAL ASSISTANCE

Visit the TRA web pagewww.hud.gov/tra

Join the TRA E-Mail ListFollow the instructions at the bottom of the TRA web page

Email TRA@hud.gov Submit questions and comments to HUD

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REVITALIZATION ACT: GUARANTEED LONG-TERM AFFORDABILITY

Congressman Ellison’s legislation to transform rental assistance assures Long Term Affordability:

• HUD must renew contract unless property or owner is not in good standing• PHAs must accept renewals offered by HUD• 30 year agreement will be extended with each renewal

• In the event of nonrenewal, HUD may issue vouchers or, after consulting with residents, transfer the assistance to another property• Replace every hard unit 1-for-1 with only exception for weak markets

where vouchers are easy to use in low-poverty areas

• If a foreclosure occurs, the property remains affordable in perpetuity:• Federal option to purchase former public housing properties• Rental assistance contract and Use Agreement survive foreclosure and

bankruptcy

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HAP RENTS FOR CONVERTED PROPERTIES

• For properties requiring above-market rents:

• HUD could approve an exception rent up to the higher of 110% of the applicable Fair Market Rent (FMR) or 120% of the comparable market rent. For example, if 120% of the market rent were $500 and 110% of the FMR were $560, HUD could allow an exception rent of up to $560 (the higher of the two) to ensure long-term sustainability

• For all other properties (those not requiring above-market rents):

• HUD could approve a rent up to the comparable market rent, capped at 110% of the FMR unless authorized by the Secretary. HUD could approve a rent higher than 110% of the FMR, but only if necessary for preservation*

* This approval would be based on criteria established by the Secretary to determine whether the property should be preserved. 15

RESIDENT CHOICE AND MOBILITY

Residents of HUD-assisted housing often lack access to economic opportunity because moving means giving up their subsidy.

• Almost 2.4 million households that receive HUD rental assistance cannot move without losing their subsidy because it is tied only to the building

• Even when households have ability to move with a voucher knowledge and jurisdictional barriers are significant impediments to choice

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% living in area of concentrated poverty

Average Income

Public housing resident 48% $13,346

Assisted housing resident 26% $11,504

Housing voucher recipient 19% $12,755

CHOICE NEIGHBORHOODS

• FY 2011 Budget• $100m for HOPE VI; up to $65m can be dedicated to Choice

Neighborhoods• FY 2012 Budget• President Obama requested $250 million for Choice

Neighborhoods• Authorizing Legislation• Representative Waters introduced H.R. 762, which includes Choice

Neighborhoods• Senator Menendez introduced S. 624 on Choice Neighborhoods

WHERE IS PUBLIC HOUSING?

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