HUD’s Office of Public and Indian Housing (PIH) held a town hall meeting on June 24 to summarize and discuss a report titled, Capital Needs in the Public Housing Program.
In November 2007, Congress directed HUD to undertake a public housing capital needs assessment. Two similar studies were conducted in 1985 and 1998. The consulting firm Abt Associates began work in April 2008 and submitted a final report to HUD in November 2010.
The capital needs study provides two types of assessment. One estimates the repair or replacement costs of systems that require immediate action to restore them to working order, the capital needs “backlog.” Another estimates “accrual needs,” new repair or replacement costs that emerge each year as building systems wear out through normal use. Accrual need is calculated based on the assumption that the backlog is met, an unlikely occurrence. Both types do not include routine maintenance.
The latest estimate of the capital needs backlog for all federal public housing amounts to $25.6 billion ($23,365 per unit). Of this total, $20.7 billion ($19,029 per unit) is derived from on-site inspections. A nationally-representative sample of 140 public housing agencies (PHAs) was selected, and at each of those PHAs a sample of four units were inspected at 548 developments, including all developments in the sample with more than 500 units. Capital needs vary considerably, with 25% of units with needs less than $5,248 per unit, while another 25% have capital needs greater than $28,570 per unit.
Dwelling unit systems comprise 38% of backlog needs, and building systems (for example, roof, windows, exterior walls) account for an additional 34%. Site systems (e.g., sidewalks, streets) make up 19% of capital needs, while building mechanical systems (e.g., elevators, heating and air conditioning) are only 8% of need.
In addition to the inspection-based capital needs, estimates were made for three other backlog components: $4.2 billion for cost-effective energy and water efficiency improvements, $307 million for lead paint abatement, and $265 million to accommodate people with disabilities. The energy and water improvement estimates were based on a computer model, while the lead paint and disability improvements were based on PHA survey responses. Six percent of the stock needs lead paint abatement, a high percentage.
Because of the timing of the inspections, the 2010 capital needs estimates do not take into account the $4 billion available from the stimulus money provided by the American Recovery and Reinvestment Act (ARRA). HUD reports that about $3 billion in ARRA funds were used to reduce the capital needs backlog.
In order to make comparisons of the inspection-based backlog of capital needs between 2010 and 1998, adjustments had to be made to compensate for methodological differences. The result is that the adjusted estimated of 2010 capital needs backlog is $31.9 billion, compared to an adjusted $33.1 billion in 1998, a 3.4% decline overall. However, because many public housing units were removed from the inventory since 1998 due to demolition or sale, there were 9% fewer units in 2010. Therefore, the 2010 per unit estimate of backlogged capital needs is an increase of 6.3% (from $27,679 to $29,421).
Comparisons of lead paint abatement, disability accommodation, and energy and water efficiency needs cannot be made because of irreconcilable methodological differences between 2010 and 1998.
The annual accrual needs over the next 20 years are estimated to be $3.4 billion per year ($3,155 per unit), a 15% increase over 1998.
In the future, HUD’s introduction of a Physical Needs Assessment (PNA) system for measuring needs on an ongoing basis will take the place of the occasional capital needs assessment. The PNA will make project-level data available, integrate energy audits, and include a module to collect data on repairs and improvements needed to make public housing quality closer to that of market rate quality. The PNA system will have data from every public housing project and will be generated annually.
Capital Needs in the Public Housing Program is at http://portal.hud.gov/hudportal/documents/huddoc?id=PH_Capital_Needs.pdf.
A copy of a Question and Answer document is at http://www.nlihc.org/doc/Capital-Needs-Assessment-Q&A.pdf
A HUD media release is at http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.11-132.
A copy of the PowerPoint from the June 24 town hall is at http://www.nlihc.org/doc/PH-CNA-Town-Hall-Powerpoint-6-24-11.pdf