HUD’s Office of Public and Indian Housing (PIH) sent a letter to public housing agency (PHA) executive directors dated November 13, 2018, signaling the agency’s intent to dramatically reduce its public housing stock, euphemistically calling it “repositioning public housing.” Because Congress has failed to provide adequate funding for the public housing capital fund for many years, there is an approximate $50 billion backlog in capital improvement needs. HUD cites that backlog as the need to provide PHAs with “additional flexibilities” so that PHAs can “reposition” public housing. HUD’s immediate goal is to “reposition” 105,000 public housing units by September, 2019.
What is “repositioning?” The term essentially means reducing the number of homes in the public housing stock. HUD lists four means of repositioning public housing: the Rental Assistance Demonstration (RAD), the demolition of public housing, the facilitation of voluntary conversion of public housing to vouchers, and the retention of assets after a Declaration of Trust (DOT) release.
Rental Assistance Demonstration (RAD). One form of repositioning involves the use of the current Rental Assistance Demonstration (RAD) which is in the process of converting up to 455,000 public housing units to one of the Section 8 programs, either Project-Based Vouchers (PBVs) or Project-Based Rental Assistance (PBRA). HUD has in the past sought to eliminate the cap on the number of public housing units that can be converted to PBV or PBRA. More information about RAD is on page 4-15 of NLIHC’s 2018 Advocates’ Guide.
Voluntary Conversion. Another repositioning “flexibility” in the PIH letter is voluntary converting public housing to vouchers. Section 22 of the United States Housing Act allows PHAs to voluntarily remove public housing units from a PHA’s inventory and provide residents with tenant-based or project-based vouchers instead. This is often referred to as “vouchering out” of public housing. Because the regulations focus on occupied public housing units, it is possible there will not always be a one-for-one replacement of existing public housing units with vouchers. The vouchers provided are “tenant protection vouchers,” and the number of available tenant protection vouchers depends on HUD asking Congress to appropriate sufficient funding to meet all tenant protection voucher needs in a given year, including needs related to loss of public housing units due to demolition as well as the loss of private, HUD-assisted housing leaving the Section 8 program.
Under current regulations, a PHA seeking to voluntarily convert public housing to vouchers must submit a “conversion assessment” to HUD as part of its regular, annual PHA Plan process. A conversion assessment must have five elements:
- An analysis of the cost of continuing to operate the development as public housing, compared to the cost of providing vouchers.
- An analysis of the market value of the development before and after rehabilitation.
- An analysis of the ability of residents to use a voucher, given housing market conditions.
- An impact analysis on the surrounding community, including the effect of conversion on the availability of affordable housing as well as on the concentration of poverty in the neighborhood.
- A description of a PHA’s planned use of the property.
The conversion assessment must satisfy three conditions:
- Conversion will not be more expensive than continuing to operate the development as public housing.
- Conversion will principally benefit the development’s residents, the PHA itself, and the community. Related to potential benefit to residents, the PHA must consider the availability of landlords willing to accept vouchers, as well as access to schools, employment, and transportation.
- Conversion will not adversely affect the availability of affordable housing in the neighborhood.
Section 18 Demolition. HUD’s letter refers to “new flexibilities” for Section 18 demolition and disposition. In November, 2010, NLIHC’s Board of Directors raised concerns to the HUD secretary about legal services attorneys’ observations that PHAs had been abusing the Section 18 demolition regulations and that HUD was lax in monitoring PHA demolition practices. HUD agreed to meet with legal services attorneys in early 2011, and after several meetings, phone calls, and exchanges of letters, HUD issued Notice PIH 2012-7 which addressed many of the issues raised. Then on October 16, 2014, HUD published proposed demolition regulations correcting many of the problems identified. HUD informally indicated that, as a result of the proposed regulations, demolition of public housing had slowed down. Unfortunately, the proposed improvements to the demolition rule were never finalized. Under the current HUD secretary, both the proposed rule and Notice PIH 2012-7 were withdrawn (see Memo, 1/8). The old, inadequate demolition regulations are still in place and a new Notice PIH 2018-04 eliminated all of the resident protections of the previous Notice (see Memo, 4/2).
Retention of Assets after a Declaration of Trust (DOT) release. A Declaration of Trust (DOT) is a legal instrument that grants HUD a formal interest in public housing property. It provides public notice that the property must be operated in accordance with all federal public housing requirements, including the requirement not to convey or otherwise encumber the property unless expressly authorized by federal law and/or HUD. PHAs must ensure a current DOT is recorded against all property - including land - that has been acquired, developed, maintained, or assisted with funds authorized by the U.S. Housing Act of 1937, including the Public Housing Operating Fund and Capital Fund. If a PHA wants to dispose of (sell) public housing property, it must get Section 18 approval from HUD’s Special Applications Center (SAC) and then ask HUD field office counsel to release the DOT on the property.
The HUD November 13, 2018 letter is at: https://bit.ly/2OMTr0Y
More information about the public housing program is on page 4-9 of NLIHC’s 2018 Advocates’ Guide.