Large and Small PHAs Confront Underfunded, Aging Properties
For nearly two decades the nation’s public housing program has experienced significant reductions in federal funding, especially in the critical Capital Fund. With few options and a declining funding source, housing authorities, large and small, are tackling the nation’s aging public housing stock.
Tyrone Garrett, DCHA Executive Director and PHADA Trustee.
The DC Housing Authority (DCHA) has joined a long-list of PHADA members who are grappling with the realities of the federal government’s policies and its latest strategy to preserve public housing, albeit without additional funding, portfolio repositioning.
While the U.S. Department of Housing and Urban Development (HUD) identifies four options for portfolio repositioning (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 release), many industry thought-leaders warn the new strategy simply means, “reducing the number of homes in the public housing stock.”1
Like many of his industry colleagues, DCHA Executive Director Tyrone Garrett is facing a conundrum. According to his agency’s data, 2,610 units in its portfolio of about 8,000, require immediate attention due to physical conditions. The homes in 14 complexes are in such disrepair that the health and safety of more than 5,000 residents (including more than 800 children and 900 elderly residents) could be affected.
Tyrone Garrett, meets with residents to discuss portfolio transformation.
Garrett and his senior team developed a transformation plan (available at: www.dcha.us) in the wake of comprehensive unit-by-unit analysis that started shortly after he arrived at DCHA in late 2017. After months of research, planning, and public engagement and input, Garrett is scheduled to present the plan to the DCHA board of commissioners in October.
“A majority of our properties are more than 50 years old and some were constructed when Franklin Delano Roosevelt was president. Many of the buildings are simply beyond their lifecycle. A combination of their age, condition, and an inadequate source of funding has landed us where we are. It is unsustainable,” Garrett said. “On one hand, we have housing that’s virtually uninhabitable and on the other hand, we have a steadily declining subsidy to maintain it. Stuck in the middle, of course, are the low-income children and seniors that make up the majority of the people we serve.”
DCHA was not the first housing authority to give thought to its real estate portfolio en masse. Beginning in the early 2000’s, some PHADA members began making dramatic changes to their real estate portfolios. The most aggressive by far was Atlanta, GA, where that city’s housing authority redeveloped 13 of its traditional public housing sites.2
Governing Magazine reported at the time, “Today in Atlanta, people talk about housing projects as ‘catalysts’ for rejuvenating entire neighborhoods. As for the housing authority, city officials, developers, bankers, educators, and ministers all describe it with a new word: ‘partner.’”3
At the time, Atlanta Housing Authority CEO Renee Lewis Glover told the New York Times, “For us to think that a program that was conceptualized [during the Great Depression] is still the right answer, it makes no sense. Today is a whole new era.”4
In DC, 2,610 units require immediate attention due to deteriorating physical conditions.
Public Housing Authorities (PHAs) of all sizes are confronting the dilemma of poor conditions and reduced funding. The story at smaller agencies, like those in Annapolis, MD, and the U.S. Virgin Islands, is very similar to DC and Atlanta.
Working with HUD, Virgin Island Housing Authority (VIHA) officials have been developing a long-term strategy to deal with its distressed housing for the last five years. Even before two Category 5 hurricanes hit the islands in 2017, VIHA’s portfolio was in great distress. Robert Graham, executive director of VIHA, says the public housing stock is functionally obsolete and in need of significant capital improvements.
“We plan to replace or rehabilitate all 3,000 of our public housing units. Most of our housing is more than five decades old and in poor condition; we have no other choice,” said Graham. “Federal funding is very tight and declining. RAD approvals and vouchers are limited. We are focused on demonstrating to our residents, federal officials, and to the Territorial Government that progress is underway.”
VIHA has a portfolio of approximately 3,000 public housing units and the agency estimates its repositioning strategy will require approximately $800 million to complete. VIHA plans include funding from HUD, FEMA, LIHTC, local funding, and other sources. VIHA estimates the plan could take as long as 10 years to fully implement.
An agency with an even smaller portfolio is the Housing Authority of the City of Annapolis (HACA). HACA has 935 public housing units in its portfolio spread over nine sites throughout the quite city and home of the U.S. Naval Academy.
“Annapolis is a beautiful city, full of historic and Cape Cod homes on the Chesapeake Bay, and I assume each of them has an annual cost of maintenance that increases year-over-year,” said Beverly Wilbourn, HACA’s Executive Director and CEO. “The cost of maintaining any home, large or small, public or private, increases with time. Yet and still, housing authorities are required to manage with a declining capital budget, ever challenging property and external conditions, and no means to raise revenue. RAD [with Section 18] was the most practical approach for HACA to rebuild and retain its valued affordable housing stock.”
Wilbourn said HACA decided to reposition its entire portfolio due to the age, condition, and rising costs of maintenance. HACA submitted an application to HUD for RAD in 2017 and HUD approved the first phase of the plan in 2018. The RAD conversions are now underway.
Recognizing that HUD approvals and funding are his greatest obstacles to addressing the housing conditions in Washington, DC, DCHA’s Garrett said, “Whether it’s RAD, partial demolition, project-based conversion, or acquisition of other assets, all options are on the table for us in DC Like most PHAs, we are the largest provider of housing to low-income families in our city. We will do whatever is necessary. We still have a responsibility to provide the greatest number of housing options to these families.”