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Transforming Rental Assistance: The Basics

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Nicholas Dahmann

on 2 March 2011

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Transcript of Transforming Rental Assistance: The Basics

presentatIon overvIew 1 2 3 4 HUD 2010:

tRANSFORMING
rENTAl aSSISTANCE
...the potential and likely disastrous implications context and overview Tenancy What is to
be done? Issues Context and overview [tra]
What's with the words "renewal"
"reform" and "transformation"? 1960s urban "renewal" = urban removal
And TRA's "transformation"
of public housing today?
"transform" = convert public housing
into a privately financed, operated
and de facto owned entity
Context and overview (Tra)
Public Isn't that a
contradiction? Yes it is!
but here's
The TRA plan... 1996's welfare "reform" = war on the poor Wait... Private housing? What? $ 350 million from the capital fund appropriation

280,000 units of public housing to Section 8(n)

public housing using the property as collateral

a whopping $7.0 billion bucks in "leverage" ~ Open to foreclosure AND BANKRUPTcy
~ Private ownership and operation
~ reliant on private finance capitalists
~ loss of tenant rights and hard units pillage CONVERT MORTGAGE DEBT FINANCE "PUBLIC HOUSING" under tra's plan (TRA) bulldozed communities
displacement and dispossession
disproportionate attack on Black communities severe reduction in social spending
time limitations and work requirements without jobs

TRA The details (TRA) tra TRA = Transforming Rental Assistance
introduced as part of HUD's FY11 budget

PETRA = Preservation, Enhancement and Transformation of Rental Assistance ACT
Confusingly, "Petra" is the TRA bill (no h.r. #)

The first Congressional Hearing on tra was held late May; House Appropriations Does not Fund TRA for FY11. HUD is still pushing... the details Context and overview [tra]
TRA is HUD's latest "initiative" TO geT out of the low-income housing business 3. Nixon's 1973 federal "moratorium" on affordable housing production essentially ended any new construction programs.

The private market and corporate tax breaks become housing "policy." 4. In 1974, the private market "solutions" of Section 8 were adopted before its pilot program (EHAP) was even completed or its results analyzed. 1. The need for affordable housing outstripped supply in 1970 for very low-income tenants and by 1978 the same was true for low-income tenants.

It has become worse every year. 2. The Decline in affordable housing and HUD's budget coincides with the rise of contemporary mass homelessness 5. Since then, assistance for public housing has shrunk while Section 8's tenant- and project-based programs have grown. 6. At the same time, federal tax breaks that largely benefit wealthy homeowners has grown to dwarf HUD's entire appropriation 4:1

Even the IMF calls this distorted! 8. Today the affordability crisis is at its worst. Even before the economic crash there were only 38 affordable units available for every 100 households. 9. After allowing 200,000 public housing units to be lost through demolition or disposition, HUD now wants to "transform" public housing, the only real long-term affordable housing we have.
petra's conversion of public housing to
Section 8(n) Funding Rather than fully fund the capital and operating needs:
TRA converts public housing properties to the Section 8 model of multi-family housing with expiring use contracts Conversion to the new Section 8(n) entails taking out a mortgage on the public housing property to cover both capital needs backlog and ongoing operating costs. With mortgages come up-front capital, but importantly there are debt service payments for the length of the mortgages, likely 35 years. The cost of debt service depends on: 1) the size of the unmet capital needs and 2) HUD rent subsidy levels. By introducing TRA, HUD has argued that private financing is necessary to fund unmet capital needs between $20 and 30 billion. The reason there is an unmet backlog is the Capital Fund has been starved. However... However,
Any way you cut it:
TRA's debt financing
costs more... lots more... Especially
over 35 years... Additional! Base line Tenant Changes in taking out
mortgages, Private Financing and project based subsidy TRA adopts the Project-Based Multi-family Model.

This changes a number of key rights that public housing tenants currently have. For more info go to wraphome.org! private financing... Ending the Public
in Public housing! private Managers... 7. Yet, Section 8 is not truly permanent.

Since 1995, 360,000 units have been lost through foreclosure and owner opt-out.

335,000 more units expire this year and 900,000 expire over the next 5 years.
Policy Roots of TRA The 1998 Quality Housing and Work Responsibility Act (QHWRA) Established during the period of welfare "reform"
Lays the groundwork for TRA's implementation Aspects of QHWRA that underpin TRa Financial deregulation that allows PHAs to leverage finance captial The ability to mortgage public housing using the property as collateral Changed income targeting levels, which means the "neediest" families are no longer considered as low income Gave PHAs ability to use punitive eligibility requirements Introduced the "Faircloth Amendment" that limits the expansion of public housing Compels PHAs to enter into "asset management" that treats Public Housing as a commodity using "private market" principles TRA is not a new or creative Idea It re-brands Bush's HUD FY03/04 plan to mortgage and project-base public housing "public Housing Reinvestment Initiative" (PHRI) the bush plan called for:

using private financing to rehabilitate properties though mortgages the argument that without private-sector money PHAs will be unable to address the capital improvement backlog an emphasis on market discipline through "asset management" principles the conversion of public housing to project-based funding stream a "mobility option" to move with Housing Choice Voucher after a certain time period Bush's version of TRA, PHRI, was rejected twice by Congress In the end, TRA is just the rebranding of the Rickety regime of market rule, and congress saw that once and should again! Instead of learning from this experience, HUD is pushing the same thing While playing up aspects of TRA such as Choice and Tenant Mobility, the central issue is the financing and conversion to Project-Based Rental Subsidy This isn't about a problem with Public Housing.

HUD has never asked for the necessary appropriation. Right to Organize:

loss of 964 rights in "favor" of weaker Project-Based Section 8 rights
Funding for organizing will be competitively distributed loss of Procedural Rights in the Grievance Procedures:

again following private landlord model of multi-family housing, this makes addressing problems more difficult Eligibility:

persons without papers are permitted in public housing but not in project-based section 8

like with HOPE vI, there is the opportunity for private managers to enforce different, more punitive rules. Rent levels:

PETRA does maintain the 30 percent of income cap
However, new minimums can be applied
Also, anyone paying a flat rent would likely have this raised to 30 percent. 50 billion total!!!! 66 billion total!!!! 88 billion total!!!! JOIN WRAP'S HOUSING RIGHTS CAMPAIGN... AND DEMAND: 1. Preserve and Restore Public Housing:
Fully fund Public Housing's capital and operating grants during appropriations
Stop TRA, PETRA Choice Neighborhoods Initiative
Strengthen Public Housing One-for-One Replacement and Tenant Protection Act of 2010 (no H.R.# yet) 2. Preserve and Extend Section 8 Contracts:
Restore Section 8 contracts to a minimum of twenty years
Strengthen Housing Preservation and Tenant Protection Act of 2010 (HR 4868) 3. Change Federal priorities:
Stop spending trillions of dollars bailing out a broken financial system
End wasteful overseas military engagements
Cap the Mortgage Interest Deduction and eliminate all deductions for luxury and second homes
Fight the war on poverty: fully fund health care, living wage jobs, education, housing, infrastructure and ending homelessness 4. Roll-back Quality Housing and Work Responsibility Act of 1998:
Public housing needs its own equivalent of the Financial Reform Bill
Stop privatization and risky financing of public goods
Remove QHWRA's amendments to the Housing Act of 1937
Full transcript