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T RANSFORM R ENTAL A SSISTANCE NALHFA – 2011 Annual Education Conference David Lipsetz US Dept of Housing and Urban Development May 19, 2011.

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Presentation on theme: "T RANSFORM R ENTAL A SSISTANCE NALHFA – 2011 Annual Education Conference David Lipsetz US Dept of Housing and Urban Development May 19, 2011."— Presentation transcript:

1 T RANSFORM R ENTAL A SSISTANCE NALHFA – 2011 Annual Education Conference David Lipsetz US Dept of Housing and Urban Development May 19, 2011

2 C HEAP P LOY TO C URRY YOUR F AVOR 2

3 A FFORDABLE H OUSING P ROGRAMS 3

4 HUD R ENTAL A SSISTANCE 4 HUD provides direct rental assistance across multiple programs with varying rules and separate administrative structures. Program AdministratorsUnits Section 8 Housing Choice Vouchers2,406 2,233,706 Section 8 Project-Based Contract53 1,189,294 Conventional Public Housing3,123 1,175, Project Rental Assistance Contractn/a* 102,550 McKinney Supportive**1,938 87, Project Rental Assistance Contractn/a* 27,666 Section 8 Moderate Rehabilitation189 25,037 HOPWA219 23, Mainstream Vouchers203 14,783 HOME Tenant-Based Rental Assistance134 12,239 Rental Assistance Programn/a* 11,315 Rent Supplementn/a* 9,205 TOTAL8,2654,912,336 * HUD administers through its local offices | **The numbers of administrators (grantees) and projects are estimates.

5 W HAT IS P UBLIC H OUSING ? 5 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.” 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

6 H OW IS P UBLIC H OUSING F UNDED ? 6 SourceUseFY 2011 Capital Fund Develop, finance, and modernize units, and for management improvements $2.50 B Operating FundOperate and maintain units$4.77 B OtherRevitalization grants (HOPE VI)$0.20 B TOTAL$7.47 B Per UnitAvg. 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.

7 7 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 P RESERVATION OF P UBLIC H OUSING

8 S OLUTION : T RANSFORM R ENTAL A SSISTANCE 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 8

9 C URRENT S TATUS May 2010: HUD Discussion Draft: Preservation, Enhancement, and Transformation of Rental Assistance Act of 2010 (PETRA) December 1, 2010: Representative Ellison introduced H.R 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. 9

10 FY12 R ENTAL A SSISTANCE D EMONSTRATION 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 10

11 FY12 R ENTAL A SSISTANCE D EMONSTRATION 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 11

12 FY12 R ENTAL A SSISTANCE D EMONSTRATION 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? 12

13 T RANSFORMING R ENTAL A SSISTANCE Visit the TRA web page Join the TRA List Follow the instructions at the bottom of the TRA web page Submit questions and comments to HUD 13

14 R EVITALIZATION A CT : G UARANTEED L ONG -T ERM A FFORDABILITY 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 14

15 HAP R ENTS FOR C ONVERTED P ROPERTIES 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

16 R ESIDENT C HOICE AND M OBILITY 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 16 % living in area of concentrated poverty Average Income Public housing resident48%$13,346 Assisted housing resident26%$11,504 Housing voucher recipient19%$12,755

17 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

18 W HERE IS P UBLIC H OUSING ? 18


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