Transform Rental Assistance

1. Transform Rental Assistance NALHFA – 2011 Annual Education Conference David Lipsetz US Dept of Housing and Urban Development May 19, 2011

2. Cheap Ploy to Curry your Favor

3. Affordable Housing Programs

4. HUD Rental Assistance HUD provides direct rental assistance across multiple programs with varying rules and separate administrative structures. * HUD administers through its local offices | **The numbers of administrators (grantees) and projects are estimates.

5. What is Public Housing? • 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.” • 1.178 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. How is Public Housing Funded? 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. Preservation of Public Housing • 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

8. Solution: Transform Rental Assistance 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

9. Current Status • May 2010: HUD Discussion Draft: Preservation, Enhancement, and Transformation of Rental Assistance Act of 2010 (PETRA) • December 1, 2010: Representative Ellison introduced H.R. 6468-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.

10. FY12 Rental Assistance Demonstration • 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

11. FY12 Rental Assistance Demonstration • 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

12. FY12 Rental Assistance Demonstration 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?

13. Transforming Rental Assistance Visit the TRA web page www.hud.gov/tra Join the TRA E-Mail List Follow the instructions at the bottom of the TRA web page Email TRA@hud.gov Submit questions and comments to HUD

14. Revitalization Act: Guaranteed Long-Term Affordability 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

15. HAP Rents for Converted Properties • 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.

16. Resident Choice and Mobility 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

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. Where is Public Housing?