Much of the nation’s public housing stock is aging. Stagnant funding for operations and capital repairs have meant many public housing properties suffer from deferred maintenance. They need new roofs and boilers, kitchens and bathrooms, and upgrades to improve energy efficiency and access for persons with disabilities.
Amid controversy over conditions of its Public Housing sites, the New York City Housing Authority (NYCHA) announced a plan in mid-November that will revitalize thousands of its Public Housing units using HUD’s Rental Assistance Demonstration (RAD) program.
NYCHA’s proposal reflects the growing use of RAD by Public Housing Agencies (PHAs) around the country to improve the quality of Public Housing. NYCHA is the nation’s largest PHA, with 400,000 residents living in its public housing units.
RAD lets PHAs convert Public Housing developments to Section 8 Project-Based Rental Assistance (PBRA). This allows private investors to contribute capital for needed upgrades and repairs to Public Housing properties. The Public Housing program does not support private investment in properties, but Section 8 PBRA funding is familiar to bankers and investors.
Section 8 PBRA developments have attracted billions of dollars in private investment since the program began in the mid-1970s. According to HUD’s RAD Newsletter, 100,000 homes nationwide have been repaired and $5.75 billion secured for construction investment. Properties improved with RAD had an average of $57,000 per unit in improvements.
RAD supports major repairs such as replacing roofs and boilers, removing environmental hazards like lead paint and asbestos, replacing kitchens and bathrooms, increasing energy efficiency and improving accessibility for person with disabilities. Residents retain the same rights they had as Public Housing tenants. They pay 30% of their income for rent, the same as the Public Housing program. They also have rights to return to the development once repairs are complete, relocation assistance, resident input in project planning and established grievance procedures. Residents also have a right to “choice mobility” at properties converted into the Section 8 Project-Based Voucher (PBV) program. This means that after one year of living in the RAD property that has been converted to PBV, they can apply for a Section 8 Housing Choice Voucher (HCV) and use it to rent an apartment elsewhere in the private market.
New York City Mayor Bill de Blasio announced the NYCHA plan to address $13 billion in comprehensive repairs on 62,000 apartments. Approximately 140,000 people live in these units, spread across 21 properties. The initiative is a public-private partnership, with NYCHA retaining control of the land. Private investors will contribute to the financing and the properties will be managed by private property management companies. Private developers will also build new apartments on land owned by NYCHA that will generate income for the housing authority. The work will be done on a rolling basis with all units complete by 2028. Mayor de Blasio said, “This is a turning point for tens of thousands of NYCHA residents. We have an opportunity to undo decades of neglect and mismanagement, and we have to take it.”
The RAD announcement comes as good news on the heels of recent troubles NYCHA has had with how it has responded to lead paint in its apartments. Since 2010, NYCHA routinely challenged health department orders to remove lead paint from its apartments, with the health department backing down on the orders in 158 out of 211 cases. Since July this year, NYCHA will no longer challenge lead paint orders. The new RAD development will also remove lead paint and other environmental hazards from the 62,000 apartments being repaired.
The RAD program was authorized by Congress in 2012 as a demonstration program. It is authorized to continue through 2020. Congress originally capped the number of units that could be converted under the program at 60,000. Because of demand for the program, Congress has raised the cap over the years, most recently raising it to 455,000 units in the FY 2018 HUD appropriations. Even with this increase, HUD’s RAD Newsletter estimates the cap will be met within 10-18 months due to the overwhelming interest of PHAs who need to fix their aging apartments. Many affordable housing supporters have called for the unit caps to be lifted completely. They also support extending the program authorization date or making it permanent so that it will not end in 2020.
Edited by Nathan Brunet