Private/public housing?

HUD’s new policy forces public housing to mirror private business

The U.S. Department of Housing and Urban Development says it’s high time for public housing to go capitalist. The government is mandating that local housing authorities manage their properties as it’s done in the private sector: Make money, or else ...

Henry Alvarez

HUD is tweaking its subsidy spigot, and asking that individual public-housing communities become financially self-sufficient. The mandate to the nation’s 3,200 agencies housing the poorest of the poor requires switching to a new “asset-based” management system, which means that public-housing properties either need to cut their costs or increase their revenues.

HUD still hasn’t asked Congress for the full amount of money it would need to properly implement the new program, and local housing authorities already know they stand to get just 85 percent (or less) of housing-support funding from the federal government. And HUD still hasn’t finished writing the guidelines for the new rule that takes effect for some agencies on October 1.

Though the San Antonio Housing Authority doesn’t have to switch from a central administration scheme to the stand-alone-properties plan until January 1, it has opted to start the transition ahead of schedule. SAHA has instituted the asset-based management model already, and the agency plans to be switched over fully by July, officials say.

Henry Alvarez III, president and CEO of SAHA, says that while his agency should be able to weather the transition, other housing authorities may face worse problems. “We’re treading really troubled waters at the moment. We plan fairly well here in San Antonio, and we don’t see those massive layoffs, `and` lotteries to remove `tenants`. In fact, we don’t plan on any layoffs,” he said. “We’re planning to manage this process through utilizing our other business interests to support our traditional programs.”

Those “other business interests” include SAHA’s “affordable-housing” program, which typically serves tenants who pay higher rents. Because that program generates higher rent revenue, it will help subsidize the public-housing program, which serves some of the poorest people in San Antonio. (SAHA also administers the Section 8 Housing Choice Voucher Program, which allows clients to live at private properties that accept the vouchers.)

The bottom line is that HUD is asking the local housing agencies to do more with less. Alvarez calls it an “unfunded mandate.”

“The dilemma that you have is if HUD cuts these budgets by 20 percent, they’re not cutting what they’re requesting us to do for service,” Alvarez said. “As a result, we have to find a way to provide those services with fewer resources.

“If they continue to constrain our resources, we’re not going to be able to provide the level of service that we’re able to provide today,” Alvarez said. “In most instances, we are the housing of last resort, and if we are unable to support folks in finding decent, safe, and sanitary housing, I don’t know where they’re going to go.”

No one likes to talk about it, but these changes — forcing public-housing communities to be financially self-sufficient — mean that some of the country’s poorest people could be forced to vie for fewer housing units. Because there are only two ways to make a housing development self-sufficient: Increase revenue or cut costs. And housing officials say costs have been cut to the bone. Since rent is based on tenant income, a housing development might get more rent revenue from tenants who make more money.

Even the plan’s proponents say it is severely flawed, largely because HUD asked Congress for $250 million less than it needs to properly implement the new management practices.

And then there’s HUD’s procrastinating on writing that pesky rule. “Agencies are facing compliance standards that don’t yet exist,” said Jim Armstrong, a policy analyst for the Washington, D.C.-based Public Housing Authorities Directors Association. “Some bits and pieces are out, but the whole kit-and-caboodle isn’t there yet.”

Still, SAHA is moving forward. Officials say changes should make public housing in San Antonio a bit better for those who use it. The asset-based initiative means tenants could deal with much of their housing business within their residential community, rather than going to SAHA’s central office on South Flores Street. Because individual property managers will have more authority and decision-making abilities, some aspects of public housing may become more user-friendly. Maintenance requests would be tackled more quickly. Same goes for other problems, SAHA officials said. New housing applicants will also be able to start and finish the application process at any of SAHA’s communities (although parts of it will still be handled at the main office).

While the changes may work, in theory, lack of funding is going to hurt the agencies, Armstrong says.

“I think virtually everybody acknowledges that for agencies that have in some cases had fairly centralized operations, moving to a project-based accounting and management system is going to involve some costs, at least initially,” he said. “And it looks as though agencies are going to be at risk of receiving only 75 cents on the dollar of what the federal government says they’re due to operate their housing.”

SAHA has been working under the assumption that the new plan means a 20-percent reduction in its budget. But this could cause serious problems for SA’s public housing.

“Many of us will find that very difficult to swallow,” Alvarez said. “We would rather not have any cuts at all, but the reality is that there are going to be cuts and we need to change our business model to deal with them ... I’ve tried to cut and streamline as best I can to measure up to that 20-percent cut ... Now I’m kind of between a rock and a hard place.”

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