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HUD rules, intended for good, impede Durham Housing Authority development plans in Northeast-Central Durham

Durham Housing Authority plans to convert its properties to Section 8 units, even though its Section 8 department is broken

The Durham Housing Authority's Section 8 department September received a scathing, 21-page federal audit that concluded it paid more than $43,000 in ineligible fees and housing assistance, plus wrongfully received another $7,000 in administrative fees. Now DHA wants to convert its public housing properties to, yes, Section 8 units, putting the troubled department in charge of implementing a groundbreaking federal program.

Download HUD audit

Like many housing authorities nationwide, DHA says it will participate in a new HUD program that changes how low-income people receive housing aid.  The RAD program, which is short not for radical, although it is, but Rental Assistance Demonstration, essentially eliminates public housing as we know it. Instead, of conventional public housing communities, housing authorities team with a private investor (s), to transform existing and renovated projects into Section 8 units. Those residents' public housing vouchers convert to Section 8, also known as Housing Choice Vouchers. The housing authority manages the program, but the private investors are responsible for the day-to- day leasing and maintenance. 

Why would a housing authority do this? Coincidentally, the UNC School of Government posted a blog today about RAD that cuts through the mumbo-jumbo of the hud.gov site. Here's the deal: Public housing authorities don't have enough money to repair and improve their properties. 

According to the UNC blog, "congressional cutbacks on HUD subsidies over the past 15 years have severely hampered maintenance of many of the nation’s 1.2 million public housing units. HUD estimates it has a $26 billion backlog in deferred repairs. Due to ongoing lack of repair, units are becoming uninhabitable. As they do, they are demolished or sold. From 1990-2010, 300,000 units were lost from public housing stock due to continued lack of maintenance."

That's right, 300,000 units gone. This is at a time when HUD is serving only a quarter of the people who are eligible for housing subsidies. And as the blog notes, the demand for subsidized housing will likely increase as the population ages and rental and home prices escalate. 

Apparently it's a very popular program because housing authorities have too little money to repair their aging housing stock. In a 2014 pilot program HUD limited the number of units that could be converted to 60,000. There were 180,000 applications. That's just how dire the national affordable housing situation is.

DHA plans to have privatized all of its properties by the end of next year, according to Meredith Daye, development director for DHA, who spoke at a board meeting this afternoon. The agency will remain the management agent. Residents will moved from their current contracts to Section 8 contracts, which still guarantee them long-term, permanently affordable rents, for the 15-20 years of the contract. 

However, we already know that in October DHA gave people the wrong information about whether they could apply for two-bedroom units with a one-bedroom voucher (they can). At last month's development committee meeting, according to the minutes, board member Tom Niemann cited the audit in his concerns that a private investor "might not be comfortable with DHA managing its sites based on issues with the Housing Choice Voucher department."

Download Board minutes

Ouch.

HUD's Inspector General is requiring DHA to reimburse the feds nearly $50,00o for the ineligible payments and receipts. The Housing Choice Voucher department failed to consistently get eligibility documentation; it also miscalculated housing assistance payments and did not inspect several units as scheduled.

Board member Dan Hudgins added that he "did not feel the agency was ready for this transition because the HCV department is not efficiently providing core services and has an unfavorable reputation in the community."

Double ouch.

Dallas Parks, the housing authority CEO, said the HCV department is short-staffed, has high turnover and a high error rate. The HCV director, Rhega Taylor is working on a reorganization plan for that department, per HUD's audit, which will require Parks' approval.

In addition to DHA's shortcomings,  there are rightful, overarching concerns about the privatization of a public service/benefit. If you want to see how that can play out, look no further than the private prison system. Or privatized health care. And the RAD program is only a year old, so it's too soon to tell if it will work for the benefit of low-income people.

But those people could be tossed aside, reads the UNC blog, which notes that critics have raised concerns of what would happen "if the agency defaulted or contracts were not renewed, and the property switched into private hands. enants there expressed fear of displacement, and future affordability on the contract system. They worried that the potential repairs and renovations might spell permanent displacements from their homes, or that the switch in contracts meant they might have to reapply for their homes and potentially not get them back."

Durham already has a shortage of Section 8 landlords, and if we rely on allow the free market to work, that dearth of affordable housing will likely become more severe. 

 

 

Comments

Khalid Hawthorne

It is definitely an interesting proposal. Given the current and projected future environment it is probably the best option with more pros than cons. RAD projects are different from "normal" Section 8/ Landlord situations.

Essentially, a private developer submits a redevelopment proposal to the housing authority and can approach banks/ investors with "guaranteed" federal payments which reduces the risk for the developer. The majority of developers who pursue these and HOPE VI type deals are experienced with the projected returns as well as the perils of operating a low-income housing facility.

RAD projects could also help Durham achieve its goals for affordable housing in TOD and downtown areas. A creative affordable housing plan could subsidize workforce housing as in a project creating a true mixed-income development. There are several city- and county-owned sites that could not only maintain and slightly increase the affordable housing in downtown but could provide a healthier mix of incomes in those developments.

The current and past HCV problem is a non-issue to me because it has to be resolved anyway. Expanding the program may influence the caliber of candidate that is attracted to that department. A lot of housing authorities have problems in this area...I wonder if they are receiving proper training. They probably need a more quantitative/ financially minded manager or at least a controller to handle the fiscal activities.

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