HUD’s privatization scheme may herald end of public housing

At a time when a shortage of affordable housing is devastating low-income families, U.S. policymakers appear to have all but given up on the idea of a state-managed public housing system. The U.S. Department of Housing and Urban Development (HUD) says more than $26 billion (PDF) is needed to repair the nation’s aging public housing, a backlog that has left many residents in deteriorating living conditions.

Yet the notion that the solution lies in improved public funding and support — or that public housing should be publicly owned at all — has become a political nonstarter. Instead HUD is embarking on a sweeping privatization program in the name of renovation. After decades of demolitions and decay of public housing units, the Rental Assistance Demonstration (RAD), a pilot program that purports to preserve existing housings units by providing access to more stable funding, could eradicate public housing as we know it within the next three decades.

Launched in 2013, the RAD will hand over 60,000 units of public housing to private management by 2015. While that’s only a fraction of the nearly 1.2 million public housing units nationwide, RAD’s reach could soon expand: HUD Secretary Julián Castro and participating developers are lobbying Congress to lift the cap set during the program’s initial phase and allow more conversions to private ownership, and HUD is requesting $10 million toward the expansion of the RAD.

In a recent editorial for USA Today, Castro called for a “new approach” to affordable housing. Among other things, he proposed overhauling our public-housing system in order to “tap into the power of the marketplace.” But the agency doesn’t seem able or willing to say what will happen in the long term to public housing units outsourced to private developers.

To be sure, the U.S. model of public housing is flawed. Since its inception in the 1930s, public housing has been constructed primarily in poor, minority neighborhoods, reinforcing racial segregation and the marginalization of low-income residents. But in a time of deep economic pain, public housing continues to provide a crucial safety net for more than 2 million people.

Market-based solutions are hardly a new approach to the United States’ affordable-housing woes. The RAD is but the latest in a series of initiatives to propose a rescue by private capital as the solution to a free fall in public housing funding. In 1992, for example, HUD launched HOPE VI, a federal program that issued grants to developers to tear down distressed public housing units and construct mixed-income communities in their place. Though the program was ostensibly intended to decrease concentrated poverty, for many public-housing residents, HOPE VI brought displacement and a string of broken promises. To date, as many as 250,000 units have been lost to demolition or sale as the result of HOPE VI and subsequent initiatives. Residents of distressed buildings targeted for demolition were often told that they would be relocated. However, there was no firm requirement that demolished housing had to be replaced at a 1:1 ratio, and only a third of the housing torn down through HOPE VI was ever rebuilt.

For many public-housing residents, RAD’s arrival evokes an eerie sense of déjà vu. Some who were forced out of their homes by HOPE VI demolitions now live in buildings designated for RAD conversions and fear that they could soon suffer a similar fate. While HUD touts long-term preservation of affordable rental housing as RAD’s primary goal, tenants remain wary, given housing authorities’ repeated failures to back up sanguine pronouncements with any real oversight.

Most developers who rehab housing through RAD will receive low-income housing tax credits, which come with requirements regarding continued affordability. But at the end of a RAD contract — typically 15 to 20 years, with one renewal — developers are free to do as they wish with buildings, including turning them into market-rate apartments. As public-housing residents brace for another wave of displacement, many of the contracts between local housing authorities and developers are being negotiated in secret. Residents and housing advocates are pressing for more information about these contracts.

In Baltimore, where nearly 40 percent of the city’s public-housing units are slated to undergo RAD conversions during the program’s first round, Housing Authority Commissioner Paul Graziano says RAD will be “a shot in the arm” for public-housing communities. But residents here are far more concerned about being shot in the back.

On Oct. 22, Baltimore public-housing residents held a renters’ rights rally outside a Housing Board of Commissioners meeting to protest what they say has been a lack of transparency about the potential impact of the RAD. In addition to the apparent absence of protections to ensure buildings’ long-term affordability, residents emphasize the uncertainty over how their existing tenant rights will be preserved under the program. Those who are organizing against RAD in Baltimore say they have already begun receiving eviction notices, even after they paid their rent — a move they suspect may be an attempt to force the tenants out of their buildings or silence them from causing troubles for the new owners.

Tenants are not the only ones opposing the RAD. The program’s proponents boast that it will create at least 120,000 jobs nationwide. But in Baltimore and San Francisco, unions representing security and maintenance workers in public-housing buildings say as many as 200 of their members in each city could be laid off as a result of RAD implementation. There are questions over the quality of jobs that would be created. A host of developers and real estate associations undertaking RAD conversions recently wrote to HUD seeking to ensure that Davis Bacon — a law requiring that federal contractors performing work on public buildings pay their laborers no less than local prevailing wages — would not apply to their projects.

In addition to its potentially harmful effect on tenants and workers, RAD could serve as a vehicle to help investors acquire prime real estate and gentrify cities on the taxpayer’s dime. Critics note that some of the public-housing properties chosen for RAD conversions are those that would be most attractive to investors rather than those most in need of repairs. Several buildings in Baltimore included in the program, for example, are located across the street from John Hopkins hospital or in the gentrifying neighborhood of Mid-Town Belvedere.

Thus far, the HUD push to lift the cap on RAD conversions has been unsuccessful. Earlier this year, Congress maintained the cap in the 2015 spending bill after House Financial Services Committee Chairwoman Maxine Waters, D-Calif., wrote to HUD expressing concern about the program and insufficient evidence of positive outcomes. But a group of developers known as Lift the RAD Cap Coalition is lobbying Congress to expand the RAD to 185,000 units in the final 2015 budget.

If altered substantially to engage tenants in the process, the RAD could provide an opportunity to rethink the U.S. model of public housing. Some housing advocates are looking into acquiring public-housing buildings through community land trusts that could be managed by tenants and current building workers and into assisting tenant organizations in buying back buildings after RAD contracts expire. By forcing such organizations to compete with deep-pocketed investors and disregarding or punishing tenants who speak out, housing authorities are closing off alternatives that could truly begin to improve a troubled but vital institution.