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Transform Rental Assistance

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Transform Rental Assistance

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    1. Transform Rental Assistance NALHFA – 2011 Annual Education Conference

    2. Cheap Ploy to Curry your Favor 2 Tabulations are derived from tract-level Census 2000 poverty data.  Counts of Multifamily and Public Housing units and Sec. 8 Housing Choice Voucher households are as of 12/2009.Tabulations are derived from tract-level Census 2000 poverty data.  Counts of Multifamily and Public Housing units and Sec. 8 Housing Choice Voucher households are as of 12/2009.

    3. Affordable Housing Programs 3

    4. HUD Rental Assistance 4

    5. What is Public Housing? 5

    6. How is Public Housing Funded? 6

    7. 7 … and not replaced Disposition Many existing units are in serious disrepair. Why? Systematic underfunding - HAs to cut costs, reduce maintenance, delay repairs – ultimately leads to loss of units HAs lack tools available to the private affordable housing world – can’t leverage their assets to raise capital While HOPE VI has redeveloped some of the worst public housing it is small … and not replaced Disposition Many existing units are in serious disrepair. Why? Systematic underfunding - HAs to cut costs, reduce maintenance, delay repairs – ultimately leads to loss of units HAs lack tools available to the private affordable housing world – can’t leverage their assets to raise capital While HOPE VI has redeveloped some of the worst public housing it is small

    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 8 Combine many programs into one main program This will make it easier for local governments to administer HUD programs and make it easier for tenants to understand our programs Allow public housing and orphan programs to convert to long-term section 8 contracts to allow for leverage We estimate that public housing alone could leverage more than $27 Billion in private financing, eliminating its current backlog of needs Have a market-based rent setting system, which increases the amount of funding We estimate that by switching from a formula-driven funding system to a market-based system would increase the funding for public housing along from $7.2 billion to $8.4 billion Allow for resident choice If a family needs to move to be near a sick relative or to be closer to work, they will have the opportunity to leave public housing with a voucher. Combine many programs into one main program This will make it easier for local governments to administer HUD programs and make it easier for tenants to understand our programs Allow public housing and orphan programs to convert to long-term section 8 contracts to allow for leverage We estimate that public housing alone could leverage more than $27 Billion in private financing, eliminating its current backlog of needs Have a market-based rent setting system, which increases the amount of funding We estimate that by switching from a formula-driven funding system to a market-based system would increase the funding for public housing along from $7.2 billion to $8.4 billion Allow for resident choice If a family needs to move to be near a sick relative or to be closer to work, they will have the opportunity to leave public housing with a voucher.

    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. 9

    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 10

    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 11

    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? 12

    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 13 Now that the legislative proposal has been approved, we are in the process of compiling all of the questions received thus far via tra@hud.gov and will be revising the FAQs accordingly.Now that the legislative proposal has been approved, we are in the process of compiling all of the questions received thus far via tra@hud.gov and will be revising the FAQs accordingly.

    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 14

    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. 15

    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 16 Tabulations are derived from tract-level Census 2000 poverty data.  Counts of Multifamily and Public Housing units and Sec. 8 Housing Choice Voucher households are as of 12/2009.Tabulations are derived from tract-level Census 2000 poverty data.  Counts of Multifamily and Public Housing units and Sec. 8 Housing Choice Voucher households are as of 12/2009.

    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? 18

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