On April 22nd, I attended a workshop where HUD staff presented financing tools for small public housing authorities to reposition their existing portfolio of homes. HUD presenters included: Greg Jungman, Director of Public Housing, Greg Byrne, Director, Affordable Housing Transaction Division of Office of Recapitalization and Jane Blumenfeld-Hornstein, Director, HUD’s Special Application Center.
Public housing has a large and growing backlog of capital improvement needs, estimated at $26 Billion in 2010. By repositioning public housing through conversion to Section 8 rental assistance contracts, project revenue is expected to stabilize, providing access to finance capital needs, and program administration is simplified.
The Oklahoma Housing Finance Agency has agreed to partner with PHA’s to be their voucher administrator. The partnership means “new” vouchers for OHFA with a modest admin fee, and, assisting HUD with conversion analysis (rent reasonableness, payment standards, and utility allowance).
Traditional PHA options are:
- Mixed-Finance Rehab & Development
- Choice Neighborhoods
- Operating Fund Financing Program
- Capital Fund Financing Program
- Energy Performance Contracts
- Section 30 Mortgaging
HUD repositioning options for PHA’s to preserve long term affordability include:
- Section 32 Homeownership– Units must meet code before selling.
- Rental Assistance Demonstration (RAD)-Convert public housing subsidy units into
project basedSection 8 subsidy- either Project basedvouchers or Project BasedRental Assistance. PBRA must go through RAD. Agencies with lots of reserves should review RAD; you keep your reserves.
- Section 18 Demolition & Disposition– Authorizes demolition or disposition of public housing. Generally, approve when a property is physically obsolete, scattered site (non-contiguous) with operational challenges, owned by a PHA with 50 units or less, or Efficient and Effective. Relaxes the process for scattered sites of 4 or less. 2 year Tenant Protection Voucher. Fair Housing Equal Opportunity must review that vouchers can be used in the market. Authority cannot keep reserves.
- RAD/Section 18 Blends- 75% RAD/25% Section 18. OKC PHA Sooner Haven renovation is an example.
- Voluntary Conversion (including Streamlined Voluntary Conversion) i.e. Section 22- 250 or
lessunits cost tests waived, change to vouchers and leave program; or could make Project BasedVouchers.
- Required Conversion(250+ units with 10% vacancy) i.e. Section 33.
PHA’s are encouraged to examine their assets to decide which financing approach is appropriate for their community and explore the various repositioning options. Choosing to reposition includes:
- Changing program income eligibility threshold from 80% AMI to 50% AMI.
- Becoming a landlord in the voucher program.
- Analyzing risk of failure.
Is your PHA interested? Reach out and contact your local HUD field office.