Troy’s public housing authority pursues private funding

Troy’s public housing authority pursues private funding

A relatively new, popular federal program will allow the Troy Housing Authority (THA), which controls about 1,200 public housing units and receives annual operating and capital funds through the Department of Housing and Urban Development, to access private funding streams to carry out long-deferred repairs and renovations.

HUD’s Rental Assistance Demonstration (RAD) program essentially involves housing authorities transferring projects from HUD’s public housing program to its project-based Section 8 voucher program. In THA’s case, over the next several years, the process will entail a transfer of ownership of nine projects across the city to wholly owned, non-profit subsidiaries.

This seemingly semantic shift will allow THA to pursue federal Low Income Housing Tax Credits, which in New York are competitively awarded by the state Division of Homes and Community Renewal. The vast majority of affordable housing projects in the United States are financed through LIHTC, which offers a dollar-for-dollar tax reduction for investors (though the credits’ allure has reportedly diminished thanks to President Donald Trump’s pledge to lower the corporate tax rate).

The RAD program will also allow THA to borrow more liberally, including against the value of its projects. Previously THA could only borrow against anticipated capital fund apportionments, which typically amounted to about $2 million annually. For perspective: Without RAD, the extensive, $12.6 million renovations currently underway at the ‘70s-era Martin Luther King Apartments, a multifamily complex in a hillside cul-de-sac overlooking North Central, would have consumed THA’s capital budget for more than half a decade—that is, the renovations likely would not have happened at all.

Plans to privatize public assets, even plans that enjoy bipartisan support, might reasonably be eyed with suspicion. In a series last year, The New York Times detailed how cash-strapped localities across America have sold their golf courses, water and sewer systems, and fire departments to private equity firms, sometimes with non-optimal results. In Troy, plans to sell One Monument Square, the former site of city hall that was demolished in 2011 amid lofty expectations, has led to years of failed projects; litigation (real and threatened); and a city government—still lacking a permanent home—saddled with hundreds of thousands of dollars in rent expenses per year for the foreseeable future. But while taking on private loans might mark a significant administrative change for public housing authorities, the practice does not appear to amount to a full-bore privatization.

In any case, the RAD program is perhaps best regarded as a novel stopgap. Congress has inadequately funded HUD for decades. More specifically, the portion of HUD’s budget devoted to public housing’s capital repairs, adjusted for inflation, decreased by more than 50 percent from 2000 to 2015, according to the work of Alex Schwartz, a professor of urban policy at The New School. Public housing authorities now face what HUD baldly calls a “daunting backlog of capital repairs.” The New York City Housing Authority’s capital needs, for instance, are close to $17 billion.

The term “stopgap” seems particularly apt in light of Trump’s recently unveiled budget for next year, which would slash HUD’s budget by about 15 percent. While access to and reliance on private funds might shield RAD participants from the brunt of this austerity, at least one important facet of the program could be affected.

The nonpartisan Center on Budget and Policy Priorities has estimated that Trump’s proposed budget would eliminate 250,000 portable housing vouchers for families. While RAD’s project-based vouchers would not meet an equivalent fate, the program explicitly guarantees that tenants cannot lose housing as a result of RAD conversions. As a kind of corollary to that, the program allows tenants to convert project-based vouchers to portable ones—the type of which there will be a quarter-million fewer, if the president has his way.

Ultimately, while RAD enables public housing authorities to act more like private real-estate developers, they will retain deep ties to HUD. That has certain advantages—RAD includes certain safeguards in the event of foreclosure, a real (if somewhat remote) risk of the private-capital approach—but it also means that, in years to come, budget cuts could still easily hamper the whole experiment.

“All we want to do is upgrade our existing housing,” THA executive secretary Dan Crawley recently told The Alt at the Martin Luther King site’s administrative offices. “People deserve to live in nice, safe, affordable apartments. Just like everybody else does, you have to keep on upgrading your facilities. We’re not making money to do that, so we have to figure out ways in which we can do it so [we] pass inspections and everything is nice and people want to live here.”

THA’s waitlists suggest no shortage of demand. Corliss Park Apartments in Lansingburgh, for instance, has over 1,600 people on its waitlist, and the portable Section 8 voucher waitlist has been closed for more than two years. Turnover at the THA’s senior housing complexes, including the Kane and Conway Court Apartments, is particularly low.

“The only reason people leave there is because God takes them,” Crawley said.

Another low-turnover senior housing complex in Troy has operated as a project-based Section 8 facility for quite some time, perhaps previewing how future RAD conversions might pan out. Over a decade ago, legislation sponsored by then-state Senator Joseph Bruno allowed a similar use of private funds for the renovation of the John F. Kennedy Towers, a peculiarly shaped complex sited in a park that fronts Sixth Avenue.

More than 350 public housing authorities, including THA, are now participating in the RAD program. “$4 billion in new private and public funds have been leveraged by RAD with an average of $61,000 invested in construction per unit,” a recent HUD infographic states. “It would have taken these [public housing authorities] 46 years to accumulate enough public housing Capital Funds to complete a similar level of construction.”

You might question whether the whole, rather abstruse RAD arrangement—nonprofit subsidiaries, tax credits, paperwork, consultants, et cetera—could have been obviated by the federal government simply sustaining or increasing direct outlays for public housing. We built all this housing, why not just pay for its upkeep?

THA administrators did not really have the luxury of entertaining such questions.

“This is the way it’s going,” Crawley said, speaking of his decision to pursue the RAD program on behalf of the THA. “We might as well get in early.”

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