The Department of Housing and Urban Development announced new policies increasing flexibility for public housing authorities to reposition their assets by converting traditional public housing to federally assisted models that attract private capital investment, on Aug. 28.
The policy change directly affects housing for approximately 900,000 of the nation’s lowest-income residents who live in traditional public housing. Repositioning allows housing authorities to leverage private investment to rehabilitate aging buildings that the federal government has chronically underfunded.
The physical condition of public housing across the country is severely deteriorated, with an estimated capital repair backlog exceeding $70 billion. Many buildings were constructed in the mid-20th century and have not received adequate maintenance funding from Congress in decades.
For residents, repositioning can mean long-overdue renovations including new roofs, plumbing, electrical systems, elevators and kitchens. Residents retain their housing subsidies after conversion, though the subsidy structure changes from the traditional public housing operating fund to project-based rental assistance.
The Rental Assistance Demonstration program and related conversion authorities have been used by housing authorities in cities across the country to attract billions in private investment for rehabilitation projects that would otherwise be impossible under the traditional public housing funding model.
Critics of repositioning argue that converting public housing to privately managed, federally assisted housing risks reducing the number of deeply affordable units over time and subjects low-income residents to private landlord dynamics. Advocates counter that without private capital, the buildings will continue to deteriorate until they become uninhabitable.
The new flexibility provisions were not fully detailed in available release content. HUD’s Office of Public and Indian Housing is expected to publish implementation guidance specifying what additional authorities housing authorities will receive.
Housing policy researchers will be watching whether the new flexibility provisions include adequate resident protections, including rights to return after renovation and limits on rent increases.