#162 Summer 2010 — Public Housing Privatization

PETRA Perspectives: National Alliance of HUD Tenants

The National Alliance of HUD Tenants weighs the merits and drawbacks of the PETRA proposal.

NAHT recognizes some positive features of the PETRA proposal. We see value in at least some consolidation to improve consistency and transparency. We appreciate HUD’s affirmation of resident rights and proposals to increase penalties for non-complying owners. We also support giving HUD-assisted multifamily and public housing tenants “mobility,” under certain conditions.

However, rent simplification, program consolidation, and resident empowerment can be pursued by other means, such as the Section 8 Voucher Reform Act and HR 4868, the comprehensive preservation bill filed by Rep. Barney Frank.

NAHT’s major objections to PETRA have to do with the ownership and financing model and the risk of privatizing public housing, especially under future administrations. Successful implementation of PETRA depends on the ability of strong legislation to make it through Congress and the good will and capacity of future HUD administrations. We are concerned that these conditions cannot be guaranteed.

We cannot support PETRA unless the following concerns are addressed.

Permanent Preservation: Properties receiving PETRA assistance should be maintained as affordable housing for either the maximum legally allowable term (99 years) under state law or the “useful life of the property.” Do not convert public housing to “expiring use” housing.

PETRA should also reinstate real one-for-one replacement of hard units by dropping the exception for low vacancy areas. Replacement units should be provided with a preference for on-site or immediate neighborhood locations. HUD should also require affirmative replacement of units already lost (both public and HUD-assisted multifamily).

Keep Public Housing Public: Public housing for low-income people must be maintained under public or social ownership in perpetuity, whether through a public agency, legitimate mission-driven nonprofit organization, or resident-controlled entity such as a resident-run nonprofit or limited equity cooperative.

PETRA should ensure this by barring private equity investors, including limited partner investors as in the Low Income Housing Tax Credit program. The provision in PETRA allowing PHA officials to participate in privatized ownership entities or partnerships should be dropped due to conflict of interest issues.

Perpetual affordability use agreements should always be senior to any loan agreements. At a minimum, the legislation should be revised to eliminate a future secretary’s discretion to waive use restrictions in order to attract lender participation, and to require FHA/HUD insurance so that HUD takes over as owner in the event of an owner default.

A Shelterforce ad seeking donations from readers. On the left there's a photo of a person wearing a red shirt that reads "Because the Rent Can't Wait."

Explore Other Capital Strategies: Before turning to private capital, HUD should first evaluate the use of the $4 billion provided in the stimulus bill for PHA capital needs and complete an updated capital needs assessment. When new assessment is in, the administration should mount a priority effort to request increased capital funding to make up the shortfall.

We ask that HUD and the GAO conduct a long-term cost comparison of financing public housing repair needs from annual appropriations versus the use of private capital. We also ask that HUD consider public agency bond financing, treating public housing as infrastructure. Why not expand the Rebuild America bond program to include public housing? HUD could also utilize existing authority for PHAs to borrow funds against future capital repair funding streams, rather than against physical assets.

Make “Mobility” Work: NAHT cautiously supports the mobility provisions of PETRA, in principle, provided that additional incremental vouchers are provided annually so people already on Housing Choice Voucher waiting lists won’t be bumped.

Residents’ Rights: NAHT appreciates that HUD recognizes legitimate tenant associations independent of owners and PHAs, and appreciates extension of a “grievance” process to HUD-assisted multifamily tenants (although the process should be strengthened). Funding to realize these rights should be provided on the basis of $25/unit.

HUD enforcement of resident rights, in particular the right to organize, is rare and inadequate. HUD should ensure that tenants have access to information and third party enforcement rights not only in PETRA, but in existing programs. HUD should to support these provisions in HR 4868 now, and include them in PETRA. PETRA should also be revised to ensure more than “consultation” regarding potential demolition of units, and to include mechanisms for tenant oversight and involvement in management decisions.

HUD needs to demonstrate a meaningful working partnership with NAHT before we can sign off on PETRA, even if the legislation is otherwise revised to address our concerns. Specifically, we call on HUD to recognize NAHT as the national representative of HUD-assisted multifamily tenants; to work with NAHT to provide organizing resources to local groups; to reestablish the national “Eyes and Ears” process; and to disavow the idea that HUD staff and field offices can pick and choose HUD tenant representatives or organize tenants at the building level.


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