Reported ArticleHousing

Does RAD Privatize Public Housing?

How exactly does HUD's Rental Assistance Demonstration program work and why is there a raging debate over whether it’s putting tenants’ rights and housing affordability in peril?

Photo by Flickr user Brenda Gottsabend, CC BY-NC 2.0

Last fall, Shelterforce published an article about a new HUD initiative called the Faircloth-to-RAD program, which could help public housing authorities rebuild upward of 227,000 units of “public housing.” Public housing gets the scare quotes treatment here because calling it that garnered pushback from some Shelterforce readers who argue the new initiative might be building housing, but it is not building public housing.

HUD is using an existing program called Rental Assistance Demonstration (RAD) to help fund the construction of those 227,000 units. RAD allows public housing authorities to convert from using public housing program subsidies, which Congress has largely underfunded, to project-based Section 8 subsidies, which Congress has funded (comparatively) well. Public housing authorities can use the guarantee of Section 8 funding to pull together other loans, tax credits, and grants to rehab or construct new housing. Housing authorities can also use RAD to outsource ownership and management of the units to nonprofit or even for-profit entities.

While it’s true that some units that get built will not be managed by public housing authorities, HUD considers the housing built through Faircloth-to-RAD to be public housing. Even though those new units will be funded by Section 8 vouchers, the units will count toward the public housing program’s 1999 unit cap.

Therein lies the debate: is RAD a privatization program? What constitutes privatization? Are units built through Faircloth-to-RAD really public housing? Some of the pushback to the article last fall stems from the very real problems created by past public housing redevelopment programs, like HOPE VI, which resulted in significant displacement of public housing tenants, degradation of tenants’ rights, and the loss of more than 43,000 units of public housing that weren’t replaced after demolition. Advocates fear RAD could result in the loss of rights for tenants in the short term and a loss of deeply affordable housing in the long term.

But some of the pushback stems from a misunderstanding of how RAD works. Contrary to common wisdom, RAD does not require public housing authorities to transfer ownership or management to nonprofit or for-profit entities, and fewer than half of RAD-converted units have changed hands so far.

Shelterforce spoke with housing advocates, researchers, tenant organizers, and HUD officials to help clarify how RAD works and why there continues to be a raging debate over whether it’s putting tenants’ rights and housing affordability in peril.

How RAD works

RAD was created in 2012 to provide the funding necessary to preserve America’s aging public housing stock. About 1.8 million low-income Americans live in the roughly 958,000 units of public housing left in the United States. To date, about 155,000 units of public housing have been converted through the RAD program, which as a “demonstration” program currently limits the number of conversions to 455,000 units.

Thanks to insufficient funding for the public housing program, much of that housing stock is in desperate need of repair. A recent estimate puts the repair backlog at $70 billion for leaky roofs, broken appliances, mold, and other problems tenants are forced to live with. Yet Congress has not funded the public housing program at a sufficient level to address the problem. According to Office of Budget and Management data, public housing capital funding—which pays for repairs and maintenance—is down 58 percent over 1998 levels, when adjusted for inflation. Public housing operating funds have increased slightly over the past two decades but have not kept up with inflation.

‘It is true when there’s a RAD conversion it’s not [part of the] public housing [program] anymore … But to a large extent it’s still deeply subsidized housing for extremely low-income individuals.’

Since 2000, Section 8 funding has grown by 45 percent. RAD allows public housing authorities to tap into that steadier source of operating and capital funding by converting from public housing subsidies to project-based Section 8 subsidies, which are tied to specific projects rather than individual voucher holders.

Because Section 8 subsidies are more stable than public housing subsidies, housing authorities can better leverage that funding to pull together other loans, tax credits, and grants to do the expensive repairs and redevelopment their housing projects need. As part of RAD, housing authorities can also outsource ownership and/or management of the redeveloped units to a mission-driven nonprofit entity. When RAD projects turn to the Low Income Housing Tax Credit program (LIHTC) to fund redevelopment, they must bring in a nonprofit or for-profit partner to manage the tax credits.

According to HUD, 56 percent of the units converted through RAD so far are owned and managed by a public housing authority or a nonprofit subsidiary the public housing authority created to manage finances, under the control of the PHA. Those roughly 86,000 units are reliant either entirely on public sector funding (project-based Section 8 or other government grants) or are getting loans from a bank, but do not use LIHTC or other equity funding that could be considered to create an ownership stake in the properties.

For the remaining 44 percent of RAD conversions, the public housing authority has entered into a joint partnership with a nonprofit or for-profit entity and is using LIHTC for redevelopment funding. Within that 44 percent, about 24 percent of the units are still owned and managed by the housing authority, with a passive LIHTC partner. Ownership of the final 20 percent, or about 13,500 units, has been transferred to nonprofits.

“It is true when there’s a RAD conversion it’s not [part of the] public housing [program] anymore,” says Susan Popkin, an Urban Institute researcher who’s written extensively on public housing reform. “But to a large extent it’s still deeply subsidized housing for extremely low-income individuals. It doesn’t change the character of the housing that much or the purpose of it.”

Do tenants’ rights hold up?

Public housing tenancy comes with important, hard-won rights: the right to self-organized tenant associations, the right to a grievance procedure, the right to pay no more than 30 percent of your income on rent, and more.

On paper, those rights transfer to tenants whose units are converted under RAD. Residents can still organize a tenants’ association and the public housing authority must pay $25 per unit to fund it, there are still formal grievance procedures, and tenants pay a maximum of 30 percent of their income on rent.

There are also formal rights for RAD tenants meant to ease the transition during conversion. For example, tenants must be included in at least two meetings during the RAD planning process. If a tenant must relocate during the RAD renovation process, they have a right to return without having to reapply or be rescreened for their unit. If, after a year of living in the RAD converted unit, they decide they dislike it, they have a right to request a housing voucher that allows them to move to a market-rate unit that accepts vouchers elsewhere in the region.

“We really have worked hard to learn from past experience and things that people are raising and continue to tweak the program in response to concerns people raised,” says Tom Davis, director of the HUD Office of Recapitalization. “We get feedback from folks and make adjustments in the RAD notice to address things that enhance the resident rights and protections along the way. We really are very focused on making sure we implement the ideals of resident protections and quality housing.”

Though the rights exist on paper, there is fear from tenant advocates that there is not enough oversight to enforce them. For instance, a recent Human Rights Watch report called the program “risky” and highlighted preliminary evidence that shows evictions jumping in New York City Housing Authority units once they were converted.

According to the report, “These cases offer a cautionary tale about ways in which the process of conversion could lead to negative impacts on housing rights if adequate safeguards and oversight aren’t built into the program.”

The National Housing Law Project (NHLP) has also collected examples of tenants’ rights being violated after a conversion, including failure to respect the right to return, attempts to raise rents, attempts to bar tenants from returning because their incomes didn’t meet LIHTC requirements, attempts to block tenant organizing, and more. A 2018 Government Accountability Office evaluation of RAD similarly found that HUD had insufficient oversight of RAD converted properties.

“Even though those rights are meant to be carried over, a private entity might not know to enforce them or monitor them,” says Deborah Thrope, deputy director of the National Housing Law Project. “From a tenant’s perspective, the less public a process is, the more risk there is with respect to realizing their rights. The best public housing properties are ones where tenants are at the table and part of the decision-making process.”

Popkin says HUD has tried to strengthen tenant rights in each update of the RAD regulations.

“This administration has already strengthened tenants’ rights around rent, tenant councils, the right to organize,” she explains. “RAD has stronger tenant rights than we had in HOPE VI or Choice Neighborhoods. But obviously it’s all in the implementation. Inevitably there will be somewhere where it doesn’t go well. But I don’t think that’s going to be a typical experience.”

For tenant organizers, there’s fear that private management is less up to the task than public housing management. After all, more-efficient, less-costly management doesn’t necessarily translate to a better experience for tenants.

“Private management is often under-resourced and [doesn’t] have the proper skill levels,” says Sulaiman Hyatt, a housing organizer with Housing Rights Committee of San Francisco. “You’re paying people $17 an hour to do work with people who have gone through a lot and may have experienced a lot of trauma. You’re asking someone who’s unskilled and underpaid to do the work of a high-level social worker. It’s a bad combination.”

He continues, “I hear tenants either say it feels like I’m in kindergarten or it feels like I’m in prison. The rules don’t change, but the enforcement of those rules does.”

Data on tenant experience in RAD units is sparse. A 2019 RAD evaluation surveyed 522 residents at 19 RAD converted properties. Of those surveyed, 32 percent said property management was better than before, 12 percent said it was worse, and 53 percent said it was about the same. On the question of property improvement, 56.6 percent said it was significantly or somewhat improved, 6.7 percent said it was either much worse or somewhat worse, and 36.1 percent said it was about the same.

Similarly, a 2020 survey of New York City Housing Authority residents by Community Service Society found 56 percent of those surveyed support RAD conversions.

A fear of losing housing in the long term

Beyond the impact RAD could have on tenants, advocates’ biggest fears tend to be that RAD opens the door for an eventual conversion from Section 8 subsidy to market-rate units. Many units of HUD-subsidized housing have been lost to the private market over the years thanks to expiring contracts. RAD attempts to avoid that problem by requiring that RAD units enter into a 20-year contract that automatically renews for another 20-year term. Because the program began in 2012, no RAD contracts have reached the end of their first term.

Still, advocates worry that the presence of profit-motivated lenders and LIHTC investors creates a risk that doesn’t exist in public housing.

“What happens for example when an owner is foreclosed upon? What happens when the private owners want to pull out because of changes in the market? There’s a lot, because we’re still in the early stage of the program, [where] there’s a big question mark. There are some safeguards in place, but it’s a new program and there’s not a lot of oversight, so as an advocate it gives you pause,” says Thrope.

“The contracts require the perpetual renewal of deep rental assistance,” responds HUD’s Davis. “The Use Agreement requires it. We regularly hear the fear that at the end of the 20 years when it’s time for that renewal it will fail to happen. That’s a hard critique to respond to because it’s not based on an experience or track record of that happening. It is basically saying that ‘we don’t believe that the contractual language or statutory language will bind people.’”

HUD Deputy Assistant Director Ethan Handelman adds, “The fear is understandable. There is a history in this country of displacement, neglect, maltreatment of communities living in marginalized areas. That’s just part of our history that we are dealing with. I will say regulated affordable housing, particularly with the kinds of contracts created in RAD, [provides] very strong legal protections against that.”

why public housing matters

For some advocates, maintaining the public housing program is primarily about maintaining the oversight and leverage they see as necessary to protect tenants’ rights.

“We will fight for public housing until the death,” says Thrope. “We’re still fighting to maintain public housing as a purely public entity for all the reasons: tenants’ rights, long-term affordability, the level of affordability of the units themselves. The bottom line is that public housing is the only housing targeting affordability for the poorest families across the country.”

For others, it’s about the countervailing role public housing can play in an increasingly expensive housing market.

“Large actors in the real estate market have a significant ability to drive rents and land values upward,” says Paul Williams, a fellow at the Jain Family Institute who researches and writes about public housing. “The aim of the public sector should be to provide housing for people as a right. One way to help with those larger macro effects is to exert downward pressure on the housing market. That is something that really only a public entity that is not operating in search of yields can do.”

Of course Congress could decide to support and fully fund the public housing program, rendering RAD moot. The Build Back Better social infrastructure package included $65 billion for long-overdue public housing rehab and maintenance. But Congress has shown little interest in significantly expanding public housing funding and, as of this writing, Build Back Better appears to be dead in the water. Which means that the choice isn’t just between RAD or traditional public housing. It’s also potentially a choice between RAD and housing deemed unrepairable.

“In the absence of RAD conversion and the absence of Congress allocating money, public housing is going to close because they can’t keep up with repairs,” says Popkin. “[Public housing authorities] are going to be in a situation where they do demolition and disposition, where giving everyone a voucher and closing the building is cheaper than trying to fix that. The whole point of RAD is to try keep that from happening and losing more units.”

Related Articles