The supply of low-income housing across the United States has been dwindling and deteriorating, with the loss of 10,000 affordable units every year due to neglect or aging, and an estimated $26 billion backlog of deferred maintenance and capital improvements nationwide.
In 2012, Congress approved the Rental Assistance Demonstration project to address this problem by bringing private investment to public housing. During the past two years, Tom Davis of the Department of Housing and Urban Development has led this program, generating $3.9 billion in private money to rehabilitate or rebuild 60,000 affordable housing units without any new federal funding.
“Tom’s work has been visionary and transformative, and has been critical to the success of this housing program,” said Sara Meyers, a deputy assistant secretary in HUD’s Office of Housing.
The program creates partnerships between public housing authorities and private investors, and allows privates investors to become the landlords of public housing if they make substantial investments to upgrade or rebuild the properties, with HUD maintaining oversight of the converted units. The upgraded housing then qualifies for HUD’s Section 8 program, which provides the federal payment of subsidies to the public-private partnerships to help low-income individuals or families cover some of their monthly housing costs.
The rationale for the program is to get the private sector to make investments in low-income housing at a time when there are limited public dollars available for this purpose. While most conversions have involved the modernization and stabilization of existing properties, public housing authorities in some cases have demolished distressed properties, and developers have replaced these units with new, permanently affordable Section 8 rental housing.
In 2015, the private sector invested about $8.90 for every dollar of public money. This ratio has steadily climbed and is now estimated at more than $18 for every dollar in public housing funds that have been invested.
“The scope of Tom’s work is huge,” said Nani Coloretti, a former HUD deputy secretary. “Tens of thousands of people live in this housing and it is crumbling.” Rehabilitating this housing stock is having a positive impact on people’s lives, she added.
Davis leads the team that designed and is implementing the rehabilitation program, and he has guided its dramatic growth and adoption in communities all over the country.
In Boulder, Colorado, the public housing authority and its private-sector partners used low-income housing tax credits and other private-sector tools to improve the livability of its properties and finance energy efficiency retrofits for units that house 279 economically vulnerable families, seniors and individuals with disabilities. The funding also covered construction of three community centers to provide space for education and training programs for adults and children.
In Long Beach, California, the American Gold Star Manor, which provides 348 units for low-income veterans and parents of deceased service members, was able to fully rehabilitate the 42-year-old property, modernize the sewer system, remodel living units, reengineer the landscape for an the aging population and add additional services for its clients.
And in Austin, Texas, the housing authority is modernizing kitchens, bathroom equipment and air conditioning in nearly 2,000 apartments in 18 communities, some of which are 70 to 80 years old.
To allow the program to ramp up at scale, Davis set up a management team to coordinate work from the five HUD offices that oversee parts of the initiative, and to coordinate those efforts with private-sector investors and advocates for low-income renters.
“This project required an unbelievable amount of cross-departmental work,” Meyers said. “Tom had to be flexible and forward-thinking.”
Within HUD, the Office of Housing leads the implementation and underwriting, while the Office of Public and Indian Housing confirms eligibility, guides participating public housing authorities, and provides local insight and risk evaluation. Together, they lead project conversions.
In addition, HUD’s offices of General Counsel, Fair Housing and Equal Opportunity, and Community Planning and Development, all provided assistance in the development of the program, and offer ongoing support to ensure that the projects promote opportunity for all residents, respect residents’ rights and do not place HUD at financial risk.
Davis said he and his team “were looking to give practical advice to folks outside of government while making public policy to best meet people’s needs.”
“It took constant creative energy to get our guidance to hit a gold standard,” Davis said.
This year, Davis and his team have made process improvements a priority, resulting in a 40 percent reduction in the time it takes to close a deal.
The program has a cap on the amount of housing that can be converted and there is currently a long waiting list, which Meyers said is “a testament to the success of the program and to Tom.”
For Davis, the popularity of the program comes with a special benefit. “The increase in quality of life this brings to people is what makes it really special,” he said.