Executive Summary

Formerly reserved for the poor, the affordable housing crisis has increasingly become a middle class phenomenon. Thirty years ago, moderate income families in Hawaii could expect to find housing of reasonable quality priced at or below 30 percent of their incomes. This is no longer the case. As the affordable housing crisis has expanded to higher income families, it has garnered increasing attention from academics, the media, policymakers, and politicians.

But this attention has been selective, focusing disproportionately on demographics for whom housing burdens are a new phenomenon and ignoring those who have been priced out of the private market for decades. This, in turn, has resulted in a remarkable exclusion of Public Housing Authorities (PHAs) from conventional narratives related to the affordable housing crisis.

This exclusion is shocking not only because PHAs are directly responsible for the majority of affordable housing in the nation, but because PHAs are positioned to impact the housing crisis above and beyond their administration of HUD programs. Their fiscal and regulatory authority, not to mention their existing assets, allows them to be key partners with city and state agencies as well as private and nonprofit developers.

In this report we use data collected on a random sample of 40 PHAs to explore the role that Public Housing Authorities can play (and are playing) in solving the affordable housing crisis.

We find that the majority of PHAs are already engaged in affordable housing development and preservation above and beyond the standard HUD programs. This is particularly true for larger PHAs whose growing expertise with mixed-finance redevelopment has allowed them to undertake major developments in their jurisdictions, directly and through collaboration.

Our data show that at least 58 percent of PHAs (and 80 percent of large PHAs) have partnered in some form mixed-finance redevelopment. Of our 40 sampled PHAs, this activity has produced over 7,000 units of subsidized housing. The most productive PHAs were those that were best able to leverage their land assets in collaboration with other branches of state and local government.

This situation is due to accelerate as HUD expands its Rental Assistance Demonstration (RAD) program, which allows PHAs to convert dilapidated public housing into Project Based Section 8 developments, thus allowing them access to additional financing sources. While some RAD conversions simply renovate existing structures, others demolish and rebuild new housing, adding density and increasing the supply of affordable housing. Unlike previous programs, RAD redevelopments are required to maintain a 1-for-1 hard unit replacement of all public housing units.

Public Housing is perhaps the most straightforward housing policy. Using funding from the Federal Government, local Public Housing Authorities own and manage units which they rent to eligible families. Because the units are almost wholly protected from the volatility of local housing markets, they remain affordable to the poorest families in perpetuity.

This approach has been very successful in general, but a catastrophic failure in some highly publicized instances. Cities in which the development of Public Housing was explicitly used to segregate poor minority families into large high-rise developments on the urban periphery saw their investments quickly deteriorate into areas of stigma, violence, and joblessness (Austen 2018; Popkin et al. 2000). In these areas, the concentration of disadvantaged populations into high-rises simply amplified other forms of structural violence leading to intolerable living conditions and large scale, highly publicized demolitions.

But while these failures have gotten most of the public attention, they represented less than 10 percent of the public housing stock. For roughly one million families today, public housing provides a viable option for affordable housing when market rate housing has moved beyond their reach.

And yet despite the important role that public housing plays within the subsidized housing landscape, the Federal government has continued a bi-partisan trend away from PHA’s ownership and management of housing and towards leveraging the private market to supply and develop affordable housing (Hackworth 2007). Not only are PHA’s legally prohibited from using federal fund to construct new public housing (McCarty 2014), but there has been a significant decline in public housing operating funding relative to costs, gradually increasing the backlog of repairs and maintenance in HUD’s portfolio. Of greatest concern is the decline in funding to the Public Housing Capital Fund which has decreased by roughly 35 percent since 20001 (Bell & Rice 2018).

This trend has, of course, lead to the increase in the proportion of families subsidized with housing vouchers (specifically Housing Choice Vouchers, formerly Section 8). But it has also created an estimated $26 billion backlog in capital repair needs. This backlog means that Public Housing Authorities are required to think beyond the traditional programs simply to preserve their existing housing stock, not to mention increase the stock of affordable housing to keep pace with increasing demand (Kleit and Page 2008; Kleit and Page 2015; Kleit, Airgood-Obrycki, Yerena 2019).

This report explores how PHAs have responded to these challenges; it is divided into three sections:

First, we articulate the role that public housing authorities play in addressing the affordable housing crisis. For many poor families, the Federal programs administered by local PHAs represent the only option for securing stable housing at a price they can afford. In addition, PHAs are increasingly branching beyond the standard slate of Federal programs, utilizing the land and regulatory assets to undertake affordable housing development directly.

Second, we describe several case studies of mixed finance development projects undertaken by Public Housing Authorities including information on their development process and capital stack.

Third, we summarize the tools that Public Housing Authorities have used to increase the supply of affordable rental housing. Specifically, we focus on how PHAs have leveraged the Low Income Housing Tax Credit (LIHTC) and, more recently, the Rental Assistance Demonstration (RAD) program to promote the preservation and development of affordable housing.

To address these questions, we use data collected from a random sample of 40 Public Housing Authorities. Specifically, we use online databases, document analyses, and personal interviews to develop a picture of how PHAs are promoting the development of affordable housing.

At the end, we synthesize these findings to describe the opportunities that PHAs have to drive local affordable housing development projects. Throughout, we look at lessons learned from earlier redevelopment projects, such as HOPE VI, that often failed to meet their intended goals, and discuss how PHAs can establish guardrails in their work to ensure that the public good is maximized in an environment of resource shortages.