As affordable housing programs face budget cuts year after year, public housing authorities (PHAs) are increasingly asked to do more with less. Out of these difficult circumstances came the idea of the Rental Assistance Demonstration (RAD), which allows PHAs to place targeted public housing properties on more stable financial footing for the long term. Through its fiscal 2012 spending bill, Congress made this idea a reality by authorizing 60,000 units of public housing to convert under RAD, promising much-needed repairs to some of our nation’s crumbling public housing stock.
But the program is already oversubscribed. As a testament to the challenges the affordable housing industry faces, PHAs have applied to convert over 180,000 units across more than 300 metro areas. Now the PHAs waiting for authorization to participate in the demonstration, as well as the developers, lenders, advocates and other affordable housing stakeholders who understand the vast need and potential for this program, have come together to try to expand access to RAD as part of the Lift the RAD Cap Coalition.
RAD allows PHAs to transition the funding stream for targeted properties from public housing to project-based rental assistance, which offers more flexibility to access billions of dollars worth of private and public funding sources, like the low-income housing tax credit, as needed. This outside funding allows PHAs to make the needed repairs to the properties at no additional cost to the government, while still preserving the long-term affordability of each apartment.
If RAD is expanded so that all of the units on the wait list can convert, there will be a $6 billion infusion of capital into the public housing stock and more than 120,000 jobs created nationwide. But without it, we will continue to lose thousands of public housing units each year due to obsolescence and decay.
By this fall, the Department of Housing and Urban Development (HUD) expects to have closed as many as 6,000 units of public housing conversion—or roughly 10 percent of the initial approvals it has issued to date. Additionally, nearly half of the HUD “legacy” programs, such as the Rent Supplement and Rental Assistance Payment programs – or approximately 8,000 units of the total eligible units across the country—have already been approved for conversion under RAD during this same period.
HUD is already reviewing applications from PHAs on the wait list so that as soon as the cap is lifted, additional conversions can begin.
Lifting the cap is entirely up to Congress. Because of this, the Lift the RAD Cap Coalition is focused on educating members of Congress about the vast capital needs across our country and how RAD would help to address them.
The coalition’s first success came in June of this year, when the Senate Appropriations Committee approved a significant expansion of RAD from 60,000 to 185,000 units in its FY 2015 Transportation, Housing and Urban Development (THUD) spending bill. The bill also included $10 million to assist in the conversion of apartments that would not be able to make the needed repairs without additional subsidy. However, the Senate spending bill has since stalled. And because the House of Representatives did not approve an expansion of RAD in its FY 2015 spending bill, there is more education that needs to take place before a final FY 15 THUD appropriations bill is enacted – which will almost certainly not happen until after the November elections.
In the meantime, Congress will pass a continuing budget resolution (CR) before the fiscal year ends in September in order to fund the government through the elections. If leadership allows members to add provisions into the CR beyond what’s needed to keep the government running, it could serve as an ideal vehicle to lift the RAD cap.
Some have argued that we should wait until all 60,000 units authorized to participate in RAD complete their conversions before we lift the cap. But the longer we wait, the higher the costs. Our public housing stock already faces a backlog of repairs that exceeds $26 billion. That figure continues to grow because of chronic underfunding. Meanwhile, there are significant public and private resources available for RAD conversions that would help close this gap. These resources will be re-allocated to other priorities if the RAD applications on the waiting list are not approved. Moreover, doing nothing actually costs the government more. For every unit of public housing that is lost, HUD must issue more expensive tenant protection vouchers that must be renewed annually.
If the Lift the RAD Cap Coalition is successful, at least 180,000 public housing apartments will be preserved and restored to good condition. It is quite possible that RAD could be expanded even further in the future, so that every public housing authority has access to the tools needed to preserve our scarce affordable housing resources in an era of fiscal austerity.
Diane Yentel is vice president of public policy and government affairs at Enterprise Community Partners. Emily Cadik is a senior policy analyst at Enterprise.