The nation’s public housing stock needs an estimated $25.6 billion for large-scale repairs, according to a new study released by the Department of Housing and Urban Development (HUD).
“The bottom line is we are treading water,” said Sandra Henriquez, HUD assistant secretary for public and Indian housing.
The study points out that the needed repairs are not about bells and whistles, Henriquez said in an interview with Affordable Housing Finance. “It’s to bring the levels to basic living standards,” she said.
The “Capital Needs in the Public Housing Program” study updates a 1998 analysis and looks at costs to address overdue repairs, accessibility improvements for disabled residents, lead abatement, and water and energy conservation measures.
In November 2007, Congress directed HUD to compute new national estimates of capital needs and compare them with prior estimates from 1998. HUD began the new study in April 2008 and determined the total capital needs estimate, commonly referred to as the “backlog,” at $25.6 billion, or approximately $23,365 per unit. Moreover, the study determined that with normal use and aging, each year the units accrue an additional $3.4 billion of needed repairs and replacements—or roughly $3,155 per unit. These accrual costs exclude routine maintenance and are calculated based on the assumption that the backlog is met.
Housing authorities have renovated or developed nearly 380,00 publicly owned affordable homes using the $4 billion they received through the American Recovery and Reinvestment Act of 2009. “ARRA made a dent, but with the accrued backlog of $3.4 billion, it is virtually a wash,” said Henriquez.
The findings show the continued need for a long-term preservation strategy for the public housing portfolio, she said.
According to the analysis, a simple comparison of 1998 and 2010 data reveals the estimated total backlog of capital need decreased by approximately 3.4 percent over 12 years. Part of this decrease is explained by a 9 percent decline in public housing units in 2010 and an increase in average per unit repair cost. The new study estimated that annual accrual needs climbed by 15 percent from 1998, due in part to lagging repairs to major systems that eroded their overall lifespan.
HUD has proposed a number of new initiatives to help address the backlog, including Choice Neighborhoods and the proposed Rental Assistance Demonstration (RAD). Choice Neighborhoods provides grant funding to demolish and redevelop public and assisted housing while RAD seeks to address the backlog and future need in the entire public housing stock by allowing private investment in the stock. Both programs are part of a comprehensive strategy proposed by the Obama administration to offer a long-term solution to preserve and enhance the country’s affordable housing stock, including leveraging public and private funding to make much-needed improvements.
Choice Neighborhoods aims to transform the most distressed neighborhoods. In the fiscal 2010 HUD appropriations, Congress authorized up to $65 million of the HOPE VI appropriations for a Choice Neighborhoods demonstration.