Alexandria’s public housing authority is considering ways to extract value from its real estate to offset federal underfunding.
The Alexandria Redevelopment and Housing Authority (ARHA) administers federal housing programs, including public housing and “Section 8” vouchers, locally. ARHA currently serves over 2,700 households, 95 percent of which make less than $50,000 annually, and about a quarter of which make less than $10,000. The private housing market provides essentially zero options at these income levels. ARHA’s waiting list includes another 8,500 households.
Despite the need, ARHA contends with severe money problems. Revenues from tenant rents are small, and HUD funding for traditional public housing has historically dwindled. As a result, ARHA faces an estimated $84 million of deferred capital maintenance, according to Rhae Parkes, a frequent consultant to ARHA and the city government on public housing matters.
At a joint meeting with the City Council and Planning Commission on Thursday, May 2, ARHA outlined a handful of options to address their financial woes.
“We’re looking to figure out, how could we grow the supply of additional affordable units, leveraging the housing authority’s land?” said Parkes.
Local officials gave particular attention potentially to using HUD’s Rental Assistance Demonstration (RAD) program, made broadly available to housing authorities in the past few years. RAD could enable ARHA to access private sector financing in a new way, which could unlock additional capital to rebuild or rehabilitate its housing stock.
RAD enables housing authorities, by a kind of legal paperwork shuffle, to “convert” public housing properties to fall under a different framework of federal housing legislation. While cost-neutral at the federal level, the conversion would streamline the way ARHA receives, and confer greater flexibility in how it may spend, its federal dollars. RAD conversion would also cede from HUD to ARHA fuller control of ARHA’s land. ARHA would see increased operating cash flow and the ability to lock in subsidization levels for 15-20 years at a time, under contracts which legally must be renewed. ARHA could take this localized control, improved cash flow and predictability to the bank in order to secure loans.
“You cannot borrow money against a public housing unit,” said Parkes. “So the primary benefit of conversion … is a financing tool. It’s an ability to be able to leverage the private market and raise capital to finance redevelopment.”
In conjunction with RAD conversions, ARHA would likely continue redeveloping its more valuable properties, especially in Old Town, as it’s done in the past. ARHA wants “to redevelop at significantly greater scale [density] so [it] can cross-subsidize” the lowest-income units with land sale proceeds or higher rents from better-off households in mixed-income communities, said Parkes.
For example, ARHA recently sought to redevelop its Andrew Adkins site, together with CRC, a private builder. The Adkins comprises 1.5 contiguous blocks immediately adjacent to the Braddock Road Metro station, making it a potentially lucrative redevelopment opportunity and ARHA’s most valuable piece of land. CRC would’ve bought part of the land to build a market-rate high-rise. ARHA would’ve used the land sale proceeds, plus financing through a federal tax credit program, to rebuild new subsidized units. That particular deal fell through, but the principle is illustrative.
In all this, ARHA may choose to take on private partners, in which case ARHA is no longer the sole landlord, said Helen McIlvaine, who heads the city government’s housing department.
While housing authorities taking on private partners isn’t new, some housing advocates worry RAD might exacerbate a lack of HUD oversight.
For example, public housing residents in Hopewell, Va. filed fair housing complaints against their housing authority in 2017, alleging discriminatory relocations during redevelopment in connection with RAD.
The Legal Aid Justice Center, the nonprofit that represented the Hopewell residents, said in a statement at the time: “RAD is often touted as the new frontier of public housing, but advocates are concerned that the program lacks adequate accountability to protect residents’ rights. Lack of HUD oversight and broad program discretion under RAD can lead to situations like Hopewell. … These ‘public-private partnerships’ are still publicly funded and their purpose is to serve the lowest income community members, not primarily for developers or investors to make money.”
In terms of unlocking needed capital, “RAD is better than nothing,” said the Legal Aid Justice Center’s Brenda Castaneda in a May 6 interview. But it’s a new program and “the dust is still sort of settling.” It’s a “big, complex beast that nobody really fully understands.”
She’s wary of “opaque” rules. HUD “would never know” if private owners or housing authorities were misbehaving in the process, she said.
In particular, she stressed a need for affected public housing tenants to be clearly informed about their rights under RAD conversion, and to assert an organized voice during contract bargaining.
RAD legislation requires that, after conversion, tenants maintain the right to a clear grievance process and to landlord-provided funds to support tenant organizing activities. The law also requires housing authorities to hold at least two meetings with affected tenants and submit tenants’ comments to HUD, as part of HUD’s consideration of whether to approve conversion.
But in practice, Castaneda thinks housing authorities are more apt to focus on “look at the pretty cabinets you’re going to have [in your redeveloped unit]” rather than “substantive engagement” with tenants.
McIlvaine thinks the processes laid out in a recent bilateral agreement between ARHA and the City Council would head off sloppiness or malfeasance of the sort experienced in Hopewell. Among other things, the agreement commits ARHA to furnish the city government with a detailed “Affordable Housing Plan” prior to any redevelopment.
According to an April 10 memo from City Manager Mark Jinks: “The Affordable Housing Plan will allow the city to review ARHA’s plans for tenant relocation, identify temporary and permanent replacement units, and affordability levels of the proposed redevelopment project, among other things. Affordable Housing Plans are reviewed by the Alexandria Housing Affordability Advisory Committee and the Landlord Tenant Relations Board.”
Councilmen Mohamed “Mo” Seifeldein and Canek Aguirre expressed a desire to learn more about RAD’s potential downside risks at last week’s meeting.
For more on RAD and tenant rights, visit www.hud.gov/RAD/impact. For more on city-level processes, see City Council’s Resolution 2876 and “2019 Affordable Housing Plan Guidelines,” available by contacting the Office of Housing at www.alexandriava.gov/Housing or 703-746-4990.