Monday, April 20, 2015

House panel looks at public private partnerships for affordable housing

by Amanda Gold and Ethan Handelman, National Housing Conference

On April 16, 2015, the Housing and Insurance subcommittee held a hearing entitled, “The Future of Housing in America: Increasing Private Sector Participation in Affordable Housing.” The subcommittee heard testimony from four witnesses:
  • Adrianne Todman, executive director of the DC Housing Authority (DCHA).
  • Brad Fennell, senior vice president of WC Smith. 
  • James Evans, director of Quadel Consulting. 
  • Sheila Crowley, president and CEO of the National Low-Income Housing Coalition.
All of the witnesses stressed the importance of government involvement in affordable housing. Subcommittee members disagreed about what the appropriate balance should be between the public and private sectors and used their questions to draw distinctions. Many questions focused on the pros and cons of the Moving to Work (MTW) initiative in public housing, the Rental Assistance Demonstration and ways to encourage effective private sector involvement.

Balancing public and private investments in affordable housing
  • Chairman Blaine Luetkemeyer’s (R-Mo.) opening statement highlighted the importance of public private partnerships in leveraging public funding. Saving his questions for the end, Luetkemeyer concluded the hearing by asking the witnesses to follow up with the subcommittee, highlighting programs that stretch funding to serve more households and pilot projects that should be tested.
  • Crowley expressed concern about relying too heavily on the private sector, noting a fundamental challenge stemming from conflicting objectives in the public and private sectors. HUD wants to provide decent and affordable housing, but private sector operators care about profits. Private sector actors need public investment to make their involvement cost effective. 
  • Fennel described successful development supported by the Low Income Housing Tax Credit (LIHTC) in which developers’ business interests align with the public sector objectives of affordable housing and strengthening communities.  
  • Rep. Mike Capuano (D-Mass.) highlighted the need for government support to make housing affordable, noting the gap between need and what the private sector provides without subsidy. He also took time at the end of his questions to press Crowley on her proposal to cap the home mortgage interest deduction and its impact on homeownership in high-cost markets. 
  • Rep. Andy Barr (R-Ky.), prompted Fennel to discuss improvements to the LIHTC program that would provide more commercial and service opportunities in properties, greater income mixing and more certainty in financing.
Pros and cons of Moving to Work

Many of the members seemed interested in the Moving to Work (MTW) initiative in public housing: the successes of MTW, areas for improvement and the degree to which the program or a specific policy innovation could scale up.
  • Pros: Todman highlighted many of the advantages of MTW, including increased local control and flexibility, helping clients find affordable housing in gentrifying neighborhoods, providing funding for social services and allowing programs to support one another. Evans recommended expanding MTW or building innovations into existing public housing and Section 8 programs. Rep. Dold (R-Ill.) highlighted the value of local flexibility.
  • Cons: Rep. Nydia Velazquez (D-NY) asked about the risks to residents created by MTW flexibility. Crowley mentioned that with increasing flexibility, MTW removes a lot of the protections normally afforded to public housing residents. With limited data to support the efficacy of many of these programs, she advised the subcommittee to proceed with caution.
Rental Assistance Demonstration

The Rental Assistance Demonstration (RAD) allows public housing authorities to convert properties from public housing funding to long-term rental assistance contracts, thereby bringing in private capital to renovate and preserve the housing.
  • Rep. Maxine Waters (D-Calif.), ranking member of the full committee, expressed strong concerns about the risks of the program and protection of residents.
  • Rep. Velazquez focused on the Section 3 hiring requirements of RAD and how broadly it would apply within RAD. 
  • Evans noted that RAD transactions rely heavily on LIHTC to provide capital and suggested ways to make the two programs work better together. 
  • Todman discussed RAD in the context of DCHA’s current and past efforts to recapitalize and preserve public housing, emphasizing the need for flexibility and additional resources.
Targeting of Home and CDBG

In a surprising exchange, Rep. Waters asked Crowley her reaction to the idea of retargeting all of the CDBG and HOME block grants into low income housing. Crowley’s response emphasized her desire to see greater targeting. The exchange is likely to spark further discussion among housing stakeholders. Rep. Dan Kildee (D-Mich.) also highlighted the particular needs of communities that have seen population loss, declining housing markets and blight.

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