Letter to HUD Secy. Opposing PETRA

March 19, 2010

Secretary Shaun Donovan

U.S. Department of Housing and Urban Development

451 7th Street S.W.

Washington, DC 20410

Re: Human and Housing Rights Organizations’ Opposition to HUD’s

Transforming Rental Assistance Initiative (TRA) and 2011 Budget Proposal

Dear Secretary Donovan:

As human rights and housing rights organizations working around the country, we

applaud the efforts your administration has taken to address the housing crisis facing

residents of public housing. We are particularly encouraged by your office’s embrace of

human rights and your commitment to ensuring that our national housing policy reflects

its grounding principles.

As such, we are writing to express our strong objection to the Department of Housing and

Urban Development’s (HUD) Transforming Rental Assistance Initiative (TRA) as

outlined in the 2011 budget proposal, and, in particular, the proposal’s conversion of the

public housing program to a project-based scheme.

As national and community-based organizations working to improve the housing

conditions facing our nation’s most vulnerable communities, we believe TRA fails to

address the housing needs of low-income communities and falls woefully short of

guaranteeing the human right to housing.

Although we appreciate the need to secure much needed funding for the public housing

program, increasing the influence of private capital on our nation’s public housing system

would inevitably create a conflict between profit driven interests and the needs of lowincome

residents. Additionally, as we have witnessed in this current economic downturn,

over-dependence on private investment capital for the development and maintenance of

our national housing system is not a sustainable solution. Consequently, we hope that

you reassess HUD’s current approach and consider different alternatives for addressing

the needs of public housing communities.

We have outlined below our reasons for opposition to the plan.

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1. The proposed conversion of the public housing program to a projectbased

system threatens the permanence of our nation’s public housing

stock, and the much needed affordable housing it provides.

Public housing is currently the only permanent, affordable housing stock in the country.

It has long provided much-needed, deeply affordable housing to those most in need.

Disposition of public housing to a project-based Section 8 scheme potentially eliminates

the permanent affordability and long-term availability of these units. This loss would

detrimentally impact the ability of local governments to address the growing U.S.

housing crisis, would destabilize entire communities, and would increase homelessness.

As currently promulgated, the Section 8 program does not supply a permanent stock of

affordable housing units. Contracts between private owners and the government have

time restrictions, and owners have the ability to opt-out of the program once a contract

expires or prior to its expiration pursuant to certain guidelines. According to HUD’s own

data, “as many as 13,000 Section 8 contracts will expire by 2013, meaning 800,000

privately owned buildings could potentially be put up for sale or have the rents on their

apartments raised to full market rates.”

 

1 Hence, under any new scheme, HUD mustensure there is no loss of hard public housing units currently in use, and that those units

remain at their current levels of affordability. There must also be guarantees that, during

the conversion process, there is no displacement of residents, and, in instances of

rehabilitation, there be phased rehabilitation and adequate, on-site relocation support and

assistance. Additionally, HUD must ensure one-for-one replacement of all public housing

units. This includes one-for-one replacement based on unit (bedroom) size.

Under the HUD proposal, housing authorities may be permitted to leverage public

housing through mortgage-backed loans from private banks. Mortgaging public housing

makes developments vulnerable to foreclosure and adds a financial burden, over time,

through decades of interest payments. Additionally, HUD’s plan to seek private

investment for construction capital may further encroach upon the integrity of this

valuable public resource. Dependence upon private capital could have dire consequences

in the event of loan defaults. In order to prevent the loss of public housing to the private

market, mortgage-backed loans must be FHA-insured. In addition, HUD must create a

process, which is developed and overseen by residents and other key stakeholders, by

which the financial health of housing authorities participating in any new program would

be evaluated. This evaluative process would serve as a potential safeguard to ensuring

that housing authorities with weak financial positioning do not fall victim to private

interests, leaving residents vulnerable to private takeovers.

Ultimately, if the goal of HUD’s proposal is to improve conditions in public housing – a

mission we fully support – as has been stated by various HUD officials, we implore you

to advocate for adequate funding of the public housing program through government

appropriation rather than risking the long-term affordability that this vital resource

provides to residents and communities throughout the country.

2. The HUD proposal may lead to the loss of government control and

oversight of the public housing program, negatively impacting

government accountability and transparency.

(See the continuation of this letter on the next post)

 

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