The Herald, Sharon, Pa.

January 13, 2014

Housing Authority may try funding change

Flexibility from change would ease operations of public housing

Joe Pinchot
Herald Staff Writer

MERCER COUNTY — The federal government has accepted Mercer County Housing Authority into a radical new program that would change how it is funded and lessen its regulations.

The authority has a year to decide whether it wants to participate.

The Rental Assistance Demonstration program – RAD, for short – would allow the authority to be treated more like a private entity that provides the same service, affordable housing, at least in terms of public housing.

The program would not affect the Housing Choice Voucher Program – also known as Section 8 – which the authority manages, or authority-controlled units built with funding by other sources that have specific requirements unrelated to public housing.

The U.S. Department of Housing and Urban Development has been pushing RAD as a way to do something about the aging public housing stock, said authority Executive Director Nannette Livadas. HUD estimates it has $26 billion in unmet maintenance needs for public housing units, with no hope that Congress would ever grant it the money to catch up.

Under RAD, housing authorities would be allowed to borrow money and ask for tax credits for renovation projects, two things it cannot do now, Livadas said.

The idea is to allow individual authorities to borrow money to catch up on their individual capital needs, instead of simply working with the modernization money HUD grants authorities, a declining figure that brings in about $800,000 a year to Mercer County.

The authority’s capital needs for the next five years include replacing roofs, kitchens, bathrooms and windows, Livadas said.

There are other bonuses for authorities that go with RAD, Livadas said, including loosened budgeting requirements and eliminating certain planning requirements and what some see as Draconian procurement procedures.

There also would be a down side, including taking away eligibility for certain grants, such as the safety grant the authority used to install security lights and hire security grants for some communities, and extra money for capital projects, she said. There also would not be any reward for being a high performer under HUD’s annual report card evaluation, which can free up more capital money.

RAD would not impact the rents tenants pay, Livadas said.

“It wouldn’t change what we do,” she said. “It just changes how we’re funded.”

The authority receives a general operating subsidy and capital funds each year from HUD for public housing, and the operating subsidy can fluctuate from month to month, something that officials said makes budgeting a nightmare.

Under RAD, the authority would receive a set amount of money according to the number of units, combining the operating and capital subsidies into a single amount set by a 40-year contract with HUD.

To try to entice authorities to go with RAD, HUD is offering to base the contractual amounts on 2012 subsidies.

“Our 2012 levels were pretty much what the fair market rents were so we were a good candidate for that,” Livadas said.

The contract would include an annual escalator to account for increasing costs, and the authority would know each year what money it will receive from the federal government, she said.

The federal government still would inspect each apartment about every three years.

It the authority decides to go with RAD, it would close on the deal in December. That gives officials the rest of the year to study the potential impact.

“This is a year of planning, planning and planning to plan,” Livadas said, noting she has hired a Washington attorney who in specializes in RAD to advise the authority, and is looking for a consultant or developer for more guidance. There could be a grant available to help the authority offset some of the planning costs.

As part of the planning, officials are looking at the flexibility they would have with RAD, the size of units, their location and any problems attracting tenants. Officials would be allowed to move public housing out of certain areas and into others if they think they can improve demand.

It’s too soon to say if RAD would affect staffing, but Livadas said staff members would spend less times preparing on reports for HUD.

The review can’t hurt the authority, even if officials decide not to go with RAD, Livadas said.

“It’s very exciting,” she said. “It’s super-super exciting. I admit it’s a little scary, but there’s no commitment until December. There are a lot of unknowns, for sure.”

Livadas said she believes HUD is moving toward RAD as standard operating procedure. It’s matter of deciding whether now is the time to jump on board the train, or wait and hope there will be more incentives later, she said.

Board member Timothy Jablon said he likes the prospect of being able to act more like a private company.

“If things change you can change with them,” he said. “Now, you’re stuck with what HUD (money) comes down.”

Board President Carol Gurrera said she approved of how authority staff is going about the evaluation of RAD.

“I think you’re wise to proceed with the planning,” she said. “I think you’re going into it more with your eyes open.”