Reprinted with permission from Human Rights, Volume 44, Number 2, at 2-4. ©2019 by the American Bar Association. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Each year that President Donald Trump has been in office and has sent his annual budget request to Congress, he has proposed massive cuts to federal affordable housing programs, as well as other essential programs that ensure basic living standards for low-income Americans. For this upcoming fiscal year, President Trump proposed to slash the budget for the Department of Housing and Urban Development (HUD) by a whopping $9.6 billion or 18 percent below fiscal year (FY) 2019’s congressionally enacted funding levels. The president proposed eliminating several programs, including funding that ensures public housing agencies (PHAs) have the money they need to address their most pressing capital needs, like fixing leaking roofs or replacing outdated heating systems. Additionally, the president proposed to reduce housing benefits by increasing rents and imposing harmful work requirements on some of our country’s poorest families who are lucky enough to receive federal housing assistance from PHAs and private owners who are subsidized by HUD.
In the past 20 years alone, HUD has provided housing assistance to more than 35 million households. Without the opportunity that HUD has provided, many of these families would be homeless, living in substandard or overcrowded conditions, or unable to afford other basic necessities because so much of their limited incomes would be spent on rent. In fact, the U.S. Census Bureau’s most recent supplemental poverty measure showed that housing assistance raised almost 3 million people out of poverty in 2017. But despite their proven track record, HUD’s affordable housing programs are chronically underfunded.
It’s a bitter truth that three out of four American households who are eligible for HUD assistance do not receive it because of lack of funding. Unlike other basic needs programs, affordable housing is not an entitlement in this country. Families often languish on waitlists for years, and some housing providers close their waitlists altogether to avoid giving people a sense of false hope. According to the National Low Income Housing Coalition, there is a shortage of 7 million homes that are affordable and available to America’s poorest families. If the Trump budget were ever enacted, it would greatly exacerbate this dire situation. If anything, our government should be increasing critical investments in programs that ensure families have decent, accessible, and affordable places to call home.
Thankfully, Congress has largely ignored President Trump’s budget requests with lawmakers in both parties turning to an old Washington, D.C., saying: “The President proposes, Congress disposes.” The past two years, Congress has increased HUD’s budget to ensure the renewal of housing assistance and to target new resources to help vulnerable populations. However, while the Trump administration has failed to enact its proposed cuts, it has used its budget request as a blueprint for the further demolition and disposition of our nation’s remaining public housing stock that is home to almost 1 million households, the majority of whom have a senior or disabled family member.
Public housing has seen decades of underfunding during both democratic and republican administrations. As a result, public housing now faces a backlog of capital repair needs of at least $50 billion, threatening the quality and even the existence of these homes. While we ought to determine what public housing can be preserved and what cannot, the Trump administration has taken an aggressive approach to getting rid of all public housing one way or another. Last November, HUD’s Office of Public and Indian Housing (PIH) sent a letter to PHAs signaling the agency’s intent to dramatically reduce its public housing stock, euphemistically calling it “repositioning public housing.” HUD cited the capital backlog as the reason to provide PHAs with “additional flexibilities” to reposition their housing stock. HUD’s immediate goal is to reposition 105,000 public housing units by September 2019. HUD later updated this goal in the agency’s most recent budget request to 125,000 units—more than 10 percent of the remaining public housing stock—to be repositioned by the end of FY 2020. HUD listed four means of repositioning public housing: utilizing the Rental Assistance Demonstration (RAD) program, demolishing public housing, facilitating the voluntary conversion of public housing to vouchers, and releasing PHAs from their declarations of trust with HUD.
PHAs have already taken note of the Trump administration’s goals and are now planning accordingly. Just recently, in response to the PIH memo, the Orlando Housing Authority decided to demolish more than 1,000 aging public housing units instead of trying to repair and rehabilitate them. The Orlando Housing Authority is planning to provide vouchers to public housing residents, who will now have to contend with one of the tightest rental markets in the country. According to Zillow, rents in the metro Orlando area rose more quickly in 2018 than any other major U.S. city.
At the same time, HUD Secretary Carson continues to push Congress to lift the cap on the number of public housing units eligible to be transferred to the private sector under the RAD program. Initially set at 60,000 public housing units, the cap is currently set at 455,000. The RAD program was created to address the unmet capital needs of public housing properties by converting them to project-based rental assistance with private ownership. Secretary Carson repeatedly touts RAD as a way to build public-private partnerships that can better serve the American people than big government. While RAD is not perfect—and tenants and advocates have every right to be concerned with how HUD and PHAs are implementing the program—it does offer a platform to better preserve some public housing (albeit through a different subsidy structure), and there are examples that prove the point.
However, for the RAD program to work as intended, the federal government still has a role to play in providing the federal rental assistance that has been contractually obligated to private owners who agreed to participate in the program. If the government’s commitment to provide this assistance seems shaky, private owners and investors are more likely to walk away from the program, as they become uncertain that projects will be able to meet their debt servicing and operating obligations, impairing investment and increasing financing costs.
Some private owners participating in HUD programs were recently put in a precarious financial position when President Trump’s failure to compromise with Congress led to a 35-day shutdown of the federal government, the longest in U.S. history. Lawmakers from President Trump’s own party implored him to reopen the government, to which he capitulated only after deciding to declare a national emergency to secure funding for his controversial plan to build a wall along the southwest border.
With no spending bill in place to fund the government, HUD had to scramble to find funding for private owners whose rental assistance payment contracts expired during the shutdown. Furloughed HUD employees were called back to the office and worked many long—and at the time, unpaid—hours to renew as many contracts as possible with money Congress had previously appropriated to the agency. HUD provided little communication with housing stakeholders, including private owners, but advised those owners with expired contracts to dip into their own individual funding reserves, where available, to cover shortfalls. Had the shutdown continued much longer, advocates were alarmed that owners would have to resort to cutting services and repairs, or in worst case, raising rents on low-income residents, many of whom live on fixed incomes. Moreover, the shutdown certainly did nothing to encourage private owners to participate in the RAD program. If anything, it likely led some owners to consider giving up providing HUD-subsidized housing altogether, especially owners with properties in gentrifying areas where market rents have increased.
These owners again face funding uncertainty, as Congress and the administration continue to disagree on whether to raise the austere limits on federal spending in FY 2020. When the Budget Control Act of 2011 was signed into law, it created very low spending caps, restricting federal funding for discretionary programs. Since then, Congress and the White House have reached short-term agreements to provide limited budgetary relief, however the spending caps return for the FY 2020 budget. If they are not lifted, the caps could lead to devastating cuts to affordable housing. Congress and the administration must work together to not only provide relief from the caps but also increase funding for affordable housing programs so that housing providers, including private owners, can continue to serve low-income families without disruption. On top of that, lawmakers should increase funding for affordable housing outside the appropriations process to fully meet the need. Potential opportunities to provide this funding include housing finance reform and an infrastructure spending package.
While it is unclear to what extent HUD has reached out to owners to help rebuild trust and assure them of future funding, so far, the actions of the Trump administration have only undermined the very solution it has proposed to address the problem of our nation’s crumbling public housing stock.
Published in GPSolo eReport, Volume 9, Number 4, November 2019. © 2019 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association or the Solo, Small Firm and General Practice Division.