HUD looking to close funding gap

HELP NEEDED: A 292-unit family development at 560 Prospect St. in Pawtucket is a candidate for a HUD Rental Assistance Demonstration program that could fund major improvements. / COURTESY TOM GIFFORD
HELP NEEDED: A 292-unit family development at 560 Prospect St. in Pawtucket is a candidate for a HUD Rental Assistance Demonstration program that could fund major improvements. / COURTESY TOM GIFFORD

The $11.7 million awarded to Rhode Island’s 25 housing authorities this past summer might sound like a windfall. According to urban housing-authority executive directors, it is anything but.
The Capital Fund money that comes to public-housing agencies every year is meant to help pay for large-scale improvements, like re-flooring of the community for the Burns Manor elderly complex or expansion of a parking lot at the Fogarty Manor elderly high rise, both in Pawtucket, said Stephen A. Vadnais, executive director of the city’s Housing Authority.
Those projects are on the drawing boards now that approximately $1.1 million has been awarded to the city authority, he said.
But the predicament that urban public-housing authorities are in, say Vadnais and his counterparts in Providence and Woonsocket, is that while the U.S. Department of Housing and Urban Development invested in public housing in the 1940s, continual federal funding cuts over the past three years have left municipal authorities stuck managing deferred maintenance in their strategic plans.
The risk, they say, is that the older housing units could become uninhabitable relatively soon if ways to fund major renovations aren’t found.
“We could continue to hobble along five, 10 years, at current funding levels,” said Vadnais. “But if … they continue to cut capital funds, maybe that whole process of deterioration of housing stock speeds up. … These developments were built with money from the federal government and we’re not given the resources to maintain our investment.”
Added Robert Kulik, executive director for the Woonsocket Housing Authority: “Yearly funding we get is grossly inadequate. It was $2.5 million (last year). It’s now $1.8 million. Congress has not stepped up to the plate as far as I’m concerned. If they want to have public housing, they need to fund it. If they don’t, they need to close the doors on some of these older developments.”
Enter two creative solutions – both from HUD.
The first, a pilot program called the Rental Assistance Demonstration Program, is a new financing tool designed to enable public-housing authorities and private owners of multifamily developments to borrow money from private lenders to finance major improvements while using operating receipts, instead of capital funds, to pay back the loans. The Pawtucket housing authority is working with a consultant to apply for RAD for a 292-unit family development at 560 Prospect St., Vadnais said.
Providence is exploring whether it can take advantage of the program, too, said Paul Tavares, interim executive director of the Providence Housing Authority.
With RAD guarantees, plus other tax credits and financing, the Pawtucket housing authority could get $60,000 to $80,000 per unit to do a 20-year upgrade that includes new kitchens, refurbished bathrooms, new heating systems, playground upgrades and site improvements, Vadnais said. The Pawtucket building is 73 years old, he added.
Rehabbed in 1989, the building is “long overdue for some updating,” he said. “One of the greatest intangibles is to get the heating system updated with high-efficiency boilers. The need is great. It’s not as healthy a financial asset as my other properties, but it’s a solid community; the surrounding neighborhood is a good residential area.”
Barbara Fields, HUD regional administrator for Region 1 New England, said the agency locally and nationally is “doing the best we can to operate in the current environment.” The economic challenges have pushed HUD to re-examine how to use existing resources with increased flexibility. Despite extraordinarily long waiting lists, Region 1’s first priority is “to help those we already serve,” she said.
“The challenges are real,” she said, adding that there is a backlog of $26 billion in capital public needs across the country.
“We are excited Pawtucket is exploring this,” Fields said. “We’re working hard to bring (RAD) to New England, because the resource is needed and the flexibility here is what we think will attract the private capital and help preserve and upgrade and update these apartments for families. It’s a little tougher in New England because we have high rents and old housing stock.”
The idea behind RAD, which does not yet have awards made to New England housing authorities but has had success around the country, is to broadly look at the ways HUD invests in affordable housing and make adjustments so that the owners of these properties, be they public housing authorities or private developers, can access capital in the private market, Fields said. Additional appropriations from Congress are not required, she said.
RAD takes existing federal funding that is highly regulated and appropriated on a yearly basis and moves it over into a long-term contract with a more flexible regulatory financing platform, she said. Accessing private money is the key, she added, noting that Rhode Island’s congressional delegation has been supportive.
Providence, which received $3.2 million in Capital Funds, has 2,600 units in nine different developments and is trying to determine where using RAD would make the most sense, Tavares said.
RAD “will give housing authorities the potential to engage more private capital to make improvements. It’s definitely a creative tool being offered to us that we don’t want to dismiss out of hand. … It’s not a cure-all. It will be a tool to address a larger problem, which is to have sufficient dollars to address older housing stock.”
This year, that $3.2 million is 6.5 percent less than last year’s allotment, but will cover some major improvements, including $350,000 for underground electrical upgrades at Chad Brown family development, and $600,000 to replace controls on aging elevators in Hartford Park Towers, Tavares said.
“We are very fortunate we have a congressional delegation that truly understands and values the importance of public housing and the need to support public housing,” he said. “They fight to get funding. Unfortunately, we’re part of the larger national funding and sequester debate. We have pressing needs and it becomes quite a juggling act to address your capital needs and improve your housing stock.”
Woonsocket, which is experiencing similar constraints in funding, is tapping into a different HUD program to achieve similar ends, the Choice Neighborhoods grant program.
That program, another option available to distressed communities, focuses on housing, people and neighborhood revitalization by helping communities develop a comprehensive strategy, or transformation plan. If successful, the planning grant leads to large implementation grants that can range between $20 million to $30 million for housing and related community projects and services. Choice has new resources available, totaling approximately $200 million nationally, which has been cut back from the administration’s proposal of $400 million, Fields said.
The Woonsocket housing authority has received a $300,000 planning grant to study the Fairmount neighborhoods and the Blackstone River Valley, said Kulik, where the 296-unit Veterans Memorial housing “suffers from functional obsolescence and deferred maintenance.”
That description is from a request for qualifications seeking a master-development partner that could help transform the housing and surrounding neighborhoods into “a livable community of choice, justice and opportunity.”
“That would be a benefit to the area – to try and bring in some businesses and renovate houses that are vacant,” Kulik said. “If we don’t get the program, then we don’t have another avenue of funding.”
Providence also is using a $250,000 planning grant for a Choice Neighborhood initiative that will be followed sometime in 2014 or beyond with an application for an implementation grant that could be as high as $30 million, Tavares said. Redevelopment could cost three times that, he said, and would involve the Olneyville neighborhoods where a Manton Heights development of 330 family units is located.
An implementation grant would address improvements not only to the building but to the surrounding community, Tavares said. Partners include the Olneyville Housing Corporation, city of Providence, the Meeting Street school and the national Local Initiatives Support Corporation, which has a Providence office, he said.
Fields said Rhode Island officials are smart to avail themselves of these programs.
“Our success around the country has shown indeed there is an appetite in the private market to invest when (RAD) changes are made,” she said. “The good news here is that the private sector has stepped up. Housing authorities who are forward-thinking have already been working with private investors, so they’re not new to that market.” •

No posts to display