Make HUD great (again?) Part II: Mid term challenges
In part 1 of this series, RHINO looked at some immediate challenges that the incoming President will need to address: selecting leadership, fixing Multifamily Transformation, and fixing Project Based Contract Administration. This week, RHINO picks some less urgent, but equally important challenges that need to be addressed over the medium term of the new Secretary.
Fix the Real Estate Assessment Center (REAC) and address troubled properties. REAC is one of those Gore era reforms designed to use private inspectors to monitor the physical and financial performance of public and privately owned HUD properties. Entrepreneurs quickly gamed with physical inspection system so that, for a fee, almost any property could pass the HUD test. Adding to is the fact that HUD’s REAC office adopted a “black
box” strategy for dealing with “troubled properties” that has
prevented enforcement against bad owners in favor of back room “work
outs.” For at least three years, Congress has called for more
accountability. HUD's response was to slow walk regulations that were
way too complicated to be effective when a property is at risk of
collapse. This summer, Florida Senators Rubio and Nelson introduced new
legislation to compel transparency and encourage tenant
input into the troubled properties process.Meanwhile, Ohio advocates have taken the lead in bringing aggressive enforcement actions. If the administration doesn't want Congress to design the new system, the next President needs to act swiftly.
Continue public housing reform. Rental Assistance Demonstration (RAD) is quickly evolving as a model for public housing reform Soon after the new President takes office, HUD should have enough data to assess the initial wave of RAD conversions. Congress (and the White House) need to use this first wave data to assess, reform, and universalize the RAD process as the way in which local public housing authorities unload their obsolete housing stock. Delivering affordable housing units through “some 3,300 public housing authorities” in the US is simply too inefficient and unmanageable Eventually merging local public housing authorities into regional and state wide units will improve efficiency, improve mobility, and reduce local government interference in what are, after all, national policies. Getting
to mass consolidation is a long range goal, but making smaller steps
that encourage voluntary consolidation over the next 2-8 years is
critical.Things like reducing the number of hard units, rewarding collaborative efforts around affirmatively furthering fair housing, and reducing the administrative cost allowances will make it easier for PHAs to move towards consolation.
Implement Affirmatively Furthering Fair Housing (AFFH). As with all dramatic "reform" efforts, the devil is in the details. The Obama administration, with a nudge from the Supreme Court, has made sweeping changes in the way that local grantees must show they are "affirmatively furthering fair housing, but implementation and enforcement is everything. With
a prompt from the Supreme Court, the Obama administration committed
HUD to implementing this policy yhsy esd embedded the 1968 Fair
Housing Act.Two challenges are:
Can HUD carry out a long term plan without delay or a million regulations and exceptions?
Will Congress succeed in blocking funding for the policy?
The next President will need to select appointees with a commitment to AFFH (that was 1/2 of the breakdown in the Nixon era) and will need to go toe to toe with Congressional Republican who are threatening to defund HUD efforts to implement and enforce the new regulations.
Continue to address healthy homes and re entry housing expectations. Under President Obama, HUD has added healthy housing elements to the HUD mission and has nudged Federal housing providers to open their doors to “returning citizens.”But HUD’s "walk softly” approach, using incentives and guidance to encourage voluntarily compliance, is weak. But HUD’s "walk softly” approach, using incentives and guidance to encourage voluntarily compliance. is weak. This “nudge” strategy to addressing these two new housing issues raises a question: will the new administration continue to try to persuade compliance or will HUD issue more regulations at the risk Congressional obstruction and charges of impunity?
Mary Clark responds to CityScape story on Slumlords in Cincinnati.
"As an agent with a background in rental housing, especially multifamilies, I have always wondered what we can do to bring standards to investment and how to mandate some kind of education for any entity or person planning on purchasing rental housing in Ohio. This is a complicated situation but the lack of education for prospective investors seems to be an important aspect which is overlooked." Read more here.