The Maryville Public Housing authority wants to join a national shift in how localities deal with public housing funding.
Nothing has been inked yet, but if all goes according to plan, the county’s only public housing outfit may join a handful of other programs throughout the state in adopting the U.S. Department of Housing and Urban Development’s Rental Assistance Demonstration program.
Simply termed “RAD” in current public housing parlance, the initiative postures itself as the solution to an estimated $35 billion plus in needed physical improvements for buildings.
Literature given to MHA residents says that, under RAD, HUD will change how it provides rental assistance to housing authority properties and begin using a Section 8 platform contract.
What does that mean for residents?
Nothing, for the time being, according to MHA officials.
But at Oct. 28 and Oct. 29 meetings, residents were worried. Nearly 100 total showed up, which is an uncommonly large turnout.
No one showed up to a September resident meeting, by comparison.
“That letter was very scary that we sent out,” MHA Executive Director Nancy Burnette said in an interview, explaining the large turnout. “It talked about every possibility because it had to address every housing authority.”
Nine pages long, the letter detailed the specifics of the shift and emphasized residents who need it will still be getting rental assistance. But with statements like “In the rare event that your rent calculation would change” or “we may need to move you during construction,” the letter still generated concern.
“Some authorities will have to tear down and rebuild,” Burnette said. That is true for larger housing authorities with more needs. But in Maryville, officials say structures are mostly in good shape and projects over $25,000 are relatively rare.
MHA does have a big project in their back pocket, however, one they’ve had to delay at least once: a two-phase, $1 million plus imitative to address water infiltration issues at Broadway Towers.
That job is part of the reason officials want to move to the RAD program: there is a guarantee they will be subsidized at 100% every year for 20 years at the most.
In previous years, that percentage has dropped to 97% and even 93%, after prorations and other cuts, according to Burnette.
Third time’s the charm
Passed by congress in 2012 under the Obama administration, RAD was created to test a different method of tackling a massively expensive backlog of repairs.
How is it supposed to do this?
Primarily by shifting housing authorities to a long term — usually 20 or 15-year — Section 8 contract.
“These new contracts provide a more reliable source of operating subsidy,” RAD informational literature says. These allow housing authorities and owners “to safely leverage private capital — typically debt and equity — in order to finance the property rehabilitation or replacement.”
In plain language, housing authorities can use this alternative source of funding to pay developers who would then fix or rebuild properties.
In return, those developers would receive subsidies and/or tax credits.
Some people fear this will lead to a privatization of public housing, allowing developers to ultimately take control of properties.
Burnette is one of those people.
She said she and other MHA officials were very wary when they first assessed the possibility of adopting RAD, adding they’ve actually considered and rejected it twice already.
“If you don’t do it correctly, you can end up losing your property,” Burnette said. Losing your property means that a developer who came along and fixed up a home or an apartment building could end up owning it through RAD. There would be certain standards new ownership would have to adhere to, keeping the property affordable.
But guarantees that developer-owned property would not hurt residents haven’t been assuring.
In fact, a report from the U.S. Government Accountability Office published in February showed that HUD wasn’t keeping good track of what happened to residents affected by RAD developers. It also concluded there are risks to long-term affordability to RAD properties, contrary to HUD assurances.
“We don’t want that,” Burnette said, reflecting on what she called “bad deals” other housing authorities were making with developers.
But, between a training this year, meetings with nearly 20 other East Tennessee housing authorities and visits from local HUD representatives, many of those fears have been mollified.
That’s why MHA has an application out already and is taking steps to have each of its 400 public housing units surveyed by an out-of-state company — which could cost around $50,000, Burnette said — to see if it qualifies for RAD.
Burnette, Leasing Supervisor Julie Chaney and MHA Facilities Manager J.R. Davis said they are almost positive they will be accepted into the RAD program.
Difficulty securing contracts
Until then, officials say the current model for fixing and maintaining buildings is restrictive at least.
“It’s become harder and harder to get anyone to bid on projects anymore,” Davis said.
He has a team of five technical maintenance employees and four people who do property turnover. When bigger projects come up, they go out for bid.
But finding any takers for those bids is difficult, Davis explained.
“The reasoning is the amount of paperwork and reporting burden,” he said. “It kind of scares them off.”
Added to that is the fact that Maryville is rife with development and contractors are more attracted to high-dollar jobs. It’s simply difficult for MHA to secure large jobs, with any contractor, much less local contractors, Davis said.
RAD is supposed to change that.
“There’s a lot less reporting with a multi-family model,” Davis said. “It is less stringent.” That multi-family funding model is essentially what all public housing will shift to if RAD is adopted. It will allow MHA to get quotes and accept jobs quickly, without the encumbrance of seemingly endless paperwork.
Making it easier to work with contractors also makes it easier for developers to get into the low-income housing business.
And even though Burnette said she wasn’t in favor of “bad deals,” she said she has not ruled out the possibility of working with developers to address repair needs in the next 20 years.
“We may still do it, even if we have to do it with a developer,” Burnette said of the choices MHA will have to make as it seriously considers RAD.
“But we’re going into it with our eyes open ... I feel much more comfortable that we’ll be able to make good decisions moving forward.”
Beginning of broader changes
During the October meetings, Burnette said residents had mostly positive responses to the possibility that RAD could be implemented in the near future.
“They had really good questions. We were impressed,” she said.
Inquiries about details behind the shift were mixed with worries: Am I going to have to move? If I do, where will I have to move? How much is it going to cost me? Will I still get a utility allowance? Will our rent go up?
Burnette said she could guarantee there would be no changes for MHA residents.
Especially given that most MHA properties are in relatively good shape, according to officials, that may be the case.
But time and the potential upcoming survey of property needs will give both residents and officials a clearer picture.
Much of the decision to move rests on that which may be approved in the next two months and which will show how much the MHA needs to spend. Depending those costs, officials can make a more informed decision on RAD come 2020.
If it goes through, Maryville may be one of the forerunners in a larger wave of RAD acceptances nationwide.
In 2018, the RAD unit cap — the limit for units converted under the program — was increased from 225,000 to 455,000 units.
According to information given to The Daily Times by HUD officials, out of the nearly 90 housing authorities in Tennessee, there are only 59 public housing projects that have been converted under the RAD program thus far.