Dive Brief:
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The Department of Housing and Urban Development's Rental Assistance Demonstration (RAD) program has brought in $2.5 billion of private investment for repairs to more than 19,000 public-housing units as of October 2015, according to a HUD study evaluating the program's progress since its launch in 2012.
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The program allows the conversion of public housing to Section 8 rental-subsidy properties, which are then eligible for private partnerships and funding as long as rents remain at below-market rates.
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Advocates of the program say it has saved an annual 10,000 public-housing units, which would otherwise be left in a state of disrepair without spending taxpayer money, according to The Wall Street Journal. Critics worry that involving private investment is the first step toward making a program that began as public housing ultimately unaffordable for low-income families.
Dive Insight:
RAD participation is currently limited to 15% of all public-housing units, and most of the benefits were seen in larger cities with high rental rates and where there were enough investors interested in financing renovations and repairs, the Journal reported. Case in point, New York City has a $17 billion maintenance backlog for its public-housing units and plans on converting 1,400 rentals to the Section 8 program by the end of this year. Shola Olatoye, chairwoman of the New York City Housing Authority, told the Journal that the ability to participate in RAD is "a major shot in the arm."
In response to the success of RAD, HUD Secretary Julián Castro said in a statement that public money "can't keep pace" with public housing's capital requirements and that the program was "helping to preserve an important piece of our nation’s affordable housing stock." However, following a National Low Income Housing Coalition report in May of this year indicating that more than 10 million low-income families were in need of housing (7.2 million units), Castro said the government should still keep its hand in public housing because private companies would only respond to that need if they could make a profit.
The NLIHC report underscored the need for truly affordable housing, finding that nowhere in the U.S. can a minimum-wage ($7.25) worker afford a "modest" two-bedroom apartment without working 112 hours a week, year-round.
As a result, governments are increasingly tapping homebuilders to introduce more affordable units into communities nationwide through "inclusionary housing mandates," which require them to include below-market-rate apartments in their developments. In June, San Francisco doubled down on its affordable housing requirements and now mandates that developers of 25 units or more make 25% affordable, up from 12%.