In all, the budget proposal released in May outlined a loss in funding for HUD of more than $6 billion, with the Office of Management and Budget’s outline emphasizing a shift in responsibility toward states, local governments and housing authorities — which provide the subsidized housing and waiver programs to local residents — for fiscal 2018, which begins in October. The budget would shrink by about 15 percent, receiving $40.5 billion.
Local governments would be unable to carry the costs of repairing public housing if not for the capital fund, the letter said, signed by the mayors of New York; Flint, Mich.; Minneapolis; Albany, N.Y.; Bridgeport, Conn.; Charleston, S.C.; Columbus, Ohio; Kansas City, Mo.; Newark, N.J.; Portland, Maine; Providence, R.I.; and Vancouver, Wash. That could force some public housing authorities to close units for people receiving rental assistance, the letter said. Already, an average of 10,000 such units shut down because of disrepair every year, according to HUD’s website.
Aging infrastructure has resulted in elevated blood-lead levels, asthma and respiratory illness among those receiving rental assistance, according to the letter. HUD was facing a $26 million backlog of capital needs in 2010.
“We are on the precipice of a public health crisis in public housing, however, this is a preventable crisis,” the letter said.
HUD spokesman Brian Sullivan declined to comment, saying officials had not yet fully reviewed the document.
The New York City Housing Authority — the largest under HUD’s umbrella with more than 176,000 units — estimates the budget would slice $210 million from its capital fund. As of 2011, when the agency did its last five-year physical needs assessment, it had a $17 billion backlog of capital needs, said Deborah Goddard, executive vice president for capital projects with the NYCHA.
“We would be left with probably only being able to react to emergencies,” said Nicole Ferreira, executive vice president for real estate development with NYCHA, adding that the city already invests hundreds of millions of taxpayer dollars into repairs. “We would not be able to be doing our planned work of replacing heating systems that are outdated, of replacing roofs that are more than 50 years old, that are leaking and can be a source of mold.”
To attack parts of that backlog, the Trump administration’s budget has advocated instead for Congress to remove the current cap on the number of public housing units available to convert to HUD’s popular Rental Assistance Demonstration (RAD) program — an Obama-era program authorized by Congress in 2012. Currently, only 225,000 units are permitted for conversion. The program allows for subsidized housing units to be converted to an option where housing authorities can seek private-market loans to fund repairs.
Then, private investment can make repairs or rebuild housing as necessary. The partnerships can be a life-preserver for units that would otherwise be at risk of closing altogether.
The program has garnered more than $4 billion in capital funding from outside investment, HUD announced in May, or $19 for every $1 provided in public housing funds, according to a HUD news release. Two-thirds of those receiving project-based rental assistance in 2016 were seniors or people with disabilities, according to the Center on Budget and Policy Priorities.
But if the cuts are finalized, investors will likely avoid costly, riskier projects. That will particularly bruise the rural agencies that hold aging stock but lack the necessary staffing to negotiate with lenders, said Susan Popkin, senior fellow in the Urban Institute’s Metropolitan Housing and Communities Policy Center.
Popkin called the cuts “devastating,” saying that budgets have already been squeezed year by year.
“I don’t see any winners here, honestly,” Popkin said.
If capital needs are too great and there is little public funding available to leverage, a plan to convert more units to RAD housing would be difficult, said James Hanlon, associate professor of geography at Southern Illinois University in Edwardsville. Hanlon has been studying RAD housing since its inception.
“Even before any talks of cuts, housing authorities were having a hard time making the numbers work in some cases because the amounts of capital and operating funds are already too low,” Hanlon said, referring to outside investment in RAD housing.
The budget also reduces the public housing operating fund by 13 percent, cutting $600 million, and suggests eliminating funding for community development block grants, which provide financial assistance to states and municipalities to develop things like senior citizen centers and meal-assistance programs. Additionally, the budget would expose 250,000 households that are at risk for losing their vouchers.
“This takes us, really, to a point of no return,” Goddard said.