Some are calling new “PETRA Bill” the most aggressive housing proposal since the initial Housing Act of 1937 - Metropolitan Planning Council

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Some are calling new “PETRA Bill” the most aggressive housing proposal since the initial Housing Act of 1937

The U.S. Dept. of Housing and Urban Development (HUD) currently provides deep rental assistance to more than 4.6 million households through 13 different programs, each with its own rules, administered by three operating divisions with separate field staff.  To simplify this, HUD recently introduced the Preservation, Enhancement and Transformation Rental Assistance Act of 2010 (PETRA), which would authorize $350,000,000 in Fiscal Year 2011 to begin “transforming properties with rental assistance contracts under various programs into properties with long-term, property-based sustainable rental assistance contracts that include flexibility to address capital requirements, to enhance resident choice, and to streamline and simplify the administration of rental assistance.” 

While this bill has been met nationwide with both enthusiasm and fear, Chicagoland partners – public housing authorities (PHAs) and civic organizations already working together on regional solutions to our local housing challenges – are strategically positioned both to inform and benefit from PETRA.  Specifically, local partners are pursuing a demonstration pilot to inform HUD’s current efforts.  PETRA goals are consistent with those of public and private sector partners already working together to expand Chicago regional HCV efforts in 2010 and 2011, specifically in these areas:
 

  • recognition that regional coordination can promote efficiency and support both municipal housing strategies and resident housings;
  • emphasis on voluntary “conversions” to property-based contracts as a way to enable owners and developers to sustain operations and leverage private financing;
  • mobility goals “to expand opportunities to live in mixed -income sustainable neighborhoods;”

While PETRA has raised a number of operational questions, regional partners are eager to support its principle objectives, inform its success, and implement a model regional strategy with its support.   Absent the leadership and support proposed through PETRA to bring “best practices” to scale, a number of local pilot initiatives have already demonstrated the value of regional collaboration around both tenant-based and project based vouchers:  Specifically:

  • The Regional Housing Initiative (RHI) was launched in 2002, providing an  innovative structure to support mixed-income housing with deep affordability levels that meets the Housing Endorsement Criteria adopted by the Metropolitan Mayors Caucus. RHI partners include  six regional housing authorities (Chicago, Cook, Joliet, Lake, McHenry and Waukegan), as well as the Illinois Housing Development Authority (IHDA) and Metropolitan Planning Council (MPC). RHI provides financial incentives (via operating subsidies) to developers and owners of quality rental housing.  Developers applying for IHDA Low-Income Housing Tax Credits can also receive extra points in their application scoring if they tap RHI resources and advance RHI goals.  Effective in 2009, RHI owners are eligible for the recently amended Housing Opportunity Tax Incentive Act, which can leverage savings amounting to approximately one extra month's rent each year for each RHI apartment in property.  Already, RHI partners have awarded more than 200 subsidies to 15 viable developments, for a total of 707 new homes, largely in mixed-income communities.   For all of the homes supported through RHI, an occupancy preference is provided for people who work – or are in training programs likely to result in a job – near the RHI site.                                                                                                                                                                    
  • The Portability Pilot, launched in August 2007, was inspired by a survey the MPC conducted among region-wide PHAs, which revealed they spend more than $1 million annually helping households move between each other’s jurisdictions – a frustrating and costly process with limited success.  The Portability Pilot tackled this by tapping Housing Choice Partners (a third-party, mission-based housing and mobility counselor) to administer moves with better outcomes – for the families and PHAs alike. Over 18 months, the Portability Pilot helped 300 families, with a higher rate of opportunity moves and 26% lower administrative costs than the standard voucher program.
  • In 2010, Cook County is working with RHI and the Preservation Compact to kick off the Suburban Cook County Multifamily Preservation Initiative (SCCMPI), a new financing program created to encourage the rehabilitation and preservation of quality rental housing throughout suburban Cook County.  For properties that support the Metropolitan Mayors Caucus Housing Endorsement Criteria, SCCMPI will align new and existing resources for rental property owners and developers through one application process.  Initially, dollars will be available for soft seconds, acquisition financing, operating subsidies, and energy efficient improvements.   Among other incentives, eligible properties can earn additional points toward qualifying for Low-Income Housing Tax Credits available through the state.

Each of the above initiatives has tried to make it easier for families to secure affordable rental housing in neighborhoods with good jobs, good schools and good transit -- while also increasing efficiencies for the participating housing authorities.  While clearly advancing local and regional plans, these regional efforts to date have surfaced a number of statutory and regulatory obstacles that PETRA – if implemented well -- could help overcome.

Perhaps the most fundamental impediments and challenges are the following: 

  •  Insufficient incentives for PHAs to promote moves to opportunity areas, or to coordinate on regional solutions.
  • Insufficient accountability mechanism around “affirmatively furthering fair housing.“
  • The search time allowed by PHAs for voucher holders seeking housing in opportunity areas varies from authority to authority and is typically insufficient.
  • Fair market rents are typically inadequate to entice property owners to offer quality housing options to voucher families in opportunity areas.
  • Most voucher holders are unfamiliar with the housing market, as well as the benefits of living in opportunity areas. An adequate mechanism, such as counseling, is not readily available to enable voucher holders to expand their housing choice.
  • Especially in opportunity areas, most private property owners and public sector leaders are uneducated and/or misinformed about the benefits of voucher programs.
  • Portability and related billing procedures discourage PHAs from promoting the mobility of voucher holders. The administrative and financial burden attached to portability is a serious disincentive, especially given that the housing authority “porting out” loses the administrative funds associated with that voucher.  While housing authorities are allowed to operate in each other’s jurisdictions without losing that administrative fee, the process for undertaking such agreements is cumbersome.
  •  There are geographic-related complexities of managing a program within such a large and diverse footprint.

Looking Forward

Despite these significant obstacles, a number of public housing authorities are working with MPC and other civic partners to explore a local pilot that would inform and pursue opportunities created through PETRA.  In particular, beyond expanding  regional intergovernmental agreements, this pilot would leverage a range of public and private sector resources to ensure that rental assistance programs indeed advance the local and regional housing plans of municipal leaders and Chicago Metropolitan Agency for Planning.  Toward this end, partners will evaluate locational outcomes, household experiential outcomes, and PHA administrative outcomes, and identify policy recommendations responding to lessons learned. 

While aggressive, the principle objectives of PETRA are laudable, and MPC hopes it will leverage further leadership, innovation and commitment to quality rental housing within sustainable communities throughout the country.

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