HUD chief says Baltimore will be model for program
By By Natalie Sherman and The Baltimore Sun
Mar 19, 2014 at 8:53 PM
City officials took the head of the nation's Department of Housing and Urban Development on a tour Wednesday of Barclay to show him work by a private developer they say is starting to turn around the small, impoverished neighborhood in the middle of the city.
It's a story of a public-private partnership about to start a new chapter, now that the company is one of 11 developers slated to take over some of the city's public housing units.
HUD Secretary Shaun Donovan, in town to announce the award of $1.8 billion in capital funds for the nation's public housing, said he expects Baltimore to be a model for the new program, which is designed to allow deteriorating public units to access previously off-limits sources of money for repair.
"This is a precious resource at great risk of loss," said Donovan, calling the plan the central piece of the Obama administration's "preservation strategy" for affordable housing.
"I have a lot of confidence in the mayor, in the city, to do this right," he said.
The nation's supply of public housing is shrinking by 11,000 to 15,000 units a year, or about 1 percent annually, the federal government estimates. In Baltimore, the number of units has fallen from more than 16,000 in 1992 to about 10,300, according to city and Abell Foundation figures.
Officials said the drop has occurred in part because of a lack of federal funding for upkeep. In Baltimore, money for maintenance of public housing has fallen by more than half, from $30 million in 1997 to $12.8 million in 2014.
Meanwhile, the city's projected cost of maintenance has ballooned to about $800 million. Even the increase in funding announced Wednesday, to $17 million, isn't enough, officials said.
"Let's just say times haven't been great in recent years," Baltimore Housing Commissioner Paul Graziano said at the Brentwood, a 15-story public housing high-rise on East 25th Street, where ceiling tiles are missing in the lobby and residents said they have problems with plumbing. "There's a climate on Capitol Hill about let's not fund these programs the way we used to or the way we need to."
The new program changes the form of subsidy received by public housing, making the properties eligible for funding from different sources. About 400 housing authorities, including about a dozen in Maryland, have applied to participate, representing about 15 percent of the nation's housing stock.
Baltimore's plan for the units in the program — more than 4,000 apartments in 22 complexes — involves paying for renovations by raising money from selling state bonds and using low-income housing tax credits, which require private ownership. The city will remain a minority partner and has the option to repurchase the complexes after 15 years.
The state intends to issue about $120 million in bonds during the first year of the program, using the proceeds to provide loans to developers. Developers also can sell the low-income housing tax credits to private investors — a large bank, for example — for cash, allowing them to further reduce the amount of debt required for the renovation or construction.
Privatization will allow the city to clear $300 million in maintenance needs in about five years, Graziano said.
Baltimore's plan has drawn criticism from union members concerned that privatization violates their contract and will cost them jobs. Some housing advocates fear that the change could reduce access to or the supply of affordable public housing.
City officials say that only five units will be lost and that new residents will be drawn from the public housing waiting list. Graziano said the city is working to connect the 192 workers in the affected complexes with the new private owners and looking at possible early retirement and buyout programs.
Expanding the housing authority's public-private partnerships in low-income housing will be a boon to residents reliant on the programs, Graziano said, pointing to Barclay, where Telesis Corp. is leading an effort to build and rehabilitate more than 300 homes in the neighborhood. Telesis will take over the Brentwood in Barclay.
"We wouldn't be pursuing [this] if we didn't have the track record of success we've seen in this community and throughout the city," Graziano said. "Without this, we would not have been able to do any of the work you've seen today."
Brentwood resident Miriam Havard Britt, 51, said she has seen signs that the neighborhood is improving, but many remain unsettled despite the city's reassurances about the privatization program.
"I can see it's on the way up," she said of Barclay. "I just hope people don't get left behind that deserve to be a part of that."