Saving Ann Arbor's public housing
"If we didn't have this opportunity, we'd have to sell off half our properties," says Jennifer Hall.
"HUD is shrinking so fast it's scary," says Hall, executive director of the Ann Arbor Housing Commission. After the worst recession since the Great Depression, the funding the commission receives from the federal Department of Housing and Urban Development has fallen by nearly a quarter in the last decade, from $572,509 to $440,778.
The commission currently manages eighteen sites with 355 total units--up by just twelve units in thirty years. "Most of our stock was built in the late sixties and early seventies," says commission board president Ron Woods, "and it's in significant need of repair, rehabilitation, and revitalization."
To say the least: like most public housing of its time, the local housing stock was built as cheaply as possible. "Developers we hired as consultants told us properties we thought we could rehab we should demolish," says Hall. "The worst example is North Maple [Estates, built in 1969]. The highest point of the site is a basketball court, and the lowest is the eight houses, so there's constant basement flooding from runoff during rainstorms.
"Then there's the Broadway Terrace," continues Hall. "It was built in 1956 and has no insulation, and the plumbing is against the walls so there're constant leaks and freezing in the winter. And there's a building at the back of the site that's feet away from the edge of a cliff."
The local situation is typical. The country currently has about 1.1 million public housing units--and is losing about 10,000 a year to age and decay. HUD estimates it'd take at least $25.6 billion to repair them all, but with federal funding falling, housing commissions needed a fresh source of money to do so. The agency is helping them find it from private investors.
The program that Hall hopes will save the city's public housing is the federal Rental Assistance Demonstration project. Woods describes it as "a way to bring in
a new income stream but one that preserves public housing as public trust."
"It's a program created to get private investment into public housing," explains Hall. "The IRS allocated tax credits to the states every year, so we're competing with other cities in the state. There's a 90 percent chance we'll get it, but we'll know for sure in November."
To qualify for the program, the commission had to own the housing stock, so city council transferred title this spring, effectively turning it into site-based, voucher-funded Section 8 housing. But because the commission doesn't pay taxes, "we'll find a syndicator to find investors to buy the credits," says Hall, "banks, businesses, corporations, or people with large tax bills like pools of doctors or dentists. They get to write it off plus some depreciation.
"The program requires investors to have ownership interest," she continues, "so we'll form an LLC with them. They'll be the equity partner and we'll be the managing partner." At the end of fifteen years, [the investors will] likely look for other partnerships. "That is pretty typical," Hall explains in an email. "After fifteen years, the property generally needs to replace a number of big-cost items like roofs."
The tax credits come from the IRS, but "HUD came up with the project, and HUD still controls everything," says Hall. "For them, public housing has to be affordable forever, so they'll want us to renew it forever." The program allows smaller local commissions like Ann Arbor to access low-income housing credits to rehab and rebuild their stock.
"There'll be two phases to the project," says Hall. "The first are five rehabs: two big sites, Baker Commons and Miller Manor, and three family sites--Green-Baxter, Hikone, and Maple Meadows. We're applying for $9.8 million, the vast majority as low-income tax credits but also $300,000 from the DDA and $300,000 from the county community development fund. The second phase is Miller and Maple. We're applying for $14.2 million for that, again mostly in tax credits."
All this of course is just for the existing housing stock, and there is vast need for more. "The waiting list is between one thousand and two thousand people," says Hall. "And we last opened the list in 2010, because we're full."
[Originally published in October, 2013.]