Mr. Paul T. Graziano
Executive Director, Housing Authority of Baltimore City and
Commissioner of Housing, City of Baltimore, Maryland
on behalf of the
Council of Large Public Housing Authorities
U.S. House of Representatives
Committee on Financial Services
May 25, 2010
Chairman Frank, Ranking Member Bachus and Members of the Committee, my name is Paul Graziano. I am the Executive Director of the Housing Authority of Baltimore City (HABC), Housing Commissioner of the City of Baltimore, and a Board Member of the Council of Large Public Housing Authorities (CLPHA). CLPHA is a non-profit public interest organization whose members, located in virtually every major metropolitan area, are the largest Public Housing Authorities (PHAs) in the nation. These agencies act as both housing providers and community developers while effectively serving over one million households, managing almost half of the nation’s multi-billion dollar public housing stock, and administering one quarter of the Section 8 Housing Choice Voucher program. The Housing Authority of Baltimore City was established in 1937 to provide federally-funded public housing programs and related services for Baltimore's low-income residents. HABC is the fifth largest public housing authority in the country, with more than 1,000 employees and an annual budget exceeding $350 million. The Agency serves over 10,400 households in public housing, 13,400 in the Housing Choice Voucher Program, and nearly 1,100 families under the Section 8 New Construction, Moderate and Substantial Rehabilitation Programs.
I am pleased to be here today representing CLPHA for this hearing on “The Administration’s Proposal to Preserve and Transform Public and Assisted Housing: The Transforming Rental Assistance Initiative” and to offer our views on the Department of Housing and Urban Development’s (HUD) legislative proposal, the “Preservation, Enhancement, and Transformation of Rental Assistance Act of 2010” (PETRA).
The issue of preservation of public housing is one of paramount importance to CLPHA. For several years, CLPHA has been actively engaged in discussions with public housing stakeholders to develop a preservation strategy through reform of the public housing funding and regulatory system. A major goal of those discussions has been to establish a more stable and rational subsidy and program structure that gives PHAs the predictability, flexibility and additional tools needed to address the substantial backlog in public housing capital needs. Such reform was a primary focus of the Summit on the Future of Public Housing convened by CLPHA in 2008 and the Policy Framework produced by the Summit participants.
The criteria for preservation is straightforward. As the Summit Framework called for, we seek a long-term funding structure that addresses reasonable operating costs, adequate replacement reserves and recapitalizes the portfolio by converting public housing to more adequate, reliable and flexible subsidy models. The test for any preservation legislation should be that housing authorities can effectively use these tools to secure adequate operating income and additional capital investment to ensure long term sustainability and affordability of quality housing for low income families, seniors and persons with disabilities.
We commend Secretary Donovan for his vision and commitment to preserve and expand affordable housing. To hear the HUD Secretary say that public housing is an irreplaceable public asset that must be preserved represents a turning point in this most important public policy debate. Secretary Donovan brings commitment, expertise and a willingness to take on difficult challenges. He recognizes that public housing and other rental assistance programs are overdue for reform and need to function more effectively with a corresponding infusion of resources. In preparing to craft legislation to preserve and transform public and rental assistance housing, HUD convened working groups from a broad cross section of stakeholders, often hearing conflicting advice on the programs. The Secretary is aware of the challenges posed by reforming the myriad rental assistance programs of HUD, as he recently said at a town hall meeting on PETRA, “no one would intentionally setup a system this complicated”. He also understands the critical reality that to preserve and improve the affordable housing stock, we must invest more federal resources and incentivize the investment of private capital in this stock.
There are many competing demands in determining how to reform and transform affordable housing programs including HUD’s own internal administrative streamlining objectives and other social policy mandates -- but for us, the most immediate and compelling objective is the preservation and improvement of the public housing stock. We are very concerned that this urgent goal may be lost in the maelstrom of transformation for the department and other housing programs. PETRA creates an overly complex approach to preservation, with a complicated financial and rent setting framework, sweeping and untested social policy mandates and burdensome administrative and regulatory requirements, some of which undermine the very goal of preservation. We are dedicated to our mission to continue to serve the needs of low income people. We do not want to put the properties or the people we serve at risk. More to the point, we favor a more slimmed down bill that focuses on preservation not on transforming HUD. In general the bill tries to do too much, too soon, with too little resources.
Affordable housing preservation cannot be done on the cheap. Based on a study commissioned by CLPHA in 2008, the replacement value of public housing stock is approximately $145 billion (not including land values). The public housing inventory is a scarce and valuable asset in which the federal government has invested considerable resources. This is an irreplaceable public asset we cannot afford to lose. Yet, we are losing public housing units every day due to chronic underfunding. Preservation requires a commitment of resources – federally appropriated funds, direct rent and capital subsidies and incentives for private capital investment.