An Obama-administration program designed to pump private dollars in neglected public housing projects is paying off, according to an independent study.
The Department of Housing and Urban Development in 2012 launched its Rental Assistance Demonstration program, which allows private investors to come in and convert public housing into rent-subsidized housing under the federal Section 8 program.
The idea was to get private investors to make repairs on an aging affordable-housing stock in a budgetary environment where there are fewer public dollars to go around.
As of October 2015, the program had attracted $9 in private investments for every $1 in public funds, according to 20-month study HUD commissioned a third-party researcher.
That makes for a total of $2.5 billion in financing for repairs of more than 19,000 units, the Wall Street Journal reported.
“The Rental Assistance Demonstration is attracting substantial investment in a budget environment where public dollars simply can’t keep pace with the growing backlog of capital needs,” HUD Secretary Julián Castro sad in a statement. “It’s already clear that RAD is helping to preserve an important piece of our nation’s affordable housing stock.”
The program has been most effective in those places where investors are eager to invest: larger public-housing authorities in cities with high rents. New York City, however, is a latecomer to the program despite the fact that it has a $17 billion maintenance backlog.
The city is scheduled to close on a project to convert 1,400 units by the end of the year, and is applying to convert another 5,200 units. The Manhattanville Houses in West Harlem is one development in the city’s plan.
New York City Housing Authority chairwoman Shola Olatoye said, “It would be a major shot in the arm to the housing authority.”
Only 1.8 percent of families living in public housing in the U.S. have been served by RAD, partially because participation is currently capped at 15 percent of all public-housing units.
The program is not without its critics, who argue it’s a back-door way of privatizing public housing.