Transcripts For SFGTV 20140425

Our housing was built mainly between 1941 sorry, mrs. Smith, in order for the public to follow along, do you have a staff member who can help move these along . Sorry, okay, our housings was built between 1941 and 1973, very old, and has 270 million of Additional Needs, and 50 million of Additional Needs because of age accrues annually. But yet the capital money that we receive is 3. 5 of the need. It would take more than 5 million of annual budget just to modernize the elevators. And that 5 million that we get is for our entire portfolio. The Capital Needs have continued to increase. As you can see by this chart in 1991, we received 24 million for Capital Improvements. And we are currently receiving, we have about 5 million for Capital Improvements this year. While the needs have continued to go up, the resources that we have available to address those needs has been declinindeclinin. There are other federal programs, and why we will talk about the rad program. That do provide ways of greatly increasing the Resources Available to fix up our Public Housing. And right now our residents are living in conditions that really need improvement. And what we would like to do is pursue this rad funding, and provide better housing for our residents. Make the kinds of improvements that the housing needs. And be able to preserve this stock on into the future, for future lowincome households as well. Our regional administrator will tell you about the rad program. Thank you. Good morning, supervisors, breed and avalos. I will take a few minutes to describe the rental assistance program. And its set up on a National Basis of why we ended up with this new program. We have 1. 1 million Housing Units across the country. And not much different than what mrs. Smith described. The Capital Needs is 1. 6 billion across the portfolio. The funding is received under the United States act, and while a steady source of funding many years ago, its unreliable. Per the cuts, its a reflection of the appropriation process that Congress Goes on the budget. Just on that, is there anything you can share at some point later with my office. How the funds have changed from hud over the years, there was probably a stronger entitlement where the funds across the nation was rising and then over the years not around at all. Historically that would be good to see the difference. The slide before my presentation shows your funding decline over time. If you factor inflation and things, we would be happy to come in and show you. The Housing Authority specifically and the overall federal budget how its impacted over time as you take in inflation, be happy to do that. Thank you, i am interested in before 1991. Okay, and the other aspect of the way that the annual contributions contract between the federal government and the housing authorities that fund the individual housing authorities. Also limited access to the capital market. As making it impossible to access the Capital Markets called a declaration of trust on every Public Housing development. What we found we were losing 1015,000 units a year due to disrepair and as they fell in decline. And couldnt be repaired. So when the hud secretary, donovan came in, one of his goals was to find a Stable Funding platform for Public Housing. That would not be subject to the annual budget process, and that deals with this aspect to access other sources. In 2012 Congress Passed in the act a Demonstration Program. It authorized up to 60,000 units nationwide to convert from Public Housing to this new program. Its a Demonstration Program to see what happens to this conversion of Public Housing to a longterm rental assistance contract. With the intent to see if it preserves longterm rental assistance and affordability and improve the properties. Enabling the Housing Authority to address debt. And to put in place a system that would allow for longterm Capital Needs to be reflect in the Funding Source that would come in. Next slide. So what is interesting about this graph. You can see there was an initial interest in october, 2012, shortly after the program was implement and people could begin to apply. Housing authorities could begin to apply. There was a period of time as was new not sure how it would work. But as more used the program, you see that it shot up dramatically, december, 2013, we have hit the cap. And we have applications now for 170,000 units. Well above the cap. The other units above the cap, are sitting in a queue. Waiting either for applications that dont get approved. And they move up the queue. But the other issue, we have gone in asking congress to lift the cap. Thats where we are in the process. I would note that San Francisco is one of the top 10 applicants by Housing Authority. I think its number six or so. In terms of the number of units submitted for the rad program. So i believe that ultimately and well be explaining how the San Francisco Housing Authority will implement the program. I just wanted to set for you the context. How the program was developed. And why it was developed. And happy to answer any questions now, i am afraid i have another meeting i need to go to. Anything i can answer generally about the program. Thank you. Just briefly. You know we talk about, i hear that we are going to private developers will be managing, operating our Public Housing properties. Or some of them. Does that mean private for profit . Nonprofit . What is the rad qualifications mean for San Francisco or around the country as well . The Housing Authority establishes its process for selecting developers. In some its through the Housing Authority and some for profit and some not for profit. Its the Housing Authoritys decision. Have we seen housing authorities around the country part of rad is that selective . As that chart shows there is a huge uptake of housing authorities converting to rad. So is there a lot of interest in the program, 170,000 units is indicative of the units. Clearly there is a lot left. As the cap gets lifted and as people have the opportunity to see the authority, we will see more. Now we see San Francisco, are there other cities you can mention or name . Sure. The top 10, and i will hit a couple of highlighted numbers. Chicago is number one, they are proposing to convert 11,000 of their units. El paso, nashville and birmingham and greensboro. Are we seeing that the cities and counties are doing the same model in San Francisco, does that model vary greatly. Here i see the list, includes nonprofits or are we seeing for profits and does that skew the models . What you see is people tailoring to resources in their community. San francisco has a Housing Trust fund, and not many cities have that, its a source for potential financing. And tax credits, and there is a number of ways that cities develop their program. You will use what we call projectbased vouchers. And others choose what makes sense for their needs for repair. Hard to say there is any one particular model. Okay, looking around the country, are we seeing any Main Organization or company that is taking a large chunk of rad ownership or management . You know not that ti that i know of. There are forprofit developers who are appearing that have experience managing these developments through hope 6 or choice applications. I dont know that their is one particular company doing the bulk of the deals. And here in San Francisco . I am not sure who is all of your nonprofits and developers are, i think that olson can speak to that. I had a few questions about the requirements for the list. For example, when we, as we move forward and begin to implement rad. There is some confusion, and i know, the challenge i have right now as a supervisor, who is asking questions is there is so much information i know that will come as a result of this hearing. Some of these questions may be answered as a result of future presentations. Because you have to leave and i want to clarity around the issue, hud has a specific requirement how the list is maintained under the current Housing Authority. I want clarity. Because there is uncertainty as to whether or not the list will be directly maintained by the individual properties. Are continue to be maintained under the Housing Authority. I wonder what the guidelines are as it relates to huds requirement under the list of rad. You are talking about the waiting list . Yes. My presumption is that the Housing Authority will continue to maintain the list. Because you are vouchers. That cant be changed . It depends on how you set up, if you have project vouchers, the owner of the property can establish a list. I am not sure how you are intending to set it. Okay. We can wait if olson is the one. I am trying to understand what the hud requirements are specifically. It depends on how you use the projectbased voucher assistance. In some project based vouchers the owner can establish a list. So it is possible. Okay, thats something we would establish under this program as a city. Yeah. Pretty much you figure how you go with that. I know there is a commitment of 180 million potential dollars of renovation from the federal government under this new rad program. Thats not familiar . So thats something that olsonvilolson will have to explain. Yeah, the majority of the dhs will come from leverage, we are not providing Additional Capital fund for renovation. You will continue to provide the same dollar amount . What you will get, the dollars convert from a grant that you get from capital and operating funds. They will convert to projectbased rental assistance. They end up being equivalent, because you have that longterm contract you can leverage debt. That you wouldnt with a bank, i am not going to lend because i dont know how much money you will get next year. This stabilizes that. The last question is residents of Public Housing and the ability for them to get gainfully employed. Can someone silence their cell phone, please . In past instances with Public Housing in particular, there are individuals who have gotten jobs that are residents of Public Housing. And in some cases they are a little above the requirement to stay in Public Housing. But they cant necessarily afford another place to live in San Francisco. So they end up getting priced out of their unit in Public Housing and some many cases forced to leave the city. For example, if the requirement is that you dont make over a certain Median Income to qualify for Public Housing. And if you get a decent income but not San Francisco wage, you cannot stay in Public Housing, but you more than likely have to leave the city. So it doesnt encourage people to work or to be gainfully employed to better their situation. The reason i bring this up, i want to know if there is a possibility that we can work on making some changes to that . Yeah, i think there may be some confusion. There is income limit to admitted to Public Housing. There is not a limit to stay in Public Housing. Your rent is based on your income. The Housing Authority should have flat rents, i presume they have flat rents. Say i get a job and go from 12,000 a year to making 40,000. Lets say 80,000. Okay, 80,000 a year. Do the quick math here. And you pay 30 of your income. If you make 80 or 100. Lets use 100, that is easy. Lets say 120,000 a year. You will take 30 of that, which is 3600 a month. That doesnt mean you have to leave Public Housing. The question is do you want to pay 3600 a month to live there, or go out in the private rental market to get a property with more amenities. The Housing Authority should establish flat rents, and you cap out. But there is nothing that says you have to move out because you are making a certain income amount. Okay. Thats another discussion i guess we can have with Housing Authority staff. That has been somewhat of a challenge with individuals who have gotten higher paying jobs in the Public Housing developments in the past. Yeah, i am not understanding why that is the case. So you can be wealthy and live in Public Housing as long as you started out not wealthy. Yeah, you could get a property with more amenities, and People Choose to move at that point. This has been in place for years, allows housing authorities to establish these flat rents so they can keep higher tenants if they chose to stay. Okay, i want to be sure thats an option, we dont want to penalize people for success. Thank you. Supervisor avalos, any other questions . Okay, thank you for coming today. Okay. Director lee, are you next . I am next. Under this same presentation . Its the presentation, on to the next slide. I will thank the regional administrator to leave all the tough questions for me. The mayors housing of community development, before i start my presentation, i want to thank my staff to get us where we are today. Erin and leah in my staff have been working on this for a year, to organize the rental program and working with hud and our stakeholders at the Housing Authority. I want to take the opportunity to publicly thank them for getting us to this point. We are not over the start line but we are close to the start line. And its a lot because of their dedication and hard work. And i want to thank sophie and kay who pulled together this Powerpoint Presentation and their efforts in our office. Where do we start in terms of the questions of rad and why are we doing rad . It starts earlier, in terms of december of 2012, when the Housing Authority was declared troubled by the regional administrator and the secretary of hud. And it was declared trouble for a variety of reasons. And at that point mayor lee called for a reenvisioning process to say, what are the problems with the Housing Authority . What are the problems with the Housing Stock . And what can the city do to ensure that we have Affordable Housing for extremely lowincome people. So the mayor convened the big10 process, and we sought out ideas on how we can solve some of the problems of the Housing Authority. So over a period of four months, and there are Many Organizations involved. Many city departments involved and many public meetings. And one of the things that we learned in this process, is doing nothing is not an option. What we heard from the folks at the Housing Authority is that they didnt have the resources to really take on some of the problems that related to the operational problems related to finding enough money to do the repairs. To do the Capital Improvements, and to really manage the Housing Authority. What we heard from the residents were, you know, what we really want in this process is we want a good place to live. Like any other san franciscan, that we want to be able to press the button on the elevator and be able to get on the elevator and get down to the first floor. We want the bathtub to drain. We want the water heater to work. What we heard from the tenants is that we want decent housing like everybody else. Doing nothing as it comes out of sort of reenvisioning process, doing nothing was not an option. And the consequences of not doing anything was one, obviously the buildings continue to decline. As director smith talked about. Even though shes putting 5 million a year in repairs, the deficit in terms of repairs is growing by 15 million a year. Every year an additional 10 million gets added to the list of deferred improvements. And as we know from the recent discussions about the elevators, the mayor was successful in finding funds to try to address the elevators. That amount was greater than the entire repair and maintenance budget for the rest of the entire Housing Stock. So thats how bad things are now in terms of what the operations in terms of repair and maintenance of the buildings are. Buildings continue to decline. So one of the things that hud has the responsibility of ensuring that the monies they give to housing authorities is spent wisely. So there is this sort of joke. They give you 70 cents on the dollar, thats what they have done on section 9 funding for some housing authorities. And because of what they would say is, we estimated that the cost of operating Public Housing is 100 a year, and we will give you 70, and you have to do the best you can. And by the way, we will grade you as you got the 100, they are in the situation that the buildings continue to decline. And hud has retained their requirements as they should for the residents to have safe, decent, sanitary housing. The inspections have failed. And what happens then . Units are taken out of service, and we know as well, we have 200 units out of service because the Housing Authority doesnt have the money to turn the units over. And as they are taken out of the service, they are not providing housing for San Francisco residents. And in many cases they are creating a blight. The units are vandalize and squatted and etc. What happens then . As the Housing Authority continues to fail their scores, they become troubled. They lose their funding. They go into receivership. And someone comes in and hopefully saves the day. Puts a bandage on it. And makes it good for the next couple of years and waits for us to repeat the cycle over and over again. So that is part of the reason why the Mayors Office said, lets not do that. Lets not just put a bandage on the problem and repeat the process. We have seen this before. The director prior to director smith, was not the first director we had that came and went in a short period of time. What can we do as a city to break this cycle . So we jumped on one of the solutions being presented by the secretary. So among the secretarys initiatives were the Choice Neighborhoods Initiative as well as rad. These are two signature initiatives. And we figured out, if you cant beat them, join them. If the secretary has a new program to help Public Housing. Lets figure out a way to take advantage of it and use it for the benefit of San Francisco. Both mrs. Vascal and barbara said, its the simple way of looking at how to make this work. We are taking money, housing authorities get funded turned category called section 9. And this is where the funding for the annual contributions contracts get funded. And this is sort of a lumpsum payment to the Housing Authority. And the Housing Authority divvies among the various developments. We are moving the assistance from the section 9 bucket to the section 8 bucket. And why is that different . We talked earlier about how often the section 9 sort of bucket would give you 100 per unit per year, or whatever. And only at the cost of operating. But only give you 70. So under the section 8 program. Once you get a contract at an amount, that contract is generally fixed. You are more likely to get 100 of your section 8 amount than you would be of getting 100 of the amount eligible under section 9. The one big difference. The other big difference is the popularity or the supporters of section 9 versus section 8. The supporters of the section 9 are the residents of Public Housing and Public Housing authorities. The supporters of the section 8 Program Includes suburban jurisdictions and developers, and tenant advocates and a variety of other people that have more sway at the federal government level. So those resources are more likely to be there in the long term than the resources based upon the section 9. And that is another huge, huge difference. In terms of taking advantage of the situation and the realities of the situation. Its not necessarily fair. Its not necessarily just. But for us to be able to move forward we need to take advantage of that situation. The other thing that section 9 doesnt do is it has not funded any new Public Housing forever. And it has not funded any new modernization for forever. So really what the secretary was doing was saying, here guys, i will give you this tool, and this tool unlocks the access to loan Income Housing tax credits and debt financing. And why does it do that . We are creating these sort of rental assistance vouchers