Public Housing in a Competitive Market: An Example of How It Would Fare, 1996

Authors: U.S. Department of Housing and Urban Development    

Public housing authorities that manage their assets wisely could compete successfully for low-income tenants, according to Public Housing in a Competitive Market: An Example of How It Would Fare, a new report by the U.S. Department of Housing and Urban Development (HUD). The report models program outcomes if the present public housing system were deregulated and operating subsidies replaced with portable, tenant-based rental assistance.

HUD researchers analyzed the large and varied public housing stock of the Housing Authority of Baltimore City (HABC) to illustrate the situation that would confront public housing managers if current public housing residents received fully funded Section 8 certificates or vouchers and could choose where to live. The report estimates the supply and demand and market rent potential of each public housing development, finding that much of the city's public housing would operate at a loss.

Analysis of HABC's 45 developments showed that 12 would operate at a significant loss in their current condition. Another 11 would show either loss or surplus, depending on treatment of central overhead costs. The study also identifies changes that could move HABC to a surplus (profit) position, such as bringing substantial capital improvement funds from outside sources, reducing its inventory by about 10 percent, and shifting the tenant base to a more mixed-income clientele. Potential for increased rents would need to drive future modernization decisions. Finally, a smaller, more decentralized housing authority organization could help HABC continue to supply affordable housing and to break even or better.

Although the results of such an analysis will vary in different housing markets, this model can help other public housing authorities assess the rent potential of their stock in a future certain to be characterized by greater local flexibility and greater market discipline.

*The online version of "Public Housing in a Competitive Market" does not include all of the tables and maps contained in the print version.

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