Public Housing Authorities in the Private Market

Monday, May 06, 2019 | Whitney Airgood-Obrycki

For a variety of reasons, many public housing authorities (PHAs) have gone from being entirely public entities that just build and manage public housing to becoming “hybrid” organizations, using a variety of public and private funding sources and strategies to address local housing needs. In particular, many PHAs across the country are developing and owning housing outside of the traditional public housing stock. In a new article in Housing Policy Debate, Rachel Kleit, Anaid Yerena, and I estimate the extent of this ownership and examine the nature of these kinds of PHAs. We find that larger PHAs that have greater autonomy and operate in more progressive locales are more likely to own nontraditional housing units.

PHAs were originally created in the first half of the 20th century to build and manage public housing, which was funded primarily by the federal government. These agencies have seen that support dwindle, however, over the past several decades. Instead, federal initiatives such as the Low Income Housing Tax Credit (LIHTC), the HOPE VI program, and, most recently, the Rental Assistance Demonstration (RAD) program, have increasingly focused on combining public and private approaches and financing to create and preserve affordable, subsidized housing units.

While many PHAs have made use of these programs, existing data sources do not include complete information on the number of these units that PHAs own or have developed. Additionally, several PHAs acquired or developed nontraditional housing before these programs existed. To estimate the number of units that PHAs own outside of the traditional public housing stock, we conducted a national survey that generated responses from leaders of more than 1,000 of the nation’s approximately 4,000 PHAs. We supplemented the survey with unit counts from the National Housing Preservation database, which includes information about LIHTC, project-based Section 8, and properties funded through a few other programs.

From these sources, we found that PHAs own more than 150,000 units outside of the traditional public housing stock, and this is likely an undercount. Nearly half of survey respondents reported that their PHA owned such units. The majority of PHAs that own these units began acquiring them in the 1990s and 2000s, which coincides with the shift in federal policy towards leveraging public resources to secure private financing for affordable housing. These PHAs also reported that they had developed or redeveloped more than 125,000 units within or outside of the public housing program (while some of these units were included in the total count of units PHAs own, some were transferred to other owners). We also asked PHAs about the number of units they own that currently have no subsidy, and their responses amounted to more than 45,000 unsubsidized units.

We next used a series of regression models to see which, if any, characteristics were associated with PHA ownership of non-public housing units. The models included many independent variables related to the PHA’s organizational characteristics as well as measures of other potential factors, such as state and local political climates, support for affordable housing innovation, advocacy group activity, housing market conditions, and the differences in state laws governing the activities of PHAs.

Our major finding from the models was that while PHA characteristics are good predictors of whether they own additional units, state and local political environments and variations in state enabling legislation influence the quantity of additional units they own. Specifically, we found that larger PHAs that own traditional public housing units are more likely to own additional units. This is probably because these PHAs are more likely to have the capacity and experience needed to own and manage the additional units.

The local political environment and independence from local government were consistently significant indicators across the models. We used Sharp’s unconventional political climate index, which includes measures such as the number of women in the work force, adults with college or graduate educations, and unmarried families with children, as a proxy for progressive local environments. Independent PHAs are separate entities from the local governing body. The Housing Authority of the City of Alameda, for example, was once a department within city government but is now a standalone agency. The model indicates that PHAs operating in a progressive environment and as independent organizations may have greater support for affordable housing.

Finally, the state policy environment influences what PHAs do. Most notably, PHAs in states that grant the ability to acquire financing by issuing bonds without jurisdictional approval are positively and significantly associated with greater unit ownership. In addition, since PHAs that own additional housing tend to have an affiliate organization that owns or develops housing on their behalf, we expected that having this power granted in the state legislation would also significantly impact PHAs’ unit ownership. However, while the state legislation variable for this was positively associated with greater ownership, it was statistically insignificant in our models.

These findings have important implications for public housing authorities operating in a policy environment that encourages hybridity. The public housing stock will continue to decrease in coming years as federal policy pushes for the dispossession of public housing through RAD and vouchers. Therefore, the number of units outside of the traditional stock will only grow. For PHAs to continue to function, they will have to operate as hybrid organizations that adapt private market strategies and rely on different funding sources. Our research sheds light on the organizations that will excel in this environment but also cautions that some PHAs may face significant constraints as they try to address local housing needs.

Read More About: Housing Markets and Conditions
Whitney Airgood-Obrycki

Whitney Airgood-Obrycki

Senior Research Analyst

Whitney Airgood-Obrycki is a Senior Research Analyst at the Center, working on research related to affordable and assisted rental housing, neighborhood change and reinvestment, and housing and health...

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