The economic downturn has put tremendous pressure on an already stressed sector of society: those in extreme poverty. Funding for public and affordable housing continues to fall far behind what is needed to preserve existing units and grow the stock to meet burgeoning demand.

According to U.S. Department of Housing and Urban Development (HUD) Senior Adviser Patrick M. Costigan, who spoke at the ULI 2011 Fall Meeting in Los Angeles, there is an estimated capital repair of $26 billion for public housing, with 150,000 public housing units lost over the last 15 years. For every three new affordable housing units built in the United States over the last decade, two existing units have been lost.

To help address this problem at a relatively low cost to the public, HUD is proposing a new program called Rental Assistance Demonstration (RAD), described by Costigan and others at a Fall Meeting session titled “HUD Catalysts for Repositioning Neighborhood Markets.” The program, which is not yet authorized or funded by Congress, is part of HUD’s larger strategy for rental housing preservation. It would allow Section 9 public housing and several other HUD housing programs to convert to Section 8. This option would open public housing to conventional affordable housing finance, including low-income housing tax credits (LIHTCs), potentially leveraging about $6 billion in private debt and equity.

“The RAD program would integrate public housing into the larger constituency that supports the more viable Section 8 and affordable housing finance options,” noted Costigan. “It would be a tool to let public housing authorities function like other affordable housing developers.”

Another new HUD initiative, Choice Neighborhoods, already has been funded and has moved into the implementation phase. As described by HUD Assistant Secretary and Acting FHA Commissioner Carol Galante, Choice Neighborhoods seeks to transform neighborhoods characterized by extreme poverty into sustainable, mixed-income communities. It goes beyond the established and successful HOPE 6 initiative by taking a more comprehensive approach to entire communities, providing a wide range of supportive services for residents and expanding applicant eligibility.

In 2010, HUD funded 17 planning grants for a total of $4 million. In 2011, the agency has awarded a total of $1.2 million for five implementation programs in Boston, Chicago, New Orleans, San Francisco, and Seattle, as well as more than 12 new planning grants to date.

The $30.5 million San Francisco grant focuses on Eastern Bayview, a neighborhood south of Mission Bay that is home to a naval shipyard that closed in 1974 and the deteriorated Alice Griffith Public Housing Development, built in 1962. The neighborhood is located within a 700-acre (283-ha) planned redevelopment of the Candlestick Point and Hunters Park Shipyard area.

Funded in part by the Choice Neighborhoods grant, the 22-acre (8.9-ha) Eastern Bayview redevelopment will comprise 1,126 homes including 256 public housing units (replacing the Alice Griffith units on a one-for-one basis), 248 new LIHTC affordable housing units, 310 market-rate homes, 31 inclusionary units, and 281 workforce housing units. The grant also will provide for significant investments in education, social services, and workforce development. Public and private sector project leaders are already looking ahead to find ways to continue providing community services after the federal grant funding expires.