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Public housing looks for outside investors

Jim Burress Jan 10, 2013
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Thursday afternoon in Savannah, Ga., the head of the Department of Housing and Urban Development will unveil a pilot program meant to address poor maintenance conditions at public housing developments across the nation. HUD’s idea?  Let outside investors fix them up.

And no one is more excited at the possibility than Tamika Cummings. For the past six years, the 37-year-old has made unit 3219-B in Tobie Grant Manor, home. But Cummings says she wants something nicer for her three children who still live with her in the metro-Atlanta city of Scottdale.

“The units—they’re old,” she says, standing under her carport with a 1980s Ford Thunderbird parked behind her. “I’m thankful. But it’s time for something new.”

Pete Walker agrees it’s time for something new. Walker heads DeKalb County’s Housing Authority. He says times have changed.  The concept of public housing has changed. But Tobie Grant Manor hasn’t changed much since it was built in the late 1960s.

“What we’d be looking at is a complete tear-down,” he says, looking over the 55-acre site. “We’d start over.”  

The problem: Like tens of thousands of other subsidized developments, Tobie Grant Manor falls under Section 9 of the federal housing act. Any money to fix it up has to come from the government, and HUD says it’s about $26 billion short.

That’s why HUD Secretary Shaun Donovan says shifting properties like Tobie Grant Manor from Section 9 to Section 8 gives more options.  

“When we move them into Section 8, what we do is we cut red tape,” says Donovan.  

Section 8 is different because it allows for private investors to front money for repairs and redevelopment. HUD then pays those developers back under a long-term contract. Donovan says the shift doesn’t cost taxpayers a penny extra.

Mark Calabria of the right-leaning CATO Institute says the switch isn’t a perfect fix, but thinks “it’s a step in the right direction.”  

In the first thirty days of the national pilot program, HUD has raised $650-million in private investments for housing authorities in 22 states.

That’s enough money to tear down and redevelop 17 Tobie Grant Manors.

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