The Durham Housing Authority has been designated as “troubled” by the U.S. Department of Housing and Urban Development based on low audit scores from 2016.
The Housing Authority received an overall score of fifty-seven points out of one hundred from a recent assessment by HUD’s Real Estate Assessment Center, which reviews public housing agencies’ finances, management and housing conditions. Agencies that receive scores of sixty or less are deemed troubled, the lowest designation.
The designation continues a decline in DHA’s scores as it prepares to undertake a redevelopment of most of its public housing stock. The agency was considered a high performer in 2013, and dipped to standard performer for 2014 and 2015, having lost the most points for physical building condition.
This latest designation, which was made in April, applies to 2016; DHA hired a new CEO, Anthony Scott, in the summer of that year.
According to a letter from HUD, DHA scored twenty-five out of twenty-five points for its finances, nineteen out of forty points for the physical condition of its buildings, a management score of eight out of twenty-five points and a capital fund score of five out of ten points.
Scott told the INDY many of the points lost were because the agency has held units vacant so that residents could temporarily move in while their existing units are renovated. Those vacancies informed the agency’s scores for both its management and capital fund.
DHA has begun a multi-year project to redevelop thousands of public housing units through HUD’s Rental Assistance Demonstration program (RAD), which allows housing authorities to partner with private investors. Renovations are underway at two properties, Morreene Road and Damar Court, which unlike most of DHA’s public housing sites will be gutted rather than torn down and rebuilt through the redevelopment process.
Properties with RAD contracts aren’t factored into the assessment score, so different properties were included for 2016 versus previous years depending on where they were in the RAD process.
DHA appealed the capital fund score — which looks at occupancy rates and how long it takes a public housing authority to designate capital funds for building work — because it wouldn’t have had as many vacancies as it did if not for RAD, Scott said. According to HUD, that appeal was rejected. DHA had received a ten out of ten for the capital fund component the previous three years.
The management score also looks at occupancy rates as well as tenant intake, and for 2013-15, DHA received almost full points for this category.
The agency will likely be considered troubled again for 2017 because vacant units were still not leased. Scott estimated the vacancy issue will be improved within the next three months because DHA had already hired fourteen contractors to more quickly get empty units ready for new tenants.
“We have clear evidence that we were already working toward this,” Scott said.
As of May 31, there were 137 vacant units, with 95 ready to rent. Meanwhile, there are nearly two thousand households on the wait list for housing, according to a presentation made to DHA commissioners.
DHA’s physical score also dropped significantly from previous years; for 2015 the condition of DHA buildings was rated at twenty-eight out of forty points, meaning the agency lost nine points in the course of a year. During physical inspections, HUD inspectors look at a random sample of units at different sites.
As the INDY reported last year, DHA estimates its approximately eighteen hundred public housing units need $19 million in basic repairs — although major fixes like new roofs, plumbing and HVAC systems are also needed. An INDY review of nearly twenty-eight hundred work orders submitted by DHA residents found reports of leaks, caved-in ceilings, mold, pests and backed-up sewer lines.
The decline of public housing units is playing out across the country, adding up to what HUD estimates as a $50 billion backlog in needed repairs, although some housing advocates believe that’s a low figure. Every year, HUD says, ten thousand public housing units fall out of service because of poor condition.
Enter RAD, which seeks to fill a need for public housing dollars that Congress can’t — or won’t — by letting housing authorities convert public housing units to the voucher program known as Section 8, borrow money, and partner with private investors. DHA plans to redevelop its public housing sites as mixed income neighborhoods, with properties downtown also being eyed for uses in addition to housing. Initial planning for the fifty acres DHA owns downtown is underway now.
Under RAD, residents have a right to return to their property, and because the housing voucher program also caps rent at 30 percent of a tenant’s income, most DHA residents won’t see their rent increase post-conversion. DHA’s Housing Choice Voucher program is rated as a high performer.
The troubled designation doesn’t preclude DHA from its redevelopment plans, although RAD regulations say troubled agencies must be making progress on addressing issues identified by HUD. DHA has until July 15 to submit a proposed recovery plan to HUD.
