Public Housing, Private Landlords: Managing Poverty with Patient Capital

Abstract

Public Housing Authorities (PHAs) across the United States are running substantial financial deficits and having to curtail operating costs. To fill this funding gap, PHAs have turned to HUD’s Rental Assistance Demonstration (RAD) and the Opportunity Zones program to leverage private debt and equity and move distressed properties to the Section 8 Voucher portfolio. Advocates of RAD argue that such a model is revenue neutral and an efficient way to confront the attrition of public housing units, while critics argue that it threatens affordability. This project weighs such arguments against recent RAD conversion precedents to explore short-term benefits, such as alleviating capital needs, and long-term challenges, such as preserving affordability. More broadly, this thesis investigates whether PHAs can strike a balance between giving investors market rate returns while protecting the long-term affordability of converted units. Will PHAs in high poverty areas have the same leverage as PHAs in strong housing markets? This project shows that relying on private investors to preserve deeply subsidized housing represents a further erosion of redistributive programs and exacerbates housing insecurity among vulnerable groups.