January 30, 1994 - From the January, 1994 issue

National Housing Trust Lobbies for Affordable Housing Policies

Michael Bodaken, housing czar under former Los Angeles former Los Angeles Mayor Tom Bradley, currently serves as the executive director of the National Housing Trust. Formed in 1986, the National Housing Trust is a national nonprofit intermediary, located in Washington, D.C. The Trust is dedicated to the preservation of existing affordable housing that is assisted, owned or controlled by a federal agency. Its board of directors is comprised of nationally recognized authorities and practitioners in the housing and community development field.  

As the new executive director for the National Housing Trust, would you share with our readers your activities in Washington D.C.?

The National Housing Trust is a national non-profit intermediary organization. We work solely on the preservation of existing federally-assisted multi-family affordable housing. This is not public housing. It is all privately-owned, federally-assisted housing. It’s all the housing that was built with the assistance of Housing and Urban Development department through mortgage write-downs or interest-rate reductions after 1975 through the mid-to late-eighties. It comprises approximately 1.5 million housing units in the United States.

We spend a lot of lime doing research, education and public policy development on the housing stock, as well as providing technical assistance to local government agencies and non­profits who are interested in trying to preserve this housing stock. 

Given your extensive experience with the former mayor of Los Angeles, Tom Bradley, on housing issues in Los Angeles, how does your work in Washington tie into Los Angeles and Southern California? 

I think it's a very tight fit. Essentially, if you are going to be working on affordable housing in the nineties, in one way or another you are going to be working on the preservation issue. Particularly, HUD is trying to change its relationship to its own portfolio of 1.5 million affordable housing units. Those homes are located in places like the Los Angeles Basin. For instance, over 10,000 housing units of the approximately 400,000 housing units that are part of this portfolio are pre-payment eligible properties, the ones where owners could prepay their mortgage, and rid themselves of HUD restrictions. Typically, it's mixed-income housing located in places like the Valley and the Westside. It's some of the best housing available for poor families, and it tends to be relatively dispersed. Congress has passed a law that tries to preserve that housing, but it is not at all clear how much it's going to cost. And HUD might very well cut back on these programs. That means cities, localities and housing agencies need to keep their eyes open about the upcoming reauthorization bill because they may be asked to step in and preserve this housing one way or another, almost by default. 

What is happening at the national level to implement this program of assisting local tenants' groups and others in preserving this pre-payment housing? 

The Housing Trust convenes a national preservation working group made up of technical assistance providers and housing advocates from all over the United States. The group meets quarterly here in Washington, and meets with HUD on a regular basis to try to help HUD with its technical assistance delivery system. The Housing Trust is stepping in to fill the gaps in the delivery system of technical assistance for the prepayment housing program. We are trying to help regions of the country such as Pennsylvania, the mid-Atlantic states, Texas and other places that might not be as sophisticated or well-trained as places like Los Angeles. Frankly, I think Los Angeles is relatively well positioned to handle the crisis in pre­payment housing. But they should be aware that there will be a strong push to reduce the cost of the program, by reducing the amount the government is willing to pay to keep this housing affordable. That in turn will mean that more expensive housing, housing that is on the West Coast and on the East Coast, may be lost in the program unless Congress funds enough to cover the market value of those properties. The Housing Trust will help lead the fight against those cuts. 

Can you give us a sense of what the tenor and tone of the conversation in Washington is about housing?

The problems facing us today are certainly not the same as in 1990. The chief problem confronting all of us is the preservation or federally assisted, affordable housing in the face of a massive federal deficit and the nationally perceived need to cut that deficit.

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I think the best way to understand the current situation is to understand a bit of the recent history. In the 1980's, there was a HUD budget that was deliberately and dramatically cut. I would say that those cuts were philosophically driven. This made it difficult for the national government to have much of a housing agenda. Thus, the states and cities that were really concerned about housing, in areas such as Los Angeles, were asked to fill the gap. And they did. So you had situations like the Housing Department and many nonprofit organizations being created in Los Angeles that were in direct response to the federal government's retreat from affordable housing during the 1980's. In some ways we really built up a non-profit, technical assistance delivery system on a local level that tried to fill the gaps from the federal housing agenda.

Two things are significant. First, there are now a whole host or federal budget cuts that are being proposed. These HUD budget cuts are not philosophically driven because this administration clearly has housing as a priority. This time, these budget cuts are being driven by fiscal concerns. While the Trust and others will fight to stave off dramatic cuts, it will definitely be an uphill battle. There are some proposals floating out there now that would cut HUD's budget up to 20 percent over the next couple of years! The numbers that are being talked about, to give you some sense of proportion, are at least $2 billion from their $25 billion program, and up to $4 billion dollars. Some of those cuts, if enacted, would have a dramatic impact on the nation's cities and towns. For example, one proposal is to cut some $600 million in Section 8 contracts nationwide. No one, not even HUD, knows how many HUD­insured, project-based Section 8 units there are in a city the size of Los Angeles. But I can tell you that it's not 10 or 15. It's probably thousands. There are about 840,000 such units nationwide and, while there aren't as many as 10,000, there are probably are thousands of units that were constructed by private developers in the late 1970's and early 1980's. HUD is really seriously looking at cutting back the rent structures on these properties and perhaps even changing the project-based assistance that those properties currently enjoy.

The same is true with HUD's own portfolio, where HUD takes properties back and it costs them a lot of money, so they are going to dispose of them. Cities and towns need to keep an eye out for those properties, because they will be asked whether or not they want to step in and take over. That doesn't mean that they are going to retreat all together. In fact I think they are going to be very creative in the way they preserve the housing. But, clearly, places like Los Angeles that have a pretty strong housing agency, pretty well-organized tenants in federally-assisted housing, and which has an infrastructure of non-profits willing to take a look at this should be players in this debate. I understand that OMB has asked for a 50% cut in the Block grant program for the fiscal 1995 HUD budget, anywhere from $2 to $4 billion, including deep cuts in public housing, possible cuts to HOME or Block grants and cuts to the Section 8 program. All of this will be made public in early February. I would argue that any further cut to HUD's budget threatens critical housing, community development and homeless programs. What's ironic is, that every two years during the HUD reauthorization process is typically when HUD tries to expand its mission or try to fix the kinks in their programs. But now the Office of Management and Budget is using this reauthorization process to dramatically cut back on HUD's money available for programs. This is a very different tenor. People are scrambling to figure out a way to deal with this new reality. 

In light of these program cutbacks, are we likely to see any new initiatives from Secretary Henry Cisneros in the immediate future? 

The great irony is that these cutbacks are coming out of probably the most progressive housing administration that I've ever known. They clearly have, especially at the top, very progressive, committed and knowledgeable housing experts, professionals and advocates. You have a very concerned administration. Probably the most novel initiative going on right now is HUD reorganization. Essentially, they want to streamline the HUD field offices, which is way overdue. They are talking, about closing the ten regional offices, or at least taking away some of their responsibilities. HUD intends to maintain the current 81 field offices. and then 52 of them are going to be designated state offices. The reason this is important is that, for a long time, when we would want to do something in Los Angeles, for instance, we would have to go through San Francisco, who would then have to go through Washington. It would take forever to get anything done. If they streamline it so that HUD central would be able to respond directly to the field, it would really cut down on the amount of bureaucracy that prevented effective decision-making at local HUD offices. I sincerely hope that local offices will get the staff they need to really carry out this activity. Frankly, I have a concern that OMB is talking about cutting back HUD staff quite a bit. I'm not sure that under the current HUD reorganization, HUD field staff will have the resources to carry out their mission of greater decision making at the local level. 

What would you like to see the cities in the Los Angeles area do to appropriately react to the changes taking place in Washington? 

Like it or not, cities and towns are going to have to focus on the preservation of federally-assisted units because, I think, the federal government is going to change its relationship with at least some of its portfolio. 

If cities are going to be involved in neighborhood development in the 1990's, they are going to be working to preserve affordable housing which is the backbone of those neighborhoods. We are not going to build ourselves out of the housing crisis. Focusing our energies towards what housing is affordable makes more sense now than ever. It's particularly an opportune time because of the soft real-estate market that exists in many places, so that rehabilitation of existing housing stock makes much more sense than producing new units. But now I think there is really something else driving it. There will be opportunities in the federally-assisted housing for cities and governments to play a much heavier role that they have in the past.

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