Obama Administration Hopes to Privatize Public Housing

By Daisy Hernandez Jun 04, 2010

The Obama administration laid out its plan last week for financing public housing by turning to the private sector. If you’re thinking, “Wait, aren’t those the same guys who just wrecked the economy?” well, that was my question too. Speaking to the House Committee on Financial Services, Secretary for Housing and Urban Development Shaun Donovan said the cost of repairing and maintaining public housing is in the billions and the federal government can’t pay for it. She also noted that HUD’s insanely bureaucratic and that there’s two programs—standard public housing units and Section 8—and the administration proposes turning it all into the latter. Under the proposal once the units are Section 8, they’re rented for market value with supposedly a number of apartments staying open to people who are receiving federal assistance. Owners can also act like any other not-god-fearing homeowner and tap all that precious equity value (read: take out a loan). Wait, you ask, what happens when the loans can’t be paid back? Does that mean public housing goes into foreclosure? Donovan: the legislation, which is called the Preservation, Enhancement and Transition of Rental Assistance Act (PETRA), has “an unprecedented combination of policies intended to minimize the risk.” Yes, yes, but how? HUD’s going to monitor the financial statements. And then, tenant organizations (read: people who are poor and already organizing on every other issue) are going to find out about the foreclosures through chisme and blow the whistle. And if the properties still go into foreclosure, HUD will take its tenants and their Section 8 vouchers elsewhere. So there. That’ll teach ‘em. The proposal has raised alarm of course and spawned a petition. New York advocate and public housing resident Damaris Reyes summed up the situation best for City Limits: “Let us not forget that this is the same private market that just crashed our economy, took billions of taxpayer funded bailouts and aren’t fixing the mess they created.” George Lakoff pointed out that it’s a question of whether public housing is real estate or infrastructure and advocates with the the Los Angeles Coalition to End Hunger and Homelessness noted that the “leveraging of public housing to make capital improvements will set a dangerous precedent of taking out mortgages on other public property to pay for repairs.” For some context on public housing, take a look at Tram Nguyen’s piece on public housing in New Orleans. As she wrote in April, that city is a case study for what’s happening nationally “because things here are so extreme and exposed.”