Analysts say stimulus too late for some housing

By KEVIN FREKING
Associated Press Writer

A $4 billion stimulus boost for the nation's public housing authorities may be too late for some complexes and should go to fixing up properties in healthier, more mixed-income neighborhoods, according to some analysts.

Every public housing authority in the nation — about 3,200 in all — will get a share of stimulus funds that they can use for new kitchens, roofs, plumbing and other upgrades to their buildings. Chicago, for example, will get $144 million. Nicodemus, Kan., population 52, will get $13,936.

Housing authorities will have wide latitude on how they spend the money, but Congress said they must give priority to renovating vacant rental units. Also, the money cannot be used to cover operating expenses or to subsidize rent.

Most complexes don't fit the negative stereotype associated with public housing. But for those that do, it would be a mistake to make cosmetic upgrades so that future generations will be consigned to live in them, said Margery Austin Turner, vice president for research at the Urban Institute, a think tank.

"Use the money to upgrade and extend the life of projects located in relatively safe and healthy neighborhoods," Turner said. "Don't use the money to extend the life of projects in distress."

Turner's recommendation strikes some as unrealistic at best.

"It isn't a legally or morally acceptable position for the agency that is today responsible for decent, quality housing for those families," said Barbara Sard of the Center on Budget and Policy Priorities, another think tank.

Sard agrees that housing authorities should look at alternatives to pouring more money into rundown properties in the worst of neighborhoods. But they have to deal with current structural problems regardless, she said.

Under the stimulus, about $3 billion will go to the housing authorities to address immediate needs. Housing authorities have to commit the money to projects by next March, and most of the money has to be spent within two years. Another $1 billion will be distributed through competitive grants, which could be used for more long-term improvements. Officials at the Department of Housing and Urban Development said there are no plans to advise housing authorities to put priority on housing projects in healthier neighborhoods.

"We can serve low-income families by investing in the quality of their housing which, in turn, improves the quality of the neighborhoods in which they live," said Melanie Roussell, a HUD spokeswoman.

The department can withhold money from any of 174 that have been designated as "troubled." None of the troubled authorities can draw down their stimulus money until HUD approves their plans. Housing authorities in San Francisco, New Orleans, Newark, Las Vegas and Detroit are examples.

Roussell said there are no plans to withhold stimulus funds from any of the troubled housing authorities, but their spending plans will be subject to greater oversight and the federal government will provide extra technical assistance to make sure they put the money to good use.

Turner said she is not calling for housing authorities to leave those in the most rundown complexes to suffer. She suggests using the stimulus money for replacement stock, such as single family houses and small apartment buildings, in safe neighborhoods. The housing downturn is making that option more affordable.

The federal government spent $2.4 billion in 2008 to help housing authorities meet capital needs, so the stimulus more than doubles the amount that housing authorities will have this year to meet a backlog estimated to exceed $22 billion. The nation's housing authorities serve about 2.3 million people, most of whom are elderly or disabled.

Preston Prince, executive director of the county and city housing authorities in Fresno, Calif., said he won't have trouble finding worthy ways to spend stimulus funds.

The city plans a new, 464-unit public housing complex, complete with a community center and swimming pool, for families with a mixture of incomes. The project has been in the works for years and was supposed to start last year, but the housing authority couldn't obtain financing.

"We're ready to start construction. It's just the financing that is a glitch," Prince said. He said they believed the $2.2 million for the city authority "is going to put us over the top."

The county authority has a list of capital improvements totaling about $10 million. It will get $2.8 million with some of the money going to new plumbing, and new windows and doors, to help lower electricity and water costs.

Prince agrees that fixing some older developments may not be the best use of the money, but that in some instances there may not be a better option. With the right management, they will thrive, he said.

"I think the investment should go into the distressed communities," Prince said. "I think it's morally the right thing to do."