Just the Facts!

…about preserving public housing in Minneapolis.

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No, it does not mean that your housing is at risk.  When you read the Guiding Principles, you will notice that they are a promise to preserve our housing and protect public housing residents. Even if a plan does emerge for major renovations or redevelopment of the building where you live, any change would likely be years away. In addition, your lease protects you from being evicted or losing your housing benefits.

Here is what the Guiding Principles ARE:

  • A pledge that no resident will lose housing because of redevelopment.
  • A commitment to fully inform residents of any possible changes that could affect them, and involve residents deeply in the planning process.
  • A promise to provide residents with choices, options, and assistance in the event of any change.
  • A framework from which specific plans, if needed, can emerge.
  • A declaration that all residents will have the first right-of-return to their site.

Here is what the Guiding Principles ARE NOT:

  • A specific plan to redevelop any building (or all of our buildings).
  • An indication of any change to your home or apartment, or your public housing benefits.
  • An announcement of any financial or other deal with a private partner.
  • A signal that residents need to prepare for anything, or do anything (other than become informed and join in the conversation, if they wish).

Not nearly enough. MPHA’s funding from the federal government falls far short of addressing the major structural problems across our 6,000 public housing units. We estimate we will face about $137 million in major repair needs across our properties in 2018. To address these needs, Congress in recent years has awarded $10 million a year. This mismatch cannot continue, and we do not want to lose any of this vital housing. So we are beginning a process to explore how we can look beyond federal government funding and preserve our housing for the future. Before this exploring process begins, we wanted to put our values and our commitment to residents in black-and-white–that’s where the Guiding Principles come in.

Absolutely not–in fact, this is exactly the opposite. We pledge to our residents and to the community that every effort and action MPHA will take is about preserving and improving our housing for the low-income people we serve. MPHA does not want to lose a single unit of affordable housing or see a single family lose their housing benefit. Anyone who tells you MPHA is trying to eliminate housing or do anything to harm the people we serve is misleading you, and does not understand our mission statement.

Not at all. Under important federal requirements, MPHA would have to follow a lengthy, transparent, multi-step process and gain HUD’s approval prior to the sale of any MPHA land or buildings. This process is called “disposition” and the rules are: (1) any disposition action must be developed with adequate resident council consultation; (2) MPHA must first offer the property to any eligible resident group; (3) the disposition action must be clearly stated in the agency plan, a public document which is approved by the board; (4) families must receive advance notices; (5) any resident affected must be relocated to another similarly affordable unit. HUD requires all these conditions and more to be in place prior to submitting an application. In May 2017, MPHA adopted Guiding Principles that go well beyond these requirements. Secret or backdoor deals are not only impossible, they are illegal.

No. Our only goal is to preserve affordable housing. First, private investors might not always be necessary. And many “private” investors are actually nonprofit organizations that share our affordable housing goals. But it’s true that private, for-profit investors–utilizing the Low-Income Housing Tax Credit, or LIHTC–might play a role in the financial formula that helps us preserve our housing. In most (likely all) cases, MPHA would continue to own the land–which means we hold all the cards! In any deal we make, MPHA will negotiate the terms to include protections for tenants against rent hikes and unfavorable changes to the lease. The deals could also include MPHA continuing to manage the property, having the building returning to MPHA ownership after a certain number of years, and language that requires the housing to remain affordable in perpetuity.

No—certainly not in the way we think most people understand that word. “Privatizing” is a loaded term that means different things to different people, so here are the actual mechanics:  for the investor to claim the credit, the IRS requires us to temporarily share ownership of the property with them, typically for 15 years. The affordability of the homes is locked in for much longer—at least 30 years, and potentially in perpetuity. Never does the investor have the power to “turn it into condos,” raise rents, or evict tenants who have rights and benefits guaranteed under the tax credit rules, federal subsidy laws, and state law–nor do they have the ability at any point to sell the building to someone else. And MPHA will provide public housing operating subsidies to the property, which guarantees rents will not go up and public housing tenants will be served. If you’d like to read more, see our commentary in the Star-Tribune.

No. In fact, the RAD program contains extensive resident protections that forbid those outcomes. RAD is a HUD program that allows public housing authorities to move properties from one federal funding platform–public housing–to another: Section 8 project based vouchers (PBVs) or project based rental assistance (PBRA). Moving to a Section 8 subsidy creates a more stable funding stream for the property and–crucially at a time of backlogged capital repairs–opens up opportunities to bring in fresh investment to fix the buildings. It is a complicated process for public housing authorities, which have to justify that it will make sense financially. And a “cap” on RAD units means we have to get in line. But for residents, the process should be seamless: residents cannot lose their housing, are guaranteed a right to return if they have to move out for any renovations, and rent is calculated just as before. Nonetheless, RAD requires extensive resident information efforts even before the housing authority submits an application. Although the funding comes from Section 8, it does not mean residents are simply given a housing voucher (although one perk of the program is that after a year or two, residents in a RAD building who do want a housing voucher can hop to the front of the voucher line and choose to take one if they wish.) You can read more about the protections and process for residents under RAD on this page from HUD (https://www.hud.gov/RAD/program-details-residents) and browse case studies of how RAD has preserved public housing in other cities (https://www.hud.gov/RAD/news/case-studies).

That’s a nasty rumor — and it’s just plain wrong. None of the changes to our funding or investments in our buildings will–or even can, for that matter–change the way rent is calculated, or make the buildings unaffordable to the people who live there now. Here’s where we think this rumor comes from: projects that use LIHTC investments in the private or nonprofit sector often set rents to be affordable at higher levels than public housing–say 50, 60, or 80 percent of AMI. Why would they do this? Because there is no “deep” subsidy involved that can subsidize the rent enough to make the units affordable to people with lower incomes. However, MPHA is a public housing authority that brings deep, public housing and Section 8 subsidies to the table. In fact, we are one of the only big owners and developers around who can make a project financially viable for tenants below 30 percent of AMI (who pay 30 percent of their income toward rent), and we take that mission very seriously. Any redevelopment or rehabilitation project we do will have guaranteed, long-term affordability for extremely low-income households. No matter the underlying financial structure, the buildings MUST remain affordable to the people who live there now (who also have the first right to return if they have to move out temporarily for renovations). There is simply no other outcome.

In fact, this is about protecting MPHA’s properties from gentrification. Gentrification is what happens in the non-public-housing market when affordable neighborhoods, houses, and apartments become too expensive for the people who live there. Although the city or state may be able to pursue policies that slow or prevent it, MPHA cannot control gentrification in the private property market. However, we can control what happens with our own properties! Despite what you might have heard, our goal is to preserve deeply subsidized, affordable housing and do our part to fight against gentrification.

We are getting there. Over the course of late 2017 and early 2018, we have developed a Strategic Vision and Capital Plan, which you invite you to download by visiting our Policies and Publications page. However, this is best thought of as the menu of options we may have available to us for preserving our public housing, and some initial thoughts about how we might put those pieces together to do that. It is based on detailed study of our buildings and their needs, and the challenging landscape of funding options available to a modern public housing authority. Our Board of Commissioners approved this Strategic Vision in May, 2018. We began work on this vision and plan only after the board had adopted our Guiding Principles, a “bill of rights” for residents that promise certain core protections regardless of the plan that moves our preservation efforts forward.

It is still too early to say. Through its Capital Fund Program, MPHA works to identify the most critical needs and use its limited resources to make repairs and improvements. Currently we have over $127 million in immediate needs and this will increase to $510 million in the next 20 years. MPHA receives about $10 million per year from HUD for capital improvements. This discrepancy puts our portfolio at risk. MPHA’s goal is to utilize the framework in the Guiding Principles to raise significant resources in order to be able to make major improvements to our properties over the coming years.

MPHA has 42 highrises and 900 family homes. We expect to find that some buildings need extensive work in the near-term, whereas others are in much better shape. Even if major work were indicated for every building, MPHA would have to phase in the work over many years as it would take a very long time–and an enormous amount of funding–to move through them.

Minimizing displacement is one of our primary goals, declared in the Guiding Principles. MPHA cannot promise that no one will have to move at any point in this process. Current public housing residents whose apartments have been renovated know that it is typically necessary to move to another unit while the work is done. With the significant shortfalls in our funding, we are looking to preserve, improve and renovate for the future across as many of our units as we can, starting with those with the greatest need. In many cases, this may mean a temporary move while the work is completed, and affected residents will always have choices. In many cases, it may be possible to simply move to another unit in the same location (as we complete renovations in stages). No matter what, residents of a building are guaranteed the first right-of-return, and MPHA will pay for relocation assistance (like reimbursement for any moving costs, cable or telephone hook-up fees, etc.).

Here’s one related point worth clarifying: You might have heard that MPHA plans, though this process, to “displace” 26,000 people. Along with the many other reasons this is inaccurate, MPHA does not have 26,000 people living in public housing. Although MPHA serves around 26,000 people with our programs, 17,000 of them are in families with Housing Choice Vouchers (Section 8).

The only time we would even consider simply turning a building, vacant land, or any of our properties over the private market is if we truly believe MPHA residents will come out ahead in a big way. In the case of housing, this would have to mean replacing those units with something even better elsewhere, and making absolutely sure every current resident family is fully taken care of. Any decision like this would only happen after extensive discussions and negotiations, with residents engaged at every step, and a lengthy and public regulatory process (see related question above). This is our promise, and we expect you to hold us to it.

Residents weighed in on the Guiding Principles through a number of well-publicized meetings over three months. This does not mean the discussion is over; MPHA continues to meet with any resident councils or other groups who wish to discuss the Principles and learn more about our capital reinvestment initiative.

Here is a timeline leading up to approval by our board:

  • MPHA created an initial draft of the Guiding Principles in February 2017.
  • At the beginning of March, this draft was sent to our Board of Commissioners to notify them that we would be presenting it to residents for review.
  • On March 2, the Executive Committee of the Minneapolis Highrise Representative Council (MHRC) first reviewed the draft; the full MHRC board (with representatives of every high-rise building) discussed the draft at its March 16 meeting, with MPHA staff available to answer questions.
  • In early March, MPHA posted the draft prominently on its web site, Facebook, and Twitter accounts, and sent the draft out for translation into multiple languages (which were subsequently posted when they arrived a few days later).
  • At the same time, in the first week of March, MPHA reached out to the Defend Glendale group to offer a meeting to share and discuss the draft. (Glendale Townhomes is not a high-rise, and so is not a part of the MHRC. There is currently not a functioning resident council at Glendale.)
  • On April 12 and 13, MPHA Executive Director Greg Russ presented to the MHRC “Area Meetings.” These are large, well-publicized meetings open to all high-rise residents. They were well-attended, and Mr. Russ answered a large number of resident questions.
  • On April 17, Mr. Russ joined a Resident Council meeting at one of our large, downtown Minneapolis buildings (314 Hennepin – “The Atrium”). All building residents were welcome, and the large meeting room was full to capacity. Residents heard Mr. Russ’s presentation, and asked many clarifying questions during the extended meeting. Comments from this meeting were submitted to MHRC, which integrated them into its formal responses.
  • On the evening of April 17, Mr. Russ first met with Defend Glendale. The meeting included residents and a number of non-resident attendees. After a number of hours the conversation was still incomplete, and the meeting needed to be continued at a later date.
  • On April 26, MPHA’s Resident Advisory Board (RAB) reviewed, discussed, and approved the draft.
  • On May 5, Russ returned for a follow-up meeting with Defend Glendale. The group was made aware of their opportunity to submit suggestions or amendments. They declined to do so.
  • On May 17, MHRC submitted substantial recommendations, all of which were promptly incorporated into the draft. MHRC improvements resulted in the replacement, addition, or substantial rewording of approximately seven paragraphs.
  • On May 24, prior to the monthly MPHA board meeting, the public housing Tenant Advisory Committee (TAC) discussed with Mr. Russ and then approved the draft of the Guiding Principles that included the MHRC additions.
  • Later on May 24, the MPHA Board of Commissioners took up the draft at its regular monthly meeting. The Board made two minor changes to paragraph-order and wording, and approved a final version of the Guiding Principles.
  • This version was promptly highlighted on MPHA’s web site and social media, and sent out for translation. Once the translations were received, MPHA delivered a copy in mid-June to all public housing residents.

Last updated June 28, 2017

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