Arguments Why Public Housing Authorities Should Merge?

Are there too many PHAs?  I am not postulating but simply asking a question.  There are around 3500 public housing authorities throughout the United States administering  around 3.2 million affordable housing units mainly through public housing and housing choice voucher programs.  The majority of these housing authorities are extremely small.   In some states there are dozens of housing authorities.  On HUD’s website, you can count somewhere around 68 alone in in the Boston area.  Click Here to go to HUD’s Website. 

A report (find it here) from the Center on Budget and Policy Priorities put out a large report in 2016 that adovacated for more consolidation.

There is an argument that a smaller housing authority might understand the unique needs of its respective community better than a mega housing authority that merges several together.  However; are we losing something here?  In these modern times where the private sector is constantly forced to remake itself year after year, is the public housing industry refusing to a hard look in the mirror?  Lets take a honest stroll down a different path of thinking.

Increased Cost

A report by the Center on Budget and Policy Priorities in 2016 made more than a few cogent arguments for the idea of consolidating housing authorities.   One of the central arguments is that there are hundreds if not thousands of PHAs around the country that serve an extremely small number of households but have high administrative costs.  Just owning a building, hiring staff and owning the proper systems to do the work make the costs of administering a small program extremely high.  An Abt Associates report from 2015 showed that PHA’s below 5,250 units were administratively more costly per voucher than the larger PHAs.  The costs per voucher did slightly increase for PHAs with more than 10,000 vouchers.

Reduced Resident Choice HCV:

In addition, residents must lease up in the jurisdiction of where they receive a voucher.  This can limit choice to potentially cheaper living situations in better neighborhoods or areas.  Of course there is portability but the administrative inefficiency of that process is well known.  The Moving to Opportunity mobility program was born out of the need to give low income minorities more options to better areas.

Hard to Audit and Manage

Even outside the PHA world it is not easy for the Department of Housing and Urban Development to audit and manage the thousands of housing authorities across the USA.  There are far too many PHAs to worry about and it is unreasonable to think that HUD would be able to keep an eye out on all of these various programs across the country.  As we have seen, with out proper oversight there are some agencies that do not follow regulations correctly, mess up finances, have issues with fair housing or just plain out do not keep up with program changes.  See this quote below:

For core compliance monitoring, HUD’s level of effort for small PHAs is grossly disproportionate to the level of risk, total units involved, and subsidy dollar volume. … [I]t is reasonable to conclude that HUD invests from half to two-thirds or more of its level of effort on 10% of its units, and an even lower level of related risk in terms of subsidy funds, which is about 5%.^[9]

Small PHAs less Innovative on Average:

A Government Office of Accountability report showed that  smaller agencies are less likely to invest in technology and partner with agencies that might help their tenants improve various issues like jobs and or barriers.  While it is not necessary for housing authorities to pretend they are Facebook or Google, innovation is a necessary component of keeping up with the times.  Thinking outside of the box and maximizing technology within the social housing sector can help an agency gain an edge and do their work more efficiently.

Several Different Models Already in Place Across USA:

Some arguments about local needs fall apart when you consider how different many regions and states operate in the USA.  According to the Center on Budget and Policy Priorities, each PHA serves around 850 households.  However look at the differences in between states.

• On average in Nebraska, a PHA serves 177 households.
• However in Nevada there are only three PHA’s in the state that serve on average 6,000 persons.
• In Montana, the state administers a good portion of the vouchers (almost two-thirds) and Idaho has a state department that manages around 1/2 of the vouchers.
• Six regional PHA’s administer almost 75% of the vouchers for the state and nearly 15% of all the public housing.  This gives families more choice in moving and helps with bringing down administrative costs.

Conclusion

It makes sense to at least start the discussion on this idea.  There are so called super housing associations in the UK.  They have gone the route of integrating dozens of housing associations under an umbrella company to leverage economies of scale.   If subsidies do not increase in the near future, PHAs might need to decide on merging.  The question will be does it happen voluntarily or matronly?