George Hinson lived at the Station House in Philadelphia for eight years. The former train station had been converted into apartments serving low-income Philadelphians, many of whom, like Hinson, were recovering from addiction. But the building had fallen into a state of disrepair. According to residents, it was infested with rodents and bedbugs, covered in mold, had faulty lighting, and poor heating and ventilation.
By 2015, the owner of Station House decided to renovate it. Volunteers of America Delaware Valley, part of a national, Christian-based nonprofit that provides services to homeless people and other vulnerable populations, renamed the building The Lofts at 2601. In exchange for fixing the building, Volunteers of America received low-income housing tax credits through a U.S. Housing and Urban Development program called Rental Assistance Demonstration (RAD).
But Hinson never got to enjoy the upgraded apartments.
He ended up homeless.
The RAD program was created by the Obama administration in 2012 to tackle the severe backlog of needed repairs at America’s 1.1 million public housing units. It’s designed to motivate private developers to renovate or rebuild public housing: In a RAD “conversion,” public housing authorities turn over low-income housing to private developers, who receive private activity bonds or low-income housing tax credits to repair or rebuild dilapidated housing. Once construction is complete, the developers own and sometimes even manage the former public housing properties.
The law requires the new owners to keep each renovated unit affordable, both for existing and future tenants. That doesn’t always happen.
Tenants can be moved off-site while their apartments are under construction, but afterward, they have the right to return or to receive federal housing vouchers to help cover rent on the private market.
But for years, tenants’ advocates have claimed that residents often were treated unfairly — in violation of HUD rules intended to safeguard their rights — either by being placed in uninhabitable housing during construction or by being displaced or illegally re-screened after renovations were complete.
Hinson said he was pressured by property managers into waiving his right to return to his home after renovations were completed, and then denied his right to federal housing vouchers. That forced him to look for a new place to live in the expensive private market — without any of the required support.
HUD Spokesman Brian Sullivan said HUD is investigating Hinson’s case and cannot draw any conclusions until the investigation is done.
A ThinkProgress investigation shows that HUD is attempting to dramatically expand this federal program that privatizes dilapidated public housing without providing enough oversight to ensure that the very people it is supposed to help — low-income tenants — are protected. Low-income housing advocates say the Rental Assistance Demonstration program has a history of pushing people who already are living on society’s margins out of their homes and into dangerous and hazardous living conditions.
Advocates, tenants, and current and former HUD officials told ThinkProgress the federal agency is often slow to respond to complaints that tenant rights have been violated during or after a RAD conversion, and that it does not have the technology or staffing to properly oversee the program. Critics also say there is no guidance governing how developers should manage their properties after a conversion.
The U.S. Government Accountability Office (GAO) reported in 2018 that HUD’s inability to track people through the system put tenants and the long-term affordability of renovated homes at risk.
HUD spokesperson Jereon Brown said the federal agency is in the process of “building all the necessary oversight infrastructure” for RAD, noting it is still a new program and the agency is “learning” from each complaint it receives. HUD officials also told ThinkProgress that the agency has tweaked the way it tracks tenants following a conversion and recently hired new staff members to help oversee the program, though none are dedicated solely to monitoring whether RAD rules and rights are being followed.
As early as January 2017, attorney Rasheedah Phillips started to complain to HUD about problems at the The Lofts at 2601. After months of inaction by HUD, she and a colleague at Community Legal Services of Philadelphia filed a formal complaint last July. Five months later, on Dec. 17, Tom Davis, current director of HUD’s Office of Recapitalization, which oversees RAD, said his office was looking into Phillips’ complaint. Davis told the National Housing Law Project in a Feb. 19 email that the investigation had been set back by the government shutdown, but that it is ongoing.
Sullivan said if Hinson’s case is true, “this one example is certainly not how this program is designed to operate.”
“We’ve baked in a very robust menu of tenant protections into this program, and if our partners don’t apply those standards and it comes to our awareness, then we will intercede as we are doing with Mr. Hinson’s case,” Sullivan said.
But after eight months with still no findings, Phillips said RAD had already failed her clients.
“It’s either improve it or it’s going to blow up. But let’s call it like it is. It’s privatizing public housing, and when you do that, you have real problems,” Phillips said.
RAD’s rocky start
Even in its first year, the RAD program was the subject of “huge fights at HUD,” said Sara Pratt, a former deputy assistant secretary for enforcement and programs at HUD’s Office of Fair Housing and Equal Opportunity. Pratt helped oversee the program’s rollout in 2012, and left HUD three years later.
RAD was designed to help fund repairs and upgrades for low-income housing plagued by problems like mold, pests, leaky roofs, and cracked windows. America’s public housing had been sliding into a chronic state of disrepair since at least the mid-1990s, when Congress slashed new investments in rental assistance and public housing.
Pratt described the first year of the program as “the wild, wild West” because there was so little time to review each RAD application before it was approved. HUD officials scrambled that first year to approve the conversion of as many as 60,000 public housing units that Congress had agreed to finance, she said.
“It was popular. [Developers] were standing in line for the money and [HUD] threw the money out the door,” Pratt said. “Because of the way Congress adopted this, there was not enough startup time to create a process on how to handle applications.”
Shortly after the program was created, HUD officials began to hear that tenants’ rights were being abused.
Following an investigation in March 2014, HUD officials found that a housing authority in Laurel, Miss., had improperly evicted 27 families from a 130-unit apartment complex that it planned to turn into new housing, primarily for seniors. The evictions happened as the housing authority was applying to reconstruct the complex through the RAD program. Some residents were removed after a housing authority worker, who illegally searched their units, claimed to find marijuana. Tenants were never given an opportunity to challenge their eviction in court.
There were other instances: Pratt said she encountered cases in which public housing authorities applied for RAD conversions with proposals that would have violated the Fair Housing Act by rebuilding properties in their existing locations, which were unsafe, economically disadvantaged, environmentally hazardous, and racially segregated.
HUD’s oversight of the RAD program started to improve by the time Pratt left the agency in 2015. The agency established a more formalized, consistent, and thorough application process. It also created new rules in 2014 protecting people’s right to return to a converted property and established additional fair housing and civil rights protections in 2016, said Davis of HUD.
Those rules guided how housing authorities and agencies that own or oversee RAD properties should treat tenants throughout the conversion process and afterward. They also addressed day-to-day issues, such as ensuring housing was in good condition and accessible to people with disabilities, and setting guidelines on how to handle harassment complaints, according to HUD’s Sullivan. However, the rules are technical and written in “governmental jargon,” making it difficult for project owners or tenants to navigate, said Pratt. As a result, the rules are often not understood or followed, she said.
George Hinson’s building was renovated through HUD’s RAD Component II conversion program, which rehabs privately owned buildings that house low-income residents who receive federal housing vouchers. Construction at The Lofts at 2601 began around October 2016 after HUD approved Volunteers of America Delaware Valley to renovate the 108-unit building.
According to the complaint filed by Community Legal Services of Philadelphia, Volunteers of America planned to reduce the number of units in the building to 56, and pressured some tenants to waive their right to return to the property after construction. The organization pressured others into staying throughout construction instead of accepting federal housing vouchers, the complaint stated. A spokesperson for Volunteers of America denied breaking any rules, and says the organization is cooperating with HUD on complaints.
Developers of RAD Component II conversions are allowed to reduce the number of units in the building, but tenants receiving assistance are supposed to be placed in another unit or be given a housing choice voucher to help cover the cost of rent on the private market, Brown, of HUD, said in an email. Volunteers of America Delaware Valley was allowed to reduce the number of units at The Lofts at 2601 because it was combining efficiency apartments (which are similar to small studios) into one-bedroom units, he said.
The project was a good investment: The rehabbed portion of the building exploded in value from $1.4 million at the start of construction in 2016 to $2.4 million today, according to Philadelphia assessor’s records.
Nationally, Volunteers of America holds $7.2 million in assets from low-income housing projects that are funded at least in part through low-income housing tax credits and tax-exempt bond financing (also called private activity bonds), according to the organization’s 2018 financial audit.
Jeffrey Johnson, a former Lofts at 2601 tenant, told ThinkProgress that he lived in his third-floor apartment during construction in July 2017 while he searched for a new home that accepted federal housing vouchers. Much of floor was gutted except for his unit, which was plagued with a rat infestation, dust, and the summer heat — he said construction interfered with his air conditioning and he had no ventilation for about a month — before he was able to move out.
According to the legal complaint, Hinson alleged that in October 2017, management pressured him to sign a document that permanently eliminated his right to return once construction was complete. He said Volunteers of America later told him incorrectly that he was not eligible for federal housing vouchers because his new job as a janitor for the city of Philadelphia paid too much. Shortly after, The Lofts at 2601’s new management gave him just one weekend to move out.
Hinson spent much of the next year homeless, sleeping anywhere he could: at his ex-girlfriend’s or niece’s apartments and often, he said, in his car.
Volunteers of America Delaware Valley denied acting improperly during the conversion process and has cooperated with HUD since receiving the complaint last October, said Rebecca Fuller, the organization’s vice president of development and communications. Fuller said she couldn’t comment on individual cases, but the organization provided housing vouchers and help relocating, giving all tenants “equal opportunities to either remain in the program or move.” Sullivan said Volunteers of America hadn’t broken any rules, and has filed paperwork with HUD saying as much.
“We are confident that we have followed all of HUD’s regulations in regards to our Lofts at 2601 project and we stand by our work before, during and after construction of the project,” Fuller said. “We have been in compliance with all their guidelines and have exceeded performance expectations. The safety and wellbeing of our clients is our top priority.”
Phillips and her clients are frustrated that HUD has not stepped in: They’re still waiting for HUD officials to file a report on The Lofts at 2601.
“It’s been [eight] months and the tenants are still suffering from the impacts of the renovations and conversion,” said Phillips. “People are still suffering and there has been no clear path forward and no response yet so its been very frustrating.”
HUD can take months to respond to complaints that a RAD conversion has gone wrong, according to tenants’ advocates.
Over a year ago, HUD began investigating a Jan. 25, 2018, complaint filed by the legal advocacy group Disability Rights Maryland that accused the developers of Baltimore public housing complexes undergoing RAD conversions of improperly evicting or trying to evict several tenants. A year later, David Prater, an attorney with Disability Rights Maryland, told ThinkProgress in an email: “We’ve only recently been in conversation with HUD about the complaint.”
HUD, Prater said, officially responded to Disability Rights Maryland’s complaint almost 11 months later — on Dec. 12, 2018. The federal agency recommended that the owners of the property use a HUD template to simplify complicated paperwork for tenants. But Prater said it was too little, too late.
“The time it took for them to get back with a response, given the complaint that we filed, the data we filed, the samples we provided, the proposed remedy that they offered or the solution that they offered, way too long,” Prater said. “It doesn’t seem that they needed a year to land at where they did.”
Sullivan defended HUD by saying that the agency essentially was forced to search for a needle in a haystack. Disability Rights Maryland’s complaint included “seven unidentified residents among many hundreds of households living in these properties,” prompting HUD to “launch a broad investigation among a dozen owners in a number of properties,” Sullivan said.
“Acting on very little specific information from the complaint, we cast a wide net as part of an exhaustive, time-consuming technical and legal review of how residents were being treated,” Sullivan added. “We contacted each owner, examined their policies and practices and provided sample documents where we thought we could help. During this past year, we turned over every possible stone to make certain tenants were being treated fairly.”
Brown, of HUD, told ThinkProgress in an email that the federal agency has not received many complaints like the ones it received from Community Legal Services of Philadelphia and Disability Rights Maryland and is “learning from each one.”
“HUD is successfully reviewing these complaints much more quickly than prior complaints. The time to figure out what happened is very situation-dependent,” Brown said. “In some cases, a complaint can be resolved promptly and in others, particularly when the parties disagree on the underlying facts of the case, it can be very time-consuming.”
HUD appears understaffed on oversight
ThinkProgress has identified historically low levels of staffing at a number of HUD divisions that likely contribute to slow response times. For example, HUD’s Office of Fair Housing and Equal Opportunity (FHEO) oversees fair housing complaints or allegations of discrimination against a member of a protected class, such as racial minorities or people with disabilities, during RAD conversions. A ThinkProgress review of FHEO’s staffing levels documented in congressional budget justification reports, a 2004 GAO report, and a 1995 Commission on Civil Rights report found the number of employees has dwindled to its lowest levels since at least 1981.
Staffing at the office has declined steadily over the past 15 years, from 744 full-time employees in fiscal year 2003 to just 491 by fiscal 2018. According to congressional budget justification reports that outline agencies’ annual funding requests, the Obama administration consistently asked for more FHEO employees but Congress reduced staffing levels every year of his second term.
Under the Trump administration and HUD Secretary Ben Carson, the federal agency has changed course, requesting decreases in FHEO staff, which are achieved through attrition. The administration’s fiscal 2019 request sought to decrease the office another 10 full-time employees to 481.
In its 2010 Congressional budget justification report, HUD itself warned that FHEO’s drastic staffing cuts would “likely” negatively impact the office’s “effectiveness and efficiency.” Housing discrimination cases had steadily been increasing at the time — due to education and outreach initiatives that informed people of their civil-rights protections — while FHEO staffing levels dropped from 744 in 2003 to 601 full-time employees in 2009.
Other HUD offices that field RAD violation complaints have also seen their staffing levels dwindle over the past decade. According to Brown, HUD’s Office of Housing reviews complaints about RAD’s rental assistance and federal rental assistance voucher requirements during conversions. Staffing levels at the office have dropped from 3,221.5 full-time employees in fiscal year 2010 to 2,406 in 2018.
The Office of Public and Indian Housing reviews cases when public housing and project-based voucher requirements are not being followed during conversions, said Brown. But staffing levels there have dropped from about 1,519 full-time employees in 2010 to 1,316 in 2018.
HUD’s Office of Community Planning and Development reviews cases in which tenants were not properly relocated during RAD conversions, said Brown. That office’s staffing levels dropped from about 813 full-time employees in 2010 to 695 in 2018.
HUD has limited visibility into RAD’s trouble spots
If RAD is a flawed program that encourages private development of low-income housing, as advocates have told ThinkProgress, then HUD’s ability to intervene when rights are violated is important. But HUD has a limited ability to identify problems before they arise, and isn’t adequately tracking housing outcomes after RAD conversions to chase after violators, according to Davis, of HUD.
HUD reviews cases when it receives a “warning sign” of potential violations — often tips from advocacy groups, housing authorities, or even newspaper articles, said Davis. But HUD’s ability to catch the cases that local reporters and advocates miss is severely limited.
Recently, HUD officials have tried to improve the agency’s monitoring of the program. Since September, HUD has added “close to 10” full-time employees to help oversee the RAD program, boosting the number of dedicated staff members working on it to over 60, according to Brown, HUD’s spokesperson. However, while some new hires will help ensure RAD conversions go smoothly, none of them is “100% dedicated to reviewing complaints,” Brown said in an email.
“RAD is currently enhancing and reorganizing how we staff some of the post-closing compliance review activities and the new hires are part of that picture,” Brown said.
The agency also still does not have the technology to adequately track residents as they move through the program, said Davis. There are, for instance, different databases for people living in a public housing authority building or in a converted RAD unit, and those who are receiving federal housing vouchers, but none of those databases communicate with each other.
“The challenge that we have with the data is HUD has not gotten the kind of technology dollars that we need over the years, so the data is not as flexible to do some of the tracking that we need to do,” Davis told ThinkProgress. “There is no way to track that person through the system.”
Still, HUD, under Carson, continues to forge ahead with its plans to dramatically expand the program despite a number of warnings that it is failing the very low-income people it is supposed to help.
In October 2017, Shamus Roller, executive director of the National Housing Law Project, a legal advocacy nonprofit, warned HUD that its failure to monitor the RAD program had forced tenants to live in uninhabitable conditions, lose their homes or undergo illegal rescreening to return to them. Roller also cautioned that the program was jeopardizing the long-term affordability of converted units.
A March 2018 GAO report confirmed that HUD has not been sufficiently tracking RAD outcomes, such as changes in rent or the relocation of households, and has not assessed some potential risks that could jeopardize the long-term affordability of converted units. The report prompted Rep. Maxine Waters (D-CA) to call for the program’s reform. In January, Waters became chair of the House Financial Services Committee, which oversees public and private housing policy.
None of this has deterred the Trump administration from increasing the number of units renovated and rebuilt through this program. Last year, HUD celebrated 100,000 homes being preserved through the RAD program and requested an extra $100 million in fiscal 2019 to help fund more projects.
During a March 2018 House appropriations subcommittee hearing on the fiscal 2019 budget, Carson said HUD wanted to “convert many more distressed public housing units” through RAD.
“To date, RAD has stimulated more than $5 billion in private investment to preserve [public] housing,” Carson said. “Simply put, RAD is working. The budget proposes to open the door wider and allow more communities to participate in this innovative approach.”
Meanwhile, the Trump administration has tried to block other methods of repairing public housing. In its fiscal 2019 budget proposal, the administration asked Congress to stop funding public housing capital repairs as well as HUD’s Choice Neighborhoods program — an Obama-era grant program that revitalizes distressed public housing complexes and the neighborhoods that surround them at a cost of only about $150 million a year. This month, Congress bucked Trump’s efforts, providing about $2.7 billion for capital repairs (a slight increase from 2018) and level funding for the Choice Neighborhoods program.
Ed Gramlich, a senior adviser at the National Low Income Housing Coalition, called on Congress to provide even more funding to repair America’s public housing capital repair backlog, which he says now exceeds $50 billion.
Meanwhile, as the Trump administration continues to forge ahead with the RAD program, Phillips is still waiting for HUD officials to help her clients.
“RAD has national implications on public housing,” said Phillips. “It was authorized in 2012, so they’ve had some time to get it together. Why are we converting thousands of units when there’s no oversight?”
The RAD program, she added, “should not be the ultimate solution for how we fix public housing.”
As for George Hinson, he never did get federal help after he lost his Station House apartment. By October 2018, he had scraped together enough money from his job as a city janitor to pay $625 a month in rent and share an apartment with a friend.
His year of homelessness was over.