Private Investment in Public Housing – Berkeley Residents Cry Foul

January 5, 2011; Source: San Francisco Bay Area Indymedia | Earlier this year, NPQ wrote about the Obama Administration's privatization moves in some federal programs (here and here), including HUD's proposal called the Preservation, Enhancement and Transition of Rental Assistance Act (PETRA), aiming to attract private investment into existing public housing and to increase the amount of public housing converted to mixed income housing.

In Berkeley, Calif. some residents and advocates of public housing are saying this type of private investment will deprive people of much-needed public housing.

Some people believe that PETRA is needed to get capital into public housing. Public housing has an immense investment backlog to be remedied, but it is difficult to imagine that it will be solved just by public funding. Other observers think that PETRA is simply a scheme to reduce the supply of public housing and kick poor people out of their homes. That's certainly the feeling of some advocates in Berkeley, Calif., where the public housing authority is hoping to find nonprofit developers to buy 75 public housing units.

The article linked to above from Indymedia refers to "greedy non profit developers" depriving poor people in Berkeley of their public housing. How often do we read about "greedy" nonprofit developers? It is something of an oxymoron for most of us, but this article charges that "the non profit developers [are] interested in making a fortune from the proposed disposition scheme, that will displace many poor families from their long time homes."

One might guess that the nonprofit developers involved in this plan would view their involvement as saving affordable housing, though the units will be converted to Project-based Section 8, which gives them a HUD-established market rate rent while the tenants pay a limited percentage of their income for rent. The article charges that the nonprofit developers will "kick back" some of the market rate rents to the Berkeley Housing Authority.

What would make the public housing tenants not want nonprofit ownership and management as opposed to the Housing Authority's? We would guess it might be something concerning the rights of tenants in public housing versus what might be lesser rights of tenants in privately owned housing. Are public housing tenants really that suspicious of nonprofit developers? We would love to hear from you.—Rick Cohen