DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: PREPARE A NEW PUBLIC HOUSING CAPITAL PLAN

2-H
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: PREPARE A NEW PUBLIC HOUSING CAPITAL PLAN

 

Problem Identification:
HABC’s recently-prepared five-year capital plan is unrealistic with respect to future demolitions/dispositions and excessive in the amount of funds used for purposes other than the actual modernization of public housing.

Recommended Action:
Prepare new capital plan that: (a) increases hard cost spending on modernization; and (b) realistically addresses what the agency can keep and rehab and what the agency must demolish/dispose.

Classification:
Organizational

Functional/Operational Area:
HABC

Estimated Annual Impact:
By prioritizing capital funds for modernization, HABC could make available more than $39.2 million over the next five years in additional resources for the rehabilitation of existing structures.

Estimated Implementation Costs:
None

Barriers to Implementation:
The largest barrier to implementation is ‘weaning’ HABC of operating subsidies from the capital budget. The other barrier is the many ‘resident programs’ that are funded through the capital budget and that should not be funded from the capital budget so long as such extensive capital maintenance and repair needs exist.

Projected Implementation:
90 – 180 days

Next Steps:
Assign a staff committee to prepare a new capital plan. Following staff development, make this plan available for public comment and, eventually, board approval.

Analysis:
The current five-year capital plan is not a useful planning document and must be revised. Of the $32 million HABC receives annually, the plan allocates $7.4 million for operating-type expenses (including an average of $5.2 million for vacancy preparation), $2.92 million for resident programs, and $2.5 million for ‘development’, i.e., new construction. This represents a total of $12.8 million annually. Even if HABC were to allocate $5 million annually for these purposes, it could make available $39.2 million over the next five years for badly needed modernization. In other words, HABC would have a radically different plan, one that would result in the modernization of several thousand more units.

Probably due to the excessive spending on the above-mentioned items, the current capital plan fails to make any serious capital planning decisions. Mostly, it spreads a small amount of funds lightly over each property. However, the agency has serious decisions to make with respect to a number of physically distressed properties, including Westport, Mt. Winans, O’Donnell, Claremont, Cherry Hill, Scattered Sites, McCullough, Dukeland, and Shipley Hills. These properties receive only nominal funding in the capital plan, their future suspended in a state of disrepair. By reducing spending on non-essential items, HABC should be able to rescue more of these properties; however, even then, it will not have funds to renovate one or more of them and the most responsible action would be to demolish or dispose of those properties.

Because of the scarcity of capital dollars for modernization, the agency should also reconsider its plans to develop new elderly housing in Cherry Hill. Such funds would best be used to renovate existing elderly facilities.