During San Francisco visit, HUD secretary says private sector will save public housing

San Francisco’s troubled Housing Authority may open as many as half of its housing units to private investors, a plan that received warm praise from President Barack Obama’s housing secretary during his visit to San Francisco on Tuesday.

Under a federal scheme called RAD (rental assistance demonstration), up to 3,000 of the Housing Authority’s 6,054 units could be put in private hands in order to make necessary fixes that the cash-strapped public housing agency simply cannot afford. The Housing Authority Commission could approve enrollment in RAD as soon as Thursday.

In the meantime, Mayor Ed Lee’s plan to reshape San Francisco’s dilapidated public housing using private capital — which would fund repairs and rebuilds, leaving day-to-day operations to The City’s stock of eager nonprofits — received the sign-off from U.S. Housing and Urban Development Department Secretary Shaun Donovan.

“This is a model for the rest of the country to follow,” Donovan said while on a tour of Valencia Gardens, which was rebuilt seven years ago via a public-private partnership. “This is as beautiful a place as I could imagine. … Any parent would feel lucky to raise their children here.”

Much of The City’s neglected family housing — including some of the sites most notorious for violence, such as Sunnydale in Visitacion Valley — is already slated to be rebuilt by private investors under Hope SF.

At Hope SF sites, “extremely distressed” public housing, some of which dates from World War II, is demolished and replaced with a mix of public and market-rate units. The market-rate units allow the investors to turn a profit on the construction, while allowing existing residents of public housing to stay.

This was the model undertaken at Valencia Gardens, which was rebuilt under Hope SF’s predecessor, Hope VI. However, programs like RAD would leave non-Hope sites also open to private investment.

“Ultimately, we want every site we invest in to become investments for the private sector as well,” Lee said Tuesday. Private investment may be the only way out of the decadeslong funding crisis public housing is in, officials said.

The Housing Authority’s budget was cut thanks to federal sequestration in April, and the ongoing budget battle might mean another round of cuts Oct. 1.

Donovan said “creative solutions” such as private investment and nonprofit partnerships are needed to fill the gap.

On the ground, this translates into the public ceding control over what used to be a public asset to private parties, said Sara Shortt, executive director of the Housing Rights Committee.

Correction: This story was updated Sept. 30 to correct the spelling of Martin Ugarte's name in the photo caption.

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