Reimagining the Public Housing Authority of the Future

The U.S.’s public housing authorities (PHAs) are at a turning point. PHAs play an essential role in providing stable housing for low-income households, redeveloping communities, and offering resources for households to break the cycle of poverty. They provide more than one million units of public housing and administer more than two million vouchers across the U.S.

Before the pandemic, many PHAs were already struggling to effectively administer vouchers, deal with aging building stock and deferred maintenance, manage rising operating costs, identify gap financing for housing projects, reduce years-long waitlists, hire and retain skilled workforce, and manage complex programs with outdated technology and systems.

The pandemic exacerbated these strains. Now, driven by some of the most sweeping policy changes in decades along with tens of billions of dollars available for affordable housing projects through funding made available in recent legislation, many PHAs are evaluating options for reimagining their approach. They’re embracing this transformative moment by considering major changes to maximize the impact of federal funding programs, modernize their housing stock, and optimize their organizational efficiency and technology to better serve their tenants and communities.

Seizing the moment as opportunities arise

The challenge is how to design the optimal strategy for capitalizing on new programs and funding opportunities while complying with and adapting to updated guidance and policy changes. Some of these new opportunities and requirements arise from:

• Changes to income calculation, net family assets, income reviews, and other key tenant selection areas outlined in the January 2024 final rule of the Housing Opportunity Through Modernization Act
• The need to train staff on the finalized U.S. Housing and Urban Development (HUD) National Standards for the Physical Inspection of Real Estate (NSPIRE), which replaces its Uniform Physical Condition Standards and Housing Quality Standards
• The addition of 14 agencies in March 2024 to the 125 agencies participating in HUD’s Moving-to-Work demonstration program, which lets them innovate and flex funding for enhanced housing and service delivery options
• The deadline for PHAs to apply for the Rental Assistance Demonstration program being extended to 2029

Some states, cities, and counties that received State and Local Fiscal Recovery Funds authorized by the American Rescue Plan Act of 2021 have worked with PHAs to finance housing projects and programs. New sources authorized under the Inflation Reduction Act have tens of billions of dollars available for energy-efficient upgrades and retrofits for affordable multifamily developments. Changes to tax credit programs are providing additional capital sources for energy efficiency upgrades and onsite energy generation.

These new policy changes may seem overwhelming, but PHAs also have a major opportunity to harness new funding sources and apply innovation to redesign their processes, technology, real estate decisions, and service delivery. With the right guidance from advisors with in-depth expertise, you can take stock, pivot, and re-envision housing programs with better accessibility and efficiency in mind. Here are some key considerations for a successful transformation.

Develop or refresh your strategic plan

Sound strategic plans start with evaluating your current state, assessing what has worked and what needs improvement, identifying national leading practices, and charting a roadmap that can be gradually implemented to match the reality of your culture, budget, and operating model. For Moving-to-Work agencies that are vulnerable to having disparate activities and financing become spread too thin, the focus provided by a strategic plan is critical.

Effective strategic plans involve:

• Engaging leadership to analyze trends, identify risks, and develop ideal outcomes
• Assessing internal capabilities and the external ecosystem to capture institutional knowledge, benchmark against leading practices from peer PHAs, evaluate creative financing opportunities, and engage stakeholders
• Prioritizing and sequencing activities, identifying who owns each activity and can move it forward, socializing the strategy to gain buy-in, and setting key performance indicators to gauge progress
• Developing an implementation roadmap and process for making periodic updates as needed

Seek help with a business process improvement plan

Many PHAs struggle with long waitlists, insufficient or inefficient administrative processes, siloed procedural documentation, unsupported or untrained frontline staff, and other challenges. Turning to advisors experienced with small and large agencies for help with creating a business process improvement plan can transform Section 8 departments, optimize agency-wide processes, reduce risk, and enhance the customer experience.
A sound business process improvement plan should feature:

• Efforts to understand your agency’s people and culture
• Assessment of your organizational structure, policies, and processes
• Analysis of the customer experience based on interviews with residents, service providers, property owners, staff, and other key partners
• Review of program performance, effectiveness, and compliance in the context of existing strategic plans and initiatives, state and local housing goals, and HUD regulations
• Future-state recommendations for efficiently allocating resources and caseloads and streamlining policies and processes
• Development of an implementation roadmap and supportive elements such as new process maps, standard operating procedures, training materials, and technical assistance for staff and key vendors
• A system for monitoring outcomes and creating a framework for continuous process improvement

Assess your data risk and modernize your technology

Many PHAs face challenges with their current software solutions that limit their effectiveness with voucher administration, waitlist management, payment processing, asset management, and household/owner portals. Data risk and cybersecurity concerns also present ongoing obstacles and pose immediate emergencies when breaches occur.

To transform your capabilities and lower your security risks, consider:

• Carefully mapping your business processes and requirements as well as current software pain points
• Engaging experts to conduct a data and cybersecurity risk assessment to better understand your potential exposure
• Evaluating the pros and cons of appropriate software solution options and gauging how their offerings map to your unique technology needs and goals—being open to the possibility of customizing, integrating, or mixing and matching modules and systems
• Assessing how responsive any new solutions or technologies will be to keeping you compliant with new regulations and federal funding opportunity requirements
• Engaging third-party partners to help with software migration and/or implementation so that you can maximize usability and customization and minimize service interruptions
• Developing customized user acceptance training that covers a variety of software users across business processes

Explore innovative project structures, partnerships, and financing

While PHAs have been asked to do more with limited federal funds for many years, the opportunities for real estate innovation have never been greater than now. Recent developments give you the opportunity to explore new project structures and partnerships, incorporate data-driven tools, and assess a range of financing sources to reduce costs and serve more households.

Efforts should include:

• Reviewing your assets holistically and developing consistent prioritization and reporting tools for effective decision-making—looking across your portfolios for Rental Assistance Demonstration conversion, Section 18, resyndication, and recapitalization/repair opportunities
• Evaluating new financing sources and tax credits available through the Inflation Reduction Act, keeping in mind compliance requirements, anticipated capital and operating impact, and potential for source stacking and braiding
• Identifying which data-driven tools can help you more easily perform project stress testing, evaluate feasibility, and support project underwriting