Estimating Capital Needs in United States Public Housing

• In Event: Revisiting Public Housing as a Potential Solution to America’s Housing Crisis

Abstract

The United States current public housing stock is approximately 811,000 units, housing over 1.5 million people. HUD provides funding for public housing through an operating fund and a capital fund. The capital fund can be used for physical repairs, replacements, or improvements which are beyond ordinary maintenance. Capital needs are estimated using line item cost estimates and qualitative descriptions to quantify the costs for all elements required to maintain or return a property to its “as-built” condition. Costs are based on existing components and age, and must address any changes in standards since the building was last constructed or rehabilitated. All Public Housing Agencies (PHAs) are required to estimate their capital needs every five years by conducting a “physical needs assessment” (PNA), although HUD has been prohibited from enforcing this requirement since 2015. Congress mandates that HUD provide it with a national-level estimate of public housing capital needs every decade. In past years, HUD procured labor-intensive inspection-based studies using outside contractors to estimate the capital needs of the nation’s public housing stock. In the current research, a different method was tested to see if available development-level PNAs could be used as a basis for an econometric model to calculate a national estimate. The model uses data from 752 PNAs conducted at public housing developments collected from HUD administrative data, directly from PHAs via a survey, and a commercial vendor. The model estimates much of the variation in the capital needs of these developments, with an adjusted r-squared value of 0.72. We used the estimated coefficients for the intercept and independent variables from the regression model and applied them to the full population of 6,142 public housing developments. The estimate of capital needs is over $51.8 billion in 2024 dollars. (The main models exclude the New York City Housing Authority because of its outsize costs, which were calculated separately at $80.9 billion.) This modeling effort provides a tool to estimate public housing capital needs on an annual basis using readily available data, rather than relying on the labor-intensive inspection-based studies. It also allows for estimates of capital needs at the development level. The model may be updated over time using a small sample of PNAs provided voluntarily by PHAs. The collection of PNAs may be conducted as part of HUD-funded technical assistance to PHAs, or directly funded by HUD at select PHAs. The modeling approach can also be adapted to other subsidized housing programs. For example, HUD Multifamily Housing programs such as PBRA require a Capital Needs Assessment every ten years. This decennial data, combined with an adjusted version of our model, can be used to assess these programs, particularly when HUD examines subsidy renewals for participating properties.

Author

• Jennifer Stoloff, Econometrica, Inc.
  Presenting Author