By Bendix Anderson

After more than a decade of rebuilding distressed public housing, federal officials have given the HOPE VI program a new name and a broader mandate to look at entire neighborhoods.

“A HOPE VI development that is surrounded by disinvestment, by failing schools, or by other distressed housing has virtually no chance of ever truly succeeding,” says Shaun Donovan, Secretary of the Department of Housing and Urban Development (HUD). “That’s why we’ve introduced our Choice Neighborhoods Initiative.”

Choice Neighborhoods is HUD’s new name for HOPE VI—think of it as HOPE VI with a raise, a snappy new job title, and some expanded responsibilities. The $250 million proposal, still under discussion in Congress, would continue to mix residents with different income levels and financing from different sources in renovations of distressed public housing. But Choice Neighborhoods would also strengthen intervention in the areas around distressed public housing, demanding that local officials examine and take on factors at work in their neighborhoods from transportation to schools to the condition of nearby housing.

Much like the federal Partnership for Sustainable Communities, the proposed  Choice Neighborhoods Initiative would encourage cooperation and coordination among agencies and programs to combine safe, efficient housing with educational opportunities, transportation choices, and jobs.

“I believe we can create the geography of opportunity America needs to succeed in the decades to come,” says Donovan.

The Cost of Thinking Small

The history of affordable housing is filled with bold projects derailed because the developers were unable to include in their renovations distressed properties nearby and failing programs in the neighborhood that undercut their efforts.

The point is illustrated by the HOPE VI redevelopment of Wheeler Creek, in Washington, D.C. Certainly, it would have been easier to find people to buy or rent the apartments at the newly redeveloped Wheeler Creek if gunshots were not audible from Wheeler Terrace, the distressed garden apartment property next door. Wheeler Terrace was left out of the Wheeler Creek HOPE VI redevelopment simply because its crumbling buildings were subsidized by a different set of programs at HUD.

“You were seeing and hearing all kinds of ridiculous things,” says Mark James, development officer with Community Preservation and Development Corporation (CPDC).

Finished in 2001, Wheeler Creek created 314 new mixed-income homes and apartments on the site of a notorious public housing project. But developers and officials missed a spot when they cleaned up the neighborhood. Until CPDC began to fix up the privately owned, HUD-subsidized apartments next door six years later, Wheeler Terrace residents frequently heard the sound of gunfire; there was an average of 10 to 15 felony arrests a year on or just in front of the property.

Planning for Cooperation

Despite examples like Wheeler Creek, the HOPE VI program has been more successful that most efforts to encourage cooperation across agency lines, experts say. A HOPE VI redevelopment blends funding from as many as a dozen sources, including HUD funding such as Community Development Block Grants and HOME funds, cash from the sale of federal low-income housing tax credits reserved through state agencies and bought by private investors, grant and soft financing money from state and local programs, and a HOPE VI grant.

HOPE VI also requires developers to begin with charettes--design meetings that include all the parties who have a stake in the project, including people who live on or near the property, those who run nearby business, local officials, developers, and architects.

Charettes often draw attention to problems in a neighborhood, from vacant and abandoned properties to failing schools. For example, for the HOPE VI redevelopment of Murphy Park in St. Louis, developer McCormack Barron Salazar (MBS) raised an extra $5 million from private and philanthropic interest to modernize nearby Jefferson Elementary School as a result of charettes.

Yet, sometimes partners fail to coordinate the timing of their developments. “We’ve had projects finish where three years later the school isn’t open,” says Denise Muha, executive director of the National Leased Housing Association. Better cooperation among agencies as proposed by the Choice Neighborhoods Initiative could help avoid such problems.

Better cooperation could also keep effective programs funded in the long tern. HOPE VI funding for job training or after-school programs doesn’t last forever. There isn’t necessarily a replacement source for funds once the money from HUD runs out. “There is not a mechanism to maintain those dollars,” says Richard Baron, chairman and CEO of MBS.

In its efforts to encourage cooperation, the  Choice NeighborhoodsInitiative is paired with the Promise Neighborhood Initiative at the Department of Education. Choice Neighborhoods is expected to favor applications that show existing cooperation between agencies that work in the neighborhood being redeveloped. “If we don’t have transit and education in our plan, we won’t get funding,” says Robert Greer, president of Michaels Development Company.

Silo Busting

This is not the first time government officials from different agencies have pledged to break down barriers that duplicate or interfere with each other. Donovan calls programs like these “silo-driven investments,” because officials tend to focus on each program separately, thinking of them as if they were simply silos created to store and hand out cash, rather than focusing on the impact that each program has on a neighborhood and also on all the other programs working in that neighborhood.

At a July event at the National Press Club, a man who identified himself as a long-retired HUD staffer pointed out that the  Choice NeighborhoodsInitiative doesn’t seem so very different from the Model Cities Program created in 1966, which promised much the same kind of interagency cooperation with mixed results. That program ended in 1974 . Donovan hopes Choice Neighborhoods will last longer and be more successful.

“Everything in Washington argues against cooperation,” said former HUD Secretary Henry Cisneros, recognizing that cooperation is difficult to attain ideal. “From the committee system in Congress to the burdens on the secretaries to the hardening of turf at the undersecretary level. It’s very hard to do.”

Change can be difficult for officials at local housing authorities unused to partnering with developers, communicating with other agencies, or accessing the capital markets. But under the  Choice NeighborhoodsInitiative, all the partners benefit—for example, each agency can take credit for the success of the whole development.

Cooperation may become even easier to provide now that agencies seem to be communicating at the cabinet level. “There definitely seems to be a lot of congeniality among the secretaries, which is good to see,” says MBS’s Barron, though he remains skeptical. What would convince him that deep, real cooperation is in the works? A joint notice of funding availability between the DOT and HUD, he says.

Zero Sum

The sweeping vision of Choice Neighborhoods has already been caught up in arguments about public housing and the lack of funds to support it. For example, housing advocates have argued for years that the HOPE VI program should not reduce the total number of public housing apartments. Some members of Congress insist that any redevelopment completed by Choice Neighborhoods must replace each public housing apartment demolished. Also the proposed $250 million fiscal 2010 funding level for Choice Neighborhoods , though more than twice the 2008 level for HOPE VI, would be enough to fund only ten redevelopments.

Some people argue against parts of the broad vision behind Choice Neighborhoods. The program’s rules could direct funding away from public housing, despite Donovan’s insistence “that public housing transformation is still our priority at HUD.” The HOPE VI program specifies that program dollars be used to redevelop public housing, but Choice Neighborhoods would likely loosen that language to include HUD-assisted housing projects like Wheeler Terrace and perhaps even distressed housing with no government subsidies near the public housing site.

HUD needs to “make sure these resources flow into public housing,” says Sunia Zaterman executive director of the Council of Large Public Housing Authorities (CLPHA).

The nation’s portfolio of public housing apartments suffers from a backlog of capital needs that would cost nearly $30 billion to fix, according to CLPHA and is three times larger than the backlog in the assisted housing portfolio, according to recent statements by HUD officials.

In a situation with so much competition for scarce funds, the success of Choice Neighborhoods is difficulty to predict. According to Zaterman, regardless of the specifics of the program, “we are still very short of what is needed just to maintain what we have.”  

HUD’s press release on the initiative is available here.