To honor the legacy of Berkeley-born environmentalist David Brower, architects of the complex that will bear his name are using state-of-the-art “green” building techniques, while next door on the site, affordable housing developer Resources for Community Development (RCD) is employing the most innovative financing plan Uncle Sam has to offer.
To fund 96 units of affordable family housing—the most under one roof in Berkeley—RCD is using 24 project-based Section 8 housing vouchers from the Berkeley Housing Authority as collateral to leverage $1.5 million from a private lender, said RCD Executive Director Dan Sawislak.
With a weak economy and a high federal deficit drying up traditional sources of funding for nonprofit developments, the leveraging scheme has increased in popularity since the U.S Department of Housing and Urban Development established it four years ago. However, even some of its staunchest supporters fear that with the federal housing budget under siege, the leveraging program might prove to be as sustainable as a Styrofoam cup.
Under the leveraging program, the Section 8 vouchers guarantee RCD a market rent for the 24 apartment units. With the guaranteed revenue stream, RCD can leverage a larger loan from a private lender. That means it needs less money from the city’s housing trust fund, which is freed up to fund other projects.
Project-based vouchers gained an unfavorable reputation nationwide from a discontinued HUD program in the ‘70s and early ‘80s that funded some cheaply made buildings and often didn’t include controls to make sure they were well maintained, or accessible to the disabled. The current incarnation of the program, however, has so far won favorable reviews.
“People in the housing world think it’s generally a really good thing,” said Linda Couch, deputy director of the National Low Income Housing Coalition. Standard subsidies alone don’t allow most affordable housing complexes to serve extremely low income tenants, she said, but with Section 8 units—required by law to house three-quarters of tenants who make less than 30 percent of median income—more elderly and disabled are able to find homes.
So far this year, Berkeley has only used 18 vouchers to help fund affordable housing projects, but more are on the way. The city has committed a total of 93 vouchers to three upcoming projects by Affordable Housing Associates in addition to those set aside for Oxford Plaza. Only nonprofit developers are eligible for the vouchers, and the city can’t devote more than 20 percent of its vouchers to projects.
Developers receive the vouchers when individual Section 8 tenants voluntarily leave the program, Berkeley Housing Director Steve Barton said.
Although Berkeley still has room to expand the program, nationally there are already warnings of an untimely demise. With the federal government contemplating massive cuts to the Section 8 program, Wanda Remmers, executive director of Berkeley-based Housing Rights, said that in recent months some banks have pulled back because it’s unclear if HUD will continue to pay for the vouchers.
“Right now the whole world of Section 8 vouchers is on quicksand,” Remmers said. Although Remmers supports the concept of program-based vouchers, she questioned if the climate was right to do it in Berkeley.
“I don’t think it’s prudent to go into construction with a nonprofit when you don’t know how much money you have,” she said.