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NAHRO is pointing out a critical flaw in the ongoing Public Housing Operating Cost Study - it does not directly study public housing. Instead, it uses data from properties insured by the Federal Housing Administration (FHA). The Association told HUD Assistant Secretary for Public and Indian Housing Michael Liu that the study is missing a crucial opportunity to collect substantive data from local housing agencies (LHAs) - which is the original goal of the congressionally mandated Negotiated Rulemaking Committee.
The association believes the FHA proxy database does not reasonably represent the public housing inventory in property age and size, composition, type of ownership, rent structure, and resident demographics. Information from LHAs can be used to develop an operating cost model for public housing that is far simpler and more direct than the regression model and adjustment factor proposed by The Harvard Graduate School of Design (GSD).
GSD did not look at public housing for three reasons: the cost, the time needed to conduct such a study, and an issue they dubbed "circularity," which refers to the budget constraints in which LHAs operate. However, once they proposed a proxy study, GSD discovered it still had to include an "adjustment factor" that would capture the price of public purpose not found in the FHA database of costs. GSD proposes to create the numeric adjustment factor from a group of case studies with specially selected housing agencies.
NAHRO strongly recommends expanding the case studies to a statistically significant, random stratified sample of about 625 LHAs. Data collected from public housing would eliminate the need for a proxy-based study or an adjustment factor to capture the "additional cost" of operating as a non-profit housing provider that is a public entity with public responsibilities, compared to a private entity.
NAHRO is ready to assist HUD in building a believable, quantitatively sound approach to studying costs in public housing. Because the Negotiated Rulemaking Committee will be reconvened to compile a final operating subsidy formula based on this study, NAHRO suggests corrective action now, to avoid multiple problems later. If this opportunity is lost, NAHRO believes it will be a disservice to LHAs, the residents, the department and Congress.
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