American Recovery and Reinvestment Act of 2009

We hope to be putting this iconic "Recovery" sign up at several of our family sites thsi spring as we begin repaving walkways and improving unit entries at several family developments. We won't be the first to spend recovery funds (the Philly Housing Authority has that honor) but we will be among the first in the nation!

$4.8 Million!!

We received the word a short time ago. The Authority will be receiving slightly more than $4,800,000. We've spent quite a bit of time figuring how to spend the money and are well on our way. The amount is quite a bit higher than expected, but my initial projection used flawed numbers from the 2008 appropriation. But the basic thrust is handicapped housing, modernization of PHA-owned power distribution lines at several developments, and much needed parking, site and utility line improvements at a family development. We've already got engineers and architects lined up to begin working. The obligation restrictions are far more workable than I first thought, and I think there could be additional room for some energy improvements. We're also seriously thinking about a major competition for a legacy green project; namely, co-generation that reduces our power requirements and assists local institutions with their heating/hot water requirements...

What IS the impact?

OK, Michael Steele doesn't think that localities or the state have ever created ONE job. That's truly hilarious as my office gets calls all the time from unemployed laborers and craftsmen asking "Where can I apply for work?" once they hear there's a bid awarded for such and such project. When they get hired and make between $25 and $35 per hour, they're pretty happy campers and I'll see them at the job site and will always get a gregarious response to "How are you doing today?" Not one job?

But then again, Michael Steele tried to sell himself as a Democrat in Baltimore back when he was running for Senate in 2006 so I think he really knows better. I also think he's under investigation for violating campaign laws....And this man will lead the Republican Party? I'd say the Republicans have a problem. And Steele may be needing a job in 2010.

There's been a "serious" study as to the economic impact of public housing expenditures. Back when Republicans ruled the roost, the Council of Large Public Housing Authorities thought they had to get Republican consultants to gussy up the public housing image. One product was an economic impact study which has proven quite useful. You can find it here:

http://www.clpha.org/uploads/final_report.pdf

It is useful because I am sure our advocates used it to include public housing in the Recovery Act's list of "stimulus" programs: remember, $4 billion distributed to boost capital investment in public housing.

It basically argues that for every $1 of capital investment, $2 of economic benefit are "spun off" in the local economy.

New Bedford was one of the participating PHA's and we were charted at the lower end of the scale. I'm not sure I can agree to such a low multiplier. I recall URI fishery studies which suggested a $1:4 multiplier affect from our local and somewhat robust (depending on the species being caught) fishing industry, so I have to maintain a healthy skepticism about these "multipliers".

But you get the picture: when we spend, it resonates in the community. I personally approve payments to all manner of local vendors and on a monthly basis, there are tens to hundreds of thousands of dollars cumulatively spent on every imaginable item. We have well over 2000 items in our "stock" list and god knows how many local and regional vendors get some of the "action".

Looking at our monthly operational statements for just last month I can say that 109 vendors received $860,931.26 in expenditures for every manner of activity, from rags and rubber gloves to highly technical control parts and boiler components.

And when we spend capital dollars, it not only resonates in the community, but it is purposely designed to resonate as close to home as possible, as we maintain a "local labor" provision on any federal project over $250,000 in size.

By that we mean that 50% of EVERY trade needs to have labor from the locality (first defined as a metropolitan area and now more closely defined as the city, even though we enforce the metro area). We make provisions for allowing smaller firms to participate, and we allow them to have "key individuals" as superintendents and such, "outside" of the base from which the 50% is derived.

So we try to target the $1:2 impact as locally as we can while maintaining as much bid competition as we can muster.

After all, its our unemployed construction workers who've become part of a roving "basic" industry of construction trades who travel hither and yon in search of work. No matter where they work, the paycheck comes back to New Bedford.

So here's the scoop for 2008...we had $5,887,992 in operating expense directed at maintenance and another $ 8.5 million in capital (we're not even including Section 8 for the time being)...if you take 1:2 as the standard multiplier, we generated $28.8 million in local impact. If you look at the Census Bureau's Reports, New Bedford total economic output (2007) was $2,678,278,960...so public housing's contribution accounts for slightly more than 1% of total local economic output. Not an inconsequential sum.

But we started off talking about Michael Steele's remarkably misguided statement about "not one job" every created by the government. Just how many jobs are created per $100,000 of capital expenditure? It's rather easy (at least on the surface) to trace, as we have clerks who keep daily logs on things that happen at the job site, including the number of workers that are engaged in activities.

We've had a fairly robust $5 million interior renovation underway since the summer and its produced these jobs for reporting periods mentioned, along with the construction expenditures for the month listed:

Jobs in

(Month) Construction Expense

October 23 2008 26 jobs* $358,770 7.25

November 13, 2008 19 jobs $333,346 5.70

December 22, 2008 21 jobs $371,655 5.65

January 27, 2008 22 jobs $330,898 6.65

Summary Total 88 jobs $1,394,669 6.31

*carpenters, laborers,electricians, plumbers, plasterers, asbestos abaters, painters

We have shown a daily figure aligned with the monthly construction total to yield a number per $100,000 in capital investment. There are some problems with these measures, in that there's daily fluctuation of labor: we could be more accurate in tallying the daily job totals and adjusting for the number of 40 hour jobs per month before dividing by the $100,000 factor, but this is at least suggestive that approximately 6 jobs are created for every $100,000 spent.

We can make some general assumptions from this example as they relate to economic recovery. First, the annual appropriation for public housing operations, $4.5 billion will reverberate throughout local economies to the estimated amount of some $9 billion. While these operational funds aren't "new" stimulation to the economy, they maintain an existing web of services that employ tens of thousands of local vendors throughout the nation. And the introduction of an additional $5 billion of capital expenditure over and above the $2.5 billion already appropriated should generate approximately 450,000 jobs over the three year life of capital spending...or approximately 150,000 jobs per year. Certainly not enough to fuel an entire recovery, but not insignificant in light of the over 5,000,000 unemployed created since the financial meltdown.

First Light on the Stimulus

I really don't like the word "stimulus", much preferring "recovery". But our official language began to fail us when we adopted the "Homeland" moniker for what is a department dealing with "domestic security".

The Act is actually named HR1: The American Recovery and Reinvestment Act of 2009 but the press hasn't changed its initial reference. Here's what we've heard from insider news services: With hundreds of projects ready to go -- PHAs have held projects in limbo for years while the Bush administration attempted to scuttle traditional public housing -- housing advocates (say) that much of the $3 billion can find its way into viable projects within the 120-day deadline (the HUD secretary must get the money to PHAs within 30 days of the proposal becoming law).

Here's my initial "take" on the situation as it affects New Bedford: "(I think) we are prepared to spend most if not all of our anticipated $3,000,000 on "shovel ready" projects designed to repave and repair walkways and parking areas as well as upgrading our electrical distribution at several older sites and initiating the construction of up to 20 units of handicapped accessible housing for elderly and/or families and individuals at four developments named Shawmut, Satellite, Westlawn and Brickenwood...we've been planning on this rapid deployment since Barack was elected...in addition, we'll use funds for sustainable conversions of heating equipment and perhaps even the installation of co-gen (to supplement our electrical draw) at one of our sites...

I'm looking at the time frames...30 days from now we should have approximately $3,000,000 in our "account" and somehow will have to allocate the account into development categories--a chart of accounts of sorts which tells everyone, citizens and bureaucrats, how we'll invest. And we look at another 120 days to actually "obligate" the funds, or sign up contractors. So we're looking at July 13 as an ultimate deadline.

And I begin thinking from that point backward to calculate board authorizations, bid dates, advertising deadlines, planning and construction drawings, studies or change orders...these are all thresholds that one keeps in mind when thinking of spending funds quickly. It's as much a matter of managing the calendar as managing the consultants.

But while thinking of this I cannot hide my disappointment that the totals were slashed by $1,000,000,000 in conference: at $5,000,000,000 we figured a local allocation of around $4-5 million. We easily have more than $5 million in "shovel ready" projects. (National studies suggest $30 billion in modernization "backlog". Our latest "physical needs assessment" suggests $37,000,000 in unmet capital needs, down from $78,000,000 when I first started in 1992.)

I'm disappointed that the national advocates we support through dues failed to ask for more on the fear that we couldn't ramp up quickly enough. I think we missed a golden opportunity to revitalize public housing in a truly transformative way.

But we'll concentrate on the tasks at hand in New Bedford and make the best of this windfall opportunity. And we'll do it with strong enforcement of our "local labor" policies to make sure local workers get the benefit of this employment.

$4 billion for public housing

Details are sketchy, but we're told $4 billion will be made available for public housing capital projects if the Recovery Act passes. This should translate into roughly $3,500,000- $4,000,000 for New Bedford. We've already geared up and have identified several areas where we'll concetrate our efforts: handicapped housing, electrical grid improvements on two of our sites; walway paving to eliminate code violations and trip hazards and possible "legacy" energy projects such as co-gen, solar or wind power projects. I'll keep posting as the ideas are filled in.

Stimulus!

We've heard that the House and Senate negotiators arrived at a compromise for the stimulus bill...I've read different accounts of what public housing can expect. Anywhere from $3 billion to $5 billion. This would translate into $3,000,000 to $4,000,000 to the NBHA for "shovel ready" endeavors. We've been thinking about this since November 6th, so we have a number of projects on the drawing board as we get ready to bid. Seeing that we have around $18 million in deferred needs not yet funded, we'll have to do a round table to discuss how to spend this much needed funding...I'll keep you posted.

Public Housing, Public Works

One thing struck me as I was Googling "public housing" the other day: the clear thread connecting its origins to public works. We forget that the very first public housing was actually built through the Works Progress Administration. It was only in 1937 that a comprehensive housing act was passed by Congress. Prior to that, housing was created in public works fashion: the unemployed were recruited to be the workforce. (Soon after the 1937 Housing Act, states allowed localities to establish authorities for the purpose of receiving federal construction funds. My Authority just celebrated it 70th anniversary: it was founded a year after the 1937 Housing Act's passage. Its first project, Bay Village, was completed in 1941 and still provides decent, safe and sanitary housing for two hundred families. It has no vacancies.)

Amazingly, a front page article in the NY Times this week (http://www.nytimes.com/2009/02/09/us/09wpa.html?pagewanted=2&sq=Green%20Hills&st=cse&scp=1) brought the question of public housing/public works into stark focus. First was the picture of Greenhills housing, itself. Very utilitarian and very familiar. Apparently, these and other New Deal architectural gems are being threatened by the bulldozer.

Then here's what the great Robert Caro had to say:

“It’s ironic to be tearing (Greenhills) down just when America is going through tough times again,” said the biographer Robert A. Caro, who wrote about the W.P.A. in “The Power Broker,” his book about the builder Robert Moses. “We should be preserving them and honoring them. They serve as monuments to the fact that it is possible to combine infrastructure with beauty"

"Infrastructure with beauty" There's that word again, but you get the point. Public housing is indeed public works, with high purpose.

But just as these New Deal works are being threatened, we're threatening our public housing inheritance. Over 100,000 units have been demolished this last decade with only a fraction replaced. Many families and individuals have been dispersed with varying amounts of success. These are amazing facts when one considers the national shortage of affordable rental housing.

There's a growing sentiment that we must promote affordable housing production all across the country. And there's equal sentiment that we must require some form of "one for one" replacement when we're engaged in planned destruction of public housing units. Look for this Administration and Congress to be more prone to listen to these demands.

Getting Started

We're in the midst of a severe financial crisis and some very basic economic concepts are being debated in one of the most serious national conversations of my lifetime.

I've evolved from hearing, in Eco. 101, that the national debt is no big deal: "We owe the money to ourselves", to openly worrying how my children and grandchildren will pay (or not) the "birth tax" of over $45,000+ in publicly accumulated debt. I'm also wondering whether they've been denied the opportunity to live, as I have, in a nation of rising prospects and expectations.

I suspect when my life is over, their lives will be a bit harder and more challenging. Will foreigners want to lend us money and if not, what does this portend for America's future prosperity?

I've been involved in directing public investments toward preserving the affordable housing stock of New Bedford, Massachusetts (my home town) for nearly twenty years. By my quick summary count, it's involved well over $100,000,000 during that time. New construction and renovation have been roughly split 15%/85%...there's not much emphasis on new affordable housing construction this past generation. (More on that another time.)

I was also, in another lifetime, New Bedford's City Planner and placed a great emphasis on bolstering its "economic base" to the extent that it could be strengthened. Back in the 1970's, this "Gritty City's" base was comprised of a hefty dose of manufacturing (rubber products, textiles, electronic components, cardboard goods, marine components) as well as the extractive industries of fishing and, to a much lesser extent, extractive sand, gravel and specialized stone.

The service sector was in proportion to the needs of a small metropolitan area; retail had recently emigrated to the suburbs and no longer contributed to the downtown's stability. This trauma reverberated in local governmental circles for another generation before new and better ideas emerged (more on that later).

Government was a small but important adjunct to economic activity. The county seat is in nearby Taunton, but New Bedford has a fair share of courts and public records, making it an important local governmental center. As such, specialized legal, accounting and settlement services had a strong foothold in the old downtown.

The city also had a roving base of skilled tradesmen and laborers who plied their work at various construction sites throughout Southeastern New England. (My father was one of them, having joined the steamfitters' union in the early 1960's.)

We bolstered the base by investing in piers and bulkheads, the airport, the harbor, the rail heads and by expanding public works to service industrially zoned land. Zoning, land use and subdivision issues were of far lesser importance to our staff. Working as the planner was very basic and satisfying. Planning morphed into improving "public works"...infrastructure was an MBA/business school/financier word that I would never grow to like. The young Robert Moses introduced to me by Robert Caro was a heroic force of nature.

I'm certainly no national expert, but I think through inductive reasoning, I might be able to discuss some of the lessons I've learned and apply them to the national landscape.

At this moment, I can only think back to Galbraith and wonder what he'd say about the public vs. private debate raging in the halls of Congress. It seems that a whole generation of Americans have soured on public spending; the kernel of that idea--the preference for tax cuts first, last and always---seems to have paralyzed us at a most critical juncture.

As I write we discover that "moderate" Senators feel investing in energy efficiency in public buildings is somehow a frill? Or that investments in electronic medical record keeping and transfer not worth the expense; broadband access in rural areas not a worthy goal? Could it be that the art of public works in America has devolved into a more basic, less disciplined cold-blooded urge for bloated, uncontrollable spending symbolized by the "Big Dig"? Were the "best and the brightest" of that project over-rated and, at their core, feckless?

As I write I've not yet heard that the $5 billion for affordable housing initiatives has been scrapped. I hope it hasn't. We're already gearing up to spend an additional $3-5 million that may come our way. New construction of handicapped housing for families and individuals, repaving and repair of existing parking areas built thirty years ago, reinvesting in our electric "energy grid" and producing a "legacy" electric co-generation project(s) are among our plans. We're already hiring architects and advertising for engineers. This is a "Robert Moses moment", I keep saying.

And I'm rather upset at my colleagues who, when confronted by an opportunity to eliminate a national disinvestment in public housing, chose instead to aim low and worry about their "incapacity" to spend the funds fast enough! Public housing reportedly has a $30,000,000,000 backlog of deferred maintenance and repair nationally (In New Bedford that back-log was once over $75,000,000: today it's approximately $30,000,000 according to our latest analysis). We've been under-funded by HUD for at least a generation and while we've made some progress in improving the nation's stock of public housing, we're still dreadfully short of our goals for renewal and revitalization. And we've lost over 100,000 units in the last 15 years. As if the New York City Housing Authority ceased to exist in less than a generation: a devastating development!

In light of this, what motivates today's caretakers and fiduciaries of the nation's public housing stock to be timid? Have we not lost our credibility by failing to be bold enough to advocate for total elimination of the deferred problems? I don't know.

Nationally, there's a feeling that public housing represents up to a $200,000,000,000 investment in housing. There's also evidence to suggest that its construction or renovation generates $2 of economic activity for every $1 invested. Personally, I believe this to be low, as the secondary and tertiary affects must be followed as they ripple through a local economy. Moreover, there's scant research on the economic impact of operating public housing. The last five years have witnessed a bitter argument among practitioner and regulators over the true costs of operating a decent, safe and sanitary unit of public housing. What I see are hundreds of thousands of dollars of goods, services and supplies being acquired throughout the year; many of these purchases are in the local economy, suggesting an ongoing economic ripple affect that becomes an almost organic part of the local fisc. I want to explore what this means specifically to my city and share my findings. Maybe we can begin to understand how this reviled investment called public housing is, or can actually be a prime generator of urban or neighborhood revitalization.

Does public housing qualify as a public work? I'd have to say "yes" as it has the same basic elements of brick and mortar, wood and steel with a very utilitarian feel requiring constant attention, preventive maintenance and repair. (Wikipedia disagrees.) Many of our developments, as we call them, have lasted at least as long as 30-50 years and provide the basic human service of protection, warmth and privacy. And they are where our tenants encounter society's other public works: the sewers, water supplies, electrical and gas grids and the parking that leads ultimately to the nation's road and bridge network of mobility. Clearly, public housing is a public work, no less so than the legacy projects of the WPA, or the roads, highways, bridges and airports that dot the nation's landscape and continue to serve basic needs.

This suggests a sort of hierarchical "ranking" of public works that aid basic activities of human life. It seems that "our" end of the ranking is the upper tier, we yet refer to our housing as a foundation for living, or the manifestation of a social safety net. Perhaps we ought to revisit this and suggest quite the opposite: public housing as an apex, where a complex varietal web of "ADL's" ("activities of daily living") take place constantly.

Other public works might aid one or even two activities of daily living and we call them successful. Public housing is a rich mixture and might be the nation's most utilitarian, highest aspirational and purest manifestation of public works we can imagine. As such it deserves special and constant societal attention. But it hasn't received the attention it deserves, nor the accolades for serving its purpose. Quite the opposite.

We are its current caretakers, but generations have preceded us and many more will, hopefully, be able to use this element of the national investment in times of personal need. This is why I work.

And this is why I write Capital Idea$.