Iowa City hears plan to reposition 86 public housing units to preserve affordability and stabilize funding

Iowa City councilors on Sept. 16 heard a detailed update from consultants and the Iowa City Housing Authority (ICHA) on options to “reposition” the city’s 86 public housing units to preserve long‑term affordability and stabilize the authority’s finances. Quadell consultants Tracy Rudy and Helena Whitfield presented a three‑phase plan the housing authority commissioned after a 2024 study found the previous Harvard/Bloomberg fellow recommendation was no longer viable under current U.S. Department of Housing and Urban Development (HUD) rules. Rudy described repositioning as “essentially the conversion of public housing to a Section 8 platform,” a move that many housing authorities use to access financing and steadier rental revenue while retaining ownership and management. Why the plan: Quadell told council that ICHA’s housing stock is aging, federal operating subsidies have been constrained for years, and while ICHA’s balance sheet shows approximately $3.1 million in unrestricted net position (FY24 audited numbers) and buildings/land valued at $8 million, the authority ended FY24 with a net loss of about $261,000. Quadell said those trends make earlier strategies unsustainable and that repositioning would increase operating revenue and “improve the financial position overall.” What was proposed: The consultants described a three‑phase approach. Phase 1 would request HUD approval under Section 18 disposition to sell five units at the Chauncey (units the consultants described as low‑demand and high‑cost to operate). Proceeds from those sales were estimated in discussion at roughly $2 million, with a range cited between $2 million and $4 million depending on market timing; HUD approval would require replacement of the same unit types. Phase 2 would reposition the remaining 81 units under a RAD‑blend/Section 8 approach: Quadell estimated a blended rent model in which 73 units could be set at roughly 110% of fair market rent (FMR) while a small number would remain lower under RAD rules. The consultants estimated that the repositioning would raise projected agency revenue from roughly $820,000 to about $1.3 million annually and generate an estimated $2 million in cash for future development. They also projected an increase in recurring monthly unrestricted revenue from roughly $68,000 to about $115,000 based on FY24 numbers. Vouchers and unit counts: Quadell and ICHA staff explained that tenant protection vouchers associated with disposition would convert to project‑based vouchers attached to the units; Rachel Carter of the Housing Authority said the repositioning would create about 73 additional vouchers attached to these units. Carter said the authority’s current allocation is about 1,595 housing choice vouchers; the repositioning would increase that pool to about 1,668, because the project‑based vouchers would be added to the housing authority’s allocation. Staff explained that if a voucher recipient in a project‑based unit chooses to move after one year, HUD rules allow them to take a different voucher from the authority’s existing allocation, while the voucher remains tied to the unit. Resident impact and relocation: Quadell emphasized that residents would not face higher rent burdens because tenants would continue to pay 30% of adjusted income as their share; the change is in program platform and how rental revenue is paid to the housing authority. Consultant Rudy said “residents are in no way negatively impacted by this action,” adding the authority would provide relocation assistance if moves are required and that resident consultation is a required part of HUD submissions. City staff and Quadell noted that HUD has specific protections and requirements around relocation and resident consultation and that the authority would provide security deposits, moving assistance, and housing search support as needed. Governance and ownership structure: Staff discussed a common HUD requirement for an affiliate/nonprofit to hold properties in some disposition or RAD structures. City staff described working with outside counsel and with Baker Tilly on implementation options. The conversation noted an affiliate could be a newly formed nonprofit with a board that includes council appointees to retain public oversight, and that the affiliate could later be dissolved and the properties returnable to city ownership if circumstances change. Questions and risks: Councilors pressed on details including whether single‑family homes could be part of future replacement units (Quadell: “Single family could absolutely be in the mix.”), how tenant rent calculations would continue to follow Housing Choice Voucher rules (Rachel Carter: “we're still following section 8 or housing choice voucher guidelines”), the timing (HUD approval processes can be lengthy and are outside local control), and federal funding uncertainty. Quadell and authority staff said they were pursuing only general council support to move forward to the point of preparing HUD applications; formal resolutions and HUD submissions would come back to the council for approval. Council action: Council offered general, nonbinding support to proceed with planning and HUD application preparation. No formal vote was recorded; staff said a formal resolution or action would be needed before submitting applications to HUD. Why this matters: The proposals would change the underlying federal program platform for 86 units, potentially produce immediate cash for reinvestment, and create project‑based voucher capacity to serve current residents while generating additional rental revenue to support future affordable housing development. They also raise questions about governance, resident relocation protections, and timing for HUD approvals. Next steps: Staff and ICHA will continue planning, resident consultation, and technical work. Any HUD application or formal sale/disposition would return to council for resolution and approval.