Urban developers and low-income housing advocates reacted with dismay to the Bush Administration’s proposal in February to phase out the federal HOPE VI program.

The roughly $4.5 billion allocated to HOPE VI over the past decade has ushered in the planning or construction of dozens of mixed-income housing developments that rely — to varying degrees — on new urban principles. The federal funds spigot may go dry, however, on October 1. The Bush Administration wants to terminate the program that has been the most far-reaching tool for applying new urban planning and design ideas to distressed city neighborhoods.

In the nearly seven years since Secretary of Housing & Urban Development Henry Cisneros electrified a CNU convention in Charleston, South Carolina, by endorsing New Urbanism, considerable progress has been made on demolishing failed public housing projects and constructing new mixed-income developments in their place. About 55,000 units have been razed since 1993, according to HUD, and the number demolished for HOPE VI is expected to eventually surpass 115,000.

People both inside and outside of government have complained that the pace of redevelopment is too slow. Of the funds that have been awarded, approximately $2.5 billion has yet to be spent. Two to three years after winning their grants, some municipal housing authorities still have had no developer on board.

The delays stem at least partly from the complicated nature of financing and planning developments that are meant to bring together public and private-sector participants and to turn around some of the most stigmatized sections of cities. “HOPE VI projects tend to take at least twice as long from start to finish as a comparable, non-subsidized development project,” says Peter E. Smirniotopoulos, managing director of Petersgroup companies, a Falls Church, Virginia consulting firm that helps developers and public housing authorities devise HOPE VI revitalization plans.

Of the 165 grants awarded between 1993 and 2001, a mere 14 had been completed by this February, according to HUD spokesperson Donna White. Of the 85,000 housing units authorized, about 21,000 have been built. Concern over lengthy delays led HUD two years ago and again last year to tighten the program’s evaluation criteria. Housing authorities were put under greater pressure to show that they controlled the needed land and had local approvals and other arrangements worked out in advance of HUD’s approving their applications.

Beyond HOPE?

If HOPE VI is terminated, the $2.5 billion not yet spent will remain available to those who were promised the funds. In the absence of HOPE VI, other urban revitalization tools will also still be available, such as low-income housing tax credits and, in some locales, funds from charitable foundations. The Administration is proposing that HUD be allowed to approve, on a property-by-property basis, privatization of existing public housing projects by converting them to “project-based voucher assistance,” a mid-1980s financing technique that HUD eliminated over a decade ago. That may enable public housing authorities to line up private financing for the rehabilitation or replacement of aging buildings.

However, Smirniotopoulos, whose firm specializes in structuring the financing for HOPE VI projects, is not optimistic. “It will be extremely difficult to replace the ‘patient equity’ that the HOPE VI grant funds represent,” he said.

Others, too, regard the prospect as grim. Even after the maximum grant was cut from $50 million to $35 million, and most recently to $20 million, the HUD money remained crucial, says Richard Baron, whose firm, McCormack Baron & Associates in St. Louis, has developed mixed-income, mixed-use urban projects throughout the US. “Very few foundations in the US would make grants of that size,” Baron says.

“It’s devastating,” Trish O’Connell says of the prospect that HOPE VI will end. O’Connell is director of real estate development for the Atlanta Housing Authority, regarded as one of America’s best-run large housing authorities. Without HOPE VI, she says, it’s impossible to pay for construction of new public housing units for people who are poor and whose monthly rent payments are limited to 30 percent of their income. Moreover, says O’Connell, “smaller pots of money won’t attract the neighborhood investment that is required to turn these areas around.”

The Senate has proposed reauthorizing HOPE VI with the same sum it has in the current fiscal year—$574 million. Advocates think Republican Senator Christopher Bond of Missouri and Democrat Barbara Mikulski of Maryland, who have leading positions on the Appropriations subcommittee that oversees HUD, could help the program to prevail.

“I always thought about HOPE VI as something larger than public housing revitalization,” says Bruce Katz, director of Brookings Institution’s Center on Urban and Metropolitan Policy. “It’s one of the premier urban redevelopment efforts of the last 25 years,” says Katz, who worked for Secretary Cisneros in forming the program. “What really has to happen now is for the people involved in HOPE VI to step forward and make their voices heard,” says Katz. “The new urbanist constituency is part of that.”