In a move signaling the biggest changes since the advent of public housing 70 years ago, the U.S. Department of Housing and Urban Development told Congress last week that it wants to radically overhaul how the nation houses its poorest citizens.

The proposed changes aim to increase the social and physical mobility of public housing residents and turn existing public housing developments into mixed income communities with market rate tenants.

The changes also aim to attract private investment to those existing public housing developments. Such investment would help pay for costly, long-delayed repairs, which the agency projects total $20 billion. Public housing that receives such investment would remain under the control of the local housing authority for 30 years.

In testimony before the House of Representatives Financial Services Committee last week, HUD Commissioner Shaun Donovan outlined the Preservation, Enhancement and Transition of Rental Assistance Act (PETRA).

Under the voluntary program, local housing authorities would no longer get one stream of federal funding to run dedicated developments and another to administer portable voucher programs. Instead all public housing residents who meet income limits would be given rental vouchers. And people who aren’t poor could live in public housing developments, at market rents. Those vouchers would be portable, permitting someone who lived in the Bronxdale Houses, for example, to move to a private apartment in Brooklyn.

Currently, some low-income people already receive such vouchers. But many don’t, living instead in apartment buildings built and maintained by their local housing authorities.

John Rhea, chairman of the New York City Housing Authority (NYCHA) said he welcomes HUD’s initiative. NYCHA, which serves 655,000 households, has for years struggled to address capital repairs while providing basic services.

“We must have new financial and management tools if we are to continue to evolve, improve and remain committed to our core mission of serving residents by modernizing our operations and systems,” Rhea told the U.S. House of Representatives Committee on Financial Services last week. “PETRA provides greater flexibility in accomplishing that goal than has been seen in other measures addressing the same issue.”

Donovan told the committee that opening public housing to private market investment will bring “market discipline” to reforms. PETRA would streamline HUD’s thirteen separate rental assistance programs, each of which operates with different rules, eligibility and staff, Donovan said. The overhaul is necessary he said, because HUD’s current patchwork of subsidy programs to local housing authorities is inefficient and suffering in the current budget climate.

“By streamlining HUD’s rental assistance programs and by allowing them to link housing investments to surrounding neighborhoods, this legislation fulfills President Obama’s commitment to ensuring that all families can live in sustainable, vibrant communities of opportunity and choice,” Donovan testified.

Critics warned that relying on the private investment market – in light of the disaster wrought by mortgage investments and the difficulties emerging in buildings controlled by private equity firms — is foolhardy.

At least one warned that the dramatic changes could displace the low-income from their communities. “This is just pushing poor people out, like always,” Agnes Rivera, chair of the board of, Community Voices Heard, and a resident of the Wagner development in East Harlem told CityLimits.“We are not going to benefit from this. It would jeopardize any low income benefit for everyone. I know there are other ways that we can support public housing and it can be for low income.”

National People’s Action opposes the bill in its current form, but could support it with significant changes, said Damaris Reyes, a NYCHA resident who is the executive director of the Good Old Lower Eastside and who testified on behalf of National People’s Action. She agreed that public housing has major capital repair needs.

“It is because the current Administration, previous Administrations, and Congress as a whole have failed to act. Previous Congresses have turned their back on millions of Americans by refusing to adequately fund public housing,” she told the House committee. She said she was highly skeptical of relying on the private market. “Let us not forget that this is the same private market that just crashed our economy, took billions of taxpayer funded bailouts and aren’t fixing the mess they created,” she testified.

The National Low Income Housing Coalition supports the proposal, calling it “bold and forward thinking” in a statement.NLIHC President Sheila Crowley Crowley said in a statement that the changes were not perfect, but would provide a framework for addressing important challenges facing public housing. “The TRA proposal demonstrates HUD’s dedication to preserving our nation’s underfunded public housing while protecting tenant rights and establishing mechanisms to provide extremely low income people with more housing options,” she said.