While the waitlist for public housing in San Antonio has tripled since the COVID-19 pandemic, the number of households that the local housing authority subsidizes through public housing and vouchers has dropped below pre-pandemic figures, according to annual reports analyzed by the San Antonio Report.
Those numbers, along with an anticipated $18 million shortfall and a controversial attempt to recoup past-due rent from tenants, led the board of Opportunity Home San Antonio in June to fire its President and CEO Ed Hinojosa Jr., who had led the agency since 2021. The acting president and CEO, Michael Reyes, has the difficult task of reversing those trends.
The decision to replace Hinojosa did not come “out of the blue,” Opportunity Home San Antonio’s board Chair Gabriel Lopez told the San Antonio Report last week. “It took several months for the board … to become aware of the mismanagement. We have not just a fiduciary responsibility, but we have a moral responsibility to do what’s right for the viability and the sustainability of this organization.”
Hinojosa declined to comment for this article.
He was fired with a swift and unceremonious vote that he did not appear to know was coming after a board meeting on June 12.
Under Hinojosa’s tenure, the agency started using exponentially more federal funding to cover ballooning operating budget shortfalls in its public housing portfolio. That use is allowed, but it’s not sustainable, Reyes said.
The dozens of housing authorities designated as Moving to Work agencies, including Opportunity Home, are allowed broad flexibility in spending that funding, but it’s intended to find innovative ways to help residents become self-sufficient.
“We need to make sure [public housing] can sustain itself and that way we can have enough money to be innovative,” Reyes said.
As of March 2023, Opportunity Home housed nearly 54,400 San Antonians across the city with public housing, vouchers, mixed-income housing and partnerships with other organizations, according to its budget presentation.
Meanwhile, officials have said 113,000 people are on a waitlist. At the start of the pandemic, there were 35,000 on the list.
The agency should strive to house more families every year, not fewer, Lopez said.
“We need to make sure this organization is financially solvent,” Lopez said. “That will prepare us so that way we can impact that waitlist — there are many families on that waitlist that we want to provide services to.”
Reyes told the San Antonio Report last week that he plans to visit each of the agency’s nearly 100 properties across the city and look for solutions to its budget and service shortfalls.
“We have a lot of work ahead of us,” he said.
While it is likely that Opportunity Home will launch a formal search for a more permanent CEO, Lopez said he was confident in Reyes’ ability to make a positive impact — however long he agrees to serve in that role.
“There’s a layer of transparency that he is providing to the board that we hadn’t seen,” Lopez said, praising the work Reyes has already done toward adjusting repayment policies for tenants.
Public housing shortfalls
Opportunity Home, then known as the San Antonio Housing Authority, housed nearly 18,200 households in 2019 with public housing and vouchers.
In 2021, the agency used nearly $975,000 of its Moving to Work (MTW) funds to cover operating losses in its public housing portfolio. Prior to 2021, the agency was not required to disclose whether MTW funds were used to cover public housing shortfalls.
In 2023, the agency served fewer than 15,900 households with public housing and vouchers, while using more than $10.7 million in MTW funds to cover its public housing shortfalls. From 2021 to 2023, the agency’s public housing operating budget shortfalls have increased by more than 1,000%.
For fiscal year 2024, which ends June 30, a more than $18 million loss looms, officials estimated.
These figures include only leases at Opportunity Home's public housing facilities, where tenants pay rent based on 30% of their income, and rent vouchers, which subsidize 70% of rent for qualified voucher holders across the city. They do not include the thousands more served through its mixed-income properties and partnerships.
However, the total number of children, adults and senior citizens the agency aimed to provide housing for systemwide dropped from more than 65,000 in 2019 to more than 57,000 in 2023, according to Opportunity Home's annual audit reports.
The increasing cost of operating public housing is largely due to overstaffing, Reyes said. In the past few years, Opportunity Home residents have called for more security, pest control, maintenance and services, leading to additional staff, he said: "I think we overcompensated to cover these concerns, but we didn't have the money for it."
While the U.S. Department of Housing and Urban Development subsidizes operating costs at $440 per unit, total operating costs per unit last year were $792 per unit. This, year that will increase to $928, Reyes said.
About 27%, or $69 million, of Opportunity Home's estimated $253.1 million expenses in 2024 went to salaries, benefits and other administration costs. Reyes anticipates implementing a hiring freeze but wants to avoid layoffs among its more than 600 employees.
"I don't want to do that," he said. "We have a good team here."
All this is on top of nearly a half billion dollars in deferred maintenance, inflation and a proposal from the Biden administration to decrease public housing operating funds.
Against that backdrop, Reyes said he will be going through the budget alongside staff with a fine-tooth comb to look for efficiencies.
"We have to," he said. "I don't want the rationale to be: 'Well we have the MTW bucket [and] we can always dip into it.' That's what we've been doing, but that's not sustainable."
Reyes said he will also be looking for other local and state funding.
“The state has lots of money, too much money," he told a resident last week while visiting Fair Avenue Apartments. "But the problem is we’re not making enough noise. Well, I like to make noise. We need our fair share, don’t forget about us.”
Now, Opportunity Home is looking into the logistics of using a financial tool — called the Rental Assistance Demonstration program — offered by HUD to fill budget holes and get back on track to serve more families, he said.
The program allows housing authorities to leverage public and private debt and equity to reinvest in the public housing stock, according to HUD.
Housing authorities can turn a public housing unit into a Housing Choice Voucher (commonly known as Section 8) property and take out loans to renovate and modernize those units while keeping rents at just 30% of a tenant's income, Reyes said.
"We're the largest housing authority in Texas, and we haven't even touched it," he said. "It may not work for us ... but I think we should at least do a study."
Tenants falling behind
Another, smaller piece of Opportunity Home's public housing budget shortfall has been uncollected rent.
It was an issue that the board directed Hinojosa and staff to rectify earlier this year. Before April, Opportunity Home hadn't issued notices to vacate to public housing tenants since the pandemic-era eviction moratorium, which the agency lifted in 2022.
Meanwhile, the agency was not collecting rent from hundreds of tenants who owed more than $2 million combined.
Last year, the agency started issuing notices to vacate for tenants living in its other mixed-income properties, known as Beacon Communities. It used a tiered approach that targeted notices to tenants who owed the most.
For its public housing stock, which serves lower-income residents, Opportunity Home issued 600 notices to residents with debt at least 12 months old regardless of the amount owed. Some owed as little as $1.
Board members said last month they were “shocked” and “horrified” at the indiscriminate rollout. At least one resident who attended the board meeting said she was unaware she had accumulated debt. Lopez said he knew the agency was planning to send out notices but expected Hinojosa to share details with the board about which tenants would receive them.
Affordable housing advocates and Councilwoman Teri Castillo (D5) defended Hinojosa, blaming the board for the botched rollout.
"This isn't an action that the CEO took on his own, it was direction provided by the board," Castillo said during a press conference last week calling for Hinojosa's reinstatement.
During the same meeting where Hinojosa was later fired, Opportunity Home staff presented a plan that would create a tiered approach to pursue repayment or eviction for tenants in arrears. But that was made moot when Reyes, less than 24 hours after taking the helm, rescinded most of the notices. The next day, he announced an effort to overhaul the agency's repayment processes.
But Hinojosa's handling of the notices to vacate was not the only reason the board decided to fire him, Lopez said. In fact, there was no final straw.
"There were many concerns that the board had related to the deficit and services to the families ... there were systemic issues," he said. "If you have a year-over-year-over-year loss, no organization can provide services without those receivables."
But Castillo and other community advocates said last week that Hinojosa inherited those systemic issues — which were exacerbated by the pandemic — and was working to protect the city's poorest residents.
"You're in the midst of a pandemic and you inherit the consequences," said Graciela Sanchez, founder and executive director of the Esperanza Peace and Justice Center. "Don't blame [Hinojosa] for the consequences of everything that's gone down since."
Sanchez told the San Antonio Report that she believes the board fired Hinojosa because he stood in the way of the agency making deals with for-profit developers who can benefit from mixed-income projects.
"That's false," Lopez said. "The board's action was absolutely necessary to protect the integrity of the organization."
Finding 'middle ground'
Housing advocates criticized the previous CEO, David Nisivoccia, for using public-private partnerships to produce mixed-income housing while reducing the public housing stock. They praised Hinojosa for canceling the agency's plan to do just that at Alazán-Apache Courts.
Nisivoccia's approach left traditional public housing vulnerable, but Hinojosa's approach dug the agency into a financial hole, Lopez said.
"I see a middle ground," said Reyes, who considers both Nisivoccia and Hinojosa as mentors. "We can be compassionate with residents and understand the resident experience — but we also have to address our budget and make sure we're not in a deficit. We don't have to go to either extreme."
Mixed-income, public-private partnerships will likely always be part of Opportunity Home's portfolio and revenue, but they shouldn't be the agency's only tool to combat rising costs of an aging public housing portfolio, he said. That's where the Rental Assistance Demonstration program could come in.
"If I can help bring in the money to fix public housing, we don't need to go that route," he said.
Reyes also has a personal connection to the "resident experience," having grown up in Alazán-Apache. A few of his relatives live in public housing.
“[Hinojosa] led with compassion — that compassion is going to continue and our commitment to public housing will continue,” he said. “None of that has changed.”
