# Budget Office One-Pager - Public Equity Transfer Framework (PETF)

**To:** Budget Director / OMB / Fiscal Policy Leads\
**From:** Seth Foss\
**Re:** PETF (Housing Subsidy Reform) -- Budget-Neutral Pathway from Recurring Rent Spend to Stabilization Asset\
**Decision Ask:** Authorize a 12-18 month pilot design + fiscal gatekeeping framework under the transition's housing agenda.

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## The fiscal problem (in one line)

NYC pays recurring housing subsidy costs without building durable household stability or any municipal "return"; PETF redirects a portion of that spend into a controlled, measurable stabilization instrument.

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## What PETF does (mechanism, not ideology)

PETF converts a subset of eligible subsidy streams into **shared-equity, permanently affordable tenant ownership pathways**, implemented with:

- **Community Land Trust (CLT) ground-lease structure** to cap speculation and preserve affordability.
- **Mission lending (credit unions/CDFIs)** to standardize underwriting for low-income borrowers.
- **Program office + annual reporting** to enforce eligibility, equity targets, default mitigation, and outcomes.

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## Why OMB should care

**1) Cost control:** Converts open-ended, recurring rent spend into a structured investment with performance gates.\
**2) Risk reduction:** Stabilization reduces expensive downstream costs (shelter entry, emergency placements, repeated court cycles).\
**3) Auditable governance:** Annual disaggregated reporting + independent evaluation creates budget-grade accountability.

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## Guardrails (the "OMB comfort" section)

**Pilot gating (no blank checks):**

- Start with limited cohort size and predetermined buildings/targets.
- Require quarterly fiscal reporting and default/arrears monitoring.
- Triggered pause/stop rules if thresholds are missed (conversion rate, default, compliance).

**Legal + compliance integrity:**

- Uniform affordability covenant language.
- Fair housing review and disparate-impact monitoring.
- Procurement + conflicts controls for partner selection.

**Default mitigation built in:**

- Forbearance and modification protocols.
- Right-to-counsel linkage for program participants.
- Resale/transfer restrictions to prevent extraction.

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## What you need to authorize now (low-risk, high-leverage)

**Phase 0 (90 days):**

1. Name responsible office lead(s) and evaluation partner.
1. Define pilot scope + eligibility filters + budget cap.
1. Draft standardized legal templates (MOU, covenant, governance rules).
1. Publish initial fiscal note + implementation timetable.

**Phase 1 (12-18 months):** Execute pilot conversions + publish first annual dashboard.

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## Outputs OMB receives (deliverables)

- Fiscal note + 5-year budget scenarios (base / conservative / stress case)
- Pilot charter with gating metrics and stop-loss triggers
- Standard legal templates and compliance checklist
- Annual reporting framework (equity, costs avoided, stabilization outcomes)

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## Bottom line

PETF is a disciplined way to stop paying the same emergency bill forever—without inventing money, without fuzzy claims, and with enforcement tools OMB can actually audit.