Most Americans know that hard work alone isn’t always enough to get you a decent, affordable place to live in the United States of America. The stats are oft-cited: 47 percent of rental households in this country spend more than 30 percent of their income on housing. In New York City, where I served as deputy mayor, a minimum wage earner must work 15-hour days, seven days a week to afford a two-bedroom apartment, a situation which is not unusual in the United States.
This housing crisis has become a focal point in the 2020 democratic presidential primary. And while topics like national rent control have gotten a lot of play, our nation’s crumbling public housing stock hasn’t received a lot of solution-oriented attention, even though 2 million low-income Americans reside in it.
The candidate plans that do address public housing—namely those released by Senator Bernie Sanders and Julián Castro—call for increased investments to repair and modernize our existing stock, as well as legislative changes to allow for the construction of new public housing units. These proposals rely on a few basic assumptions—that government or the non-profit sector should own and operate all regulated affordable housing (and that they are good at doing it), and that putting billions of dollars into repairing and upgrading our aging public housing is good practice—even if the buildings are beyond their useful life.
The evolution of our housing policies and associated federal funding provides valuable lessons as we look to the future. In preparing for tonight’s debate, the 2020 candidates would be well served to articulate their own plans for cost-effectively improving the lives of public-housing residents.
First, a quick history
The Housing Act of 1937 was intended to improve living conditions in cities and create quality public housing for low- and middle-income families. But after several iterations of the bill, two critical pieces were inserted. First, the Act passed with coverage for only the lowest income residents, due in part to fear that middle-income housing would compete with the private market. And second, while federal government provided the funding, the implementation of the Act was left to local housing authorities, allowing each municipality to decide if and how they wanted to engage. In tandem, these two amendments drove the development of much of the public housing we still have today: largely segregated, often isolated from city or local services, and tenanted predominantly by low- to very low-income families.
In 1974, President Richard Nixon created the Section 8 program as a replacement for new public housing, shifting federal funding either directly to tenants to rent on the private market, or to private developers and owners to build income-restricted projects.
The Reagan Administration later cut the Department of Housing and Urban Development’s (HUD) budget by more than 50 percent, including funding for Section 8. In 1986, they introduced the low-income housing tax credit (LIHTC), which now provides the “subsidy” to for-profit and non-profit developers that finances the vast majority of the country’s low-income housing.
The march against public housing as the affordable housing model continued, embraced by both parties: In 1992, HUD launched the HOPE VI program, incentivizing the demolition of distressed public housing projects that were then replaced with mixed-income housing built and operated by the private sector. And in 1999, President Bill Clinton signed the Faircloth Amendment, prohibiting the creation of any new units of public housing. HUD’s budget for the maintenance of existing stock also steadily declined, leading to multi-billion dollar deficits nationwide.
Recognizing the toll that years of disinvestment had on public housing residents, and driven by the core belief that buildings managed by third parties generate better outcomes for low-income families, the Obama Administration launched Rental Assistance Demonstration (RAD). Under RAD, public housing units are converted to Section 8, leveraging private capital to renovate and upgrade the buildings. The Section 8 contracts ensure current residents pay the same low rent and that all units remain affordable to low- and moderate-income households, ultimately allowing a wider mix of incomes to populate the buildings as units turn over. In 2018, HUD announced the completion of 100,000 RAD conversions, and Congress increased the total allowance to 455,000. However, many of these projects require incremental funding, and Congress failed to authorize enough to complete all these conversions.
This brings us to the present, with evidence of inhumane living conditions in developments from the South Bronx to St. Louis, and incompetent, bloated, and sometimes corrupt public housing authorities operating with inadequate resources to address the growing capital needs of the more than 1 million apartments still in public ownership.
Many claim that the failure of public housing is a political choice and that the United States can simply choose to properly fund it. But if history has taught us anything, more money isn’t the answer—it’s how we spend our money that can drive positive or negative outcomes.
So what should we do?
To start, we must recognize a series of difficult truths. A grand utopian vision of a country that provides quality housing for its residents is great in theory, but let’s be honest about what that means in practice.
Keeping up with both major capital repairs and the day-to-day maintenance issues of large portfolios requires the talent, technology, and financial resources that the public sector simply cannot provide at scale. Even the best public housing authorities struggle to compete for talented property managers in strong markets. Housing authorities are also forced to bid out construction contracts pursuant to Byzantine procurement rules that slow things down and drive up costs. Nimble is not the first word that comes to mind when the government needs to procure new windows.
Much of our public housing stock is also in such a state of disrepair that it meets the federal definition of physical and cost obsolescence. New York City alone has tens of thousands of these units. And even though building new units is often cheaper than upgrading these buildings, advocates and local elected officials often pressure housing authorities to pour precious resources into them. That is simply not good fiscal or public policy.
Housing owned by the public sector also creates intense pressure on localities to prioritize their lowest-income and most vulnerable residents in distributing this public resource. As a result, developments are often 100 percent occupied by very low-income residents, perpetuating economic segregation and the stigma that all too often is associated with living in public housing. We know mixed-use buildings and mixed-income neighborhoods produce better health, education, and economic outcomes. So why double down on a system that makes that difficult, if not impossible, to realize?
We need to invest our affordable housing dollars smartly, leveraging non-profit and private sector capital and experience to achieve the goal of providing high-quality housing that is affordable to the increasing number of people in this country who are rent-burdened. And we should do it in a way that promotes diversity—not just in the buildings, but in the housing industry itself.
That is why fully funding RAD is a far better approach than just increasing funding for public housing in its past and present form.
There are many creative and inclusive ways to implement and expand RAD. Congress can require public housing authorities to do a percentage of conversions with community-based organizations and mission-based developers, often people of color who want to be leaders in their own communities.
The RAD program can also be improved and clarified to ensure that the homes stay permanently affordable and that existing tenants’ rights are protected. At the same time, our elected officials should admit that it is okay if higher income tenants move in when there are vacancies. It is simply good public policy to promote racial and ethnic diversity in our neighborhoods.
Congress should also allocate money to public housing authorities to support strong asset management and regulatory systems that hold the new owners and managers accountable—money much better spent.
At the end of the day, we can’t lose sight of the tenants who stand to gain or lose the most from these policies, platforms and political agendas. Abstract promises of “permanent” government funding and less bureaucracy down the line are hard to believe based on the effect our political past, and present, have had on public housing in this country.
We should absolutely harness the current momentum, but we must be politically smart and fiscally practical. Investing in strong public-private partnerships will improve the lives of public housing residents and is a proven model for providing quality affordable housing in this country. Let’s focus on making sure our next national leaders have the political will to make that commitment, and to make it a big one.
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