Policy Recommendations

Key Values

The policies we propose to address the endangered housing problem rest on two foundations: citizen participation and reciprocal responsibility. These policies promote democratic self-government by empowering citizens and strengthening communities. All Americans, including the poor, want to be treated as dignified and intelligent individuals, not as childlike clients of government bureaucracies.

Especially at the state and local levels, government must shed the notion of providing programs for the people. The operative philosophy must not only be government for the people, but of and by the people as well.

Just as streets can be made safer and schools can be improved when residents and parents become involved, the record indicates that endangered housing can be most effectively rescued when residents are involved in that effort, along with government and nonprofit community-based groups.

Formerly, most government-sponsored low-income housing programs provided rental opportunities that asked little of residents except to fill out the requisite paperwork. It is clear from our research that in the future programs must offer more, and require more, of beneficiaries. Only by doing so will residents develop a sense of ownership, responsibility, pride and participation that will foster close-knit relationships and community-organization building, which are vital components of the civil society.

Care must be exercised, however, to ensure that residents and CDCs have adequate resources, capacity, and skills so as not to be overwhelmed by their new managerial responsibilities. New programs should take a graduated approach, assessing the skill and potential of each resident group or CDC and providing the technical skills and resources to build and sustain strong resident involvement and leadership as it emerges and matures.

America’s strength resides in our families and communities, where the character and values of our citizens are formed. A new direction in public policy that transcends the old debate between government and market solutions is needed to place new emphasis on America’s “third sector” – the voluntary associations and institutions of community.

Key Policy Goals

1. The federal government should not abandon its prior commitment to the existing stock of privately-owned, federally subsidized low- and moderate-income housing. Therefore, federal housing policy should commit the financial resources commensurate with accepting primary responsibility for the permanent maintenance of all habitable, privately-owned, federally subsidized low- and moderate-income housing.

2. The key goal of these new federal housing policies should be to preserve the endangered stock of publicly subsidized housing while empowering community-based groups to strengthen Ameri –ca’s social and economic fabric. This will mean expanding resident participation and ownership and linking residents to community support services.

3. This new policy should also expand the capacity of community-based nonprofits to develop, rehabilitate, and manage much of this housing stock in an efficient, professional, and community-minded fashion.

A housing policy that aims to improve neighborhoods should increase the capacity of entrepreneurial nonprofit developers that have formed in an effort to save entire communities. Americans want to live in safe neighborhoods where they can raise their children. Nonprofits should focus not only on physical requirements such as open space and density, but on organizing against drugs and crime, and fighting for increased services, such as transportation and retail development – things that make urban communities attractive to people who have some housing choices.

Focusing resources on this nonprofit sector is not the same as handing over public services to the private marketplace, as with tax vouchers for private schools, or government subsidies to private, profit-seeking developers and landlords. Subsidizing profit-seeking developers to preserve housing for the poor – feeding the horses to feed the sparrows – as we did in the 1960s and 1970s provided windfalls for the wealthy while helping only a small proportion of the poor. Spending money on community-based institutions, as this report shows, can lead to efficiency and success. Policies that build on these successes will help convince the public that such programs are the type of government we need.

4. Finally, the “elements of success” – entrepreneurial leaders committed to resident participation, self-help, and building a sense of community; management excellence; and technical assistance – comport with both liberal and conservative ideology. If there is consensus that the nation is to have a national housing policy and the current one needs fixing, what better way to fix it than through new programs that promote these elements?

Recommendations

A. Promote Resident Empowerment

Government should use its resources to build the capacity of residents’ groups to own or run their own projects. Of course, not all government-owned projects lend themselves to overnight resident control and ownership; some residents lack the capacity to plan and implement a comprehensive strategy to revive a troubled project. But this should be the over-arching goal of government-sponsored strategies to save affordable housing.

HUD and all other government agencies must share power with residents. Our own study, as well as others we cite, show that when residents have that power, problems get solved. If HUD’s Reinvention II program or any other legislation or program simply shifts power from one government agency to another, problems will persist.

B. Cooperatize (Don’t Privatize) Housing Projects

Turning the nation’s endangered housing projects into livable communities is critical. But “privatizing” – selling to private developers, then eliminating all operating subsidies – is the wrong way to achieve this goal.

Most subsidized housing projects are in distressed urban neighborhoods. They suffer from years of deferred maintenance. Many were poorly constructed and quite a few were badly designed – ugly warehouses for the poor. If HUD withdraws its insurance and project-based subsidies, some private owners will simply walk away from their projects. (Indeed, many already have, once the tax breaks have run out).

Turning these projects into cooperatively-owned housing will only work if they are redesigned and improved so that people with choices will choose to live there. Otherwise, they will be eyesores, deteriorating slums, contributing to further urban decay.

We know HUD projects restricted to low-income residents concentrate and segregate the poor in ghettos. The goal should be to turn these projects into mixed-income developments. HUD’s Reinvention plan is on the right track, with mixed-income projects a central part of the new plans. But rather than handing projects over to private developers at public auctions, HUD should turn them over to resident-owned cooperatives or nonprofit community development groups (see below). This will require some continuation of HUD oversight. But with proper support, a 10-year goal of “cooperatizing” – not just “privatizing” – these taxpayer-funded developments would succeed.

Unlike former HUD Secretary Jack Kemp’s Hope program, this doesn’t mean simply turning over the keys of existing projects to tenants or nonprofit developers. It requires HUD to continue providing funds for improvements and maintenance. It takes time to organize and educate tenants to begin the goal of improving their developments. Those who want to leave should be encouraged to do so, with appropriate long-term vouchers. Those who stay should have technical and financial assistance.

C. Work With Community Developers to Save the Housing Supply and Rebuild Troubled Neighborhoods

In addition to co-ops, government should do business with nonprofit community development corporations (CDCs) that can demonstrate the capacity to build and rehabilitate housing for families that private developers and landlords don’t serve. The government should target sufficient repair funds for community-based nonprofit groups.

When HUD’s production subsidies dried up in the 1980s, private developers walked away from inner cities. Into the vacuum stepped a new generation of housing reformers with roots in these neighborhoods (like the ones detailed in this report). Today, there are over 2,000 such groups. Although not all are as sophisticated as the ones studied in this report, they are rooted in their communities, sponsored by neighborhood associations, churches, social agencies, tenant groups, and unions. They have found increasing support from foundations, local governments, and business partnerships.

The first generation of CDCs in the 1960s and 1970s included many well-intentioned but naive (even incompetent) reformers. The new generation, as this report shows, is more savvy and entrepreneurial. These groups have already overcome enormous challenges and obstacles. They operate in the most troubled neighborhoods and against overwhelming odds. Despite this, they have accomplished much. Yet these successes are typically unheralded, in part because these groups do not have expensive public relations firms or lobbyists trumpeting their accomplishments, so the mainstream media pay them little heed.

In most other industrialized nations, the “social sector” plays a key role in providing human services and housing. CDCs are the kind of “intermediary” institutions that conservatives and liberals both extol. (Dreier and Hulchanski 1990) In the past few years, an increasing proportion of the major federal programs – especially HOME, CDBG, and the low-income housing tax credit – have been allocated to nonprofit housing groups. For example, while the HOME program requires cities to target at least 15 percent of the funds to nonprofits, most large cities exceed that threshold.

HUD should make the nonprofit sector the major delivery system for saving affordable housing. However, in consolidating its many programs, whether HUD directs funds to states or cities, it needs to attach some important strings. The nonprofit sponsors should either create limited-equity, resident-owned cooperative housing developments, or provide residents with a strong voice in managing rental properties.

D. Ensure Access to Technical Assistance

Technical resources are critical to building community, strengthening democracy, and saving affordable housing. Neighborhood and community organizations must gain the technical assistance and resources to catalyze grassroots self-help efforts, such as those detailed in this report. Access to technical resources is a condition for effective participation. In a society more and more dominated by experts and computer printouts, the technology of decision-making excludes, by its very nature, a stratum of people who lack education and the resources to buy expertise. Community groups need legal, financial, managerial, and other kinds of assistance to evaluate, purchase, rehabilitate, and manage buildings, and to effectively run nonprofit organizations. They also need training in how to organize tenants. Our study found that groups should have technical assistance in 1) training and organizing, and 2) access to information and technology.

Training and Organizing for CDCs and Co-ops

HUD should provide multi-year funding for training in the day-to-day operation of community organizations, on tasks such as fundraising, budgeting, negotiating, conflict resolution, property appraisal, and membership recruitment; along with training for entrepreneurial leadership development, capacity-building, and networking.

Organizations should also be encouraged to combine local organizing with development. Without a strong organizing effort, the groups are less likely to succeed. Groups can learn how to negotiate with the various private and public agencies, but without empowering their own organizations, they will be negotiating from a position of weakness.

Training programs for community organizations should also address the following:

Training to Deal with Local Media

How the media portray nonprofit CBOs and tenant ownership efforts can help determine whether the public at-large embraces or thwarts community-based problem-solving. The media sometimes inadvertently sabotage government, community-based, and the private-sector efforts to forge solutions to the housing crisis. Major news organizations – with a few important exceptions – generally ignore or trivialize the community-building efforts of churches and neighborhood groups.

Community groups should actively seek to improve media coverage of the urban condition and community-based efforts to save affordable housing. Government should facilitate this by, for example, providing partial funding for nonprofit-sponsored conferences and workshops for journalists on urban issues and community-based problem-solving. Groups could also sponsor walking tours of their neighborhoods for reporters and editors and encourage the media to give community organizations a regular voice through op-ed columns and special pages (as The Los Angeles Times does now).

Management Training

Private management companies that manage market-rate apartments or condos cannot be expected to understand how to manage troubled areas in decaying neighborhoods, with lots of poor people and kids, drugs and crime. A new federal housing policy should increase the capacity of firms and organizations to manage the growing inventory of nonprofit and resident-owned subsidized housing.

Groups need training in management and monitoring skills. This means helping to dramatically expand the nonprofit housing industry’s management sector. Community residents should be recruited to develop careers in housing management, etc., and community colleges and educational institutions should offer training courses and degree programs in housing management. Governments should look to well-run public housing agencies to share some of their expertise (along with lessons from public housing management mistakes) with the nonprofit and resident-owned housing sector.

Organizing to Build Alliances Across Income and Race

Recent discussions of urban conditions have focused attention on the social, economic, and political isolation of the nation’s inner-city poor. Low-income housing groups need to develop strong organizations and leadership to help overcome this isolation. But they also need to build alliances with moderate-income people as well as businesses and industries that share common concerns about the condition of their neighborhoods, families, and schools, and the nation’s economy. It is often difficult to find issues and develop strategies that cut across the boundaries of income and race, but some of the most successful community organizations like Urban Edge and ACORN have done so. Federal support should recognize the importance of both empowering the poor and building alliances with the business community and those only a step or two above poverty.

Community Access to Information and Technology

For community organizations to be effective at problem-solving, they must have access to expertise and technology. The federal government should provide easy access to information (such as Home Mortgage Disclosure Act data, modernization estimates for HUD-assisted housing developments, crime statistics, funding and management resources) and help community organizations acquire the technology and expertise to interpret and work with this data. Such assistance could, for example, provide easy access to on-line data. These factors should not be considered afterthoughts, but key components of a community organization’s operating budget.

Community organizations need access to computers for desktop publishing for newsletters and other forms of communication, for research (such as Census, HMDA and crime incidence reports), and to compile membership lists. Policy should enable them to tap into on-line programs, such as HandsNet and the World Wide Web. They should have access to videos and local cable TV to enhance their community education and training efforts.

CBOs need funds to hire experts who can help evaluate housing rehabilitation and financing estimates, architectural design and zoning guidelines, and other data, and generally provide technical assistance. To promote community access to expertise, the federal government might encourage community groups and local colleges and universities to form partnerships, based on existing successful models. These include the Center for Community and Environmental Development at Pratt Institute in New York and the Policy Research and Action Group in Chicago, where academic researchers work closely with community groups not only to provide technical knowledge and scientific expertise, but to train community organizations to utilize these tools.

Support Community Outreach

In gaining access to information and technology, community housing groups also need effective means of educating community residents about available services. Many government- and privately-funded services never reach the low-income families to whom they are targeted because of inadequate outreach or bureaucratic incompetence. Churches and community housing groups need to be cost-effective vehicles for serving residents by sponsoring outreach and counseling programs around such concerns as the Earned Income Tax Credit, mortgage and credit counseling, HUD’s lead paint testing and outreach initiative, fair lending, job counseling, immunization, voter registration, etc.

E. Create an Endangered Housing Empowerment Partnership Program

To adopt these recommendations, we propose that the federal government create an “Endangered Housing Empowerment Partnership Program” (EHEP) that would build on the Clinton administration’s improved policies to encourage resident empowerment in HUD-assisted developments. The program would streamline and improve existing policy to help insure that resident groups are democratic and effective.

Through this program, the administration should provide funding to resident organizations in HUD-assisted developments for leadership and organization-building training. National, regional, and local intermediaries (training centers, organizing networks, state housing finance agencies) with track records in training and community organizing could serve to channel funding to local CBOs with a track record of success. Examples in our study include the Colorado Housing and Finance Agency, ACORN, and MHI. Through a notice of funding availability (NOFA) process, HUD can select training centers and networks to undertake this assistance effort. These intermediaries not only offer experience and a track record, but also economies of scale that would allow them to develop new training materials specifically geared to public and subsidized housing – videos, training manuals, workshops, and so on.

Initial funding should be for at least three years – sufficient time to expand capacity, train leaders, and show results. These intermediary groups, in turn, would identify CBOs and tenant and resident groups with which they could work. The program requirements and goals should be clear in terms of achievable results – a significant growth in the number of grassroots organizations with the capacity to address the social, economic and physical conditions of their developments. Tenant management and/or ownership would be one of many possible outcomes, but it need not be the sine qua non of resident empowerment.

The program should also aim to not only strengthen residents’ organizations in specific developments, but also encourage networking among developments in the same city and among organizations in different cities and parts of the country. The program should support training workshops and conferences that bring tenant leaders together.

Tenants in HUD-assisted housing should also have some direct way to voice their concerns to HUD. This could include subsidies granted directly to the tenant group to monitor the management firms and develop their organizational capacity. HUD could develop a system to formally recognize tenant organizations. These groups could elect or appoint representatives to regional advisory boards that would meet regularly with the regional administrator or top official in the HUD local office. This is one way for HUD staff to stay informed about such matters as management, public safety, maintenance, leadership development, and other related concerns.

The EHEP program should also provide direct operating support to housing groups, such as Urban Edge and ACORN Housing Corporation, that wish to improve their surrounding community through basic community improvement efforts and allied programs. Two existing programs provide something of a model. In 1985, Congress began funding the Neighborhood Development Demonstration Program (NDDP). Since then, the NDDP has provided direct support (a maximum of $50,000 a year) to CBOs. These funds have also helped raise private funds for neighborhood development. Through the NDDP, 206 organizations have received 286 NDDP grants for housing, economic development, and neighborhood improvement projects. In 1992, about 280 organizations applied for about 40 awards. The success of the “demonstration” program led Congress last year to enact the John Heinz Neighborhood Development Program, a permanent version of the NDDP. Funding for the NDDP, however, had been quite small – $2 million a year. The Clinton Administration supported increased funding for the Heinz program.

Elements of the Heinz Neighborhood Development Program should be incorporated into the Endangered Housing Empowerment Partnership Program (EHEP). The program should also have several key components:

      1) The program should encourage skills-building and coordination among community groups in different neighborhoods of the same city and in different cities and parts of the country. It would also promote the creation and dissemination of training materials, conferences, and other key components of successful training, leadership development, and organizing-building. Through a NOFA process, HUD could identify those training centers and networks with the capacity to undertake this process.

2) Second, HUD would provide direct funding to CBOs engaged in a variety of community improvement efforts, but only those who contract with one of the national training centers/networks that HUD has identified as competent to provide technical assistance. This initiative should be administered by the federal government. Local governments should not direct organizing and training initiatives.

3) State and local governments should, however, participate actively in EHEP by developing and implementing a plan to save endangered properties in their jurisdictions. State and local governments can bring flexibility to preservation programs. This flexibility is indispensable because housing at risk due to defaults, prepayments, and other causes is related to conditions in local housing markets as well as specific properties’ physical and financial conditions. Further, the effect of defaults or prepayments on communities, states, and tenants across the nation is changeable. State and municipal governments may be able to respond more quickly and effectively to local changes.

Each state and local government should designate an agency to act as its liaison with HUD to negotiate and implement preservation plans. The state agency, working with local agencies in its jurisdiction, should identify properties at risk of loss and develop proposals to maintain the projects as low- and moderate-income housing. State agencies can enlist full state government support (e.g., real estate tax abatement) and private funds or services, which are so necessary to the successful implementation of a preservation strategy.

A state plan should reflect how the given state agency, working with CBOs and residents, proposes to maintain existing units for low-income households. The plan should include specific proposals, and should identify all anticipated financial contributions.

Additionally, under the EHEP program, the government should make every effort to prevent rent increases beyond 30 percent of a tenant’s income. And while bringing in moderate-income tenants is an important way to increase a development’s stability, low-income and very low-income tenants should occupy most of the units.

Government support should also encourage community organizations, although they may work in economically diverse neighborhoods, to make sure low-income people are well-represented on their boards. Organizations’ leaders and governing boards should be democratically elected by members, and organizations should be required to hold regular meetings and develop ways to remain accountable to members and the community.

In choosing which groups to support through the EHEP program, the federal government should be careful to extend eligibility to bona fide community organizations. Although a church or group may engage in physical development and/or service delivery, it would have to show a strong interest and a plan for the mobilization and empowerment of neighborhood residents.

If the federal government is going to serve as the check writers for housing preservation, which we believe it should, it must be sure to include strict accountability standards. As it devolves its authority to states and mayors, the federal government must be sure not to preclude effective citizen involvement, oversight, and authority.

This is especially important with Congress’s recent passage of HR. 2406, which further devolves programs into block grants. HUD’s own Reinvention II plan seems to increase the authority of mayors while allowing them the option to disregard citizen groups. These proposals are deceptive. The rhetoric is community empowerment, but the subtext is devolution to local government, relinquishing of the federal government’s responsibility, and allowing virtually no citizen involvement or oversight on the use of funds. It is contrary to the lessons of our study.

John Atlas
John Atlas is president of the National Housing Institute.
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Ellen Shoshkes is an architect and planner based in Hoboken, New Jersey. Ellen is was formerly director of housing research in the Architecture and Building Sciences Group at New Jersey Institute of Technology. She co-authored Saving Affordable Housing for NHI.

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