A Withering Commitment

The federal government has never had a strong commitment to housing for low-income Americans. The recent history of national housing policy sheds light on today’s rush to remove government from housing altogether.

Over the past 23 years, the Section 8 program’s project- and tenant-based subsidies have helped provide housing to millions of Americans. As Congress continues to whittle down its support for HUD, however, both types of assistance have come under scrutiny. Housing advocates have long questioned the efficacy of paying for-profit developers to operate low-income housing, and many also argue that vouchers alone provide an insufficient answer to America’s housing crisis. The federal government, for its part, has moved to absolve itself from any responsibility to solve this problem.

The federal government has never been fully committed to meeting the housing needs of the poor, but current policies are bringing us to new and unwelcome levels of neglect and preoccupation with other agendas far removed from the quality of life of millions of Americans. Whether one is concerned with welfare reform, education, health care, or employment programs, any serious social policy aimed at addressing poverty in this country must encompass a housing strategy. In a fundamental sense, housing is central to the way people live, how they feel about themselves, and their ability to develop self-esteem, be good parents, and acquire the skills and stability necessary for work.

One can look at the history of the federal government’s involvement in housing in three broad phases – the Depression era through 1949; the 1960s and 1970s; and the Reagan years to the present. The Section 8 programs were created during the second of these periods, in 1974, but to more fully appreciate the recent changes and current policy dilemmas involving Section 8, it is useful to understand the overall context – what came before and what has followed since the enactment of these programs.

Depression–1949

Although severe housing problems were well documented prior to the Great Depression of the 1930s, the federal government did not become involved with housing programs for the general population until severe economic conditions became the primary motivation for action. In response to the high unemployment, precarious stock market, faltering and fragile banking system, stagnant construction industry, and high home foreclosure rate that characterized the period, President Franklin Roosevelt instituted a series of reform measures to stabilize banking, stimulate construction, and rescue many homeowners who were on the verge of losing their homes. The overriding goal of these measures was to create a viable economy in which private businesses could flourish. While the federal government also assisted many households – primarily through the Federal Housing Administration’s mortgage insurance program and another temporary program aimed at refinancing loans for homeowners in mortgage default – housing in and of itself was never the top priority.

The first major federal program providing subsidized housing was public housing, enacted in 1937 and reactivated after the war in 1949. However, its major intent was not providing housing for the poor. Instead, it was primarily focused on creating jobs and stimulating the construction industry. Of course, housing was an important outcome, but the beneficiaries of the program were the “submerged middle class,” those temporarily facing economic hardship during the Depression, and not the poorest citizens in the most serious need of housing.

1960s–1970s

During the 1960s, burgeoning urban unrest and civil rights protests, severe riots in many urban cores in the middle of the decade, and, finally, the assassination of Martin Luther King in 1968 provided the impetus for a sweeping set of urban programs. These included initiatives aimed at providing housing assistance to low- and moderate-income households.

By this time, the public housing program was becoming decreasingly popular, and new housing programs were set up to foster public-private partnerships, with public subsidies provided to private, usually for-profit developers. The programs that have faced “expiring use restrictions” in the 1980s and 1990s – Sections 221(d)(3) and 236 of the National Housing Act – were enacted during the 1960s.

Even before the most recent set of problems beset these programs, various flaws in program design and implementation created generally negative assessments. For example, there was a built-in incentive for developers to underestimate operating costs, and at the same time, the subsidy, which was based on construction costs rather than on a percent of tenants’ incomes, proved insufficient to cover maintenance and repairs. In addition, there was growing disfavor with the public housing program, an argument that housing-specific or “project-based” subsidies were too costly, and the concern that concentrating large numbers of low-income households in developments was creating “vertical ghettos” with a series of social pathologies. All these negative views of the existing housing production programs led federal policy makers to try a new approach – tenant-based rental certificates and vouchers.

In 1974, under President Nixon, the Section 8 program was created with two distinct parts. The first involved a major housing-allowance type program, which provided households with the difference between what they could afford, based on their paying 25 percent of household income (changed to 30 percent in 1981), and the Fair Market Rent for an apartment in their area. The second component of Section 8 continued the project-based subsidy approach and improved upon these earlier programs by fostering good design and a financing mechanism that allowed for adequate operating subsidies. Most of these contracts with developers were for twenty-year terms.

From 1974 to 1983 (when it was phased out), the project-based development part of Section 8 – the New Construction and Substantial Rehabilitation programs – produced about 1 million units of housing; the certificate/voucher part of Section 8 currently is providing rental assistance to about 1.5 million households. Despite the enactment of the Section 8 production programs, by the early 1970s the old style of housing assistance, which involved providing large federal subsidies to write-down the capital costs of producing housing, were quickly becoming a thing of the past.

1980s and 1990s

The “Reagan Revolution” began a retrenchment in federal assistance for housing that has persisted through the 1990s. Commenting on the first major wave of reductions in federal housing programs, a 1989 publication of the Center on Budget and Policy Priorities and the Low Income Housing Information Service, A Place to Call Home, noted that the Congressional Budget Office found, “Appropriations for HUD’s subsidized housing programs have fallen from a peak of $32.2 billion in fiscal year 1978 to $9.8 billion in fiscal year 1988. After adjusting for inflation, this constitutes a decline of more than 80 percent.” The report also pointed out that the number of additional low-income households assisted each year fell sharply during the 1980s.

From fiscal year 1977 through fiscal year 1980, HUD made commitments to provide federal rental assistance to an average of 316,000 additional households per year. From fiscal year 1981 through fiscal year 1988, however, the number of such additional households dropped precipitously – to an average of only 82,000 per year. In other words, the number of additional low-income renters receiving housing assistance each year fell by nearly three quarters.

In the 1990s, under President Clinton, federal support for housing has been weak. In FY 1995, for the first time in the Section 8 program’s more than 20 years, no new Section 8 certificates or vouchers were made available, and funding for existing Section 8 recipients became vulnerable. Although it presently appears that funding to renew expiring Section 8 contracts will be available, at least through FY 1998, virtually all subsidized housing programs – whether project- or tenant-based – are facing major threats or challenges. According to Bill Apgar, the lead author of the Joint Center for Housing Studies’ The State of the Nation’s Housing, we are currently seeing the first real decline in the number of subsidized housing units since the 1960s, when the Center started compiling this information. At the same time, housing needs for those at the lowest income levels is at an all-time high. According to a 1996 HUD report, Rental Housing Assistance At A Crossroads: A Report to Congress on Worst Case Housing Need, a record 5.3 million households had unmet housing needs in 1993; about 75 percent of this group had incomes below 30 percent of area median income.

The history of federal support for housing is filled with many stops and starts, new ideas, and abandoned agendas. What the federal government decides to do with Section 8 subsidies and vouchers will provide an indication of its future plans for low-income housing. But as long as the need remains acute, advocates must continue to articulate and press for creative solutions and new strategies. Anything less means ignoring the dire housing conditions facing millions of households and becoming complacent about the importance of housing in American life.

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