Millennial Misfire: the Millennial Housing Commission Report

It’s telling that the nation’s major news media virtually ignored the Millennial Housing Commission’s May 30 press conference and the release of its report, and hardly anything was in the next day’s news accounts. David Broder wrote a Washington Post column a week later, lamenting the lack of attention to the report and the issue of housing. HUD Secretary Mel Martinez didn’t even bother to issue a statement.

The report, “Meeting Our Nation’s Housing Challenges,” is a disappointment for those of us who take seriously the National Housing Goal of “a decent home and suitable living environment for every American family,” as Congress enunciated it in its Preamble to the 1949 Housing Act. That goal is now more than a half-century old, and remains elusive. Although Congress repealed the goal a few years ago – ludicrously maintaining that the government lacked the resources to address the nation’s housing needs so fully – it still is something we should aim for. It certainly is doable.

Perhaps the composition of the commission was our first clue that disappointment was in the cards: The 22 members were appointed by the chairs and ranking minority members of several House and Senate committees and subcommittees. As a body, it lacked coherence, and was heavily weighted toward the housing industry, developers, real estate investors, and bankers, with a sprinkling of state and local housing agency representatives. Our hero and standard-bearer, Cushing Dolbeare, was the only true progressive on the commission; she was balanced on the Right by Robert Rector of The Heritage Foundation. Co-chairs of the bipartisan group were former Congresswoman Susan Molinari (R-NY), now President/CEO of The Washington Group, a lobbying firm that counts among its clients the National Association of Real Estate Investment Trusts and the Real Estate Roundtable, and Richard Ravitch, a New York City-based housing developer, chair of the AFL-CIO Housing Investment Trust, and past chair of the Bowery Savings Bank and the NY State Urban Development Corporation.

That the report is not worse than it is can be chalked up to the energy and time Cushing Dolbeare put into the process. But as she put it, “When you have a bipartisan, largely mainstream group of people seeking to find consensus on a topic where there has been, recently at least, no real consensus, it’s unrealistic to hope for or expect something that the National Housing Law Project or the National Low Income Housing Coalition would issue.”

The report, which can be downloaded at www.mhc.gov, contains some useful elements. “Why Housing Matters,” the opening section, offers an excellent, succinct statement of the various critical dimensions of the housing issue, including its importance for family budgets; its relation to family stability; how it affects the life outcomes of children; its centrality to wealth creation; its links (or lack thereof) to a range of economic, social, and political opportunities; how individual housing conditions relate to community life; and the weight of housing in the nation’s economy. And the section that follows summarizes cogently and honestly the nation’s central housing crisis, honing in on affordability and lack of supply as the most significant problems of all, albeit neglecting issues of condition, overcrowding, and neighborhood defects. The federal role in housing is given a skimpy overview.

But it is the section devoted to solutions and recommendations that reveals the commission’s failure to come to grips with the seriousness and urgency of the issue. Among the most glaring missteps and omissions:

No numerical goals or targets are offered. It is possible that the commission did not want to go the way of the 1968 Housing Act, which put forth a 10-year set of production goals for housing generally and for low- to moderate-income housing, with annual reporting requirements – and which turned out to be a huge embarrassment, as actual performance fell quite short of these goals. Similarly, no cost figures were offered on the kind of public money it will take to seriously grapple with the housing crisis. Without specific targets and costs, there is no tangible blueprint for action.

Race is virtually absent from the report.
Aside from a couple of boilerplate homilies about enforcing existing fair housing laws, there is no discussion of racism, an absolutely central feature of the nation’s housing patterns and problems. Dealing with it is a sine qua non of any serious attempt to attain the National Housing Goal. That the commission ducked the issue is shameful, and its own racial composition is not irrelevant: 19 of the 22 members were white, not one Latino, Asian American, or Native American member. The difficulty I had in getting that information was telling as well. The commission’s communications director responded to my question by referring me to the biographies posted on the website. Further inquiries to other commission officials were ignored. But the commission is not alone in ignoring race: HUD still doesn’t have an Assistant Secretary for Fair Housing and Equal Opportunity, a year and half into the Bush administration.

Important aspects of the housing problem were either totally ignored or dealt with wholly inadequately. Among the missing/neglected: rural housing; Native American reservations (which have by far the worst housing conditions in the nation); the needs of those with physical and mental disabilities; migrant workers; even homelessness (which does merit one of the commission’s 13 principal recommendations but is far too vague to have any impact). Housing for seniors was explicitly excluded, in deference to the Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century, which presented its report to the Senate Banking Committee in late June. That report is available at www.seniorscommission.gov.

The proposal of work requirements for government housing assistance programs. Disturbingly, the commission endorses the more punitive aspects of “welfare reform,” ignoring the demonstrated limitations and failures of these reforms during the past five years. The commission, of course, does not suggest that the far larger government housing assistance program, known as the homeowner deduction, tack on a work requirement; that program allows homeowners to deduct from their taxable income base virtually every dollar spent on mortgage interest and property taxes, a benefit that accrues largely to the wealthy. The commission also pushes marriage incentives, that totally unproven poverty remedy hawked by the Right. But even here it did not go far enough for Heritage’s Robert Rector, who issued a dissent, stating, “Clearly, the erosion of marriages is a principal factor behind the need for housing assistance.”

The private sector above all. This, unfortunately, was built into the commission’s Congressional mandate, which charged the body with, among other things, examining “the various possible methods for increasing the role of the private sector in providing affordable housing in the United States….” The majority of commissioners represented that world, and pushed a private sector agenda. But it is the private sector that has brought us, and will continue to bring us, the country’s housing crisis.

To be sure, there is an important role for experienced housing professionals to play with respect to finance, development, and management of housing. But these actors are motivated primarily by considerations of profit. As a result, the poor, the near-poor, and increasingly the middle-class are not being served. Housing is not built for those who most need it, because it is not profitable to do so; families and individuals get displaced as a result of “market forces;” lenders and insurers redline; realtors discriminate; and so on. Only within the framework of government programs and regulations that are motivated by housing justice should we accept a greater role for the private sector – and whether the private sector will play in such an arena remains to be seen.

A very disturbing feature of the commission’s private sector orientation was its failure to specifically acknowledge or advocate the nonprofit housing/community development corporations, which have been effective in producing good housing, affordable to lower-income consumers. In city after city, these nonprofits have built, rehabbed, and saved thousands of decent, low-priced units. With more financial and technical aid, these groups could effect real progress, but this idea is nowhere to be found in the report.

Failure to support the Housing Trust Fund bill. This omission is possibly most grievous to housing advocates. The bill, which has more than 200 Congressional sponsors, is the central legislative campaign of the National Low Income Housing Coalition and state and local affiliates. It has real goals – 1.5 million units for very low-income families to be built, rehabbed, or preserved during the next 10 years – and real money to back it up, funded by profits from various Federal Housing Administration (FHA) and Government National Mortgage Association (GNMA) programs. The bill suffered a setback in July when the House Financial Services Committee, on a 35-34 vote, replaced an amendment to its omnibus housing bill that would have created a national fund with one that provides fewer dollars and restricts funding to states and localities that already have housing trust funds. Trust fund campaign strategists are now developing next steps for the House and Senate.

Support for raising the percentage of income that recipients of government housing assistance must pay. One of the worst elements of the report is its support for raising this figure from the current 30 percent of income. Noting that vast numbers of lower-income families in the private sector now pay well in excess of 30 percent, the commission suggests that “another approach [to the 30 percent standard] would set rents at 30 percent of income for the first year and then ‘step up’ the level every year thereafter” – they do not say by how much and whether there would be a cap. This “creates an incentive,” so goes the reasoning, “to seek economic opportunity.” But, of course, this is a bizarre kind of reasoning. Just because people have to pay so much of their income to have a roof over their heads doesn’t mean they can afford to make such payments, if by affordability one takes into account the full range of the family’s budgetary needs. Employing the “shelter poverty” concept – gauging a household’s housing and basic non-housing (food, clothing, medical care, transportation, etc.) needs through use of Bureau of Labor Statistics model minimum budgets – Michael Stone calculates that some 15 million American families can’t afford to spend a penny for housing if they are to have enough left over for non-shelter basics.

A Shelterforce ad seeking donations from readers. On the left there's a photo of a person wearing a red shirt that reads "Because the Rent Can't Wait."

The report does have 13 principal program recommendations, categorized under the headings “New Tools,” “Major Reforms of Existing Programs,” and “Streamlining of Existing Programs,” plus 15 more minor supporting recommendations. None is startling, none path-breaking, none of major import or impact. Even Rep. James Walsh (R-NY), who introduced the legislation establishing the commission, expressed disappointment: “I am concerned that the commission’s recommendations do not appear to demonstrate a dramatic departure from the past.”

In the “New Tools” category, the commission recommends enacting a homeownership tax credit, analogous to the existing Low Income Housing Tax Credit for rental housing; providing “exit tax relief” and other incentives as a way of retaining the stock of “expiring use” projects; providing capital subsidies to encourage production of units for very low-income households (a nice idea that would remove debt service from a household’s rental payment – but accompanied by no dollar or unit targets); enacting a new mixed-income, multifamily rental production program, again with no meaningful targets; and empowering state and local governments to use a small portion of their community development block grant funds to support comprehensive neighborhood development.

Under “Major Reforms,” the commission recommends giving local housing authorities more autonomy and applying “private real estate principles,” including the use of private funding. Other proposals include structural changes in HUD to give FHA more independence and flexibility; “elimination of chronic homelessness over a 10-year period by creating additional units of permanent supportive housing” and other means – a nice rhetorical goal, but, again, without specifics on how this can be accomplished; and the odious work requirement described above.

Finally, the report offers recommendations for “Streamlining of Existing Housing Programs.” These include expanding/strengthening the housing choice voucher program; reforms to the HOME and Low Income Housing Tax Credit programs to make them more usable; “substantially” increased (but unspecified) HOME appropriations; facilitating use of the Mortgage Revenue Bond Program; and revising federal budget laws that now deter affordable housing production and preservation.

So why do the media, Congress, and vast segments of general public (who by and large are well housed) avoid dealing with the nation’s serious housing crisis? I suspect it’s largely a combination of cost, political philosophy, and race. Attaining the National Housing Goal within some reasonable time period – say, 10 years – will take hundreds of billions of dollars of government funds. There will likely have to be some basic restructuring of the nation’s housing finance, development, ownership, and management systems to take large segments of the housing stock out of the for-profit sector and establish a massive “social housing” sector, akin to what exists in many other countries. Finally, the nation needs to figure out how people of various races – as we fast become a no-majority nation – are going to live and go to school together.

No easy tasks, these. And so no wonder that a Millennial Housing Commission produces such a bland, toothless report. And no wonder that the commission’s report, and the issues and problems it outlines so well, will get no serious attention whatsoever.

 

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