The Road to PETRA

From the early days of the public housing program in the 1930s to the present, vociferous opposition has resulted in a host of problems. Understanding the history can help put President Obama's PETRA program in context.

The federal public housing program was created in 1937 as a response to the Great Depression. It grew out of desire to reduce unemployment through a labor-intensive public works program, coupled with a need for affordable housing for the “submerged middle class” — people who were temporarily out of work due to the seriously weakened economy.

Despite the promise of jobs, there were many organized opponents and, in fact, President Roosevelt had to be coaxed into supporting the legislation. Many of public housing’s current problems with capital funding and deferred maintenance can be traced back to early decisions about the program, many of which were a response to opponents’ views.

Public housing was seen from the beginning as a threat to the private low-cost rental housing market. Before its enactment, the president of the National Association of Real Estate Boards summarized the position of dissenters: “Housing should remain a matter of private enterprise and private ownership. It is contrary to the genius of the American people and the ideals they have established that government become landlord to its citizens” (quoted in Nathanial Keith’s 1974 Politics and the Housing Crisis since 1930).

After a few years of operation, the public housing program was suspended during World War II. It was reactivated in 1949, along with the Congressional mandate that the country should strive to meet the goal of “a decent home and a suitable living environment for every American family.”

In the 1960s, as the oldest buildings were beginning to age and the early tenants were moving into market-rate accommodations, a new lower income population began to populate public housing. Large numbers of white households were also being replaced by people of color. Both changes made the program easier to stigmatize.

By the 1970s, when the reputation of public housing was, arguably, at its lowest point, some observers of the program claimed: “Had the alternative been significantly superior, the occupants would have voted with their feet and done so willingly and openly, recording their dissatisfaction for all to see” (Eugene Meehan, 1975, Public Housing Policy: Myth versus Reality, p. 135). And yet others noted, “We have, in short, a paradox: nobody likes public housing except the people who live there and those who want to get in” (Alvin Rabushka and William G. Weissert, 1977, Caseworkers or Police? p. xvi).

These negative attitudes affected funding decisions, despite the best efforts of public housing advocates. As early as the 1960s, the problem of insufficient operating funds surfaced and an initial federal subsidy was authorized. In an effort to insulate tenants from having to make up operating cost shortfalls, Senator Edward Brooke (R-Mass.) sponsored legislation that capped rents at 25 percent of income and provided additional operating subsidies. Over the years, Congress experimented with a number of mechanisms for providing operating funds, but funding has never been sufficient to meet the mounting needs.

A parallel story can be told about efforts to address the capital requirements of the public housing stock. One of the major reports on this topic was produced by the National Commission on Severely Distressed Public Housing in 1992. Its recommendations led to the creation of the HOPE VI program, which provided funding to rebuild some of the most problem-laden and deteriorated public housing developments in the country, transforming them into mixed income housing that is supposed to provide better physical and social connections with the surrounding community. One of the key criticisms of HOPE VI, however, has been that many former public housing residents have been displaced from their homes in the process and that there has been a net reduction in the number of public housing units.

Additional efforts to address the capital needs of the public housing stock were authorized by the Quality Housing and Work Responsibility Act of 1998, in which public housing authorities were given permission to borrow against future anticipated funding. In addition, that act allowed public housing authorities to enter into partnerships with for-profit and nonprofit developers and to access LIHTC and other state-based programs.

While the programs authorized under QHWRA and HOPE VI appear to be making a dent in the overall backlog, significant needs persist. Barbara Sard and Will Fischer estimated that, as of 2009, unmet capital needs totaled at least $22 billion. HUD currently puts the number at $20-30 billion.

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