This post is part of a Shelterforce series called Letters to the Next President.
Most policymakers, elected officials and advocates would agree that public housing has been transformed but also diminished the past few decades with increasing dependency on the private market. This includes growing reliance on housing vouchers, the Low Income Housing Tax Credit (LIHTC), and most recently, the Rental Assistance Demonstration (RAD). Regardless of the program, most have come to accept the position that the United States' public housing program can no longer function without private investors to help address its capital backlog of maintenance needs, maintain a supply of affordable housing units, and ensure redevelopment of significant housing assets held by Public Housing Authorities (PHAs). But with investors come expectations—financial returns and social outcomes—the former more important than the latter.
During this same time, we have witnessed one of the most toxic housing crises of modern American history, which calls into question the national value-laden priority of homeownership and the presumed superiority of the private sector in any form of housing development. The recession revealed the limitations of commodifying housing and allowing speculation to drive pricing. The casualties of the crisis, predominately communities of color and families living in modest to distressed areas of the country, remain financially damaged despite the overall economic recovery.
Given these perils, what are the risks and potential future of public housing if we continue to privatize it? Will public housing survive? Historically, public housing has not been discussed in national presidential campaigns. The last Clinton in the White House brought about rapid change with the support of Congress, resulting in the net loss of about 200,000 public housing units and the uprooting of many thousand families. The transformation touted is still not complete and in the meantime, even more families today are struggling to afford the housing they rent in the private market.
While some may argue that the next president’s public housing platform should maintain this movement towards privatization, we offer some alternative recommendations that can put the public back in public housing. We are not suggesting a return to a prior era. Instead, we envision the real possibility of strengthening the capacity of the U.S. Department of Housing and Urban Development (HUD) and PHAs in order to become a national public housing program that is grounded in a justice-oriented agenda which supports a basic human right to housing. However, to do this we do need to adhere to some fundamentals of public housing, including the commitment to keeping a portion of rental housing stock indefinitely out of the speculative market.
The following agenda seeks to maintain public rights and ownership of housing and land in ways that permanently keeps it for the public good:
1. Public Ownership: Keep a portion of the public housing stock outside of the market to protect extremely low-income families against the boom and bust of our capitalist economy. Currently, less than 1 percent of our housing nationwide is actual public housing, and we know this is not enough. Doubling this number would mean adding a million units, which obviously cannot happen quickly or without resources, but nonetheless it should be prioritized, and particularly targeted toward cities with growing inequality, while also retaining control of public units and assuring rental assistance in perpetuity.
2. Land Rights: Retain public land for uses that benefit low-income populations. Strengthen HUD’s land disposition policy by requiring meaningful community participation in the deliberation of public land sales, swaps and use, and stronger public benefits in cases where land is sold or swapped. The minimum goal should always be a one-for-one exchange and always in favor of public housing.
3. Equity Driven Contractors: Require PHAs to outsource new construction, rehabilitation, and management services to contractors that are demonstrably equity oriented with a social justice mission, including but not limited to nonprofits and tenant corporations.
4. Expand PHA Capacity: Build PHA capacity so they can serve as sole or joint developers and owners of public and mixed-income housing. Consider forming regional PHAs in order to more effectively lead and manage housing assets.
5. Mixed-Income Development and Inclusionary Zoning: In principle, housing policies that ensure a variety of housing types across income levels hold some possibility for creating more options for working class populations to live in areas that may otherwise become gentrified. The goal, however, should be to increase the number of units affordable to lower-income families in the mix. These inclusionary approaches must be adaptable to local context, including addressing the pragmatic challenges of financing and siting units in communities of color hardest hit by the foreclosure crisis and in neighborhoods where affordable housing is rapidly becoming non-existent.
6. Prioritize Comprehensive Community Change in Racially Segregated Areas: Most policy focuses narrowly on building housing units. Housing will retain and even improve in value if there is investment that improves services for families and brings amenities to the community. It can also begin to address inequality. In order get us there, housing owners, management companies, and investors need to infuse approaches that go beyond housing to also address income and wealth creation, institutionalized discrimination, and other structural barriers. Expanding the Choice Neighborhoods program and other resources focused on cross-sector change is necessary in order to redress racial segregation, depopulation, and disinvestment in communities of color throughout the nation.
7. Reshape Incentive Structures: We need to envision a role for investors—public and private—that can expand the equitable distribution of affordable housing throughout our communities. This means developing permanent public housing (not just affordable) in robust markets, which is happening already in some municipalities. In tandem, the funding levels for project-based vouchers must be increased so more PHAs can allocate them to higher income development. At the same time, we need to provide more resources to develop in distressed markets. This can include awarding HUD subsidies to a small portion of units for higher-income renters (e.g., up to 140 percent AMI) in order to incentivize mixing.
8. Change the Financial Models: The mixed-finance approach requires layers of public and private funding, as well as adherences to a range of often conflicting administrative requirements. This approach is both expensive and inefficient, making it costly to produce quality low-cost housing. Overhauling and aligning administrative requirements across different funding streams, aiming toward a common application and compliance requirements, should save time and money once developed as would changes in LIHTC requiring all investors to adhere to similar regulations, thus putting the onus on financing partners to simplify requirements.
9. Make RAD Equitable: In 2012, Congress authorized the Rental Assistance Demonstration program, which allows PHAs and HUD-assisted owners to leverage private debt and equity to address capital needs. RAD also comes with some tenant rights protections, such as a right to return. RAD reflects the future of public housing, which is to say that more public housing will likely be converted to the Section 8 program. Ultimately, RAD is a short-term solution to the broader structural challenge of financing and maintaining HUD-assisted affordable rental housing. But, the key to making RAD equitable now is to ensure PHAs distribute refinancing opportunities across entire metro areas. If RAD is expanded, it must be done strategically and with oversight to focus on properties that need access to capital for rehab, refinance, and long-term preservation. The key here is to push investment into properties in all markets, not just those that are in highly desirable markets. PHAs must retain control of all their RAD properties and prevent eviction of tenants for reasons other than due cause.
10. Support success: Reward rather than penalize tenants when their income increases, such as through rent incentives like those in HUD’s Jobs Plus Program. Instead of raising rent when the lease-up period ends, tie increases when to meaningful career milestones and educational advancements that assure long-term sustained employment and higher wages.
11. Tax Credits for Public Housing: One of the most pressing and consistent challenges is that of money to develop new public housing and subsidize more existing housing. Dwindling allocations to HUD’s budget over nearly four decades needs to a strategy to assure we do not “rob Peter to pay Paul” as has happened with the use of LIHTC to subsidized public housing transformation. Ideally, of course, we need more dedicated funding for affordable and public housing. This should include a dedicated tax credit for public housing redevelopment that is separate from LIHTC – a recommendation made by the National Commission on Severely Distressed Public Housing in 1992 and in recent proposed legislation. While tax credits are not as efficient as direct funding, they are also not a budget item so more prone to support by elected officials. And they are a proven development tool, helping to produce nearly 3 million units of affordable housing since 1987.
While the above agenda may seem “radical,” what we propose is within the legal frameworks and practices already in place across the county. This includes, for example, community land trusts that keep housing affordable for low-income families in perpetuity through collective ownership and control of land, and tax credits to encourage private sector investment. What is potentially more radical, however, is shifting funding that currently is primarily going to profit driven developers seeking return on their investment toward equity driven development and producing more public housing. Besides being proven and workable, these changes in public housing policy are necessary given the growing inequality, continued economic and racial segregation, and chronic housing affordability problems across the US.
(Photo: George Makris via Flickr, CC BY-NC-ND 2.0)