State and local governments: New initiatives in low‐income housing preservation

Abstract

Preservation of the federally assisted low‐income housing stock is a critical issue in housing policy for the 1990s. Most of the low‐income housing initiatives that emerged over the last decade at the local and state levels were in response to changing economies and housing markets, to shifts in composition of the low‐income population, and to cutbacks in federal housing assistance as well as potential losses in the federally assisted housing inventory. The expansion of housing initiatives at state and local levels has critical ramifications for federal housing policy. It is a challenge to the federal government, which has not undergone a similar dramatic change in housing assistance policies. A number of areas of a new “federal partnership” need to be explored.     

Comment on Donald A. Krueckeberg's “The Lessons of John Locke or Hernando de Soto: What if Your Dreams Come True?”

Abstract

Krueckeberg's critique of de Soto's paean to homeownership in Third World countries is well taken; his use of John Locke's rationale for private ownership provides support for the critique. But then Krueckeberg puts forward a proposal to extend homeowner‐ship benefits through a National Homestead Trust, with Individual Development Accounts or a tax like Social Security, to help renters accumulate a down payment. Abandoning a broader approach, Krueckeberg reverts to supporting homeownership as a central tenet of U.S. housing policy and wants to extend its real and perceived benefits to low‐income households. He recognizes the shortcomings of U.S. property law and tax policy that may leave low‐income owners with threats to shelter security.

To provide security for low‐income residents, fundamental changes are required. Attention should be paid to protection from evictions and from foreclosure; income/employment support; guarantee of services from utilities to schools; and, as needed, direct subsidies for housing.     

Public housing and the American dream: Residents’ views on buying into “the projects”

Abstract

This article examines residents’ attitudes toward homeownership in five large inner‐city public housing projects composed of multifamily apartment buildings. Based on 267 interviews with public housing residents in Boston, it contrasts their broad support for homeownership as a concept with their wholly mixed reaction to the idea of owning a public housing apartment. Interest in homeownership in public housing is shown to be independent of residents’ current employment status and closely tied to residents’ social investment in specific housing developments and to their perceptions about the quality of that development's management, maintenance, and security.

The findings cast renewed doubt on policies that would make public housing sales a centerpiece of national policy, but they provide qualified support for more modest efforts to increase homeownership in public housing developments and in low‐income neighborhoods around them.     

Current practices for procuring affordable housing: The Canadian context

Abstract

This article describes the current housing system in Canada, focusing particularly on the various mechanisms still available for providing affordable housing. Beginning with an overview of the Canadian housing system, it provides a brief history of Canadian housing policy and program initiatives instrumental in developing the inventory of affordable housing available today.

Current practices and procedures in private lending for affordable housing are highlighted. A discussion of current initiatives available to provide affordable housing follows, with a focus on the role of government, the third sector, and new partnership arrangements implemented to encourage more affordable housing. The conclusion highlights recent changes, the current state of the affordable housing sector, and the impact these changes may have on low‐ and moderate‐income households in Canada.     

The Gautreaux Legacy: What Might Mixed‐Income and Dispersal Strategies Mean for the Poorest Public Housing Tenants?

Abstract

The current transformation of public and assisted housing reflects the legacy of the Gautreaux case, which created the first mobility and scattered‐site programs. Mixed‐income and dispersal strategies now dominate federal housing policy, although their focus has shifted. Drawing on evidence from two preliminary studies of public housing transformation in Chicago, we argue that these new strategies seem to offer benefits for distressed public housing communities but also involve risks for the most vulnerable current tenants. Increased screening and/or the need to compete with private market tenants may force these families out of the assisted housing market.

Addressing the complex needs of the most troubled public housing tenants will call for a more comprehensive solution. The intent of the Gautreaux case was to increase opportunity and enhance quality of life for public housing tenants; policy makers should take steps to ensure that current programs reflect these fundamental goals.     

The HOPE VI Program: What about the residents?

Abstract

During the 1990s, the federal government dramatically changed its policy on housing the poor. Under the HOPE VI (Housing Opportunities for People Everywhere) Program, the U.S. Department of Housing and Urban Development intended to address the concentration of troubled low‐income households in public housing by moving away from its reliance on project‐based assistance and promoting instead the construction of mixed‐income housing and the use of housing subsidies.

This article presents important evidence from two systematic, multicity studies on how the original residents of HOPE VI developments have been affected by this radical new approach to public housing. While many residents have clearly benefited, the findings raise critical questions about whether the transformation of public housing will achieve its potential as a powerful force for improving the lives of low‐income families.     

Comment on Langley C. Keyes et al.’s “Networks and nonprofits: Opportunities and challenges in an era of federal devolution”

Abstract

Housing markets are determined by a complex interplay of consumers and suppliers. The Keyes et al. article discusses the changing landscape for nonprofit housing providers and what recent developments in federal housing assistance policy will mean to them. But this perspective is too narrow to predict the effects of changes in federal housing policy because all housing providers are somewhat interrelated. All housing providers need to be considered, and using the terms “for‐profit” and “nonprofit” to distinguish between the two types of providers is unfortunate and misleading.

For‐profits and nonprofits are fundamentally different: They place a different emphasis on community, and nonprofits can often deliver subsidies that for‐profits cannot. In addition, the strengths and the skills needed to produce housing under somewhat different objectives have led to some specialization. Ultimately, however, determining the optimal provider or mix of providers is best left to local and state governments as federal housing assistance devolves.     

Do impact fees raise the price of existing housing?

Abstract

This article uses 1991–2000 data on single‐family housing sales from King County, WA, to provide new evidence relating to the effects of impact fees on housing prices. The hedonic regression method is used to examine the effects of these fees on existing housing as well as their differential effects on price as determined by housing quality.

Impact fees raise existing home prices by about 83 percent of the amount of the fee. The increase is 103 percent for high‐quality homes and is not statistically significant for low‐quality homes. The owners of high‐quality homes realize capital gains from impact fees. However, such fees do not raise the price of low‐quality homes. To the extent that low‐quality housing is more likely to be owned by low‐ and moderate‐income households, which are often composed of racial and ethnic minorities, this finding has significant policy implications for the supporters of impact fees.     

Where will I sleep tomorrow? Housing,homelessness, and the returning prisoner

Abstract

This year, over 630,000 prisoners will be released from state and federal prisons across the country—more than four times as many as were released in 1980. In this article, we examine the scope of the prisoner reentry issue—what is known about the intersection of housing, homelessness, and reentry and about the barriers returning prisoners face in securing safe and affordable housing.

Although the housing challenges are formidable, progress is being made on numerous fronts. We seek to frame the dynamics of the reentry housing discussion by highlighting the promising strategies that are emerging. These strategies, taken to scale, could help create a very different national policy on prisoner reentry. Ultimately, effective reentry strategies have the potential not only to reduce re‐arrest and increase public safety, but also to reduce homelessness.     

Federal housing policy and preservation: Historical evolution,patterns, and implications

Abstract

This paper considers the evolution and patterns of federal low‐income¹ housing policies and programs over roughly the past half‐century. It begins with an overview of the multifaceted involvement of the federal government in housing — only one aspect of which is its intervention in the low‐income sector. This is followed by an overview of federal low‐income housing policy from the New Deal to today. The underlying assumptions and approaches of these policies are then considered with respect to such considerations as the government's presence and role, its targeting of assistance, and the selection of subsidy levels and vehicles. The paper concludes with a brief review of the implications of the historical record for future policy.     

Subsidized housing and work among welfare recipients

Abstract

Some studies suggest an inverse relationship between housing assistance and employment. That is, when housing assistance increases, employment decreases. A popular view holds that subsidized housing generates an economic disincentive to work. This article examines the relationship between subsidized housing and the number of hours female recipients of public assistance work. A California survey reveals that residents in Section 8 housing work considerably more than do those renting in the private market or residing in public housing. This finding holds after controlling for observable personal characteristics and accounting for income effects. Additional analysis comparing the two housing programs shows a consistent, robust difference, with those in Section 8 working more.

One explanation is that the finding is a statistical artifact caused by programmatic creaming or self‐selection among applicants. The second, more plausible explanation is that Section 8 housing offers residential choice and mobility that improve opportunities for employment.     

Preservation of existing housing: A key element in a revitalized national housing policy

Abstract

A key aspect of the continuing housing policy debate is how best to spend limited resources to aid the poor. Recently, the policy has focused on whether it is more effective to intervene on the supply side via provision of a voucher or rental certificate that enables a low‐income household to secure decent housing in the private market.

This paper argues that preserving and maintaining the affordability of the remaining stock of unsubsidized low‐cost housing will require a skillful balancing of supply‐and demand‐side interventions. Exclusive reliance on vouchers will not do the job, especially since large segments of the poor do not receive any form of housing assistance. Flexible programs to expand the purchasing power of poverty‐level households must be developed.     

Philanthropy and the housing crisis: The dilemmas of private charity and public policy

Abstract

American philanthropy has historically sought to address the nation's housing crisis, especially among the poor. This article compares private philanthropy's response to the housing crisis in two important eras of economic transformation: the period between the Civil War and World War I (the Progressive Era), when the United States was undergoing large‐scale urbanization and industrialization, and the period from the 1980s through today, when the United States became integrated in a global economy and confronted the shock of deindustrialization, widening economic disparities, and deepening urban decay.

Following the historical review, the article focuses briefly on the current housing crisis and the dilemmas that private foundations and nonprofit organizations face in trying to develop a coherent strategy to address the problem. It closes with a proposal for a partnership between private foundations and housing organizations that can address the need to change both public opinion and public policy toward housing.     

Housing needs and effective policies in high‐tech metropolitan economies

Abstract

What are the most effective ways to provide low‐income housing to those left behind in new economy housing markets? Do winners and losers in high‐tech competition require federal housing strategies geared to metropolitan differences? This article examines 45 large metropolitan areas grouped along a high‐tech spectrum to see who is dis‐advantaged and to deduce effective local low‐income housing strategies from market characteristics.

Finding affordable housing was, on average, more difficult for low‐income renters and owners in high‐tech economies in the 1990s. Nonetheless, high‐tech metropolitan economies, like other local/regional markets, vary greatly. Sharp differences among and within metropolitan markets make it essential that federal strategies allow local policies to respond to local conditions. To most effectively provide low‐income housing to those left behind in all markets, federal policy should target sufficient resources to severe housing needs through many more vouchers and programs that permit and encourage effective local choices.     

The viability of the thrift industry

Abstract

This paper argues that many widely referenced studies on the cost effectiveness of alternative assistance programs were conducted at a time when rental housing markets were depressed. Recent increases in rent appear to have reduced the apparent cost advantage that demand‐side subsidies hold over supply‐side interventions. In addition, the nonsubsidized poor increasingly must compete for a dwindling supply of low‐cost privately owned housing. Housing vouchers or similar demand subsidies may be appropriate in some contexts, but economic theory and recent empirical analysis suggest that such subsidies are “not the best at all times and under all situations.” Rather, the “best policy” depends on program targeting and the nature and extent of program‐induced price increases and externality effects. Since funding limitations currently block the creation of an entitlement housing assistance program, housing policy must balance the often competing goals of expanding the ability of participating low‐income households to pay for decent housing while at the same time working to limit the adverse effects that rent increases and the loss of low‐cost nonsubsidized stock have on households falling outside of the housing assistance safety net.     

Networks and nonprofits: Opportunities and challenges in an era of federal devolution

Abstract

Community development corporations and other nonprofit organizations are increasingly responsible for producing and managing low‐income housing in urban America. This article examines the network of governmental, philanthropic, educational, and other institutions that channel financial, technical, and political support to nonprofit housing sponsors. We analyze the relationships among these institutions and propose an explanation for their success. We then consider challenges the network must confront if the reinvention of federal housing policy is to succeed.

Block grants and rental vouchers, the dominant emphases of federal policy, present opportunities and constraints for nonprofit housing groups and their institutional networks. While states and municipalities are likely to continue to use block grants for nonprofit housing, the viability of this housing will be severely tested as project‐based operating subsidies are replaced by tenant‐based vouchers. We recommend ways that the federal, state, and local governments should help the institutional support network respond to this challenge.     

Understanding the neighborhood: From residents’ perceptions and needs to action

Abstract

Motivated by a renewed interest in homeownership, the U.S. Department of Housing and Urban Development developed techniques to study patterns of ownership. A baseline model is used to forecast homeownership in 2000 and then extended to illustrate how policy initiatives designed to overcome race‐and income‐based barriers to ownership could affect the national homeownership rate and the rates of ownership by specific subgroups. Another technique uses American Housing Survey data to estimate how these initiatives could affect household location and the choice of housing type.

This article clearly demonstrates that even limited success in reducing race‐and income‐based disparities will result in a significant increase in the national homeownership rate and dramatic increases for subgroups, such as minorities, young households, and low‐income households, that have low rates of homeownership. Thus, these techniques affirm the importance of focusing on access and affordability.     

The Evolution of Low‐Income Housing Policy, 1949 to 1999

Abstract

The evolution of low‐income housing policy during the past 50 years can be divided roughly into two segments: the first running from 1949 to the 1973 Nixon moratorium on subsidized production programs and the second from 1973 to the present, marked by a diminished federal leadership role and an increased state and local role. After tracing the rise of the federal leadership role represented in the Housing Acts of 1949 and 1968, this article focuses on the development of three important policy instruments that mark the devolution of housing policy: housing vouchers, housing block grants, and the Low‐Income Housing Tax Credit.

The three‐pronged strategy of vouchers, block grants, and tax credits has achieved reasonably good results and attracted an unusual degree of political consensus. A steady expansion of all three offers the most promising path to the “realization as soon as feasible” of the national housing goal.     

Long‐term care reform and the role of housing finance

Abstract

The Clinton administration's recently announced home and community‐based care proposals have potentially important implications not only for long‐term care policy, but also for housing policy in the United States. This article attempts to draw out some of those implications. The first section examines problems inherent in the current “medical/welfare” system of financing long‐term care, which constrains consumer choice by limiting the supply of providers to control costs and by increasing medical professionals’ control over the types of services provided in the name of quality control. The medical/welfare dominance of long‐term care policy has resulted in an overreliance on nursing homes as providers, resulting in both escalating costs and continued consumer dissatisfaction.

The second half of the article looks at recent market and policy developments in response to consumer demand for lower cost alternatives to nursing homes. These alternatives promote more consumer autonomy and control in supportive housing arrangements. A more comprehensive services and housing policy could promote these developments in an approach that combines the security of public financing of supportive services with the benefits of consumer choice, market competition, and legal protections that characterize housing markets. In such a scenario, housing finance institutions—including government agencies, lenders, developers, and investors—could play a pivotal role in the long‐term care debate not only by unlocking substantial financial resources but, equally important, by transforming the provision of long‐term care services to promote consumer choice and autonomy.