Challenges confronting nonprofit housing organizations’ self‐sufficiency programs

Abstract

In recent years, interest has grown at the federal level in strategies to combine subsidized housing with programs promoting household self‐sufficiency. This article explores how nonprofit housing organizations conceptualize their self‐sufficiency programs for their residents. A broad definition of self‐sufficiency is presented—one that is not exclusively focused on the individual and, instead, also includes program strategies that are focused on changing the context in which individuals live and work.

The paper then analyzes the relationship between the self‐sufficiency strategies being implemented in the nonprofit housing world and how these organizations will be affected by welfare reform, the shrinking and restructuring of federally subsidized housing, the emergence of block grant job training and workforce development programs, and the general devolution of government programs into ever more fungible pots at state and local levels. These transformations in the domestic policy agenda will present challenges to nonprofit housing organizations and to the goal of promoting self‐sufficiency.     

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.     

Social capital and crime in New York City's low‐income housing

Abstract

This article presents evidence that components of social capital can play a prospective role in preventing crime in low‐income housing. It develops a conceptual approach to crime prevention involving social capital, alternative forms of ownership, and environmental design considerations. The study compares five programs that house New York City's poorest, mostly minority residents. The effectiveness of social capital in preventing crime is assessed using data from surveys of 487 buildings in Brooklyn, NY, and crime data from the New York City Police Department.

Results of the analysis indicate that three components of social capital—basic participation in tenant associations, tenant prosocial norms, and a building's formal organization—were all related to reducing various types of crime in the buildings under study 6 to 12 months after social capital was measured. The effectiveness of social capital was related to alternative ownership structures, building characteristics, and housing policy.     

Private market provision of low‐income housing: Historical perspective and future prospects

Abstract

The unaided private market provision of new low‐income housing is substantially a fantasy. There is little on the horizon to alter this situation in the next decade. The income/cost gap is so substantial as to overcome the decline in household formation and positive changes in job patterns that have been advanced as bridge mechanisms.

To set the debate in context, an overview of the demographic and economic future of the United States is provided and mainstream forecasts of economic and demographic trends affecting housing supply and demand are reviewed. Particular attention is given to demographic maturation and shrinkage, household diversification and segmentation, and income and poverty dynamics.     

State policies and programs to preserve federally assisted low‐income housing

Abstract

Preservation of the existing assisted housing stock is likely to be a major housing issue throughout the 1990s and into the twenty‐first century. Federal legislation—the Emergency Low‐Income Housing Preservation Act and the Low‐Income Housing Preservation and Resident Homeownership Act—addresses the first wave of preservation needs and provides critically needed programs to maintain eligible units as assisted housing for the next 50 years.

This paper presents a brief review of federal preservation requirements and argues for state participation in the implementation of preservation programs. Seven areas are identified for state action, and leading state preservation programs are reviewed. Each state needs to ensure that a foundation is established to preserve these units over their useful life as decent, affordable housing. What the states learn from participating in the implementation of the federal preservation program will help them address future preservation needs and develop the capacity to manage the interdependent provision of assisted housing by the public, for‐profit, and nonprofit sectors.     

The low‐income housing tax credit program goes mainstream and moves to the suburbs

Abstract

The Low‐Income Housing Tax Credit (LIHTC) program is now 20 years old. With the maturing of the program, the use of tax credits has become commonplace in the development of rental housing across the nation. This article examines how the program has changed both financially and spatially. Specifically, the article asks whether it provides a mechanism that can help deconcentrate impoverished renters by providing access to low‐poverty neighborhoods.

This research finds that as the price for tax credits rises, the program becomes increasingly popular with developers who are helping it make inroads in low‐poverty suburbs. By entering the suburbs, the LIHTC program is meeting and even exceeding the performance of the Housing Choice Voucher Program in terms of offering opportunities to live in low‐poverty settings.     

Introduction to session 3: Estimating the costs: Perspectives on preservation of the nation's lower‐income housing stock

Abstract

This article uses survey data from the Moving to Opportunity demonstration program in Chicago to explore changes for households moving from public housing. The focus is on two key areas: housing and neighborhood conditions, and labor force participation and employment of householders. The experimental design of the program allows the differences between comparison households, which moved with a regular Section 8 voucher, and experimental households, which moved to low‐poverty neighborhoods with housing counseling assistance, to be examined.

The findings, based on interviews an average of 18 months after families moved, reveal dramatic improvements in neighborhood and housing conditions for all participating families; experimental families experienced even greater gains in terms of housing and especially neighborhood conditions. Labor force participation and employment increased for householders in both groups, likely fueled by the robust economy throughout much of the country and supporting similar findings for program participants in New York and Boston.     

Common‐interest housing in the communities of tomorrow

Abstract

This article offers a broad conceptual framework for understanding the rise of common‐interest housing developments (CIDs), including gated communities, townhouse and condominium projects, and other planned communities. The article begins by describing the CID as an institution and the essential characteristics and varieties of CIDs. Second, the rapid spread of CIDs is attributed to the incentives currently operating on real estate developers, municipal governments, and consumers. Third, this institution is placed in the context of definitions of public and private, and the categories of state, market, and civil society.

The article then presents the eight different “big‐picture” interpretations of this overall phenomenon that could inform the public policy framework within which CIDs are situated. They can be seen as an imperfectly realized version of the “rational choice” or “public choice” model, and reform efforts should be aimed at making choice mechanisms more effective.     

The excessive costs of creative finance: Growing inefficiencies in the production of low‐income housing

Abstract

The paper examines creative finance as a means of low‐income housing production and preservation. The low‐income tax credit has evolved as the main federal housing production program in recent years. But this evolution can only be understood as a last resort. The inefficiencies of this approach outweigh any advantages. High transaction costs, inappropriate targeting of benefits, and insufficient monitoring are among the problems. Recent changes in the tax credit may actually cost the government more. Furthermore, current policy in fact creates the same time bombs now exploding in the prepayment projects. Current proposals for housing reform and revitalization have positive features, but are either underfunded or still rely on creative finance. What is needed is a direct one‐ or two‐step low‐income production program.     

The cost‐effectiveness of the low‐income housing tax credit relative to vouchers: Evidence from six metropolitan areas

Abstract

How expensive is the Low‐Income Housing Tax Credit (LIHTC) program relative to vouchers? Are there any market conditions under which the supply‐based LIHTC could be more cost‐effective than demand‐based vouchers? This article examines these questions in six metropolitan areas—Boston, New York, San Jose (CA), Atlanta, Cleveland, and Miami. Controlling for family income and unit size, I compare the development subsidies of new‐construction LIHTC projects with the alternative 20‐year voucher cost in each area.

In general, the LIHTC is found to be more expensive than vouchers. The premium, however, varies significantly by voucher payment standard and local housing market. Assuming a payment standard of 100 percent of fair market rent, the LIHTC is only 2 percent more expensive than vouchers in San Jose, but more than twice as expensive as vouchers in Atlanta. Many factors account for these regional variations. This study emphasizes two: local market conditions and program administration.     

The low‐income housing tax credit as an aid to housing finance: How well has it worked?

Abstract

The Low‐Income Housing Tax Credit program has been operating for over 10 years and has helped finance thousands of developments with units set aside for low‐ or moderate‐income households. However, the program has been criticized for requiring additional layers of subsidy to leverage investment and for providing benefits to developers in excess of the amount necessary to induce them to invest.

An analysis of a sample of developments from Missouri finds that the tax credits are syndicated, with virtually all of the syndication proceeds (about 33 percent of the financing) used to pay for development costs. Conventional lending provides another 44 percent of the financing. Unfortunately, because these sources do not cover all of the costs, developers enter into a complex, costly process of layering additional subsidies, one on top of another, to fully finance the development.     

Comment on Kirk Mcclure's “The low‐income housing tax credit program goes mainstream and moves to the suburbs”

Abstract

As McClure's article notes, the Low‐Income Housing Tax Credit (LIHTC) program has indeed gone mainstream. Given the tarnished reputation of many other federal low‐income housing programs, this is good news. It is also surprising in some ways considering the many programmatic flaws inherent in the LIHTC program.

As a point of departure, I look at why McClure and others are able to describe the program in a positive light despite its many flaws. I attribute this to the unique political culture of the United States, for which the LIHTC program is well suited. In addition, it sidesteps one of the thorniest problems that have bedeviled low‐income housing programs—the spatial isolation of poor minorities. Until the LIHTC program explicitly addresses this issue, however, any praise must be tempered by a great deal of caution.     

Foreclosure filings and sheriff's sales experienced by low‐income first‐time home buyers

Abstract

This paper examines the recent history of supply‐side subsidies. The first section describes the programs that have had a major impact on the supply of low‐income housing over the last 20 years. The second section looks in some detail at the recent history of tax subsidies to low‐income housing and attempts to quantify their magnitudes. The third section presents some data on recent syndication deals to shed light on the return rate that seems to have been required in recent years to attract private investors into low‐income housing. The final section turns to the literature on rent‐seeking behavior and proposes a more efficient way to subsidize low‐income housing production.     

Racial/ethnic differences in housing outcomes for first‐time,low‐income home buyers: Findings from a National homeownership education program

Abstract

Federal housing policies aimed at making homeownership more accessible through education and affordable lending have been successful in raising the homeownership rate among minorities. By marketing homeownership to underserved populations and helping them overcome financial and informational obstacles, such programs might be expected to promote equality in housing outcomes, including housing quality, neighborhood composition, and neighborhood conditions, for minority homeowners.

This article examines the experience of participants in a national home‐ownership education program. While the transition to homeownership has been associated with modest progress, it does not overcome persistent disparities in housing quality. Homeownership appears to lead to poorer neighborhood conditions for all lower‐income buyers—not just minorities—and may be exacerbating social and spatial isolation rather than helping to overcome it. Differences in neighborhood outcomes, however, may be due to locational preference rather than discrimination in housing and mortgage markets.     

Public housing desegregation: What are the options?

Abstract

This paper examines policy and programmatic options for the desegregation of low‐income public housing. Desegregation is a strategy for relocating public housing residents or units to communities that offer a better quality of life. This paper considers the likelihood of achieving desegregation, given the factors that created segregation, by exploring the role of past and present policies and programs in producing segregation and the effects of efforts to ameliorate it.

The major finding is that public housing segregation is firmly entrenched in many major cities, and attempts to reverse it have produced marginal changes. Although the federal government has ceased to play a major role in perpetuating racial segregation, it has not taken a strong, consistent, and clear stand on desegregation policy. Some innovative desegregation programs with promising outcomes are currently under way, but it is unlikely that public housing segregation will be abated in the future.     

Targeting the suburban urbanites: Marketing central‐city housing

Abstract

This article explores target marketing as a means to identify which middle‐income suburbanites may relocate to central cities. The most targetable populations reside near central cities and lead urban lifestyles. We term such people “suburban urbanites.” Geodemography, a method combining population and location, is used to classify suburban urbanites using data from Claritas Inc., a target marketer. Claritas divides the nation's neighborhoods into lifestyle clusters by linking population density to demographic and consumptive patterns.

A case study of metropolitan Washington, DC, illustrates how target marketing works. We find that more than half the region's middle‐class, Claritas‐defined urbanites live outside the District of Columbia. Thus, a large market of potential city dwellers lives in Washington's suburbs. Target marketing enhances the statistical approaches traditionally used in policy making and may help cities understand and develop their comparative advantages.     

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.     

Housing affordability and family well‐being: Results from the housing voucher evaluation

Abstract

Studies report that real estate brokers often provide less information to black clients than to whites and steer them to different neighborhoods. However, few studies have investigated racial differences in housing search procedures. If blacks believe they will receive less useful information from brokers, they may avoid them.

Analyzing 1992 data from Detroit, this study finds that blacks were significantly less likely than whites to consult brokers. Blacks tended to rely more on methods such as talking with friends, checking newspaper ads, or driving through neighborhoods. Blacks were also more likely to believe that they missed housing opportunities because brokers discriminate. Differences in the socioeconomic characteristics of subjects account for some of the differences in the use of brokers. Eradicating discrimination by brokers will broaden housing opportunities only for blacks who use brokers. Policy actions that address the perception of discrimination by brokers may be a more powerful tool.     

The housing system of the former Soviet Union: Why do the soviets need housing markets?

Abstract

The administrative‐command system that had been in full force in the Soviet Union between 1927 and 1990 had its own logic and internal consistency. It is now common knowledge that this economic system has flaws that led to a deepening secular decline over the past three decades. Because of ideological reasons, and an inadequate economic understanding of the capacity of their system to be liberalized, many reformers sought a third way between central planning and markets. The consensus today is that there is no third way. Among the former Soviet republics, Russia has just embarked on market‐oriented reforms and is facing a difficult and unstable transition because central planning mechanisms have ceased to function, but markets are not yet in place. This transition is particularly problematic for housing, which is a very severely distorted economic sector.

The international evidence on market economies that has accumulated over the past 20 years shows that, when housing sector distortions exist, they are predominantly found on the supply side. In socialist economies, however, housing is part of the compensation provided by enterprises and other employers. As a result housing suffers from demand‐side distortions in addition to the supply‐side problems caused by the absence of land markets, vague property rights, and burdensome urban regulations. The housing sector is already so large and distorted in these highly urban economies that overall economic reforms cannot succeed without housing reforms. In addition to presenting an overview of Soviet housing, this paper provides comparative evidence indicating that, among all the distorted socialist housing systems, Russia's probably is the most impaired. The basic elements of a market‐oriented strategy to improve housing are briefly presented.