From redlining to the Reagan administration to the present-day crisis, the government has spent decades shifting the burden to the private sector
Housing is political, and public housing is political dynamite. The truly public buildings of the past have given way to more public-private partnerships and subsidized rentals, but the stereotypes embedded in low-income housing still course through the nation’s social and racial divides.
Public housing got its start in the federal Housing Act of 1937, and it flourished well into the 1970s as a tool of segregation, promoting public housing in Black neighborhoods while bestowing private developers with funding to build homes in white neighborhoods. White families could graduate from public housing with the support of federally insured mortgages denied to low-income Black families, who were left concentrated in increasingly neglected public housing projects. These redlining tactics undercut financial opportunity — through housing policy — for generations of Black Americans.
From its creation in 1934 and onward, the Federal Housing Administration, which federally insures mortgages for single-family-home purchases, deliberately promoted segregated and grossly unequal housing. Its original underwriting manual cautioned to protect neighborhoods from being “invaded” by incompatible social and racial groups: “If a neighborhood is to retain stability, it is necessary the properties shall continue to be occupied by the same social and racial classes. A change in social or racial occupancy generally contributes to instability and a decline in values.”
In 1968, Congress passed the Fair Housing Act, prohibiting such discrimination, and by 1974, President Richard Nixon put a moratorium on public housing spending. That same year, Section 8 housing vouchers were created as part of the Housing and Community Development Act. Under the Reagan administration, cuts to the U.S. Department of Housing and Urban Development essentially eliminated the creation of any new public housing beyond replacements.
Under subsequent administrations, the federal government’s investment in maintaining more affordable, public housing for low-income families declined, with the emphasis shifting to housing vouchers in the private market. Neglected buildings fell into disrepair, and more than 140,000 dilapidated public housing units were demolished between 2000 and 2016, with housing authorities no longer tied to prior Congressional requirements of one-to-one replacements.
In 1998, President Bill Clinton signed the Faircloth Amendment, prohibiting the construction of public housing if it would result in a net increase over 1999 levels. It remains in effect today.
More recent policies continue to incentivize private investment in public housing, or selling off properties, to patch up the $35 billion backlog of maintenance costs created by insufficient federal funding. The ongoing result, according to the National Low Income Housing Coalition, is the loss of more than 10,000 public-housing units each year.
And while HUD funding has shifted to rental subsidies — more than three-quarters of its proposed 2021 budget is dedicated to housing vouchers — those programs have also fallen far short of demand. According to a 2020 report by Harvard University’s Joint Center for Housing Studies, the federal spending shortfall leaves 3 out of 4 of the more than 17 million eligible households without rental assistance, and the risk of losing more affordable housing stock is only expected to make matters worse.
And the number of households that are cost burdened — spending on housing more than the federally accepted 30% of income considered financially viable — continues to rise among low- and moderate-income homes.
“Nearly three-quarters of lowest-income renters spend over half of their incomes each month for housing, leaving little money for other basic needs, including food and health care,” the Harvard report’s authors write. “Not surprisingly, these conditions have also led to increases in homelessness, particularly in high-cost states.”
Local efforts by governments, business networks and organizations are working to alleviate the housing crisis, the report states. “Ultimately, though, only the federal government has the scope and resources to provide housing assistance at a scale appropriate to need.”
While HUD retreated from low-income housing, other dynamics became driving forces for modern homelessness. Cities began gentrifying, luring people back from the suburbs by razing skid rows and building housing to attract higher-paying tenants. Mobility for lower-income households was stymied by stagnant wages. Major budget cuts enacted in Reagan’s first administration whittled down social services and deinstitutionalized mental health systems. Hundreds of thousands of people with disabilities were cut from assistance. Efforts to house people who were mentally ill — widely held at the time to be the biggest cause of homelessness — were now handicapped by a lack of available and affordable housing. In the latter 1980s, homelessness emerged as a national health issue but was viewed by the administration at the time as a local problem, rather than a federal responsibility.
By 1987, the McKinney-Vento Homelessness Assistance Act became the first federal act to specifically address homelessness in the United States. It remains the cornerstone for homeless funding today.
While the HUD budget has increased gradually over the years, it hasn’t kept up with inflation and never recovered to the levels before the Reagan cuts.
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“We have seen increases in dollars, but compare those dollars to 1980 dollars: The HUD budget never got back to the scale of what it had been,” said Michael Buonocore, executive director of Home Forward, the Portland-area housing authority. “In the context of the state of homelessness and people’s idea that it’s an intractable problem, when you look back pre those cuts, we didn’t have homelessness as it exists today. If we were to invest at the same scale we had been, we would have a really different landscape of what homelessness looks like in this country.”
In the fashion of privatization, the void left by the federal government’s retreat from public housing has been replaced in part by incentives to private investment. Today, if affordable housing is built, low-income housing tax credits were most likely involved. These credits are dollar-for-dollar tax reductions granted by state and territorial governments to private developers who sell them to private investors to fund the creation and maintenance of affordable rental housing.
Low-income housing tax credits have helped finance millions of affordable-housing units nationwide for low-income families, but common complaints for the system is that the guarantee of affordability is not permanent, and they don’t create housing for the poorest households, where there is the greatest need. The national average income of a household in public housing is $15,000, and more than half of those pay between $200 and $500 or more per month in rent, often with Social Security funds.
But creating affordable housing isn’t the same as creating inclusive communities. In an effort to undo the decades of segregation policies endemic in housing development and placement, the Obama administration in 2015 codified the Affirmatively Furthering Fair Housing mandate of the Fair Housing Act, which prohibits discrimination. This rule required that communities receiving federal assistance must work to reverse policies and actions that create racially and economically segregated and underserved communities. The Trump administration suspended it in 2018, calling it complicated, costly and ineffective. The administration then eliminated it this past August, over the strong objections of housing advocates and civil rights organizations.
Low-income tax credits alone couldn’t lure money to existing housing that had fallen into disrepair. So in 2012, Congress created Rental Assistance Demonstrations, or RAD conversions, which allow public housing authorities to convert public housing units into voucher units. This change in funding streams allows housing authorities to leverage the investment in RADs for loans to make repairs as needed, instead of relying on very limited federal funds. Nationally, nearly half of the nation’s 1.1 million public housing units could be converted into RAD, and under the proposed 2021 HUD budget, even that cap would be lifted to make all public housing units open to some degree of private ownership.
Home Forward has cut its public housing stock nearly in half through RAD conversions from just two years ago. It currently manages 645 units of public housing, in addition to administering nearly 12,000 housing vouchers. There are more than 10,000 people on the waiting list for public housing alone, which serves the lowest-income households.
“It’s out of necessity given the financial reality of public housing funding,” Buonocore said. “We often describe public housing funding as a grant program. But nobody manages housing in a grant model; you use a real estate model. One of the restrictions of public housing is if your roof needs to be replaced and you haven’t got enough grant funds to replace it, there aren’t other financing tools in a way there is like to refinance your home or take a home equity loan as the case may be. The conversion model lets us essentially use a combination of debt to tax credits to fund repairs at a really significant level that we wouldn’t have been able to do.”
Today, with the emphasis on private investment and tax credits, HUD’s role in housing assistance has been eclipsed by the Internal Revenue Service, which by 2017 cleared $64 billion in tax expenditures for individual homeowners through the mortgage-interest deduction, far exceeding the amount set aside for affordable-housing tax credits. HUD’s entire budget that year was less than $50 billion. HUD’s proposed budget for 2021 is $48 billion, $8.6 billion less than enacted in 2020.
Over the years, the term public housing became almost a dirty word, Buonocore said. But that’s starting to change. As the housing crisis increasingly permeates common welfare, talk of a federal investment in housing is becoming more common.
Among the strongest proponents is U.S. Rep. Earl Blumenauer (D-Portland). Last year, Blumenauer released his report “Locked Out,” outlining the racist and discriminatory history of the nation’s housing policies. Among numerous reforms to end racist practices and meet the demand for affordable housing, Blumenauer calls for the creation of a new $10 billion Public Housing Construction Fund to build 5 million new homes to cover the national public housing waitlist and expand public housing eligibility beyond the most vulnerable and into middle-income households, to discourage segregating poverty.
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Blumenauer also proposes eliminating the RAD program once public housing capital needs are met, to end the practice of removing housing from the public rolls.
In July, by a near party line vote, Congress passed the Moving Forward Act with a provision to repeal the Faircloth Amendment that prohibits the construction of new public housing. It awaits action in the Senate.
The Emergency Affordable Housing Act of 2020, co-sponsored by Sen. Ron Wyden (D-Oregon), would dramatically expand the low-income housing tax credit program and provide 50% higher credits for the lowest-income housing development. It would also end the “qualified contract” option that allows owners of those properties to convert them to market rate after just 15 years, and in a nod to disrupting secretory practices of the past, prohibits the consideration of local support or opposition, or local government contributions, in deciding where to build affordable housing.
“We’re not out of the woods, but there have been hopeful signs that there’s a recognition that public housing is a part of our public infrastructure and it’s really important to preserve it,” Buonocore said.
But the stigma of public housing is still powerful in politics. In August, after President Donald Trump repealed the Affirmatively Furthering Fair Housing rule, HUD Secretary Ben Carson reversed his position on local zoning changes to eliminate single-residency zoning, which has its origins in housing discrimination practices and would open up more land for more affordable, multiplex housing. Oregon banned single-family zoning in most cities last year.
Carson initially hailed the zoning elimination for unburdening developers of unnecessary regulations that he called an obstacle to creating affordable housing and said contribute to homelessness. In fact, Carson chairs the White House Council on Eliminating Barriers to Affordable Housing, created by executive order last summer to study the removal of burdensome regulations.
But in a politically charged op-ed in the Wall Street Journal on Aug. 16, titled “We’ll Protect America’s Suburbs,” Carson and Trump described the AFFH rule as “social-engineering that would have transformed the suburbs,” and they pledged to undo local efforts to abolish single-residency zoning.
Trump has spoken against diversifying neighborhoods with racist implications, saying it allows “who knows” into neighborhoods, lowers property values and makes them unsafe. In his tweets, Trump describes the desegregation approach to housing as an invasion into their neighborhood.
STREET ROOTS NEWS: Trump rescinded a fair-housing rule: What that means for Oregon
Email Executive Editor Joanne Zuhl at joanne@streetroots.org; follow her on Twitter @jozuhl
This story is part of Finding Home, a series of in-depth articles examining national perspectives around America’s growing housing and homeless crisis. Read more from this series.
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