At least one million Americans, including an increasing number of children and working adults, are homeless at some point each year. About half of all young families can't afford the American dream of homeownership. Yet both the Clinton administration and congressional Republicans favor dismantling long-standing housing programs for the poor, and some in Congress want to eliminate the Department of Housing and Urban Development (HUD) altogether.
The United States devotes about $113 billion a year to housing subsidies, less than one-quarter of that through HUD. The Departments of Agriculture, Health and Human Services (HHS), and Defense provide subsidies as well, but none contribute as much as our phantom housing agency, the Internal Revenue Service, through the home mortgage interest and property tax deductions [see Shelterforce, March/April, #80].
Doubtless, much of the $113 billion is ill directed. A progressive alternative to this must not be a reflexive defense of existing programs but a reformed housing policy that targets federal support to those who need it, relies less on bureaucratic programs, and emphasizes the role of nonprofit and community organizations in building, owning, and managing housing for poor and working-class families.
A Progressive Housing Plan
With housing activists bemoaning HUD's recent "reinvention," and Republican
leaders, including Speaker Newt Gingrich and Majority Leader Bob Dole,
urging HUD's elimination, can a progressive alternative succeed?
It can, but only if it expands the political constituency for a federal housing policy. And to do so, it must be an alternative to both the indefensible status quo and the know-nothing call to dismantle HUD.
The plan proposed here would cut the HUD bureaucracy by 75 percent within ten years. HUD's primary responsibility would be upgrading and gradually selling off the inventory of subsidized projects to residents and community groups. Its major ongoing responsibilities would be overseeing new production and rehabilitation of housing by nonprofits and monitoring discrimination by lenders, landlords, and realtors.
For the same $113 billion we spend now, but spent more wisely and efficiently, we can solve America's housing crisis with a progressive housing policy. Here's how.
Graduated Homeowner Tax Credit: $50 billion
To expand homeownership for the middle class, we should scrap the homeowner
deduction entirely and replace it with a refundable progressive homeowner
tax credit that would be available to all families each year, including
those moderate-income households that do not itemize their deductions.
By turning the mortgage interest deduction into a progressive tax credit, the same $50 billion would help many more families become and remain homeowners. The wealthy would continue to purchase homes with or without a tax subsidy. Because housing demand is more elastic at low- and middle-incomes, a $50 billion annual homeowner tax credit could make the difference between renting and owning for millions of working families. And it involves no bureaucracy.
The progressive tax credit could eventually gain the support of a broad constituency, including the housing industry lobby. By increasing the demand for homes, it would increase homeownership, catalyze homebuilding, generate jobs, stimulate economic growth, and add to local tax bases. Until now, the housing industry (builders, brokers, and lenders) has vigorously resisted any reform of the homeowner subsidy, but with the deduction under assault across the political spectrum, the industry may be able to collaborate with housing activists in supporting progressive reform.
Housing Vouchers: $50 billion
Housing vouchers for all eligible low-income households (working poor
and welfare poor) would cost about $50 billion a year. Although most poor
families will use vouchers to rent apartments, the vouchers should also
be usable to purchase a home. The program should be administered not by
HUD but by HHS. Alternatively, the poor could receive housing tax credits.
Community Developers: $5 billion
HUD should target $5 billion a year for housing development and repair
sponsored by community-based groups. That translates into 200,000 to 300,000
new homes and apartments each year.
HUD should put the nonprofit sector in charge of creating affordable housing, but whether funds go to states or cities, HUD needs to attach some important strings:
"Cooperatization" of Housing Projects: $7 billion
The Clinton plan would privatize the nation's three million units of
HUD-subsidized housing by eliminating all operating subsidies and making
these complexes compete in the private rental market. This is a recipe
for disaster. Most subsidized projects are in distressed urban neighborhoods
and suffer from years of deferred maintenance. Many were poorly constructed
and quite a few are ugly warehouses for the poor. If HUD withdraws its
insurance and project-based subsidies, some private owners will simply
walk away from their projects. Privatizing these projects will work only
if they are redesigned so that people with choices will want to live there.
HUD projects restricted to low-income residents concentrate and segregate the poor in ghettos. To turn these projects into mixed-income developments, owned by public housing authorities, nonprofit groups, and resident cooperatives, HUD should adopt a two-part strategy.
First, it should continue to provide operating subsidies to the successful, well-managed public housing agencies, which account for at least one-half of the current units. HUD should loosen the rules to allow working-class families to live there and give resident organizations the authority to set standards for eviction. Job training, child care, and other services, should be made available to residents. Operating subsidies and social services for half the inventory will come to about $3 billion.
Second, HUD should turn over troubled public housing developments and privately owned subsidized projects to nonprofit groups and resident-owned cooperatives. This will require some continuing HUD oversight, but with a ten-year goal of "cooperatizing," not just "privatizing," these developments. In the past decade, HUD has had some success with "buyouts" of subsidized projects by resident organizations and nonprofit community groups. But it takes time to organize and educate the tenants, who should begin with a goal of improving the developments. Resident groups should get technical and financial assistance to organize. ACORN and other community groups have succeeded in such efforts.
This plan requires HUD to provide funds to fix up distressed projects. About $40 billion is needed to completely modernize, redesign, and repair HUD's inventory. Over a ten-year period, that's $4 billion a year.
Community Empowerment: $1 billion
Community empowerment is consistent with the aims of conservatives
and liberals alike to use voluntary intermediary community institutions
to help rebuild the social fabric of troubled neighborhoods. Tenants who
wish to organize to improve living and safety conditions in their communities
should have the clear right to do so. The federal government should enact
legislation to provide residents in public housing developments, HUD-assisted
developments, and private housing with a vehicle similar to the National
Labor Relations Act – in effect, a National Tenant-Landlord Relations Act.
In public and subsidized housing developments, tenant associations that win elections and become the official voice of the residents in the development should receive operating funds from HUD on a per capita or per unit basis. HUD could encourage tenant associations to raise additional funds through grassroots efforts by providing matching funds. In private apartment buildings, tenants would have to raise their own funds to maintain the organization.
Some HUD money should also go to encouraging grassroots community organizing around such issues as crime watches, code enforcement, tenants rights, and especially bank and insurance industry redlining [see Shelterforce, January/February 1995, #79].
Broadening the Constituency
The approach we've outlined would help rebuild the political constituency
for a federal housing policy. The housing agenda has always made the most
headway when the concerns of the poor and the middle class were joined.
Early in this century, that meant improving health standards for immigrant
workers in the teeming slums as well as building apartments for the middle
class. In the Depression and the postwar years, it meant building subsidized
housing for the working class and shoring up homeownership for the middle
class. Today it means rebuilding communities, not just housing, and restoring
the dream of homeownership for millions of Americans who can no longer
afford it.
Prepared by John Atlas (president) and Peter Dreier (research director) of the National Housing Institute.
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