Shelterforce Interview:
Michael Stegman
HUD Assistant Secretary for Policy Development and Research
By CHESTER HARTMAN

Stegman, 53, is a nationally known public-policy and urban studies academician. Prior to his HUD appointment, he was professor and Chairman of the Department of City and Regional Planning at the University of North Carolina at Chapel Hill. There he conducted research and taught graduate courses in national housing policy and investment analysis for 26 years. He has been a housing consultant to states and localities, and led workshops and seminars for housing and elected officials across the nation. From 1979 to 1981, he was HUD Deputy Assistant Secretary for Research for then-Assistant Secretary Donna Shalala.

Stegman: The role of PD&R at HUD is quite varied. My number one priority is to participate as a member of the policy team to advise the Secretary across the Department's full range of responsibilities in the housing and development area. My office does not administer major programs, and if it is going to be a positive force in the Department, it has to play an important role at the policy table. My interest is to look at affordable housing issues and problems wherever they exist in communities, to look at programs administered in the Department, and then discuss with other Assistant Secretaries and the Secretary how these programs can be administered in the best interests of the constituents they serve.

Within PD&R there is an active, ongoing program of evaluation. My goals are to build up a responsive, diverse research agenda that speaks to the Secretary's priorities; that is, diversifiy who does research and significantly broaden the research agenda. I want not only to rebuild the agenda but also to broaden it from just program monitoring and evaluation to include research and also evaluation of other activities that HUD is not directly funding. I want to diversify both the researchers and the vehicles through which we do research.

I also have a strong interest in doing more scientific work that will stand up over time and to peer review. Looking over the research program the Department has pursued over the years, I see recurring studies of the same issue. In some cases, the research was poorly designed; in other cases, it was Congressionally mandated. But we seem to be looking at the same issues and not quite answering the questions.

As we go from funding programs that just build housing to programs that are supposed to have an impact on peoples' lives, I find that a one-time piece of research cannot tell you what the impacts were on families. We are going to begin a demonstration this year called Moving to Opportunity, built on Chicago's Gautreaux demonstration. Congress requires it to be evaluated over a ten-year period. This is a demonstration program in up to six cities that gives rent certificates to families in ghettoized public housing and other subsidized projects, to permit them to move to low-poverty neighborhoods.

Hartman: Have you picked your six cities?

Stegman: The Notice of Funding Availability is on the street now, and the applications should be coming in over the next couple of months. Because the Congress and we are interested in the long-term effects on low-income families who move from public housing and other assisted housing projects into areas with low poverty rates – the effects on school performance, on economic opportunity over the long term – the only way we can really systematically evaluate it is with a control group.

Hartman: How many families will be involved in Moving to Opportunity?

Stegman: Across the six cities, there will be something on the order of 6,200 families through 1994. Most will be families who receive not only their certificates, but extensive housing search and counseling assistance. The remainder will receive certificates and the normal services and support that the Section 8 program offers.

Hartman: What is the balance of resources and in your own priorities between the "PD" and the "R"? It's sounds to me like it's much more policy work than research.

Stegman: Margery Turner, Deputy Assistant Secretary for Research, is here this week for the first time [the interview was held on Sept. 17] and I have reserved a number of research questions until we can make some joint decisions. Margery is the former director of housing program research at The Urban Institute and a terrifically talented, knowledgeable researcher, who will be working on that agenda.

The Assistant Secretary for Policy Development and Research has to spend more time on the policy side than on the research side, considering all the areas of policy that a new administration is involved in. The creation of new research issues in support of policy is very important, and as policy directions become clear and get reflected in legislation, that will generate the need for a very diverse research program. So, more of my time will be spent on research later on.

From the standpoint of budget, HUD is a $28-30 billion a year agency with a $25 million research office. We have about 115 people, including support staff, and maybe 75 or 80 professionals divided across three broad offices of PD&R: the Office of Policy, the Research Office, and the Economic Affairs Office. Economic Affairs, led by the chief economist, does our major economic data work, conducts and analyzes the American Housing Survey, and generates Fair Market Rents.

Much of what is called a research budget, the $25 million that we can use for contracting and so on, is basically for program support like the Section 8 Fair Market Rents. But most of it one way or another supports research. The problem is that you're talking about a budget that is 13 one-hundredths of one percent of the budget authority. We have fixed costs of between $12 and $18 million a year associated with the American Housing Survey and related data collection responsibilities for the Department, and indeed the country. So now you're down to $7 million. The 1990 National Affordable Housing Act mandated 30 or more studies for HUD, and PD&R disproportionately carries out those mandated studies, so a reasonable share of the PD&R budget is needed to do Congressionally-mandated work. That's a long way of saying that the discretionary part of our research budget may be down to between $2 and $5 million in any given year.

Hartman: Within that discretionary money, what's the process of deciding what you should spend it on, what you research?

Stegman: I met with each of my division directors in the Office of Research. They reviewed everything they were doing and proposed a set of 1994 projects. It's not quite a wish list, but I asked them what they felt were essential. My Deputy Assistant for Research and I will be meeting over the next week or so to cull those studies. Where do those priorities come from? They come from two sources basically, not counting Congressional mandates. First, we are in constant communication with the HUD program offices to ask, for example, in public housing: what are the most urgent public housing issues that you have? We have so little research that overwhelmingly we try to respond to the major research demands and needs of the program assistant Secretaries.

Second, one of the things that I came here saying was, we know very little about what is happening in the non-subsidized, privately-owned stock that houses the majority of low-income and moderate-income families. It is a shrinking resource, and that is partly responsible for the fact that rent burdens are increasing. The other part, of course, is what's happening on the income side. But because this is not the focus of HUD programs, this is nobody's constituency. Nobody is studying it.

Another issue: Everybody that comes in has a different view of what the Low-Income Housing Tax Credit is accomplishing, different views as to where tax credit housing is located, within cities and outside cities, different views as to who lives in it. There is no information on this. This is not a housing program per se and it is not HUD's responsibility; Treasury administers the tax credit. We are in the process of developing a data base for the Low-Income Housing Tax Credit projects – a complete listing of projects that have actually received the subsidies – and we plan to make that data base available to the world. We have very little money to do extensive research on low-income housing tax credits. What we would like to do is answer some basic questions so that we can be intelligent about it, and we want to be able to make that kind of data base available to anybody who wants to do systematic research.

Let me use the term "democratizing HUD data" for want of a better phrase. To make what we have accessible is very important. We are talking with a number of parties right now to try to take the Home Mortgage Disclosure Act (HMDA) data and actually get them on line in an interactive way so that it can be analyzed for any community in any way. We would like people to be able to use those data with Census information. That's a form of leveraging of resources when you have so small a budget.

The Secretary has said it is HUD's job to help people create communities of opportunity, and we are talking about trying to consolidate our rental assistance programs to make them easier for communities to use. We are trying to maximize the mobility possibilities of rental certificates and vouchers, which means enabling their use across city boundaries; simplifying technical accounting problems; and offering whatever kind of incentives we can for organizations to provide search assistance.

We are overhauling the rules and regulations for the public housing production program. The Secretary has said that he wants public housing to be not only a credit to the community, which we will do through our distressed public housing initiative, but also to redesign the program so it produces housing that fits in communities, and adds a housing stock that blends in with the community, and has the same kind of amenities as are in the community. That requires dramatically changing the constraints and the way we build public housing. Those initiatives will stimulate all kinds of research.

We have a major program in the distressed public housing area that involves both dealing with troubled housing authorities on the management side, and addressing that small portion of the stock that is a prototype of the horrors of public housing. What can be achieved is illustrated by the winners of the 15 awards we just made under what is called the Hope 6 program, a program to radically redesign, reformulate and reconfigure distressed public housing through a combination of demolition, new construction, scattered-site replacement and mixed-income development. And beginning next fiscal year we will make another set of awards.

Hartman: Were these competitive awards?

Stegman: They were. The Secretary has made a commitment, resources notwithstanding, during his tenure to make a substantial dent in eliminating that blight in communities and to serve families who deserve more than they are getting, both from their housing authorities and from the community.

Hartman: What role does tenant ownership and management play in that thrust? That was such a big deal during Jack Kemp's HUD tenure.

Stegman: An important criterion for scoring high enough to be considered for an award was whether residents were significantly involved in the development of the plans, in the vision for the community, in the plans for replacement housing. But resident managment per se was not expressly required. We strongly support resident involvement and leadership in public housing. And we are especially enthusiastic about resident management. We have proposed a budget increase to give more support to resident initiatives and resident management, but we do not require it.

We also intend to broaden the definition of eligible activities for which resident organizations may apply to HUD for funding. Of course, resident management will continue to be an eligible activity. Joe Shuldiner, our Assistant Secretary for Public and Indian Housing, is now in the process of creating a charter that explains what we mean when we talk about resident councils and sponsoring activities and funding eligibility. One of the things he has learned as he goes out into the communities is that resident organizations are not the same – in terms of how democratic they are and how much resident participation they actually encourage or involve.

We believe deeply that resident councils should be representative, that the leaders should periodically stand for election, that they should be broad and representative. So we are working a lot in that area and broadening resident participation in our public housing programs much more than in the past.

Our current public housing initiatives – the development of mixed-income communities and the radical reformulation of seriously distressed sites by housing authorities – raise a whole set of very interesting research documentation and assessment programs. I also see a lot of the research moving into the fair housing area and into other areas of the Department where we will be developing some homeownership initiatives.

Hartman: Is the lack of coordination between the housing assistance offered by HHS in the form of welfare grants and HUD's housing assistance an issue on your agenda?

Stegman: Yes. It's an issue because there's a bewildering set-up from the client's perspective. We have housing rules and they have AFDC and rent rules, and they don't match. Now with the JOBS program you have certain requirements for some portion under the Family Support Act for AFDC families, and at the same time public housing authorities are now responsible for developing and implementing what are called Family Self-Sufficiency programs. The rules of the Family Self-Sufficiency program are not the same as under the JOBS program, and it is a real problem for us and for the concept of family self-sufficiency.

Helping families move along a path to greater economic independence is something the Secretary believes in very strongly. The question is, what is the housing authority's responsibility in this and what resources do they have to make sure that families have access to those services. The law requires housing authorities to coordinate the services, but we can't guarantee their availability. The subsidy system for public housing authorities has been adjusted to provide funds for service coordinators to help the authorities get staff to coordinate this. So that's one area where we've got to get together, since housing authorities absolutely depend upon services that are funded by HHS.

But there is the larger issue of welfare reform. I am the Department's representative on the Welfare Reform Working Group. One of the subgroups involves program simplification – trying to get the rules straightened out. The success of welfare reform is vitally important to families in assisted housing. When we talk about making work pay and providing families the kind of support they need to move from welfare to a more independent state, we are talking about child care support and access to training. Families who are in assisted housing don't have access to these resources now.

Hartman: When you did your study for the 20th Century Fund, More Housing, More Fairly, you called for eliminating the homeowner subsidy and putting those funds into direct housing programs. Is that at all on the screen in your work at HUD at this point?

Stegman: First of all, I was the rapporteur for the 20th Century Fund task force, not a member. I've participated in no program or discussion in the Department that deals with the issue of reducing the homeowner subsidy as a way of increasing low-income housing resources. That's not to say that there aren't discussions going on somewhere, but we are not engaged in those discussions.

Hartman: Another possible approach you have argued for elsewhere is a universal entitlement to a housing allowance. Is an entitlement program of any sort on the screen for HUD and for your work as a policy researcher?

Stegman: In the current environment, it is going to be very difficult to expand dramatically through the appropriations process. The renewal and preservation needs are paramount, and we are trying to develop all kinds of efforts to expand the supply of capital that is channeled into the production of affordable housing, whether it be through the affordable housing programs and Federal Home Loan Bank System, partnering with foundations, or partnering with the pension funds. We're working in partnership trying to expand access to union pension funds and all kinds of ways to expand the pool, but I don't see major increases. Having said that, we have not given up the hope of expanding the incremental increases in our rental assistance programs, but certainly we are not in an entitlement environment.

Hartman: Is there any entitlement structure that could be slipped in? For example, in the 1990 Housing Act there was an attempt to make the Family Unification Program (Section 8 certificates to prevent foster care or reunify families) an entitlement, and it wound up as a demonstration for a dozen states. Is there any modest way of creating, for a finite, politically attractive segment of the population in need of housing assistance, an entitlement to direct subsidy which doesn't exist in the system now?

Stegman: I really don't see that. Where it exists in a very small way, it has to do with some of our property disposition programs.

Hartman: Where is there an entitlement in the property disposition program?

Stegman: We are required to provide Section 8 certificates for previously assisted housing before it can be sold. They have to be 15- year subsidies, and so there are certain parts of the housing budget that are non-discretionary. But that doesn't mean every family is eligible. Making the Low-Income Housing Tax Credit permanent is about as close as we've come recently.

Hartman: You sound much more enthusiastic about the Low-Income Housing Tax Credit than you have previously.

Stegman: We all understand that it is not the most efficient way of producing housing, but the corporate sector has grown to appreciate and invest in it, as convoluted and difficult as it is.

Hartman: Since the years you served in the Carter Administration's HUD [1979 - 81], probably one of the biggest changes has been the emergence of a strong nonprofit sector, both in housing and community development. Do you see PD&R playing an important role in evaluating the performance of the nonprofit sector or improving its capacity?

Stegman: When I was here in the late 70's, I could point to where the expertise was in the Department and the real hands-on experience with CDC's and nonprofits. But over the last ten years as we went to HOME and block grants, that kind of resource disappeared. Because we don't directly fund CDC's, we don't evaluate CDC's per se, and we have to develop that community, number one. Number two, we have two studies underway. A recently completed study by Abt Associates looks at the costs and funding of housing developed by a range of nonprofit community-based developers. The other study, being done for us by the Urban Institute, deals with the issue of nonprofits' capacity for larger scale production. It should be finished in the next several months.

 In terms of community-based housing development, the Secretary is not only interested in supporting community development corporations and community housing, he's interested even in what you would call upstream activities, where HUD can play a role in helping to organize communities. One of the biggest differences from the 70's is that we don't have Father Baroni. We don't have Joe McNeely and Karen Kollias and all the folks we used to work with during those days, when there was an Office of Neighborhoods in the building. I can say that there is a place in the Secretary's office that has been dedicated to making sure that there is a community voice in HUD programs – a special actions office.

Hartman: That's a little vague. What kind of place?

Stegman: The special actions office has two responsibilities. One is to manage very high priority time-dependent projects that the Secretary wants to move forward quickly. George Latimer, the former mayor of St. Paul, heads that office and really rides herd to make sure that the program offices that have chief responsibility meet deadlines.

But there is something else that's going on in that office. Secretary Cisneros has a great concern for the problems of the border areas and the colonias along the Mexican border. He has a strong concern for rural issues, but we don't run rural programs per se. And he has a very strong concern about communities and community organizing, and so he is bringing on board advocates whose role it is to articulate these interests.

Hartman: Are these people on board already, or are they being recruited?

Stegman: Some of those positions I talk about are on staff now, and others are just arriving. It takes time to bring a team together. We are four or five months in, and we're not quite fully up to speed , but we're getting there.

Hartman: One last broad question, about cities. One of the big problems facing cities in general is the growing credibility of the notion that cities are obsolete, particularly in economic terms. The argument goes that cities are no longer engines of the economy but a drain on the economy. Given HUD's mandate, how can PD&R contribute to make the case for cities in terms of research and policy development and help shift the public debate regarding the roles cities play?

Stegman: One way involves HUD's role in helping the Administration administer what is a much broader community development agenda, that includes HUD and other agencies. We will be playing a major role in implementing the Administration's urban policies. Quite a few communities are not cities but older suburbs; they have the same kinds of problems that cities have and need help and support.

Recent research looks at the relationship between regional economic growth, metropolitan growth and what is happening in the central core vis a vis the suburban rings outside of the city. There is a growing recognition that what is happening in cities affects the rate of growth or could affect the rate of growth of the whole metropolitan area. There really is an interwoven destiny, a connection between the nature of the metropolitan economy and what is going on in the cities and the economic health of cities. It's an organic kind of relationship. National economic growth is the sum total of regional economic growth, so cities really play an important role here. I would like to see more research taking place in these areas. Over the last decade all of our regional economic growth research ignored what was going on in cities, as if that didn't matter in the competition among regions. We are saying place matters and community matters – both from a social justice standpoint and from an economic standpoint.
 

Back to Clinton's HUD Index.