Housing and Urban Development Policy Public Housing

Public Housing Federally built or bought dwelling units, managed by a local public housing authority, used to house lower-income households Federally built or bought dwelling units, managed by a local public housing authority, used to house lower-income households

WWI –Housing for defense contractor workers –United States Shipping Board Emergency Fleet Corporation –The United States Housing Corporation

Great Depression –Put people to work by doing construction and remove blight –Public Works Administration (PWA) 22,000 units built22,000 units built majority built in the north and large citiesmajority built in the north and large cities most tenants were White and working (WWII stimulated the economy)most tenants were White and working (WWII stimulated the economy)

Housing Act of 1937 –Set the Foundation for permanent public housing –Allowed the creation of local public housing authorities that took over PWA housing

Economic Efficiency of Public Housing –Housing subsidies No new constructionNo new construction Stimulated demand too much for pre-existing low quality housingStimulated demand too much for pre-existing low quality housing –Conventional Public Ownership Construction spending put people to workConstruction spending put people to work New structures removed dilapidated buildingsNew structures removed dilapidated buildings

Housing Act of 1949 Additional constructionAdditional construction Limited to very low incomeLimited to very low income Fewer units built than originally plannedFewer units built than originally planned

Economic Efficiency Argument falls apart--1950s and 1960s –No limit on price of land for public housing, but limit on cost per unit construction Result: Politics determined location. Shoddy projects builtResult: Politics determined location. Shoddy projects built –Rents collected were linked to income of residents: 30% Result: Not enough money to keep up the projectsResult: Not enough money to keep up the projects

Public Housing 1970s to 1990s Preferences to the very poor (paying >50% of their income to rent) Federal government owned 1 million units in 1974 –Types 80% Conventional Public Housing: Government Built, Government Run80% Conventional Public Housing: Government Built, Government Run 20% Turnkey: Private sector built, Government Run20% Turnkey: Private sector built, Government Run Budget cuts, new emphases Home Ownership: 1990 Act encourages residents to buy their unitHome Ownership: 1990 Act encourages residents to buy their unit DeconcentrationDeconcentration

Challenges for Public Housing Authorities –More pressure to be “competitive” –Public Housing Management Program Criteria Ability to perform modernization, maintenance, inspectionsAbility to perform modernization, maintenance, inspections Ability to collect rentAbility to collect rent Ability to fill vacant unitsAbility to fill vacant units Ability to work with residents to provide programsAbility to work with residents to provide programs –Rating of 60 or less and authority is put on the troubled PHA list

Public Housing Today (Quercia & Galster, 1997) Motive: Maximize provision of affordable, decent housing for very poorMotive: Maximize provision of affordable, decent housing for very poor Financial structure: Deteriorating buildings, inability to raise rentsFinancial structure: Deteriorating buildings, inability to raise rents Characteristics of stock: in big cities they tend to be aging, high rise, high densityCharacteristics of stock: in big cities they tend to be aging, high rise, high density Characteristics of tenants: Very poor, frequently single headed households with childrenCharacteristics of tenants: Very poor, frequently single headed households with children Management approach: Follow federal regulationsManagement approach: Follow federal regulations

Private Sector Building of Low-Income Housing Motive: Maximize profitMotive: Maximize profit Financial structure: Expect subsidy to house very poor who cannot pay market rate rentsFinancial structure: Expect subsidy to house very poor who cannot pay market rate rents Characteristics of stock: UnknownCharacteristics of stock: Unknown Characteristics of tenants: Tend to be % of the median income ($49,583 in OC)Characteristics of tenants: Tend to be % of the median income ($49,583 in OC) Management approach: Asset management and competition=response to tenantsManagement approach: Asset management and competition=response to tenants

Public Housing Reinvention Motive: Provision of affordable, decent housing as well as improve tenants socio- economic wellbeingMotive: Provision of affordable, decent housing as well as improve tenants socio- economic wellbeing Financial structure: Demolish bad units. Use the money to upkeep occupied, habitable unitsFinancial structure: Demolish bad units. Use the money to upkeep occupied, habitable units Characteristics of stock: Smaller “human- scale” developmentsCharacteristics of stock: Smaller “human- scale” developments Characteristics of tenants: Mixed incomeCharacteristics of tenants: Mixed income Management approach: Asset management and cost effectiveness strategy on site to site basisManagement approach: Asset management and cost effectiveness strategy on site to site basis

Public Housing Goals in Conflict Conflict 1 Investors see public housing as a risky investment due to delays by cities in making approvals, zoning, etc. Investors see public housing as a risky investment due to delays by cities in making approvals, zoning, etc. Maximize geographic and social integration of poor and non-poor households vs.Maximize geographic and social integration of poor and non-poor households vs. Maximize the amount of private capital invested in public housing authorities thereby reducing reliance on public subsidiesMaximize the amount of private capital invested in public housing authorities thereby reducing reliance on public subsidies

Conflict 2 Non-poor may not want to live with poor so benefits of having non-poor onsite are undercutNon-poor may not want to live with poor so benefits of having non-poor onsite are undercut Maximize geographic and social integration of poor and non-poor households vs.Maximize geographic and social integration of poor and non-poor households vs. Maximize the value of cross-subsidies of non- poor subsidizing poor.Maximize the value of cross-subsidies of non- poor subsidizing poor.

Conflict 3 Investors see poor tenants as risky prospects: inability to collect rent, higher maintenance, etc.Investors see poor tenants as risky prospects: inability to collect rent, higher maintenance, etc. Maximize number of poor assisted by decent, affordable housing vs.Maximize number of poor assisted by decent, affordable housing vs. Maximize the amount of private capital invested in public housing authorities thereby reducing reliance on public subsidiesMaximize the amount of private capital invested in public housing authorities thereby reducing reliance on public subsidies

Conflict 4 Too many non-poor tenants means fewer poor being helpedToo many non-poor tenants means fewer poor being helped Maximize number of poor assisted by decent, affordable housing vs.Maximize number of poor assisted by decent, affordable housing vs. Maximize the value of cross-subsidies of non- poor subsidizing poor.Maximize the value of cross-subsidies of non- poor subsidizing poor.

Responses to Quadrilemma Accept the fact that not all of the goals of public housing can be accomplishedAccept the fact that not all of the goals of public housing can be accomplished Section 8 vouchers have strong potential for filling the gapSection 8 vouchers have strong potential for filling the gap This is a decision matrix to help identify what happens in which kinds of situationsThis is a decision matrix to help identify what happens in which kinds of situations