Good Intentions Gone Wrong - Low-Income Housing Edition

Demolition of Chicago's Cabrini Green public housing / Senor Codo CC BY-SA 2.0

The Atlantic posted a story today about a documentary that commenced in 2007 and aims to examine what's happened to poor folks in Atlanta, particularly former housing project residents, in the wake of all of the city's public housing units being torn down over the last 20 years. 

The story's conclusion makes a powerful point:
"The phrase 'The Atlanta Way' was used throughout the 20th century to describe the processes of compromise between black and white elites, a negotiation strategy that prevented both total chaos and real progress for the city during the civil rights era. Williams heard this phrase over and over again from displaced residents, and he's come to think of the process of demolition and revitalization as one defined by this top-down strategy. 'It's the idea of the gentry, the landowning class, or the higher ups making decisions which affect the lower ends,' he says. 'That's what's happening in Atlanta.'"

No doubt.  That's what's happening all over the country, probably since its founding (but with less racial diversity among "the elite" in most places.)  The move away from public housing "projects" and toward subsidizing private development, in particular, is a story of well-meaning elites making serious policy reforms with little to no real understanding (or perhaps care) for how those policies will actually impact the population they're ostensibly trying to help.  


Starting in the mid-90s (at least, may have happened under Reagan & Bush I too, but I was too young to pay attention), HUD started redirecting more and more of its funds to subsidizing private construction of mixed-income single-family-home developments, "encouraging an ownership society," and subsidizing private development of multi-family "Low Income Housing Tax Credit" properties which are allowed to charge their low-income tenants rents AT or slightly above the median rent for their community.

The last of these drives me particularly nuts.  That approach *might* make sense (or be a REMOTELY REASONABLE use of scarce tax dollars) if there weren't enough median-rent properties available for those able to pay median rent, or if HUD was trying to prevent huge demand pressures from pushing up rent.  But THAT wasn't the market problem (failure) that HUD intervention was supposed to be fixing. The problem was the lack of reasonably inhabitable LOWER-RENT rentals.  The objective was supposed to be ensuring that low-income families could access housing. 

Why would we tear down existing public housing and then throw a bunch of limited tax dollars at the private residential construction, development, and large-scale rental property industries, just to have them produce and provide FAR FEWER units of (allegedly) affordable rental units than we'd had previously?

Well, it had a lot to do with some novel concepts that quite enraptured the Democratic Leadership Council (a moderate Dem group of which I was a member for a number of years), its affiliated think tank the Progressive Policy Institute, and former President Clinton in the 90's.  Public-private partnerships!  Mixed-Income Development!  De-Ghettoizing the Poor!  I love novel and creative policy ideas as much as next gal - okay, probably more - but in retrospect, the DLC and PPI were behind the spread of some pretty bad ideas, including diverting tax dollars from our public schools to secular and religious private schools through vouchers, and to untested charter schools (diluting local accountability for the performance of "our" schools in the process) and increased outsourcing of government functions under the guise of "Public-Private Partnerships" - again, with detrimental impact on the voters' ability to hold folks spending our tax dollars accountable for their actions. But I digress.

Before they started tearing down the big projects, the demand/need for affordable rent properties already far outstripped the supply, particularly in cities.  But let's be clear - this ISN'T "just" an "urban" problem.  In early 2007-09, the wait list time to get a Section 8 rental voucher in north central Idaho varied between 8 months to two years, depending on funding fluctuations.  In the meantime, a few new LIHTC-funded developments were built and opened up in the area, charging rents just above the median.  They were pretty nice for what they charged per month, but this was small consolation to fixed-income, working poor, and working class clients of mine WHO COULDN'T AFFORD MEDIAN RENTS.  There was plenty of rental housing stock available and had been for some time.  Most of these charged an amount around median rent (that's how it came to be the median.)  If they could've afforded median rents, they would've already had a place where they paid the median rent.  Units renting for far more than 40% of their monthly gross income (HUD's maximum allowable rent burden) were not a lick of help.

So rather than spending the money on more vouchers so low-income families could access rentals in the existing private market, and perhaps improving incentives for private landlords to accept those Section 8 vouchers, HUD was basically redirecting cash to a welfare program for private developers (most of them fairly affluent companies) and builders, to incentivize market activity on their part which, quite frankly, they were already motivated to do.

[This LIHTC stuff was true as of fall 2009, when I last dealt with the regs.  I hope the Obama Administration has modified the regs & HUD's priorities since then, but I need to brush up here.]

I recall that concerns about living conditions and crime in some of the projects supposedly animated the Clinton Administration's excitement about "mixed income development," but it seems like there were any number of WAY more sensible and economical ways to deal with those issues - AND to maximize the benefit to those families actually at risk of homelessness for the least $$ outlay - than the direction they chose.