Carving out a Path for Public Developers
Carving out a Path for Public Developers
Thoughts on folding public housing back into the American political consensus
For four decades, public housing sat squarely on the inside of the American political consensus. The Housing Acts of 1937 and 1949, and the Housing and Urban Development Act of 1965 (which established HUD) all expanded our public housing programs. But by the mid 1970s, stagnant growth and persistent inflation ushered the era of social safety net Keynesianism out, and the neoliberal era in.
In 1983, President Reagan’s HUD made the first big cuts to the Section 9 programs. By 1986, the Low-Income Housing Tax Credit—a new kind of housing program, a public-private partnership—was passed into law as a part of Reagan’s flagship Tax Reform Act. And in 1998, Clinton’s Quality Housing Act fully cleaved public housing from the political consensus with dramatic changes to the capital funding formula reform, a cap on total portfolio size (the Faircloth Amendment), among other policies.
As I’ve written about here before, these reforms decidedly reversed the course of public housing spending. But perhaps more important in terms of political economy was the reputational impact. Public housing was not just defunded—indeed, it was emblazoned with a scarlet letter.
Under the weight of these circumstances, how ought we think about folding public housing back into our consensus?
The Diverting of the River
If you’ll indulge me with a metaphor for a moment, I’d like to lay out one way I’ve been thinking about this.
Imagine a stream. This stream is money—investment—and it has branches. 60 years ago, housing investments in the United States flowed in one channel of the stream: funding for the construction of public housing projects. In 1949, for example, the bipartisan housing act set a target of over 800,000 publicly constructed and owned apartments—close to the Swedish Socialdemokraterna’s Million Homes Program (Miljonprogrammet) that wouldn’t begin until 15 years later.
But in 1983, Ronald Reagan stuck a blockage in front of this stream. Then, in 1986, Congress dug out a new stream bed, the LIHTC. Bill Clinton continued the diversion, shifting money into the new public-private partnership channel, and away from the old channel. Each successive Administration and Congress has followed suit, further cutting off the old stream and diverting to the new one. The public channel has been reduced to barely a trickle. As a result, the backlog at the remaining legacy Section 9 public housing projects is estimated at about $80 billion.
This is the hand we’ve been dealt, and it does not make achieving a renewal of public housing easy. In particular, it has enshrined a path of least resistance. When political pressures build to address the housing crisis, politicians can simply dump a bucket of water into the public-private partnership stream, saying “We’ll let the non-profits take care of it”.
This new consensus is not just at the federal level, but at the state and local levels, too. When local governments do fund affordable housing programs, the path of least resistance is always to pour a little bucket into the big stream for private non-profit development programs. And while these programs certainly do produce a substantial amount of housing across the country each year, they also further entrench the privatization of housing production. To actually change course, supporters of public housing must also begin to dig out new canals—by empowering public enterprises to construct housing and equipping them with resources to do so.
Digging A Way Out
A plan to reverse the modern consensus on public housing needs to grapple with these conditions. Digging out the blockages is both a political and a technical task, and there are many ways to achieve it along that spectrum.
Take, for example, Montgomery County, Maryland’s Housing Opportunities Commission—the local Public Housing Authority. Their relatively new Housing Production Fund has enabled the agency to line up thousands of new publicly developed and publicly owned mixed-income apartments. With just two years of work under their belt with this $50 million program, the county government last month doubled the size of the fund. HOC is now on track to build roughly 10,000 publicly owned apartments over the next 20 years. In the context of public housing’s place in the American consensus, this is indeed quite a feat.
Further, the Faircloth Amendment has no power here. The apartments HOC is building are 100% public, but because they don’t rely on federal funding from HUD, they aren’t bound by federal constraints of any kind.
Now in Montgomery County’s case, this expansion of public development was done through purely bureaucratic means—the public housing authority designed a new program in house that would allow them to build more mixed-income housing and got a small appropriation from the county to seed the program. In other places, less administrative, more political routes are being taken to establish public developer programs.
In Rhode Island, the legislature last month earmarked $10 million in the state budget—now signed into law—for a pilot program to build mixed-income public housing. The county PHA program in Maryland is a feat, but when was the last time a two-house state legislature passed a bill funding the construction of public housing and got the governor’s signature? Indeed, perhaps not since the 1930s. In this case, ReclaimRI, a progressive organization, pushed for the program (which will be executed by existing public agencies) through political, not bureaucratic means.
Finally, in California, a bill that is now unfortunately dead for the session would have established a brand new public agency, the California Housing Authority, to run a public housing development program statewide. Every indication is that the bill sponsor, Alex Lee, will be bringing it back up next year.
The point of all of these examples is that there are a number of different ways to start digging out a new channel for housing funding. All have their benefits and drawbacks, but indeed push forward on the goal of reinserting public housing into the broader consensus—a necessary task.
Increasing the Flow
Obviously, a few scattered programs building a few hundred units a year is nowhere near sufficient to solve the vast and various problems with housing production and provision today. To have the impact that’s needed, these programs will need to achieve scale.
This means both the levels of funding that can support wide ranges of household incomes as well as administrative capacity to produce large volumes and with a high throughput. Below is a somewhat boring looking graph—at first glance—but upon closer inspection should be at least a little startling.
The total chart area is all of the actual (and expected) housing production in the county. The blue area shows how much of that production will be publicly developed and owned thanks to the $50 million production fund. The orange shows how much of the total production would be publicly developed and owned with a doubled, $100 million fund. So what we’re looking at here is a public housing authority telling their county government “give me a few million extra dollars a year and I will be able to build 20% of all the housing produced in the county over the decade.
Considering public housing’s current and historical context, I’d say that’s pretty extraordinary.
P.S. Sorry about all the river metaphors.