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Feds Favor Private Over Public Housing Investment, Leaving Millions Out in Cold

“Affordable” housing is not within reach for the poorest.

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For a huge swath of the US population, the American Dream – the idea that if you put your nose to the grindstone, you’ll eventually be able to buy a small house for yourself and your family – is little more than a fantasy. According to the Center for Housing Policy, since the start of the most recent recession in 2007, the percentage of people paying more than 50 percent of their income for shelter has risen for both renters and owners. The Federal Department of Housing and Urban Development [HUD] puts the number of “rent-poor” households at 12 million and notes that there is not a single place in the country where a family with one minimum-wage earner can afford the market rent for a two-bedroom home. Nowhere.

But let’s step back and not look at wages just yet. Instead, let’s look at fixed incomes. The Social Security Administration website reports that the average monthly retirement check in April 2015 came to $1,287.19; the average survivor’s benefit to $1,108.05; and the average disability compensation to $1,016.88. The maximum monthly Supplemental Security Income (SSI) check – this is the program that provides income to disabled, indigent children and disabled adults who have not worked the required 40 quarters to qualify for disability benefits – is $733 per month for an individual and $1,100 a month for a couple, in which both parties are too physically or mentally ill to be employed. Meanwhile, a minimum wage worker, working 40 hours a week at $7.25 an hour, earns a gross salary of $1,247 a month.

Finding a place to live on incomes like these is quite the challenge.

In fact, the National Low Income Housing Coalition reports that workers throughout the country need to work full time and earn at least $19.35 an hour to afford a decent two-bedroom place at current rent levels. breaks it down city-by-city and offers the average monthly rents by locale. Here’s a random sample of costs for a typical two bedroom: Birmingham, Alabama, $761; Boston, Massachusetts, $2,144; Flagstaff, Arizona, $953; Greensboro, North Carolina, $673; Honolulu, Hawaii, $1,577; Los Angeles, California, $1,832; Paterson, New Jersey, $1,622; New York, NY, $2,512; Memphis, Tennessee, $811; Savannah, Georgia, $795; and Vancouver, Washington, $852.

Why did this happen? …”The short answer, is Ronald Reagan.”

Small wonder that the National Alliance to End Homelessness estimates the number of people without shelter on any given night at nearly 600,000. Coupled with a 32 percent jump in foreclosures since the summer of 2009 – it is noteworthy that 40 percent of those who become homeless as a result of foreclosures are renters – and the fact that the US is facing a shortage of more than 7 million units affordable to low-income people, it is not an overstatement to say that we’re facing a housing crisis.

Why did this happen, and what can be done about it?

It doesn’t take long for Tom Angotti, professor of Urban Affairs and Planning at Hunter College in New York City, to explain the “why.”

“The short answer,” he told Truthout, “is Ronald Reagan. He ended direct public subsidies, the capital funds to build new public housing in the US.” The change resulted, in part, from a new ethos that blamed public housing – once the primary source of shelter for those unable to pay private sector rents – for the concentration of poverty. “Many liberals also got on the bandwagon and began to blame public housing for racial segregation,” Angotti says. “Since the 1980s, there has been a move away from building and maintaining public housing in favor of subsidizing the private development of housing. We’ve also moved to a voucher system, providing tenants with Section 8 subsidies that ensure that landlords can get market-rate fees for their rental units.”

The upshot is that developers, planners and legislators no longer talk about creating public housing – they talk only about creating units that are “affordable,” something that Angotti calls “a scam” to put government dollars into private pockets.

“When the federal government allocated federal money to build public housing in the 1930s, ’40s, ’50s and ’60s, the properties were not mortgaged,” he says. “This meant that housing authorities did not need to pay off a bank, which got the banks and insurance companies out of the housing business.” In other words, debt service did not need to be factored into rental fees.

“Legislation going back at least 20 years provides low-income housing tax credits to wealthy people and corporations, allowing them to write off big sums on their taxes when they contribute money for the construction of ‘affordable’ housing.”

Not so today, says Angotti. Rather than direct financing of building construction, he charges that tax credits have been used as a way of leveraging money for new developments. “Legislation going back at least 20 years provides low-income housing tax credits to wealthy people and corporations, allowing them to write off big sums on their taxes when they contribute money for the construction of ‘affordable’ housing,” he says. “There are whole syndicates that put together groups of investors to build so-called affordable dwellings. It’s been a gravy train for these investors, and if you look, dollar for dollar, at how many units of housing you actually get, it’s apparent that this is an incredibly expensive way to build.”

And low-income renters typically bear the brunt of this policy because they are all-too-often priced out of housing deemed “affordable.”

“Affordable housing,” Angotti adds, “is a euphemism. We have to ask, affordable for whom? On a national level, HUD establishes the Area Median Income (AMI) for each city or town, which is the amount that is used to gauge what is considered affordable.” When an area includes well-heeled individuals, it skews the AMI upward, so that even when rents are capped at 30 percent of AMI, the rent is likely out of reach for those with extremely low incomes.

This crisis, Angotti adds, was further exacerbated by HOPE 6, a Clinton-era program that allocated $5.8 billion for the construction of new mixed-income housing. “HOPE 6 was a compromise that allowed local public housing authorities to demolish public housing complexes and replace them with new low-rise buildings. For the most part, it didn’t happen. The latest figure I heard is that 100,000 units of public housing have been lost since HOPE 6 began.”

“There are 354 distinct state- or city-run programs to support rental housing, but very few of them benefit very poor people.”

This highlights another gargantuan issue, especially in urban areas. “Some new housing is being built,” says Andrew Scherer, policy director for the Impact Center for Public interest Law at New York Law School, “but it’s not nearly enough, due to ongoing displacement. It’s just as important to focus on anti-displacement work – housing preservation – as it is on building new units. Tenants also need stronger rent protections. In New York City, an apartment gets decontrolled when the monthly rent hits $2,500, and a landlord can then charge whatever amount he or she wants. Apartments should not automatically be decontrolled; rents should also not get jacked up whenever an apartment is vacated. This policy provides an incentive to landlords to increase turnover.”

Dr. Sheila Crowley, executive director of the National Low Income Housing Coalition, notes that while this is specific to New York City, there is nonetheless an enormous patchwork of laws and policies governing US housing. “There are 354 distinct state or city-run programs to support rental housing,” she says, “but very few of them benefit very poor people.” In fact, 10.3 million US residents are considered extremely low income – at or below 30 percent of AMI – but only 3.2 million rental units are truly affordable to them, a shortfall of 7.1 million.

“The only way things will improve,” Crowley concludes, “is for there to be a federal program that makes housing for low-income people a priority. Since the current administration is not making it a priority, most affordable housing advocates are focused on making sure that existing subsidy or voucher programs are not cut.” At the same time, Crowley and other housing activists are working to increase the minimum wage to something livable. Lastly, she and the NLIHC are working to amend the tax code to benefit homeowners whose annual income falls below $100,000 – a shift that would benefit the middle class but do nothing for the poor.

Crowley acknowledges that while momentum is building on both fronts, neither change is imminent. Nevertheless, she is heartened by growing support for the development of real solutions to homelessness. She cites Oregon’s governor, Kate Brown, as an example. Brown has proposed a $100 million bond initiative to finance the creation of 3,000 to 4,000 units of housing for the state’s poorest residents – homeless families with school-aged children and those being released from jails and prisons. The legislature is expected to vote on the measure by the end of June. Dani Ledezma, housing and human services policy adviser to Governor Brown, says that if approved, the initiative will launch in 2016 and lead to the creation of everything from small modular units to large apartment buildings.

Other localities are also looking for ways to provide permanent housing for those who need it most. Quixote Village in Olympia, Washington, grew out of an encampment of homeless adults that sprang up in 2007. Five years later, on December 24, 2013, 30 homes overlooking Black Lake Meadows, opened. The 144-square-foot micro-units surround a common kitchen, showers and meeting area; construction was financed by donations and a combination of state, city, county and federal grants. Residents, whose average annual income is less than $3,000, pay between $14 and $300 a month.

“Moving from an outdoor encampment to actual heated residences with electricity, and a sink and toilet, as well as a staff, was a transition,” says residence manager Raul Salazar. “When folks lived in a self-governed camp, they’d sit in a circle on Sunday nights and deal with any issues. They could kick someone out for three days, or for good, and could decide who they wanted to let move in. I can’t give the tenants that amount of decision-making about whom to admit; we have to obey the landlord-tenant and fair housing laws.”

The original group, Salazar reports, included some drug users and people with severe mental health issues, which led to turnover in the Village’s first months. “Twelve of the original 30 are now gone, some by choice, some because we asked them to leave,” Salazar says. Some likely end up back on the streets. Nonetheless, he emphasizes that, “our whole thing here is to help people. One of my roles is to identify what people need. I work with an advocate to link people with services. We give people opportunities. We’re all adults; the residents range from 21 to 64 and have either recently become homeless or have been in-and-out of homelessness for years. They sign a lease and there are rules here. We have a Residents’ Committee to keep residents involved. There is a large garden where we grow loads of vegetables and berries, but there is no AA, NA or counseling on-site. The residents did not want this.”

The Quixote Village maintenance budget, $240,000 a year, comes from HUD, the rent roll and donations.

Salazar boasts that there has been interest in replicating what the Quixote Village community has built from every part of the US, Australia, Canada, England and Germany. “We now know what can be done better. Creating some place for storage is an issue we did not anticipate, but overall what we’ve made here works. We’re by no means perfect. We’re still tweaking procedures and figuring things out. It’s been hard.” Some residents, he adds, are simply down on their luck, but Salazar cautions program developers to be aware that addiction and serious mental health problems will invariably crop up. “Other places that are thinking about creating something like this need to know what they’re getting into,” he says.

Indeed. But even HUD Secretary Julian Castro admits that building communities of 30 – no matter how good they are – is not a solution to the housing crisis. In February, he estimated that it would take approximately $2.5 billion to create 25,000 units of permanent supportive housing for those who need social services in addition to housing. He also asked Congress to authorize $235 million in Housing Choice Vouchers to entice private landlords to rent to the poor.

He did not, however, mention the need for government-sponsored public housing for the 7.1 million who’ve been priced out of market-rate dwellings.

Seventy-eight years ago, in 1937, the Wagner-Stegall Act was passed by Congress. The bill was the nation’s first commitment of resources to “provide the most vulnerable Americans with a home that would otherwise be out of reach.” Isn’t it time to resurrect the demand for today’s most vulnerable?