July 01, 2008

Low-Income Housing Will Make a Comeback -- As a Political Issue

Here's a prediction: Now that the pre-convention summer doldrums of political campaign coverage has descended to a discussion of presumptive Democratic nominee Barack Obama's patriotism, it won't be long before he's defending his record as a fellow traveler of slumlords.

Can you say Tony Rezko? This long article in last Friday's Boston Globe certainly could, along with Valerie Jarrett (major campaign adviser), Allison Davis (former law partner and major fundraiser) and a host of other close Obama associates connected to the low-income housing development industry in Chicago. The upshot: some of these public-private partnerships, developed under official U.S. housing policy that channeled tax credits to subsidize private-sector and non-profit housing for low- and moderate-income renters over the past 20 years, have fallen into disrepair. Some of the developers and managers have walked away from the projects, leaving rat-infested, deteriorating buildings in their wake.

Is this a failure of the public-private partnership model, as suggested by Slate's Kausfiles? I'm curious what Kaus would offer people who can't afford market rents. Would he like to see a return to the massive public housing projects that drew his and better writers like Alex Kotlowitz' justifiable condemnation in the 1980s?

With the foreclosure crisis sending thousands, perhaps millions, of struggling families back into the rental market, the nation could use a decent discussion about what it takes to provide adequate housing for those whose incomes cannot support rents high enough to pay for reconstruction, heat, electricity, maintenance, and profit for developer/landlord. There are many developers in Chicago who used the low-income housing tax credits and section 8 voucher program to build and maintain solid housing for people who otherwise would be living in slums. Alas, in a political season, those positive examples aren't discussed, nor why they may have succeeded.

Instead, we get a story about the failures (which are real) tied to a political candidate who politically supported that industry. Given the way the campaign is going, no doubt Obama will soon be apologizing for that, too.

But if public policy doesn't empower public-private partnerships to build and rehab low-income housing (and no one would seriously suggest a return to building public housing), then what? Here's an idea. How about capping the home mortgage interest deduction at $500,000 per household. Any new tax payments collected can be earmarked into a fund (thus be revenue neutral for the federal government) to pay for rent subsidies for people earning less than $75,000 a year whose rents exceed 30 percent of income. Perhaps then landlords (the responsible ones, at least) will be able to charge high enough rents to maintain their buildings in low- and moderate-income neighborhoods.

As my father was always fond of saying, the problem with poor people is that they don't have enough money. Whenever I see a run down rental building, the first question I ask is, "what's the rent?" Too bad the Globe reporter or Mickey Kaus never asked that question.

Posted by gooznews at July 1, 2008 08:50 AM
Comments

That's halfway right, Gooz. No one wants to return to the massive housing projects that concentrated failure (although it's worth noting that some public housing authorities continue to do a damn good job of providing affordable, safe, and clean shelter for a vulnerable population.) And you're right that the failures of the public-private partnership model are leavened by successes, even if neither has come terribly cheaply (it's not unusual for the subsidies in these projects to equate to roughly twice the market rental rate in the neighborhoods in which they're built - and there's not much correlation between the amount of funding and the success of the project).

But what are you suggesting instead? It sounds like a larger, expanded version of Section 8. But that's hardly a panacea, either - take the situation in Memphis, as chronicled this month in The Atlantic. It turns out that providing government rent subsidies simply diffuses dysfunction. Most landlords won't take the vouchers, irrespective of the law - they'd rather not deal with the bureaucracy, and subsidized tenants are, on average, poorer risks. Plus, most of these tenants need access to mass transit. So what you end up with is a situation in which the poor are concentrated along mass transit corridors, clustered closely enough to raise the levels of crime and violence in those neighborhoods, but spread far enough apart to make the delivery of social services difficult and innefficient, and to deprive them of the community and support networks that were the sole redeeming features of the older projects.

There are no easy answers here.

One place to start would be by abandoning the quest for silver bullets. Section 8 works for some people; public housing, when built right and maintained properly, works for others; public-private partnerships, as you note, have also sometimes found success. It's not an either/or situation. Different approaches are suitable for different environments and populations. But the real key is abandoning the illusion that "the problem with poor people is that they don't have enough money." The problem with poor people isn't just that they don't have enough money; it's that they never have had enough money. A child of the middle-class who works a starting job at a nonprofit right out of college may earn as little as an inner-city wage laborer, but income-level is about all they share. One has been endowed with education, a familial saftey-net, a social-network, positive role-models, and self-confidence; the other, in all probability, has not.

And that's the flaw with most of these approaches. They pretend that altering the environment is enough to change the person. It never is. Transfer, en masse, the population of a housing project into a luxury condonminium, hold all else equal, and you'll still have a disaster.

So instead of turning from one housing policy to another in an endless quest for the one that will magically end poverty, we might do better to conceive of housing as one piece of the puzzle. Other social services are just as important - policing, education, healthcare, transportation, social welfare, and more. Focusing on one aspect to the exclusion of the others is a recipe for failute. Witness Memphis. But build a well-policed mixed-income housing development, located in a good school district and next to bus and subway stations, in which the residents are granted access to quality affordable health care, job training programs, and other social welfare services - and all of a sudden, it doesn't matter whether the development is public housing, a public-private partnership, or a private development that takes Section 8.

Posted by: Observer at July 1, 2008 02:42 PM

Well said, but I think the evidence is also mixed about using Section 8 vouchers for dispersing the poor. Many families have seen their fortunes turned around by the opportunity to live in a middle-income neighborhood. Make every unit in a luxury high-rise available to low-income folks with no change in their income status, and you undoubtedly would have a disaster on your hands in a few years. Don't allow the percentage to go over 20, and you probably enable a few more kids to go to college.

Posted by: Merrill at July 1, 2008 04:42 PM

The people without housing and losing their housing probably couldn’t "really" afford it in the first place. Those who can't lift a hammer or a paint brush for that matter or have any other skill or economic basis to produce something of value to society have no basis to own a house.

Its very unfortunate for America that the era of productivity based on a bounty of natural resources is over. As our infrastructure deteriorates and as we drive out our productive immigrant population who creates the housing, the welfare society can no long provide free or subsidized housing.

Retirement and living off of savings to buy food and fuel will now become the major issues. We are about to join the majority of the world's population. Produce something of value for the world market or starve. The Chinese have been doing it for centuries and are now emerging as an economic powerhouse.

It will become very clear when the vacant houses are occupied by the Chinese and Mexicans start emmigrating to China, that's where the next welfare state might have a chance to revival.

Just like at the laundry - no tickie no shirtee. If you got a job keep it. The future is only for those who produce.

Posted by: Al Goozner at July 6, 2008 07:08 AM