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Public Housing’s Role in Reducing Poverty

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This article is part of a five-part series I am writing on affordable housing. Each article includes a podcast where I explore some of the themes and get a little personal with the experts I interviewed. Check out this article about the property industry’s role in affordable housing, this one about the 35-year-old tax credit that is shaping the affordable housing industry, this one about the growth of “naturally occurring affordable housing,” and this one about the ways that housing can help erase the racial inequality in our cities. This special series is made possible by the generous underwriting of MRI Software.

To understand public housing you have to understand the theory of poverty. I say theory because much of what we think about poverty has changed drastically over the last century. Each political era came with its own school of thought about how we should shelter our huddled masses. Our public housing buildings are living artifacts of the general consensus around poverty at the time it was built. 

At the turn of the century, the prevailing theory of poverty was dominated by The Chicago School, a group of sociologists that were using nature as a way to understand how humans interact. Biological phenomena like natural selection and competition were applied to our societies and our cities. This led many to believe that poverty is an inevitable byproduct of industrialization and that slums, transitory places where ‘low-achieving’ workers concentrated, are unpreventable components of our cities. This oversimplification about the nature of poverty was the basis for an urban policy that would lead to a public works effort called urban renewal, the demolition of slums, and the construction of government-controlled residential buildings.

The theory of urban renewal had been around for a while before it got adopted in America, it was being done in London as early as the 1860s. But it was the New Deal that poured gas on America’s slum removal initiatives. As the country was awash in stimulus money, government agencies large and small were looking for shovel-ready projects. America’s version of urban renewal was to tear down the blighted, unsightly, and mostly ethnic urban slums and replace them with public housing for working-class, (mostly white) families. 

There were lots of problems with this approach. First, ending poverty is not the same as replacing buildings or displacing the poor. These areas of concentrated poverty remained resource-constrained and many of the working-class families struggled there too. Eventually, they left for greener, more suburban pastures. Second, public housing forced governmental organizations into a role that they are arguably not well suited for: being a landlord. Underinvestment in many government-owned and operated buildings has created the same blight that the ‘projects’ were intended to replace. Lastly, the idea of poverty is endemic to cities and ignores the cultural and psychological influences that contribute to disenfranchisement and impede upward mobility.

Our theories around poverty have changed since then, reshaping our public housing buildings. Where the thinking used to be that subsidized housing should be enough to help some out of a bad situation, a policy called housing first, studies have shown that in order to help the poorest and most vulnerable citizens they need much more than just a place to sleep at night. “In the U.S. and elsewhere about five to ten percent of the population has economic and/or behavior challenges that make it hard for them to afford a place to live,” says David Smith, founder of the Affordable Housing Institute. That means building housing in a place with access to resources like healthy food, good jobs, and good education. It also means providing services like daycare, legal aid, and counseling. “Housing is essential,” Smith said, “but we don’t want to just provide housing. We want to help people regain their independence and to do that we have to be able to ask people to participate in programs to help them overcome whatever is making it difficult for them to be independent.” 

Public/private divide

The new, more holistic concept of poverty has transformed public and affordable housing developments from isolated apartment towers to mixed-use, mixed-income community centers. But in order to integrate affordable and public housing into market-rate projects, the private sector has to step in. Putting private organizations in charge of our most vital social safety net can often be controversial. But, after reviewing the current state of much of the 1.2 million public housing dwellings, many see it as inevitable. “There is controversy around bringing in outside capital into our public housing but it is critical to keeping and improving our public housing stock,” said David Quart, Board Member of New York’s Regional Plan Association and the Northeast Real Estate Market Leader at VHB. “I am a big believer in public/private partnerships, I think that they can be done in the right way that doesn’t displace people. It may be the only way to solve the current state of public housing.”

One of the most important pieces of legislation helping bring private money and professional management to public housing is the Rental Assistance Demonstration (RAD) program. Passed in 2012 and administered by the U.S. Department of Housing & Urban Development (or HUD as you likely know it), RAD allows for public, government-owned housing to be converted into private, subsidized housing. The program comes with some important restrictions like the right for current tenants to remain (or return in the case of a renovation). The number of units that can be converted is capped but that limit has gone from 60,000 to 450,000 thanks to the initiative’s effectiveness.

Even still, there are lots of roadblocks to bringing public housing into larger developments “Building affordable housing can be very difficult,” Quart said. He should know, he was part of the Essex Crossing project in the Lower East Side of Manhattan. The land was acquired for ‘urban renewal’ in 1965 but, due to both community opposition and political corruption, wasn’t approved for redevelopment until 2012. To get the project approved, Quart and his team worked with the community for years to understand their needs before plans were even submitted. “We had to work very hard to build trust,” he said, “which is challenging because you have people on both sides that either distrust the government or the private sector, or both.” As the project moves toward completion today, it will include 561 permanently affordable units spread across multiple buildings plus a grocery store (the first Trader Joe’s in the area to be exact), a park, a movie theater, and an expanded 150,000 square foot public market. Previously displaced tenants were given the first right to apply for the affordable units and the rest are being allocated through the city’s housing lottery system to locals and New Yorkers in need.

The struggles of the Essex Crossing development, over 50 years in the making, showcase both the difficulties and the impact of bringing affordable housing into larger developments. While collaborating with local community groups and providing social services might seem like a deviation from the core competency of the real estate industry, David Smith of the Affordable Housing Institute thinks that it should be seen as a required part of doing business. “Affordable housing is a business that exists for a double bottom line purpose. If you want to be in it, you have to be good at both the economics and the social impact, and that means being good at providing services as well as subsidized units,” he said. 

Privatizing public housing also makes us have to reconsider whether or not we should think of subsidized housing as charity work. Until now, many affordable and public housing complexes were funded and managed by non-profits and charitable organizations. But that will not be enough to keep up with the growing need for low-income housing according to Smith, “If we want people to build affordable housing, we have to make it worth their while. If you don’t make a profit, then your business isn’t sustainable so the government should be paying enough to make it economically viable for businesses to operate in the space.”

The legacy of the projects

Even as we find new ways to allow the private sector to create and convert more public housing, it doesn’t solve the problem of what to do with the stock that is still in use. Millions of people live in government-owned buildings, many of which are in a state of disrepair. New York City’s Housing Authority is the biggest in the nation by far, housing over 400,000 residents. It is named one of the city’s worst landlords year after year because of the number of complaints and health and safety violations its properties get. 

Part of the problem is funding. Public housing agencies have to fight for funds with other governmental organizations and often see their budgets cut. This is exacerbated by buildings that, built in the 50s, 60s, and 70s, are reaching the end of their expected life. Most older public housing properties need significant upgrades to get them to meet even the current standards for healthy and sustainable buildings. Renovating them to a point where they will meet our ever-increasing climate commitments will be nothing short of a monumental task.

There could be help on the way, in the form of a government stimulus package that was just passed. “The $1T bipartisan infrastructure bill did not include a housing component but there is the possibility of enhanced resources for rental housing development through the $3.5T reconciliation package,” said Beth Mullen, National Director of CohnReznick’s Affordable Housing Industry Practice. Whether or not this money will help improve our public housing comes down to the way that we define infrastructure. When we think about all of the important benefits of having a roof over the heads of the lowest-income workers, it is hard not to think of these programs as foundational to a functioning society.

Even if some of the infrastructure money gets earmarked for repairing and building public housing, there is still the question of how that money is best spent. If the old paradigm of large low-income towers is no longer seen as viable, what does the next iteration look like? First and foremost, any government-funded building should be a good place to live. “Historically the federal government has seen public housing as a liability and not an asset. That needs to change,” said James McIntyre, former Director of Capital Markets for New York State Homes & Community Renewal. “What is the point of owning uninhabitable housing?”

Every housing agency has been looking at new building techniques to create not only more livable but more sustainable housing. The New York State housing authority is in talks with a company called Project Etopia to help find ways to create lower cost, net-zero housing in using advanced materials and modular construction techniques. Perhaps one day modern, high-tech, and even modular construction could replace the soulless brick projects in our minds when it comes to public housing. 

When it comes to affordable or public housing, any discussion inevitably gets philosophical. It all really boils down to one important question: Should the government be responsible for housing its citizens that can’t afford it otherwise? For nearly everyone I talked to that works in affordable housing the same answer to that question kept coming back up: Housing is a right.

This is a statement that many of us can agree with but the stickiness of this issue comes with the increasingly complicated theory of poverty. There is much more to the right of housing than just a place to sleep. We no longer see poverty and slums as inevitable parts of our cities, as the academics at the Chicago School did a century ago. With enough resources and planning, we can overcome systemic poverty. But while slums are not endemic to our cities we do still have to admit that lower-income citizens will always be an important part of our cities. Lower-paying jobs, after all, are what keep our urban areas clean, fed, and moving. David Smith of the Affordable Housing Institute summarized the importance of public and affordable housing the best: “Housing is where jobs go to sleep at night; affordable housing is where foundational jobs go to sleep at night. The people who make the city work should be able to live in it.

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