The Housing Act of 1937 was intended to improve living conditions in cities and create quality public housing for low- and middle-income families. But after several iterations of the bill, two critical pieces were inserted. First, the Act passed with coverage for only the lowest income residents, due in part to fear that middle-income housing would compete with the private market. And second, while federal government provided the funding, the implementation of the Act was left to local housing authorities, allowing each municipality to decide if and how they wanted to engage. In tandem, these two amendments drove the development of much of the public housing we still have today: largely segregated, often isolated from city and local services, and tenanted predominantly by low- to very-low-income families.
In 1974, President Richard Nixon created the Section 8 program as a replacement for new public housing, shifting federal funding either directly to tenants to rent in the private market or to private developers and owners to build income-restricted projects.
The Reagan Administration later cut the Department of Housing and Urban Development’s (HUD’s) budget by more than 50 percent, including funding for Section 8. In 1986, it introduced the Low-Income Housing Tax Credit (LIHTC), which now provides the “subsidy” to for-profit and non-profit developers that finances the vast majority of the country’s low-income housing.
The march against public housing as the affordable housing model continued, embraced by both parties: In 1992, HUD launched the HOPE VI program, incentivizing the demolition of distressed public housing projects that were then replaced with mixed-income housing built and operated by the private sector. And in 1999, President Bill Clinton signed the Faircloth Amendment, prohibiting the creation of any new units of public housing. HUD’s budget for the maintenance of existing stock also steadily declined, leading to multibillion-dollar deficits nationwide.
Recognizing the toll that years of disinvestment had on public housing residents, and driven by the core belief that buildings managed by third parties generate better outcomes for low-income families, the Obama Administration launched the Rental Assistance Demonstration Program (RAD). Under RAD, public housing units are converted to Section 8, leveraging private capital to renovate and upgrade the buildings. The Section 8 contracts ensure current residents pay the same low rent and that all units remain affordable to low- and moderate-income households, ultimately allowing a wider mix of incomes to populate the buildings as units turn over. In 2018, HUD announced the completion of 100,000 RAD conversions, and Congress increased the total allowance to 455,000. However, many of these projects require incremental funding, and Congress failed to authorize enough to complete all these conversions.
This brings us to the present, with evidence of inhumane living conditions in developments from the South Bronx to St. Louis, and incompetent, bloated, and sometimes corrupt public housing authorities operating with inadequate resources to address the growing capital needs of the more than one million apartments still in public ownership.
Keeping up with both major capital repairs and the day-to-day maintenance issues of large portfolios requires the talent, technology, and financial resources that the public sector simply cannot provide at scale. Even the best public housing authorities struggle to compete for talented property managers in strong markets. Housing authorities are also forced to bid out construction contracts pursuant to Byzantine procurement rules that slow things down and drive up costs.
From an article by Alicia Glen, Former Deputy Mayor for New York City, in a citylab.com blog.
Editor’s Footnote: New York City Housing Authority (NYCHA) has had a tumultuous past few years, from charges of mismanagement to illegality, with questions about mold remediation, lead paint remediation, and forged documents, plus ongoing sagas around buildings that are falling apart. NYCHA and the city recently entered into an agreement with federal authorities at the Department of Housing and Urban Development (HUD) that includes a federal monitor of NYCHA. RAD also includes three HUD “legacy” programs: Rent Supplement, Rental Assistance Payment, and Section 8 Moderate Rehabilitation.