The Future of Public Housing in US Housing Policy

[00:00:00]This video is sponsored by Morning Brew.

[00:00:03]Public housing policy in the United States is notorious for concentrating poverty, then not providing enough money for building maintenance and policing.

[00:00:12]The result was housing so bad that cities have been tearing down buildings ever since the 1970s.

[00:00:17]But today, there are people advocating for bringing back public housing.

[00:00:21]There's even a name for these people, PHIMBYs, for public housing in my backyard.

[00:00:26]Their argument is that we're in a massive housing crisis, and if the private market can't provide affordable housing, then the government needs to step in.

[00:00:34]They are undaunted by the negative legacy of public housing.

[00:00:37]Does public housing have a place in US housing policy?

[00:00:40]Well, that depends on whether you think we're doomed to repeat the mistakes of the past or ready to learn from them.

[00:00:46]Or whether you think the private market can provide enough affordable housing or if places like Singapore provide a model of housing policy success.

[00:00:54]Where do you fall?

[00:00:55]Let's find out after the bike bell.

[00:00:58](bicycle bell ringing) Let's be clear, despite all of the public housing demolitions, the United States still has almost one million public housing units with 1.8 million residents.

[00:01:08]New York City's public housing has over 400,000 residents alone.

[00:01:13]Many of these units are sub-standard, with broken elevators, people heating their apartments with ovens, and flooding issues.

[00:01:20]Yet, for many residents, there are no other options, and there's a waiting list of 178,000 people hoping to move in.

[00:01:28]In many areas of the United States, the demand for public housing exceeds supply.

[00:01:32]Why not build more?

[00:01:33]Well, it's literally against the law to build more public housing.

[00:01:37]In 1998, Congress passed, and President Bill Clinton signed, an amendment to the Housing Act of 1937, the bill that started public housing in this country.

[00:01:46]The Faircloth Amendment, as it's known, stipulated that the US government could not build more public housing than existed right at that moment.

[00:01:53]In 1998, there were about 1.28 million units.

[00:01:57]About 250,000 units have been lost since then, so the United States can only build about 250,000 new units right now until the amendment is repealed.

[00:02:07]The amendment passed because Congress believed public housing had failed as a policy, and that attitude is not much different today.

[00:02:13]Members of the progressive group the Squad have proposed repealing the amendment and spending $1 trillion to build 9.5 million new units of public housing, but the window has likely closed on that legislation for now.

[00:02:25]It's also unlikely to pass, given the fact that we can't spare the $70 billion needed to fix the public housing that already exists.

[00:02:33]Losing units of public housing through demolition of an unsafe building is just as bad as not building new units, so the preservation of public housing is worth it.

[00:02:41]Let's say that there's some public will to repeal the Faircloth Amendment and build some more public housing.

[00:02:46]Maybe not the 9.5 million new units for $1 trillion, but let's say more than the zero we're building right now.

[00:02:52]How could we ensure that those projects don't turn into, well, the projects?

[00:02:57]We could learn from the mistakes of the past and ensure a continued stream of money for maintenance of those new units.

[00:03:03]It can be hard to guarantee money for public housing maintenance though.

[00:03:06]Congress has a hard time ensuring there's a trust fund for things as important as social security or roads and bridges.

[00:03:12]Housing for some of the most vulnerable people in the country, often with little to no voice in our current political system, might be the first thing to get cut when budgets get tight.

[00:03:21]The United States could look to Singapore as a possible model to both build new housing and sidestep the maintenance cost issue.

[00:03:28]In Singapore, the government builds towers of new housing and then sells the condos at affordable prices.

[00:03:34]The buyers aren't actually buying the unit, but instead a 99-year lease that is effectively home ownership.

[00:03:40]But here in the United States, local governments could acquire land for new construction and use federal dollars to build new apartment buildings.

[00:03:46]Maybe not full-on towers like Singapore, but multifamily buildings and sell off the units.

[00:03:51]The buildings will be managed by a condo board or co-op.

[00:03:54]If you're interested in this idea you can read Noah Smith's full proposal.

[00:03:58]I left a link to it down in the description.

[00:04:00]And this proposal's interesting because it addresses a couple of key challenges.

[00:04:04]First of all, there's a housing supply shortage in the United States.

[00:04:07]We have not built new housing at the same rate that we're growing as a country.

[00:04:11]And some of the most dire housing need is in places that would otherwise be growing quite quickly, coastal metropolises is with strong economies.

[00:04:18]If the federal government built new housing to sell off at affordable prices, it could begin to address this gap.

[00:04:24]Second, by selling the units instead of renting them, maintenance wouldn't be the federal government's responsibility, and subject to the whims of Congress, they'll be managed like any condo building.

[00:04:34]But this isn't a silver bullet solution.

[00:04:37]Yes, the federal government isn't on the hook for maintenance costs, but somebody is, and, in this case, it's the low-income home buyer.

[00:04:43]Those maintenance costs may be low initially, but rise over time and could put the unit out of reach of low-income buyers in the future.

[00:04:49]And this plan doesn't address one major obstacle, NIMBYs.

[00:04:53]In many coastal cities, not-in-my-backyard residents opposed to neighborhood change could come out in droves to block any new development that threatens community character and their property values.

[00:05:04]Imagine the pushback if the new development was public housing for low-income households.

[00:05:09]And unfortunately, NIMBYs in many cities are not just contrarian cranks but people who hold significant power.

[00:05:15]The same reason we don't have enough housing built by the private sector would also make it nearly impossible for the public sector to build it.

[00:05:22]I know that some of you are shouting at your screens right now.

[00:05:25]"Eminent domain!

[00:05:26]"The government can use eminent domain "to take properties for public use."

[00:05:30]And that's true.

[00:05:30]But eminent domain is also politically radioactive these days.

[00:05:34]And back in the 1950s, '60s, and '70s, when public housing was getting built, they hadn't used eminent domain back then, but there was still significant pushback to locating public housing in middle and upper-class neighborhoods.

[00:05:46]That's why it was primarily built in tall towers, to reduce the overall footprint of the development.

[00:05:51]And those projects were built in low-income areas, concentrating poverty.

[00:05:55]So eminent domain is not the answer either.

[00:05:59]What's the answer then?

[00:06:00]I mean, we're in a housing crisis.

[00:06:01]Certainly, the federal government has to do something.

[00:06:03]And it does, though it doesn't always prioritize low-income households when it does so.

[00:06:09]The biggest government program supporting housing is the mortgage interest deduction.

[00:06:13]This allows homeowners to deduct a percentage of the interest paid on their mortgage, reducing their tax burden.

[00:06:19]In 2017, Americans deducted $60 billion.

[00:06:22]That's a massive government giveaway to homeowners, a group of people generally richer than renters.

[00:06:28]In 2017, Congress passed a bill reducing the mortgage interest deduction, which, under a different administration, could have been the first step towards shifting our national priorities towards helping low-income people find housing.

[00:06:39]Americans only deducted $25 billion in 2018, but the cuts came more from low and moderate-income homeowners, while wealthier homeowners could still take a deduction.

[00:06:49]American housing policy favors wealthier homeowners, but there are some smaller rental housing programs that help low-income families and can make a bigger impact if they were expanded.

[00:06:58]The federal Housing Choice Voucher Program, formally called Section 8 Vouchers, is such a program.

[00:07:03]It provides rental assistance to low-income families so they can afford to rent housing in the private market.

[00:07:09]The primary issue with vouchers is that there's not enough of them.

[00:07:12]Only one in four eligible households receives assistance.

[00:07:16]Adding federal dollars to this program would have an immediate impact on many low-income families, whereas building more public housing would be a long-term affair.

[00:07:24]But there is a problem with vouchers too.

[00:07:27]In places where housing is scarce, housing is scarce for voucher holders as well, and they also face housing discrimination from landlords.

[00:07:35]One study found that only 48% of households that received a voucher could use them.

[00:07:40]This then could be seen as an argument for public housing.

[00:07:43]If government is the landlord, discrimination isn't an issue, and if the government is building more housing, scarcity is less of an issue too.

[00:07:50]Does public housing have a place in US housing policy?

[00:07:54]Well, at least I think so.

[00:07:56]I mean, there are a million units of public housing out there right now serving the public.

[00:08:00]I think that the role could be expanded too.

[00:08:03]I have positive feelings about public housing because, up until about two years ago, I lived in public housing, and it was great.

[00:08:09]My townhouse was owned by the Capital Area Development Authority, a California state agency responsible for managing state-owned land in Sacramento.

[00:08:17]The agency acquired a ton of land around the capital in the 1970s for state offices, but quickly realized it had too much land for that purpose, so it built over 700 units of public housing, with a quarter affordable to low and very-low-income households.

[00:08:32]I lived in a market-rate unit, but CADA kept the rent at the extremely low end of market rate.

[00:08:37]The agency was a great landlord too, and the units were in great shape.

[00:08:41]You'll hear the argument that government shouldn't be in the business of real estate development and being a landlord, but if an agency like CADA was created specifically for that purpose, then maybe it could work.

[00:08:52]If you couldn't tell by now, federal housing policy is extremely complicated.

[00:08:57]I've only scratched the surface of federal housing programs out there, but a common theme emerges pretty quickly, no program is adequately funded to serve the growing need.

[00:09:06]Now, public housing may not be the most efficient use of dollars, and it may be a long-term solution, but if it increases the overall federal spending on housing, it could be worth it.

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