A new model for public housing is gaining momentum among Democrats across the country. AOC is behind a new bill that would create a federal social housing developer. Housing experts support local experimentation, but there are questions about whether the federal government’s approach will work.
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Rents and home prices are rising across the country, making housing one of the most pressing issues facing voters in this election.
About half of renters spend more than 30% of their income on housing, while homeowners face higher insurance premiums, home repair costs and property taxes. At the same time, government housing subsidies for the poorest people recently reached a quarter-century low.
Vice President Kamala Harris has focused on this issue, building 3 million new homes in her first term, sending $25,000 down payment assistance to first-time homebuyers, and billions of dollars in housing innovation. promised to spend. But some progressive lawmakers in Washington want to go further.
In September, two Democratic members of Congress, Rep. Alexandria Ocasio-Cortez and Sen. Tina Smith of Minnesota, announced a federal housing initiative tasked with building and rehabilitating more than 1 million permanently affordable housing units. He introduced a bill called the HOMES Act that would create a development authority. Housing is owned and operated by local governments, nonprofit organizations, or some type of cooperative, and rent is capped at a percentage of income. This bill aims to address a fundamental problem plaguing homebuyers and tenants: the lack of affordable housing.
“There’s been a lot of talk in this country about building new housing, but too often what’s not being talked about is who’s going to build that new housing,” Ocasio-Cortez said last month. Ocasio-Cortez’s spokesperson had no comment prior to publication.
The new developments will be so-called “public housing,” which exists outside the commercial market, has rent caps set at a percentage of income, and is owned by governments, nonprofits, or some type of cooperative. It means to do.
Unlike traditional American public housing, which is typically reserved for low-income households, public housing is intended for mixed-income households. Under the HOMES Act, 70% of the housing units in a given development area would be set aside for low-income and very low-income residents, and 30% of the housing units would be set aside for people who meet the area’s median income.
But some pro-housing experts (aligned with the YIMBY, or “Yes in My Backyard” movement) question the existence of a federal public housing authority. They want more experimentation at the local level first, and don’t believe many state governments, let alone the federal government, have the resources or know-how to do the work of developers and real estate companies.
Local and state governments are experimenting with public housing
New York State Assemblywoman Emily Gallagher’s 2022 trip to Austria changed her perspective on housing.
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Gallagher, a Democrat who represents a gentrifying neighborhood in North Brooklyn, was struck by the stability that Vienna’s public housing provides. Residents “were not thinking about rent increases. They weren’t worried about being displaced or draining New Yorkers,” she said.
So earlier this year, she introduced a bill that would create a new state housing authority tasked with building permanently affordable housing for both very low-income and moderate-income New Yorkers.
Progressive policymakers across the country, including in Rhode Island and Atlanta, are also considering this model. California passed a bill last year to study this concept. Maryland’s Montgomery County, a wealthy suburb of Washington, D.C., is already building its own public housing.
In Reno, Nevada, Mayor Hillary Schieve, who is prioritizing housing security in a state facing severe shortages, says the success of public housing efforts will depend on the quality of partners working with local housing authorities. He argued that there was a high possibility that it would be affected. “We’re not developers, so that’s a concern,” she said. “We need to have very knowledgeable people at the table.”
Jenny Schuetz, an expert on urban economics and housing policy at the Brookings Institution, said that “capable and wealthy local governments with the political will” could make it happen, but many other localities lack the resources and resources. He said there was a lack of know-how.
“The reality is that many states and agencies won’t be interested in building the housing themselves,” said Shane Phillips, a housing researcher at the Lewis Center for Regional Policy Research at the University of California, Los Angeles.
Unlike traditional public housing, which relies on fickle federal lawmakers to provide maintenance and operating funds, the public housing proposed by U.S. lawmakers would be partially funded through marketing bonds and would include nonprofit organizations and tenant associations. It will be run by various local organizations.
Schuetz worries that co-ops and tenant associations won’t be able to tap into the type of capital that real estate companies have access to and need to continue investing in buildings. Local housing authorities also have limited budgets. “The challenge is always, 10 years from now, 15 years from now, when you actually have capital expenditures, where are you going to get that money from?” she said.
Tricky politics in Washington
Federally funded public housing has a flawed history. From the 1930s to the 1960s, the government concentrated public housing in poor black and brown neighborhoods and reinforced racial segregation while building highways that cut through those same communities. Due to continued lack of council funding, the houses deteriorated over time and many were demolished.
Over the past several decades, the United States has moved away from the squalid model of public housing and embraced federal subsidies for below-market-rate private construction development through the use of low-income housing tax credits.
Under the Housing Act, the U.S. Department of Housing and Urban Development is required to work with states and cities to act as developer. Schuetz argued that a national approach would be very similar to the low-income tax credit model of development because the federal government would have to delegate much of the work to local governments and developers.
“Can HUD hire a team of people who know how to navigate the land development, entitlement, and construction process in rural areas across the country?” Schutz said. “There’s a reason we evolved from public housing to LIHTC.”
Congress is unlikely to support a federal public housing corporation until there is evidence of success at the state level.
Once states build their programs, “it’s much easier to go back and say, ‘Okay, we need a national coordinating organization to manage this,'” he said, to protect relationships in Congress. says a national affordable housing expert who requested anonymity.
Schuetz also wants HUD to invest in pilot programs in different regions to experiment with and evaluate different versions of public housing and help expand the most successful models. “Although it’s not as high-profile or as glamorous as a public housing program, it’s actually more effective and more likely to pass Congress,” she said.
