President-elect Donald Trump recently said he would nominate Dr. Ben Carson to be the Secretary of the Department of Housing and Urban Development. Carson of course accepted and the media frenzy and political commentary has already begun. One recent piece from the Manhattan Institute’s City-Journal stands out among the crowd. In “Laying a New Foundation at HUD,” Manhattan Institute Vice president Howard Husock says that “public housing is a paramount example of long-term government dependency.” He then lays out the five major changes Carson could make right away to improve public housing in America.
Charles Tassell, Chief Operating Officer of the National Real Estate Investors Association said “These ideas are spot on and exactly the prescription this Doctor can fill to fix public housing’s ails.”
The five things are:
Time Limits for Public and Voucher Housing: Sending a signal to new subsidized tenants that they shouldn’t expect lifetime housing support—to which they are entitled at present—would be the best way to change the culture of public housing. A time limit, moreover, is not fanciful. As a result of discretion permitted by the Moving to Work demonstration program, eight public-housing authorities have already adopted time limits, with promising results. In San Bernardino, California, incomes among those subject to a five-year time limit—call it short-term assistance if that sounds more compassionate—rose by more than 12 percent since 2008. Employment rates among those in the time-limited program rose by 17 percent. Time limits also free up housing units for those who’d otherwise be stuck on a waiting list. Carson should extend the discretion to impose such limits to all 3,000 of the nation’s public-housing authorities.
Stop Work Disincentives for Subsidized Housing: Under current law, a public or subsidized housing tenant must pay 30 percent of his income in rent. That may sound like a good deal, but it means that, for every $100 that a tenant’s income increases, his rent goes up by $30. This creates an obvious disincentive to work, and sends exactly the wrong message to those at the bottom of the income ladder. Moving to Work has allowed 20 housing authorities to treat subsidized tenants like other citizens by letting them sign a fixed-rent lease. This approach, too, should be expanded across the public-housing system.
Privatize Management of Public-Housing Properties: There may once have been good reason for government to build low-income housing, but there’s no reason why it should also manage the properties once they’re built. Private management firms can undertake capital repairs through expansion of another fledgling HUD program already on the books. The Rental Assistance Demonstration (RAD) program lets HUD subsidies be used as bond-repayment guarantees for private investment capital. New York’s public-housing authority has considered upgrading its antiquated heating systems, but fears seeing its federal support reduced if it lowers its utility costs. The RAD program can change that, and should be expanded.
End “Affirmatively Furthering Fair Housing”: The Affirmatively Furthering Fair Housing rule is premised on the wrongheaded idea that the best way to encourage upward mobility among minorities is simply to relocate poor inner-city households to wealthy suburbs. The rule should be done away with. At the same time, the Community Development Block Grant, designed to support physical improvements to low-income neighborhoods, should come without strings attached. Let localities decide how best to put that money to use.
End Affordable Housing Mandates: Fannie Mae and Freddie Mac, the secondary-mortgage market giants supervised by HUD, are charged with fulfilling the federal government’s affordable-housing mandates. They must demonstrate that large percentages of the mortgages they purchase have been made to low-income buyers or neighborhoods. These mandates contributed to the 2008 financial crisis and continue to send the wrong message to banks, which are essentially told to fulfill mortgage quotas even when loans aren’t repaid. It’s time either to scrap the mandates or require Fannie and Freddie to report on the performance of such loans.
Click here to read “Laying a New Foundation at HUD” on City-Journal.org
