Housing hope: stateside reform

This month marks the first anniversary of the election of Barack Obama as the 44th President of the United States, and ten months since his administration took office, bringing with it a promise of hope and change for America.

Public housing may not be a high profile priority, but reform is certainly on the agenda of Obama’s administration, as Alex Outhwaite reports.

With a solid majority in Congress and a filibuster-proof majority in the Senate, the Democrats have the greatest opportunity in decades to introduce major progressive reforms. So far, hot on the tails of the economic stimulus plan and the environment bill, media and public scrutiny has latched rabidly on to the controversial area of healthcare. Although public housing commands a lower profile in the news cycles, there has been plenty of activity in that area, with proposals for some of the biggest changes to housing policy in 17 years on the table.

Public housing in the United States has been a matter of coordinated federal policy since 1938, as part of Franklin D. Roosevelt's New Deal in the wake of the Great Depression. As well as funding various new public housing projects, the administration founded the Federal National Mortgage Association, also known as Fannie Mae, in order to enable low income families to take out mortgages and become homeowners. In 1965, the Department of Housing and Urban Development (HUD) was created, which has been responsible for developing and executing housing and community policy ever since.

HOPE VI: Housing Opportunities for People Everywhere

In 1992, prompted by the severe degeneration in public housing (particularly the urban projects, where extreme poverty and, consequently, crime had become concentrated), Congress introduced the HOPE VI programme - Housing Opportunities for People Everywhere. Since then, around $6billion has been allocated in major regeneration programmes, focusing on the worst identified developments. Existing projects underwent extensive renovation, preserving the buildings as public housing - in some cases whole developments were demolished and replaced, implementing the theories of New Urbanism. HOPE VI project designs generally rejected high rise apartments in favour of street-focused, low-rise houses and duplexes, with the intention of attracting mixed income residents in order to avoid the problems of concentrated poverty. As well as subsidised public housing, some accommodation was made available at market rates and, because the programme brought much needed funding to the most distressed urban areas, HOPE VI enjoyed widespread bipartisan support amongst city mayors and state governors.

While HOPE VI has been broadly successful, like any major policy programme it has had its problems. Chief amongst these has been the breaking up of existing communities as people were relocated to allow for the demolition of the old buildings. In some cases, due to the screening applied to applicants to the replacement developments, previous residents could not always be rehoused in the same area. Screening varies from project to project - for example, some developments might have an employment requirement, or automatically reject households which had members with a criminal record. These "hard to house" cases - people who haven't met the screening criteria for public housing and who wouldn't fare very well in the private market - might end up being housed in the old, un-renovated areas, thus exacerbating the clustering of poverty and crime to an even greater degree than before.

HOPE VI and New Deal for Communities

Diane K. Levy, an expert in Housing at the Metropolitan Housing and Communities Policy Center, part of the Urban Institute (UI), spoke to 24housing about some of the research the UI has been doing into solving the problems of public housing. The Urban Institute is a not for profit, highly respected, independent policy research organisation, operating across the whole of the United States. Founded in the 1960s, it is one of a number of such organisations and its research is funded from a range of sources including federal and local government, social service agencies and private companies.

In 2008, Diane and her colleague Susan Popkin at the UI teamed up with the Institute of Community Cohesion (iCoCo) in the UK to develop a twelve month research project "to compare approaches to community revitalization, community cohesion and sustainable neighborhoods in cities across both countries". A major component of the project was study visits to each country, specifically visiting HOPE VI sites in the US and New Deal for Communities (NDC) sites in the UK.

As Diane says: "The initial vision for the first stage of the project was to bring mixed groups of housing practitoners, researchers and funders to each of the countries to look at different regeneration efforts and then to look at what really stood out from a diversity of perspectives. So it was a learning trip for the participants and we produced a report based on key themes that came out of that trip."

That first phase involved whistle-stop tours to Birmingham, Coventry, London and five cities across the US. In the second phase, which took place this summer, the exchange project took an in depth look at just two cities - Birmingham and Chicago. "This time we were able to spend a little more time, interviewing people who were involved in the developments and doing focus groups with residents," says Diane.

The project partners found that different things stood out to each delegation, with an extremely interesting exchange of ideas. Diane reports: "One thing that really struck the American delegates when visiting NDC sites was that we would see, even in places where construction work was still in progress, that there seemed to be a priority placed on getting community infrastructure in place early on.

“So the community centre, the school, the health centre - those types of services were created early on in the process. With the HOPE VI programmes in the US, a lot of times - though there are exceptions - what we see is that the housing is the first focus of the developments.

“Which is not to say that it's a criticism of the programme, but just when you step back you can see there's a different emphasis in terms of what the programmes are getting done first and in terms of the resources available. I think the American delegates were quite excited to see the different emphasis there. From the delegates from Britain there was considerable interest in the role of private funders - there's a lot of private foundations that are involved in the housing and redevelopment programmes over here. That was quite fascinating for people."

The research that the UI conducts is politically non-partisan and not intended to advocate for specific reforms. They publish their findings which are then available to departments like the HUD in order to inform their policy making decisions. Diane has noticed a definite increase in interest in some of their research since the economic downturn and particularly the mortgage crisis.

More so than in most European countries, home ownership has always been strongly encouraged as part of public housing initiatives, particularly during the last eight years under the Bush administration, as a means of wealth creation. But since the promotion and widespread uptake of sub-prime mortgages, which contributed to the disastrous economic downturn and led to drastic government intervention to save the Fannie Mae and Freddie Mac mortgage associations, a new approach to public housing is being taken. While there will still be support for home ownership amongst low income families, Obama's administration is placing a greater emphasis on the role of affordable rental accommodation.

Economic Stimulus and Housing

Housing has also featured prominently in the American Recovery and Reinvestment Act of 2009, which was signed into law back in February and is intended to stimulate economic growth and stabilise the economy. Amongst the many recipients of Recovery Act funding are the Indian tribes and Alaskan native communities, which have been allocated nearly $510million to improve housing and stimulate community development. Department of Housing and Urban Development Secretary, Shaun Donovan, announced, "If we're serious about re-investing in programs to improve housing conditions for all Americans, we must make a serious investment for our first Americans."

The biggest Recovery Act spending in relation to housing is through the Neighborhood Stabilization Program (NSP), which has been allocated $6billion to award as grants to help state and local governments respond to rising foreclosures and falling home values. The funding is intended "to assist these state and local governments, as well as non-profit developers, to acquire land and property; to demolish or rehabilitate abandoned properties; and/or to offer down payment and closing cost assistance to low to middle income homebuyers."

The NSP also seeks to prevent future foreclosures by requiring housing counseling for families receiving homebuyer assistance, for example by helping them obtain a mortgage from a lender who agrees to comply with sound lending practices.

The Future of Public Housing: Choice Neighborhoods Initiative

In May, the Obama administration announced proposals to build on the successes of the HOPE VI programme by incorporating it into its new Choice Neighborhoods Initiative. As well as continuing the work of redeveloping housing, the Initiative includes dramatic community development plans, potentially including day care centres, parks and even farmers markets. There would also be strong links to school reform, making the proposals the most progressive in community and housing since the introduction of HOPE VI.

Whether these plans - if approved by Congress - would draw on the research conducted at the Urban Institute remains to be seen, but for Diane Levy and her colleagues it is encouraging to see that the problems their work has highlighted are not being ignored. Even with the furore over healthcare reform, Diane says: "There's definitely interest and attention being paid to housing at a federal level, just in a quieter way than healthcare."

Public housing in the USA

Public housing in the US is mainly administered at a local level, with funding from federal and local government as well as private foundations. As a result, there is a huge variety of projects and types of housing. Assistance for low income families can come in the form of both subsidised public housing and vouchers towards rental in the private market.

The Federal National Mortgage Association (Fannie Mae) was founded in 1938 in order to provide mortgages to low income families in the wake of the Great Depression. It became a shareholder owned company in 1968 and the Federal Home Loan Mortgage Corporation (Freddie Mac) was founded in 1970 to provide competition. As guarantors or owners of half the mortgages in the US, the two firms made huge losses during the downturn of 2008 and were bailed out by the government.

The harshness of life in the poverty stricken and crime ridden housing projects of 1970s and 1980s New York eventually proved a cultural crucible, begetting the pioneers of hip hop and rap.