Affordable housing, land tenure, and urban policy: the matrix revealed.

Author:Byrne, J. Peter

    Housing provides a necessary foundation for physical and social life. It provides shelter, security, recreation, and wealth. It plays a central role in the health and well-being of its occupants and also supports their employment and educational endeavors. Among the poor, there is a severe shortage of adequate, affordable housing. Because housing is central to the social and economic needs of all people, it is not surprising that national policy has long proclaimed the goal of a "decent home and a suitable living environment for every American family." (1) Indeed, although in recent decades government spending for relief of poverty has been curtailed, in part because of doubt about the efficacy of transfer programs, spending in support of housing subsidies for low-income persons has persisted. (2) Even though federal funding for affordable housing has shrunk, many state and local governments seem firmly committed to increasing the availability of affordable housing through a variety of innovative subsidy programs, many of which involve partnerships with private non-profit and for-profit entities. (3)

    Even when using federal money distributed through block grants, (4) state and local programs generally permit a wider range of approaches to housing without as much bureaucratic complexity as federal programs. (5) These varied programs persist alongside continuing federal programs, in particular the traditional public housing program, Section 8 vouchers, and housing built with the Low-Income Housing Tax Credit. (6) Thus, an unprecedented array of approaches to subsidized housing exists today in practice. An observer may be excited by the creativity shown by affordable housing developers but confused about the goals they may be pursuing. The variety of means employed in different housing programs calls for clarification of the many social goals subsidized housing may achieve.

    This Article describes the policies advanced by housing programs and shows where tension between the policies and programs exists. For example, traditional public housing has at times provided very poor people with decent, affordable shelter, but often results in concentrating the misery and hopelessness of poverty in large, segregated projects that are toxic to neighboring property values and, in many cases, to the residents of public housing. (7) Similarly, some contemporary programs use subsidies to sell homes to low-income people at below market prices. This approach has many advantages, including the possibility of building wealth for the recipients. Such wealth creation does not preserve the affordability of the housing for future residents, however, as the housing may subsequently be sold at its market price. (8)

    This Article attempts to organize and clarify the relationships among various goals of subsidized housing policy and the elements of programs adopted to meet them. Our purpose is primarily explanatory, even taxonomic. The profusion of housing subsidy programs can be better understood and managed if the variety of policy objectives is admitted and the ability of different programs to further those policies assessed. Frank recognition of the variety of goals pursued through housing policy and of the tensions among them also may facilitate further policy innovation, a topic we return to at the end of this Article. In general, we favor housing programs that offer residents some economic stake and real management responsibilities in their dwellings, which should be located in economically diverse neighborhoods. Program design for any project should reflect local needs and opportunities of the program's sponsors and residents, as well as local market and political conditions. (9) Indeed, tradeoffs among different goals and program features should be directly confronted.

    As part of this introduction, we address why public expenditures should be devoted to subsidized housing for poor persons rather than simple wealth transfers. Although this subject has been addressed before, (10) our extended discussion helps one to appreciate the range of policies different projects may pursue. Subsequently, we elaborate on certain policies and explore how they interact with each other.

    First, housing is a basic human need. Physically, we need shelter from the elements and from dangers, and a place to perform basic human functions. (11) Socially, the home is the center of intimate relations and family life. None of these assertions need to be belabored. Like food, housing is so essential that both charitable entities and governments long have felt that every person should have it without regard to ability to purchase it in the market. Whether or not it is useful to declare a right to housing, (12) it is easier to argue that the community should assist with housing than to simply provide a minimum income.

    Second, paternalism favors housing subsidy. The community may not trust the recipient to use public money for essentials, so it provides essential housing instead. This may preserve political support among taxpayers. It also benefits the recipient's dependents, who share the housing; indeed, providers cannot assist the recipient's children without assisting the recipient. Decent housing provides a foundation for improvement in other aspects of the recipient's life. Affordable housing allows beneficiaries to preserve money for other needs. It makes attainment of employment or education more likely, and may improve physical and mental health. Moreover, housing can be a durable asset that sustains the recipient over time. Thus, housing is a necessary, if not sufficient, element for escaping poverty. (13)

    Third, homelessness or inadequate housing imposes negative externalities on others. Public health officials long have campaigned against slum housing, viewing it as a breeding ground for disease and crime. (14) In no small part, this effort has been directed at protecting the wider community against harms emanating from substandard or deteriorated housing. Thus programs that attack inadequate housing may have benefits for those who fund them. (15)

    Fourth, it is widely accepted that the market will not provide housing that meets community standards. (16) As we discuss in greater detail below, housing codes and land use regulatory measures raise the costs of even the most basic new housing to levels above what poor people can pay. More generally, the high fixed, upfront costs of any new housing encourage developers to seek higher returns by marketing to the more affluent. Even older housing that might "trickle down" to the poor must meet basic standards and can be renovated profitably in strong markets for resale to the affluent. While some of these regulations may be improvident or even exclusionary, most still reflect the values implicated in the first three points above.

    For the foregoing reasons, there is broad consensus that housing for the poor, at least in urban areas, (17) should be addressed through subsidy rather than through deregulation, a consensus that has not formed around other important commodities. Housing subsidies, therefore, will remain a cornerstone of approaches to poverty and to urban planning. This Article conceptualizes the purposes that housing subsidies pursue in light of the general goals of effectively assisting recipients and promoting urban vitality. In contemporary practice, these goals usually are joined. Nonetheless, tensions may appear among the purposes of any particular programs. Indeed, the limits of program design, local needs, institutional priorities, and resources frequently require program designers to choose among purposes. The Article seeks to manifest these tensions for the purpose of enhancing debate about housing programs. One of the conclusions we reach is that it is impossible to assess the cost-effectiveness of a housing program design without placing values on the range of benefits it may accomplish.

    We proceed by detailing eight possible objectives of subsidized housing and consider how different housing programs may or may not accomplish these objectives. The central portion of the Article is divided into sections based on the eight objectives: 1) decent shelter; 2) wealth creation; 3) social integration; 4) urban vitality; 5) civic engagement; 6) training; 7) institution building; and 8) efficient use of public funds. At the end we provide general reflections on these purposes. We conclude that developers of specific projects should think carefully about the priority of goals they hope to accomplish and adapt their programs to meet those goals, recognizing that they may have to sacrifice other beneficial competing goals in the process.


    1. Decent Shelter

      The chief goal of government housing policy towards the poor has been the provision of decent shelter at affordable prices. (18) At least since the large scale industrialization of cities and the influx of immigrants after the Civil War, reformers have sought to ameliorate the harsh physical conditions under which the urban poor lived. (19) Inadequate light, plumbing, and heat, unsafe wiring, and poor ventilation presented urgent issues of public health. New York enacted successive tenement laws, regulating construction design and basic utilities, which were emulated by other cities and states. (20) As late as 1968, the Kerner Report identified overcrowded and substandard housing to be a major cause of urban civil disorders and urged a "massive" program to produce more decent affordable housing. (21) Modern housing codes, which mandate minimum standards for health and safety for all private dwellings, have become ubiquitous, due in part to federal encouragement offered by the Housing Act of 1954. (22)

      The federal government began to fund the construction of publicly-owned and managed housing for low-income persons in the 1930s. (23) In his second inaugural address, President Roosevelt evoked "one...

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