November 2002

Planning

Copyright by American Planning Association

Feds Must Do More, Housing Advocates Say

By James B. Goodno

Advocates of a national housing trust fund want to get the federal government back in the business of seriously financing affordable housing construction and rehabilitation. That's because they believe it will require a concerted national effort to address the nation's housing problems.

"Financing affordable housing is ultimately a federal responsibility," says Peter Dreier, co-director of the Urban and Environmental Policy Institute at Occidental College in Los Angeles.

The federal government does not disagree. Representatives of the U.S. Department of Housing and Urban Development acknowledge the need for increased spending on affordable housing, but question some of the methods proposed by advocates for financing a trust fund. Meanwhile, the Millennial Housing Commission has called for an expanded federal role.

"Addressing this problem will require concerted efforts both to expand the supply of rental housing and to preserve the existing stock of subsidized and unsubsidized low-cost housing," the commission declared in its final report in May. "The addition of 150,000 units annually would make substantial progress toward meeting the housing needs of [extremely low-income] households, but it would take annual production of more than 250,000 units for more than 20 years to close the gap."

More resources and tools needed

Because state and local governments and the private sector do not have the capacity to produce enough housing units, commissioners believe the federal government must expand the available resources and tools. The government has not entirely abandoned production. The HOME investment partnership program provides direct assistance for housing programs designed and administered at the state or local level. Community development block grants allow cities and counties to finance affordable housing and other local initiatives.

In its proposed budget of $31.5 billion for fiscal 2003, HUD asked Congress for $2.1 billion for the HOME program, $238 million more than 2002, and $4.436 billion for CDBG, an increase of $95 million. HUD also has worked with local housing authorities to redevelop failed housing projects through its HOPE VI program. Although HOPE VI has been praised for its design and social impact, its emphasis on mixed-income housing and elimination of the unit-for-unit replacement mandate has led to a decline in the number of units, especially those for very low-income renters.

Changing Priorities, an annual report by the National Low-Income Housing Coalition, says that between 1976 and 2000, federal housing assistance budget authority dropped 51 percent, from $51.2 billion to $18.5 billion in inflation-adjusted dollars. "Almost all of the 1976 budget authority was spent on expanding the stock of assisted housing through production, rehabilitation, and rental assistance, whereas in 1999 most of it was spent on maintaining or improving the existing stock of housing assistance and renewing expiring subsidy contracts," the report says.

"The commitment to solving serious housing problems has all but vanished," says Sheila Crowley, president of the National Low-Income Housing Coalition. "Beginning at the end of the 1970s," Crowley says, "the federal commitment to affordable housing declined, precipitously in the Reagan administration, putting a halt to serious efforts to develop new housing for low-income people."

The proposal to create a national housing trust fund financed by surpluses in federal mortgage insurance programs has 189 co-sponsors in the House and 27 in the Senate. It is backed by more than 3,000 organizations and individuals around the country, including housing and community advocacy groups, religious congregations, civil rights groups, labor unions, municipalities, elected officials, and others. The idea also may have popular support. A poll commissioned by the National Housing Trust Fund Campaign says that 62 percent believe there is a shortage of affordable rental housing in their communities, 66 percent believe Congress should act to solve the problem, and 66 percent back the idea of a trust fund once it is explained to them.

HUD opposes the idea of financing a trust fund through Federal Housing Administration insurance funds, drawing a distinction between reserves necessary to the health of the system and what advocates call surpluses. Tapping the reserves, a HUD spokesman says, could lead to insolvency in federal mortgage insurance accounts. "It's stealing from Peter to pay Paul," he says. HUD hasn't taken a stance on the broader idea of a national trust fund.

Representative Bernard Sanders, a Vermont independent, was expected to offer the trust fund proposal as an amendment to H.R. 3995, an omnibus housing bill, when it came to the floor this fall. At press time, however, it was unclear if the house leadership would allow the bill to reach the floor, and advocates are digging in for the long haul, working to win further endorsements and encouraging local groups to lobby their legislators.

James Goodno writes about politics, policy, and urban affairs for several national magazines.