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The fall and rise of public housing: with some innovative changes, public housing is making a comeback. (Housing).

Article Excerpt
IF NEW SPENDING IS A REASONABLE MEASURE of the country's priorities, then few areas of domestic national policy have experienced as dramatic a decline in favor over the past 25 years as low-income housing. That is especially true of programs administered by the Department of Housing and Urban Development, which underwent profound change between the time Jimmy Carter entered the White House in 1977 and when Bill Clinton left in 2001.

While not every important policy trend can be reduced to numbers, the numbers are a very big part of the low-income housing story -- in terms of needs, available supply, who is helped, and federal commitment. Assessing how well housing assistance competes for funds relative to other areas of domestic policy activity is complicated by the fact that increasingly higher budget commitments are needed just to hold constant the number of families receiving housing assistance. That is because, each year, a rising number of long-term subsidy contracts come due and need to be renewed or extended. Thus, in housing's case at least, rising budgets do not always reflect greater levels of program activity.

Ironically, housing's long-term fall from grace has set the stage for a remarkable comeback by the one low-income housing program that most fiscal conservatives love to hate: public housing. What is more, the comeback is being led by what, historically, has been branded one of the most dysfunctional public housing authorities in the country: the Chicago Housing Authority.

HOUSING BY THE NUMBERS

In less than a generation, subsidized housing's share of new federal spending commitments declined by 80 percent, from about five percent of total federal bud get authority in 1976 to just one percent in 2000. Housing bas even lost ground within the welfare portion of the budget; over the same period, housing assistance's share of all budget authority targeted to the poor fell from more than 36 percent to less than seven percent.

Because sustained budget cuts have real consequences, the assisted housing rolls have fallen sharply since the 1970s. From 1978 to 1984, the number of additional subsidized households grew by an average of 230,000 per year, while from 1985 to 1995 the average annual growth was 126,000 households. From 1996 to 1998, Congress stopped funding any new incremental assistance, resulting in the addition of virtually no new households. Although modest approprations have resumed, fewer than 35,000 new households receive assistance each year.

Housing needs Were housing's lower profile to be matched by an equally sharp decline in needs, spending for housing assistance would be a non-issue. But I believe it is clear that that is not the case. Over the past 20 years or so, the number of American families with critical housing needs -- those who spend more than half of their income for housing or live in seriously substandard housing - has almost doubled, from around 7.2 million to 13.7 million according to HUD. Both absolutely and relatively, a larger share of the nation's families has a critical housing problem today than 20 years ago -- about 14 percent compared to nine percent.

Besides sheer numbers, there are two major changes in the profile of housing needs that significantly affect budget and policy: the growth and persistence of homelessness in America, and the steady rise in the burden of severe housing costs up the income ladder and into the suburbs.

Homelessness With respect to the former, Urban Institute researchers estimate that more than two million adults and children -- equaling nearly one percent of the U.S. population -- are likely to be homeless at least once during a year. That likelihood grows to more than six percent for people living in poverty. On average, more than half of the homeless population consists of families with children (40 percent) or lone minors (14 percent).

From no expenditures for emergency shelter and other homeless assistance in the 1970s, HUD now spends more than $1 billion each year to support shelter and housing-related assistance for the homeless. That represents almost five percent of HUD's FY 2002 housing assistance budget.

Middle-class needs HUD and Congress have yet to identify the sharply rising cost of housing for moderate-income working families as a problem requiring discrete federal action. But it is fast becoming an explosive political problem and calls into question some of the fundamentals of national housing policy. That is because, for most of the last 20 years, federal housing policy has implicitly or explicitly linked the housing problems of American families to issues of poverty and welfare dependency. While the poor have by far the highest incidence of housing needs, an exclusive focus on very-low-income families fails to appreciate the full extent of the country's affordable housing problems. Indeed, in 1999 almost four million working families with moderate incomes had...