Mon – 7/8: In this land of casual cruelty, the Department of Housing works to make American kids homeless. Your comment due tomorrow, 7/9.

Action – Write a comment telling HUD Sec. Ben Carson what you think of his plans. Deadline Tueday night (7/9) tomorrow at 11:59 EST.

The Trump Administration is doing what it does best… Just like the debacle of their health insurance reveal, the GOP is bankrupt of any good ideas to solve America’s affordable housing crisis. So they’re using their go-to distraction plan…inflaming the racists and xenophobes amongst us and pitting the poorest against each other, while stealing the homes and security from 55,000 American kids. All the trauma without making anything better for anybody.

Comment by Tuesday, July 9th, at 11:59 pm EST here!

  • The repetitive proposed rule is here.
    • Ben wants all non-eligible family members out. That includes DACA kids, work permit and U visa holders as well. Or the whole family.
    • He want to change the rule so that non-eligible adult can no longer be leaseholders for citizen minor children. The rule specifically says that the sole eligible member can be a minor.
    • We would like Ben to go back to buying overpriced dining tables and leave us alone. No one in the video wanted to go to the dark place of forcing ol’ Ben to explain why some kids are more American than others.
  • If you need inspiration, cruise the comment section here. However, NOTE! DO NOT COPY VERBATIM anybody else’s comment. COPIES AREN’T COUNTED.

We have two “Background” sections for you today. One is for Ben Carson’s cynical meat-toss to the administration’s base and one is why we haven’t cracked the affordable housing issue yet and a very good idea by the People’s Policy Project.

Background on Ben Carson’s very, very, very bad idea 

At the direction of the White House, HUD Secretary Ben Carson has issued a proposed rule at HUD that would evict existing mixed-status families from Section 8 and Public Housing. (Stephen Miller, we know you’re there…) Mixed-status families are made up of members who are both eligible and ineligible for housing assistance based on their immigration status. Not all ineligible people are undocumented persons.

There is no public policy reason for this proposal. It is a blatantly cruel, xenophobic attempt to push over 100,000 people, including 55,000 children who are legal U.S. residents, out of their homes and leave them at risk of homelessness, while costing HUD millions of dollars.

Diane Yentel, president and CEO of the National Low Income Housing Coalition, called the proposal cruel. “The cruelty of it is really breathtaking and it would do real harm to kids and to families and for what?” Yentel notes that HUD’s unusually frank analysis concludes that there would be few benefits from the change for other low-income families waiting for aid.

Carson’s interpretation of the law means he should stick to brain surgery, or as previously mentioned, dining room table shopping:

  •  HUD’s proposed rule is premised on the understanding that allowing mixed-status families to participate in federally funded housing programs is a violation of Section 214 of the Housing and Community Development Act of 1980, which is incorrect. No matter how many times he says it.
    • The Housing and Community Development Act of 1980 prohibits the Secretary of HUD from making financial assistance available only to families with no eligible members.
    • To qualify for admission to HUD housing covered by Section 214, at least one household member must have eligible immigration status as defined in Section 214.
    • The eligible member does not need to be the head of household and can be a minor child. Households with no eligible members are not permitted to move into covered housing.
    • When there are family members who aren’t eligible for assistance: Any financial assistance made available to that family by the applicable Secretary shall be prorated, based on the number of eligible individuals in the family and under this section, as compared with the total number of individuals who are members of the family Since a family’s rent subsidy or voucher amount is calculated only on the eligible members of the household, mixed-status families are already more rent burdened than other families in subsidized housing.
    • Since Section 214 of the Act limits access to federally subsidized housing programs to U.S. citizens and a narrow list of noncitizens, there are a number of noncitizens with legal status, such as individuals with Deferred Action for Childhood Arrivals (DACA),U visas, employment or work visas who are ineligible for the program. This means that the proposed rule would have impacts beyond families with undocumented members.
  • Vulnerable American citizens will be hurt:
    • Up to 7% of U.S. citizens do not have documents readily available that can prove their citizenship. This number is likely to be higher among those receiving housing assistance in Section 214 programs because low-income individuals are less likely to have documentation than those with higher incomes.
    • 12% of U.S. citizens earning less than $25,000 per year are not able to easily produce a U.S. birth certificate, a naturalization certificate, or a valid unexpired U.S. passport.
    • The risk of an eligible U.S. citizen or senior not being able to produce the proper documentation and therefore not being able to maintain their housing assistance is higher for the most vulnerable. For example, if they already lack the necessary documentation, seniors and people with disabilities may not be able to obtain it because of decreased mobility.
    • People who are homeless or formerly homeless may have lost important documents if they did not have a safe place to store their belongings while they experienced homelessness. The new documentation requirements add administrative barriers which could cause more eligible recipients of housing assistance to experience housing instability.
  • All statements about “Family and children” are suspect: The new proposal would force families to make the impossible decision of either breaking up to ensure eligible members can continue to receive assistance or staying together and face eviction and potentially homelessness, which adds costs to social services and risks families’ health and well-being. It runs completely counter to HUD’s mission.
    • Emergency homeless services are an expensive way to address housing instability. It is also less effective than homelessness prevention efforts.
    • Allowing mixed-status families to remain in their homes with their housing assistance intact makes the best use of HUD’s limited resources and preserve homeless services for those for whom prevention is no longer an option 
    • “Fair and Inclusive” housing markets include mixed-status families.
    • That people have been waiting years for housing assistance is HUD’s issue, not mixed-status families with U.S. citizens.
    • Children are harmed by homelessness. Those experiencing homelessness demonstrate worse academic and social outcomes than their residentially-stable peers, such as lower vocabulary skills, problem behaviors, grade retention, increased high school drop-out rates, and lower adult educational attainment.
  • During the greatest national housing crisis in generations, this plan would cost HUD money and result in fewer people receiving housing assistance. HUD estimates 108,000 tenants in 25,000 mixed households would be affected by the proposed regulatory changes nationwide. About 70% of them are citizens or legal residents and three-quarters of those — 55,000 — are children. Approximately 72 percent of these mixed families reside in three states: California, Texas, and New York. For these families, the negative effects of the rule would be devastating in one of the most expensive metropolitan areas in the country.
  • Mixed-status families means more money for HUD: These families pay higher rents than families where all family members are eligible for a subsidy. HUD’s own analysis shows that if this rule went into effect, it would immediately cost up to $227 million per year in lost revenueAs HUD’s own analysis states: “Housing assistance is not an entitlement and the federal budget for housing is not expected to increase because of this rule.” Therefore, the quantity of housing vouchers will be decreased and the quality of service at public housing complexes will be reduced to cover the increased cost of the proposed rule. Again, HUD’s own analysis acknowledges this consequence of the proposed rule and the likely outcome
  • This immediate cost doesn’t count 3 million and 4 million dollars on eviction costs, “for those households that required more rigorous enforcement of the regulation.”
  • Why do cities like Houston have such long waitlists for housing? The problems starts back at in WWII era, where cities like New York built a lot of government subsidized public housing and cities like Houston depended on the free market decisions. The number of homes in Houston that fall in the category of what’s called “naturally occurring affordable housing” – private housing that is affordable to people with low incomes is declining. As of 2017, 335,000 of the affordable multifamily housing units in Harris County, for example, were at risk of becoming unaffordable, according to a study by the Greater Houston Flood Mitigation Consortium. (See Background on Housing, below)
  • HUD should immediately withdraw this proposal that serves no purpose other than to terrorize families based on their skin color and country of origin.

Instead of trying to make children and families homeless and pushing cuts to programs, HUD should be working to get more funding to build and repair public housing, provide the number of vouchers needed and enforce fair housing laws

Background on Housing and why we don’t have enough of it.

Google “why are people homeless? and one normally sees poverty, joblessness, decline  in public assistance, health care issues, domestic violence, mental illness and drug and alcohol addiction as main causes. Go to the national Coalition for the Homeless site and they’ll also list foreclosure and lack of affordable housing. The “greatest country in the world” is filled with luxury tax haven homes and apartments for foreign investors, empty for at least 10 months of a year, while having a shortage of over 7 million “affordable and available” homes for its own people. California college students, after absorbing 12-16 years of state-funded education, are leaving because there’s no places that they can afford to rent. This is a structural problem. Throwing 55,000 American kids into shelters isn’t going to solve this.

Compared to other countries, American poor and working classes have never been well-housed, but the 2008 financial crisis, dramatically expanded the number of people suddenly in need of affordable rental housing. The crash, rooted in a housing market built of gimcrack mortgages packaged to those who were told they could afford them by those who didn’t care, created a tidal wave of foreclosures resulting in a drop in the homeownership rate of 6 percentage points. 

Luckily for the wealthy partners in this destructive dance, they were made whole with our tax dollars. A 2011 Levy Institute analysis, counting the week-by-week extension of credit from the Fed to the companies who originally conceived of and profited by the shenanigans that caused the crash, came up with a total of $29 trillion in cash and loans, which they promptly repaid us by extending their financial crime spree with a “robosigning” scandal.  Whatever its total size, the bailout was colossal, one of the biggest private sector subsidies in world history. 

Meanwhile, 9 million people lost their homes and ended back in the rental market, pushing rents upwards in a time when no one was building new housing. It started up again with federal stimulus spending but by 2015, new new unit construction had only reached 400,000 per year- this matches unit construction levels in the late 1980s, when the population was 25 percent smaller. Also, the new construction was built mainly for luxury markets in major metropolitan areas, unlike earlier construction which was more evenly distributed in costs. 

low rent stock

Over the last year, the growth in rental households has stopped or even reversed—but rent prices are still growing. And the number of burdened renters (paying 30% of their income or more on rent) remains substantially above its pre-2008 crisis level. (We’ve reformatted this information into a chart for us visual learners…)cost burdened rentersThese “burdened renters” now account for 47.4% of all renters. Meanwhile, some people who would have been homeowners in decades past now have been discouraged of home buying. The share of households making over $100,000 and renting has increased from 12 percent in 2006 to 18 percent in 2016, while wage stagnation and student debt keeps down payments out of reach. As the Joint Center for Housing Studies concludes, “The rental market thus appears to be settling into a new normal where nearly half of renter households are cost burdened.”

For those renter households identified as extremely low-income (ELI) by making less than 30% of the median income in their area, there is, on average, only enough “adequate, affordable and available” housing for 46% of them, causing housing insecurity and homelessness. Rent increases of over 25% since 2010, especially on the West Coast, caused a 26% rise in homelessness by 2017.affordableHUD’s Section 8 housing voucher program helps 2.3 million ELI households by subsidizing a portion of their market-rate rent, but it only reaches 22% of the 11.8 million eligible households. 21% have found market-rate housing, 2.2% are covered under the USDA Section 515 program and the leftover 54%, may be housing-insecure – sleeping on couches, in cars or campers, living with friends or…outside. The states with the greatest percentage of ELI renter households with a severe cost burden are Nevada (83%), Florida (79%), California (77%), Oregon (76%), Hawaii (75%), Colorado (75%), and Virginia (75%). And even the little that we give to housing programs, like Community Development Block Grants and Section 8 vouchers, is at risk, because of the need to pay for the costs of the GOP’s 2017 tax cut.

Two strategies designed to encourage the private market to build the affordable housing we need, suffer from serious deficiencies. The first – “Low-Income Tax Credit” (LIHTC), which currently creates 90% of new low-income units, gives tax credits to developers. The process has been criticised for being too small in scale, inefficient,  prone to substantial corruption, and impermanent – the affordability requirements lapse after 15-30 years. With higher land prices and NIMBY neighbors in well-off communities, too many subsidized units end up in poor neighborhoods, concentrating poverty and exacerbating segregation. And since the 2017 Republican Tax Act reduced the corporate tax rate from 35% to 21%, the financial incentives for banks to help fund these projects have been significantly reduced.

(Complete Frontline episode here)

image.pngThe second strategy “Inclusionary Zoning” requires that all new residential projects include some fraction of affordable units. Like LIHTC, it’s not big enough nor efficient enough to dent our housing problem and it’s created some new forms of corruption and housing dislocation. In New York City, some developers forced tenants out of existing affordable units, destroyed those buildings, and then collecting city tax money to build a new high-end development. They also invented a short lived phenomenon called the “poor door“.

Rent control is a reasonable policy for allowing people to remain in their homes and preserve existing affordable units, especially in the face of a spike in demand. However, it does little to enable the construction of new units; and stronger forms may actually impede new private construction when they cut into potential profits.

Other places like Vienna, Finland and Sweden have prioritized housing for their people. “In the early 1960s, Sweden faced a severe housing shortage caused by an increase in incomes, migration from rural areas to cities, and the post-war generation reaching adulthood and requiring their own accommodation. Unwilling to tell young baby boomers they should simply live with their parents for the next decade, in 1965 the Social Democratic government embarked on a strikingly ambitious project to build one million homes over the course of ten years, demolishing 400,000 units of inferior or damaged housing stock in the process. The scale of the challenge embarked on becomes apparent when one considers that “the total Swedish housing stock at the time was barely three million dwellings.” Read about them here.

A proposed solution to house all Americans.

Here is the plan proposed by the People’s Policy Project.

If we are to take the housing crisis in the United States seriously, after reviewing international models, we see only one conclusion—local governments, supported by the federal government, must build a very large amount of affordable, mixed income, publicly-owned housing, initially by developing existing publicly-owned land. Our policy proposal, outlined below, highlights specific targets, principles, and areas of concern.

1. Building Houses

We believe that a target of ten million municipal homes in ten years could be delivered with sufficient political will. This should be funded through a variety of federal policy instruments in addition to local resources. The most important of these would be the provision of low-interest loans and partial capital grants to municipal housing authorities, utilizing the government’s borrowing and taxation powers to close the gap between affordability and costs in the short run. In the long run, “solidarity rents” on wealthier tenants would ensure municipal housing developments are self-sustaining or even profitable.

The form of the federal programs would be as follows:

  • Firstly, the federal government would borrow funds at existing Treasury yields and loan those funds out as required to municipal housing authorities at that rate plus a single basis point. This would provide much-needed capitalization for local housing developments without costing the federal government anything, assuming the loans are repaid.
  • Secondly, the federal government would provide capital grants to municipalities who construct mixed-income housing devel- opments. The capital grants would be equal in value to whatever a private sector developer would receive from the Low-Income Housing Tax Credit (LIHTC) program for a similar development. Put simply: the inequality between public sector and private sector access to federal capital subsidies for housing construction would be eliminated. The Faircloth Amendment capping the number of units for which local public housing authorities can receive federal subsidies should be immediately repealed.
  • Thirdly, additional capital grants should be allocated for developing accessible and supportive housing for groups with specific needs. These groups include the formerly homeless, people suffering from drug addiction, refugees, those with disabilities, and elderly people with mobility issues.

The local administration should be responsible for providing adequate sites for municipal housing developments and ensuring a streamlined planning process. Fixed rents for public land should be set to ensure that land is not severely misused, but these charges on housing authorities should be limited to incentivize municipal housing development.

We support the use of the vast quantities of existing public land for municipal housing—and where such sites are unavailable, unusable, or exhausted, we also support the requisitioning of aban- doned properties and vacant sites for development (a 2000 survey found huge quantities of such land in most cities). Additionally, public land trusts could be established to identify new potential sites where they come up for sale, and to be responsible for maintaining a supply of viable sites for municipal housing construction.

The scale of the proposed program is moderate compared to major municipal housing initiatives in other countries, reflecting the fact that schemes like the Million Homes Program (which constituted an increase of 20% over the pre-existing housing stock, as against 7.3% in this proposal) were carried out in countries which already had a substantial public-sector housing delivery infrastructure. We see no reason why this target could not be revised upwards after a few years if policymakers decide it is insuffcient. We do not anticipate any risk of the United States experiencing a housing oversupply at this juncture.

2. Ensuring Fairness

There should be conditions placed upon these incentives to guarantee that federal money is spent effectively, to prevent discrimination, and to maintain standards and income profiles for housing, thus ensuring quality service provision into the future.

We would urge that the federal government resist the temptation to delegate responsibility for this to states by means of block granting—many states with large minority populations in urban areas are already responsible for de-facto discriminatory policies with regards to voting, welfare, and Medicaid. Instead, the federal government should partner directly with municipal governments who have a need for additional affordable housing in their communities: the administrations in Jackson and Houston are more likely to be willing partners than state governments in Mississippi and Texas.

Mass incarceration has had a grossly disproportionate impact on low-income households and communities of color, and existing policies by many public housing authorities barring those with arrest records or convictions (and often their families) from accessing a ordable or subsidized housing should be repealed or drastically reformed. Providing stable supportive housing for individuals who have been released from prison and treatment facilities will, in the long term, do more to address anxieties about criminality and drug abuse in public housing than the present failed strategy, which condemns such people to a cycle of homeless shelters and imprisonment.

Inaccessibility for disabled people has serious impacts on their quality of life, and authorities should seek to go beyond the requirements in the ADA to ensure that there is no implicit discrimination in their developments. Direct capital grants should be given out to assist in providing accessible units, and permanent supportive housing should be given to those who suffer from substance abuse issues—along the lines of the Finnish model.

Housing developments should be mixed-income, adequately served by public transport, and have easy access to amenities and shops. They should comply with strong regulations to prevent racial segregation—including regulations that prevent disparate impacts through reviews. Such reviews are provided for in the Affirmatively Furthering Fair Housing guidelines recently delayed by the Carson HUD department. The presence of some market-rate tenants in developments can help to ensure quality services and incentivize better-quality housing units and surroundings, as this will increase the potential revenues from each development.

The federal government should not permit its funds for municipal housing to be used for any development which displaces tenants or otherwise reduces the amount of low-income housing available on that site. The aim must be to increase the housing stock, not to socially cleanse areas which local governments consider a “problem.”

It is likely that this program will employ and train a large number of people in the variety of occupations needed to expand housing construction at this scale. One major benefit of an ongoing government investment in municipal housing is an increase in job security for people involved in municipal housing construction—while the supply of housing being built may vary somewhat over time, it need not do so to the same extent that any individual private developer’s workload fluctuates.

Working positively with labor unions to ensure a sustainable, productive and mutually beneficial settlement on increasing the size of the public service is very desirable. A nationwide collective bargaining agreement which regulates training, pay, and working conditions for those involved in publicly-funded housing developments would play an important role in ensuring the process runs smoothly and effectively while avoiding exploitative conditions for the workers involved in delivering a ordable housing. Progressive policies should be delivered in a progressive way.

3. Local Initiatives

Local government could immediately begin funding projects of this type before federal assistance becomes available. We understand that our target of ten million municipal homes over ten years will not materialize without considerably more support than that which can be offered by cities alone, but the municipal bond mar- kets offer a way to immediately begin investing in new housing without subsidizing developers. 

The capacity of local governments to press ahead with such initiatives in the absence of federal assistance depends on specific conditions, such as their own land endowments, the cost of construction, the interest rates on municipal bonds, and their own willingness to provide shallow subsidies to the initiative to improve its viability where necessary. Though there may be circumstances where municipal housing is comparatively suboptimal, as federal incentives are stacked against them, there are almost certainly a large number of cases where municipal housing would be a beneficial investment even without federal incentives. Local governments struggling with profit-gouging developers should analyze the situation and consider the viability of doing it themselves—obtaining a sustainable asset and putting developers on notice that the administration will consider cutting them out in the future.

This is a long-term reward: a local administration which can build its own housing can never be held hostage by developers expecting an unreasonable profit margin again. Even if local authorities do not wish to end their public-private housing partnership schemes at this minute, developing a publicly owned alternative affords them greater autonomy and bargaining power in future procurement decisions; and it does not require them to release large amounts of public land which they cannot easily recover.

Local administrations might also seek investments from ‘anchor institutions’ such as schools, universities, and hospitals which are largely geographically fixed in the area, on the understanding that helping to provide lower housing costs will have a positive impact on both the reputation of those institutions and the cost of living for their locally-based employees. Some of these institutions already own underutilized land and capital endowments which could enable substantial housing developments at a limited cost to the local government.

4. Covering Costs

Assuming an average cost per unit of between $150,000–$220,000, the government could finance and build ten million houses directly in a revenue-neutral fashion—simply by repealing the Republican tax plan.

This is not our proposal; and we acknowledge that the final cost per unit will depend on a range of factors, and indeed may be higher than that range in some cases. What it highlights is the scale of funding available to federal policymakers if they adopted a serious political commitment to housing—indeed, our proposal for ten million houses costs a mere fraction of the giveaway to wealthy donors by Paul Ryan and the Trump administration. 

Since tenants in these houses will pay rent that covers ongoing expenses, and since much of the construction costs will be returned through loan repayments, the long-term cost to the federal government will be far lower than the cost of building all the houses itself—and the continuing annual costs will only run as high as the amount of new loans or grants it decides to issue that year. Loans— whether subsidized or profitable—do not cost as much as grants, and issuing grants worth 10% or even 50% of construction costs is still less expensive than paying for the full total.

If we assume a capital cost per unit of $300,000 and that the federal government absorbs 20% of this capital cost in losses (an immensely pessimistic estimate), ten million houses could be financed through less than half the revenue which would be raised simply by restoring the corporate tax rate to its pre-TCJA level.

Rents should be set such that a parcel of housing units is able to nance its operating costs, maintenance costs, and capital costs after subsidies. In some cases, especially where it is difficult to make housing affordable otherwise, primarily market-rate developments may be used to cross-subsidize mixed-income developments, but inter-development subsidization should be strictly limited in its scope; federal authorities could set regional caps between 0–20% of long term operating and capital costs which can be covered through profits from other developments in each city depending on construction costs and market rents.

Examples of self- financing rental models can be seen in the Appendix.

Investing in large-scale municipal housing developments will have long-term benefits to the public purse—once loans are paid off in a few decades, tenant rents that once merely covered costs will instead begin delivering substantial organic profits to the municipal housing authorities which own the houses, a dividend which could be shared between the existing tenants in the form of lower rents, and the city in the form of an additional funding source for the next generation’s housing developments.

Crucially, we do understand that this is not a simple task. Atrophied public sector housing institutions will take time to rebuild capacity and efficiency, and there is no need to immediately eliminate existing policies while this process takes place. LIHTC, section 8 vouchers, and other rental subsidies may be necessary in the immediate future, but as noted in Section 1 we caution against overeliance on their use—they only further deepen the dependence of government upon private developers, and the dependence of private developers upon ever-increasing subsidies.

However, it is our contention that once the public sector has rebuilt its housing delivery infrastructure, learning from a hundred years of lessons and practices at home and abroad, the benefits to the public could be immense: a country where high quality affordable housing is a right available to everyone, not a privilege of the wealthy few.

Building ten million homes in ten years wouldn’t get us all the way there—but it’d be a damn good start.

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