Sonny and Cher pledged “I Got You Babe,” John Kennedy was mourned, and U.S. troop members swelled to more than 100,000 in Vietnam in the months leading up to the creation of the Department of Housing and Urban Development (HUD).
Lightning flashed, thunder followed. HUD was born in the wake of the civil rights marches in the South and the burning of Watts in the West.
Explaining that America had changed from a rural country to a highly urbanized nation, President Lyndon B. Johnson signed legislation creating the 11th department of the federal government on Sept. 9, 1965.
“It is not enough for us to erect towers of stone and glass, or to lay out vast suburbs of order and conformity,” he said. “We must seek, and we must find, the ways to preserve and to perpetuate in the city the individuality, the human dignity, the respect for individual rights, the devotion to individual responsibility that has been part of the American character and the strength of the American system.”
In recent months, protesters marched in Ferguson, Mo., and parts of Baltimore burned as police officers were blamed in the deaths of two young black men, one in each city.
So what’s new? How far have we come? HUD’s 50th anniversary presents a time to reflect on what the agency has achieved and what direction it should take next.
Putting cities on the federal agenda
Facing changing demographics, expanding ghettos, and rising racial tensions, President Kennedy wanted to establish a department of urban affairs but lost the battle in Congress. That left it up to LBJ, who was determined to have the cabinet department as part of his Great Society. Adding “housing” to the name and accepting compromise, he ushered in the new agency.
“HUD put cities on the agenda for the federal government, and by its various programs, HUD put urban redevelopment on the agenda of communities all across the nation,” says Nic Retsinas, who’s been at the forefront of housing policy from several posts, including assistant secretary for housing and Federal Housing Administration (FHA) commissioner at HUD in the 1990s. “Sometimes it’s worked well, sometimes not. It is now a legitimate topic to debate and to act upon.”
The federal government was involved in housing long before the dawning of the Age of Aquarius. It follows that HUD’s efforts and achievements have leaned more on the housing side. Many of the department’s programs, including those today, were created to fix prior wrongs.
“There was the Federal Housing Administration, which existed before there was a HUD. Public housing existed before there was a HUD,” Retsinas says. “There were some not-so-great experiences. FHA redlined, and public housing segregated poor black families. When HUD came on board, it took awhile, but it addressed many of those issues.”
There are still strong headwinds in our communities, but HUD has made significant inroads over time, he adds.
The agency has about a $45 billion budget this year, with rental assistance as its biggest program. More than $19 billion of that budget goes to support tenant-based housing choice vouchers, also known as Sec. 8. Another $9.7 billion helps provide project-based rental assistance.
Serving more than 3 million households, including families with children; seniors; and people with disabilities, rental assistance is by far HUD’s biggest program and expenditure.
Funding for the voucher program, which emerged in the 1970s, has been fairly stable in recent years, but it’s not without debate. Some say Sec. 8 rental assistance is too expensive and eats up too much of the HUD budget. Others argue it’s not funded enough, reaching only 25% of eligible households.
“The voucher program is very important,” says Sunia Zaterman, executive director of the Council of Large Public Housing Authorities. “It’s been an important tool. It serves more households than any of the other programs individually. It gives a reach to voucher holders that they hadn’t had in previous programs.”
She adds that the flexible subsidy of project-based vouchers serves as a tool for creating affordable housing that would otherwise be difficult to address, particularly in high-opportunity areas. “Vouchers are also hugely important when combined with the low-income housing tax credit,” Zaterman says. “It is how the housing tax credit program reaches lower-income households.”
Successes and failures
Many think of HUD only as providing housing for the poor, but its reach extends much further, according to Henry Cisneros, HUD secretary during part of the Clinton administration.
“People don’t think of HUD when they think of the cabinet department. Every one of us who has been involved in housing constantly questions why housing is not higher in the national priorities when everybody has to have a home,” says Cisneros, who continues to be involved in real estate as founder and chairman of development firm CityView. “It’s one of those basic American commodities that is essential. Nevertheless, HUD is an important department in many regards. It continues to be a major player in housing for all Americans through FHA and through its involvement with housing policy. Everyone’s home is touched.”
Still, HUD conjures up images of dilapidated, crime-ridden public housing high-rises.
“I think the perception is that public housing has been the biggest failure,” Retsinas says. “I don’t think that’s really fair. In some places, it has been the worst of warehouses for the poor. Terrible conditions. Most of public housing, however, has not been that. Those were the high-rise ‘projects’ that existed in major American cities over time. With HOPE VI coming in the early 1990s, it helped address those issues by getting rid of some of the worst of the public housing and [rebuilding] in a more sustainable way.”
HOPE VI began a new era for public housing authorities, making them proactive and seen as an important affordable housing development entity, adds Zaterman. “It also established a more holistic approach about housing development and operations and management in the context of neighborhoods and improving life outcomes for residents,” she says.
Another success for HUD has been the recent reductions in homelessness. Last fall, the department reported there were 578,424 persons experiencing homelessness on a single night in 2014, an overall 10% reduction, and 25% drop in the unsheltered population, since 2010.
At the same time, it’s been frustrating to see a widening affordable housing gap across the country. It’s like running a race only to have the finish line move farther and farther away.
For extremely low-income households, those earning no more than 30% of the area median income (AMI), the gap between the number of renters and the units they could afford almost doubled from 2003 to 2013. In 2013, excluding inadequate units and those occupied by higher-income households, only 34 affordable housing units were available for every 100 extremely low-income renters, according to Harvard University’s Joint Center for Housing Studies.
For very low-income households, those earning no more than 50% of the AMI, the prognosis was slightly better, with 58 affordable units available for every 100 very low-income renters.
“The greatest HUD failure is the ‘silent’ affordability gap that has been growing since HUD was created as a cabinet-level department,” says Rick Lazio, leader of the Affordable Housing Industry Team at the Jones Walker law firm and former U.S. representative from New York. “The historic culprits are many but include insufficient accountability, an inefficient bureaucracy, inadequate funding, and a lack of innovation. There has been recent improvement in terms of accountability and efficiency, especially at the FHA, but it’s still a cabinet gency that needs a more inspired vision. From a practical financial standpoint, the Sec. 8 accounts, which have successfully housed millions of Americans, are cannibalizing the rest of the HUD budget while only one in four income-eligible households is getting the help.”
Fifty years is no small feat for an agency that many have tried to dissolve. In 2012, presidential candidate Mitt Romney raised the possibility of abolishing HUD, an agency once led by his father. Others have also put the agency in the crosshairs, points out Sheila Crowley, president and CEO of the National Low Income Housing Coalition.
“HUD has survived. That’s not something to take for granted,” she says. “Over the years, many people have felt that it should be dismantled or cannibalized. The ability of the agency to be a voice for, and a place where there’s, an antipoverty agenda in the federal government has been better or worse depending on who the secretary is and who the president is. But there isn’t another agency that has taken that on.
“There are programs operated by Veterans Affairs, the Department of Health and Human Services, and the Department of Labor that are antipoverty programs, but the agency identified with attempting to at least call attention to the issue is HUD. That’s extremely important. On the other hand, HUD has never had the resources to be able to seriously address poverty.”
The next chapter
Much like when the department was founded, it’s a turbulent time now. The nation is still feeling the pains of a disastrous housing crisis, and cities are struggling. Perhaps today’s storms will spark new efforts, new thinking.
“To be relevant, HUD needs to be re-engineered to be more financial in nature: They need more financial expertise and a clearer mission,” Lazio says. “New financial tools that leverage private-sector dollars, reduce the reliance on bureaucracy, and align public and private interests should be the North Star. They also need to redefine themselves more as a department of communities than a place that is only known as providing support for shelter. They must break down the silos that separate housing from health, education, and job training.”
HUD is moving in that direction to address problems in a more holistic way, according to Retsinas.
“It’s not focusing just on shelter,” he says. “There are new initiatives tying into transportation, sustainability, health care. The new HUD builds bridges to other departments, programs, initiatives. It does that not from a top-down point of view, but by encouraging that kind of behavior from the bottom up. That is a good thing.”
The early HUD was in a silo, but it’s breaking through, according to Retsinas. “We just need to do more of it,” he says. “It’s going to be a challenge. There are always budget constraints.”
An example is Choice Neighborhoods, the successor to HOPE VI, which emphasizes a comprehensive approach to neighborhood revitalization. The initiative often involves school districts, police, and other local groups.
Other housing leaders also call for better partnerships, more unified programs, and greater funding for urban revitalization. Maybe the goals aren’t all that different from 50 years ago.
“We’re going to need more workforce housing in the cities. We’re going to need more housing of all kinds,” Cisneros says. “A great city needs a mix of housing types. One of HUD’s priorities ought to be to build America’s cities and economy by assuring the adequate supply and production of housing in its metro areas. [There] ought to be a major recommitment and a reinfusion of energy into those goals.”