Henry Cisneros has traveled the roads of politics and housing.
He’s been the mayor of San Antonio and the nation’s top housing official as President Clinton’s secretary of the Department of Housing and Urban Development. He is also the founder and chairman of CityView, an investment firm focused on urban real estate.
With firm footing in both policy and development, Cisneros recently served as co-chair of the Bipartisan Policy Center’s Housing Commission. In its new report, the Commission sounds a call to establish a new system of housing finance and expand the low-income housing tax credit (LIHTC) program.
What makes the Bipartisan Housing Commission different from other housing committees and groups that have assembled over the years?
At the beginning, the group thought it was charged with designing an overall framework for what housing should look like after the downturn. That proved to be a task that’s too amorphous, too large, so the commission took a different tact. It said we are going to address three or four tent-pole issues, big undecided questions, and take a stand on those and then the system will shape itself in due course. One was the makeup of the system of housing finance that replaces Fannie Mae and Freddie Mac. There’s a broad consensus that they will not exist and what needs to replace them. Second, how do we rebalance for the immense need for rental housing away from our present predominant focus on ownership toward something that resembles more of a balance and responds to the needs of the country, including workforce housing and affordable housing. Third, what can we say about the response of the housing industry to demographic challenges, principally the growth of immigrants who will be the next middle class if they can get decent housing and use that as a platform for building their future and the tsunami of aging and what that means in terms of the housing stock. There were others, but those were three big take-our-stand issues that say the system needs to look different after this. I think it was the right thing to do.
How optimistic are you that the recommendations of the Bipartisan Commission will be implemented?
I am very optimistic because they are so powerful. The issue of the demographics is clear. Since the end of World War II, one of the major factors in creating the middle class that has served the country so well has been access to decent housing, particularly homeownership. We’ve got to be thinking about how we use housing counseling strategies, affordable housing, and rental housing as a platform toward homeownership and every mechanical device that we can think of to help people access decent housing.
There are millions of people who will be moving beyond the 65 range and into their 80s. We need to be attentive there as well. Today, we have about 40 million people in the country over 65 years. It is estimated that by 2040 that number will be about 80 million. It will double. We have about 6 million who are over 85 today. In that same timeframe, that number will go to 20 million. It will triple. Most of those people will not live most of their lives in nursing homes or institutional care, and they shouldn’t. They don’t want to. It’s too expensive. It’s not the best way to house people. Many will want to stay in their own homes, but that doesn’t mean they can care for the house that they raised their children in. We have to find more stock of housing that is age appropriate, properly scaled, properly priced, properly located. We also have to retrofit the existing housing stock so it is age appropriate by doing things like removing stairs, adding ramps, and lowering bathroom fixtures.
All of these are challenging. Absolutely, the country is going to have to deal with these issues one way or the other. We are either going to deal with them intentionally and with policy, fairness, and support, or people are going to be on their own to do what they can.
The Commission covered much ground, including housing finance reform, homeownership, and rental housing. What topic had the most debate?
One involved the nature of housing finance and the Commission’s final stand that we had to reduce the government’s role in housing finance because the exposure of the taxpayers was too great. We needed to create a system that had more private capital but kept the government in as a backstop so in times of recession we can keep the housing system functioning. That was controversial because on the left there are people who want government more involved and on the right there are people who don’t want government involved at all. That was a hard balance to strike. I think we did it fairly well. The best evidence that I can give you is that most of the models being discussed now have some resemblance to this framework and principles.
The other one that was equally hard was finding the right language to say that we have invested immensely in homeownership, not just in government programs but also through tax expenditures, and that it dwarfs what we do on the rental side where the need is greater in terms of people who need housing acutely. We have to strike a better balance. We found some very delicate language that in effect says when tax reform occurs and when all tax expenditures are on the table, including the home mortgage interest deduction, we believe the savings ought to stay in housing and that we need some balance in the attention to affordable rentals.
What was the Commission’s thinking on the recommendation to increase the annual LIHTC allocation by 50 percent?
The Commission believes that the most successful, effective way to deliver governmental support for low-income housing has been the LIHTC program because it inspires competitive designs. It sets the bar high in terms of the quality of sites and locations. It draws private-sector techniques from design to management. It draws private-sector investment. It has rational ways to select what is the best. There are many aspects that are different from a more centralized, governmentally driven model that make it a very effective mechanism for providing affordable housing.
Is this just pie in the sky? Do you see any chance of an increase?
I’m hopeful that in the tax reform debate, which I believe is ahead, that it will be recognized that not all tax credits are equal. Some have worked better than others. There are some fundamental core American issues like access to decent housing. They are so core, so essential, that every other model of how we create social progress is a decent place to lay your head down when the sun goes down at night, where your children can be safe. I hope that people will recognize this is not one that we can lose. In fact, as we do lose programs and funding declines as inevitably will happen during this era of sequestration and debt reduction, the way to get more bang for the buck is to boost LIHTCs.
Is there a recommendation in the report that you personally feel very strongly about but has been perhaps overshadowed by some larger, far-reaching proposals that were made?
That’s like asking which of your children you like best, an exercise that I assiduously avoid. I’ve tried to play a role in bringing people together. I didn’t play favorites on any recommendations. But, if you’re asking me at the end of the day what is said that hasn’t been said before, it is this idea of looking at the demographic changes in America, recognizing we are changing as a country, that demography is destiny. How are we going to create the base conditions, the minimum conditions, the positive conditions in which families can prosper given the new demographics of immigrants and elderly people needing assistance? That’s a powerful logic: That we ought to build for who we are, the new America, and prepare the housing stock for the future.