The Case for Public Housing

The Case for Public Housing

The market can’t solve the nation’s affordable housing crisis. The gap between costs and incomes is just too large.


Across the United States, from the Rio Grande to northern New England, housing activists, civic leaders, and policy-makers are struggling to produce affordable, below-market housing. In rapidly gentrifying city centers but also in suburbs and rural areas, the challenge is fundamentally the same: to bridge the gap between stagnant wages and the high cost of quality housing.

This quest has spawned a tangle of small-scale programs and partial financing mechanisms, local, state, and federal, each promising its own kind of byzantine, incremental salvation. Tax credits, low-interest loans, land trusts, zoning, and other land-use regulations have all been deployed in the service of lowering the cost of housing for increasingly rent-burdened Americans. Yet amid these myriad offerings, the one remedy capable of providing the quantity and quality of affordable housing we need is not even on the menu: deep cash subsidies for construction and/or operation of buildings.

Decades ago, these kinds of subsidies, provided by the federal, and in a few places state government, gave rise to what was once praised—and is now maligned—as public housing. If we want to solve the problem of the high cost of quality housing today, we will have to embrace this kind of active government engagement again.

To understand the singular importance of government subsidies, it helps to look back at the country’s long history of attempts to solve its various housing crises.

The Birth of Public Housing

Americans have more than a century of experience in the field of affordable housing. Roughly 140 years ago, Alfred Tredway White began work on the country’s first subsidized apartment complex, the Home Buildings, in what is today the heart of Gold Coast Brooklyn: Cobble Hill. A well-to-do Unitarian, White became interested in the housing question when tasked by his minister to investigate the topic. White’s solution, following examples in the United Kingdom, was to wrest control over production and ownership from the speculative market by developing so-called model tenements on a low-profit basis, offering “wage earners” quality apartments at below-market rents.

Half a century later, an entire industry had emerged in New York and other cities, including Washington, Philadelphia, and Chicago, to provide immiserated workers better housing than the market, at lower rents. Nonprofit, subsidized housing as an alternative to tenements was just as important as strong building codes in making cities livable, advocates claimed. Some of the housing, like the Home Buildings, was developed and managed by organizations set up by single benefactors. Other complexes were built by joint-stock companies designed to allow larger numbers of smaller investors to participate. Yet others were owned, and sometimes built, by the tenants themselves on a nonprofit, consumers’ cooperative basis, often with the support of trade unions. Along the way, local and state governments started to support private nonprofit housing with property-tax abatements and long-term low-interest construction loans.

The energy and creativity that went into these efforts generated thousands of units that rented (or, in the case of co-ops, sold) at below market rates. But it was not until public housing emerged out of the desperation of the Great Depression—when activists and politicians like New York City Mayor Fiorello LaGuardia and US Senator Robert Wagner (D-NY) convinced Congress to fund the program, later matched by state and local programs in a handful of places—that the country really began to adequately address the need.

The impact was dramatic, especially in New York, the nation’s largest, densest, and most expensive city, whose leaders aggressively pursued the federal funds and found space on which to build. In 1936, the year before Congress funded a permanent federal public housing program, two million people in the city still lived in tenements erected in the 19th century, before robust building codes. By the 1970s, the city had nearly 180,000 public housing apartments, with another 105,000 deeply subsidized “middle-income” apartments built through a 1955 state program called Mitchell-Lama.

The End of Subsidies

But the public housing program survived less than 40 years (and Mitchell-Lama less than 20); such was hostility to the idea and to the disenfranchised African Americans whom housing subsidies increasingly served. Initially, public housing drew a mixture of families: white and black, poor and working class; many were upwardly mobile. But as mass-suburbanization relieved pressure on city housing markets, those who could afford to do so left. Congress—pressured by builders to fund only housing that would not compete with the private market—forced cities to economize on construction, compounding the problem. The situation was made yet worse by careless management and policies prioritizing tenancy by the most desperate households: an idea that however reasonable on paper, proved disastrous without a rise in support for social services.

By the late 1960s, public housing’s reputation was tarnished. Following the implosion of Pruitt-Igoe, a 18-year-old high-rise complex in St. Louis, and with the support of the “silent majority” of suburban whites, President Nixon put a moratorium on public housing development in 1973.

In the decades since public housing ended, activists and city and county officials in high-need areas coast to coast have worked creatively to fill the gap. In the 1970s and 1980s, cities like New York capitalized on large stocks of housing abandoned by owners or seized in lieu of property taxes, and on the willingness of many tenants to invest sweat equity, to add below-market units with minimal cash subsidies. In the 1980s and 1990s, leaders pressured Congress for new subsidies like the Low-Income Housing Tax Credit, introduced in 1986. Some began to promote consumer-cooperative and other non-speculative models repackaged with fresh-sounding names like “mutual” housing and community land trusts.

As in the earliest days, nonprofits spearheaded much of this activity. In fact, virtually all of the approximately three million units of below-market housing built in the United States since 1973 have been developed by an increasingly professionalized network of private affordable-housing providers. For further evidence of the system’s sophistication, witness the beauty, stability, and popularity (among tenants and prospective tenants), of buildings like Via Verde in the South Bronx, completed in 2012, or any of the dozens of affordable complexes in the Bay Area designed in the past decade by architects like David Baker Architects and Michael Pyatok.

And yet, no matter how good the buildings or how happy the tenants, Americans deserve better. The nonprofit model, while always evolving, has consistently failed to deliver enough housing or housing that is cheap enough, for long enough to help those most in need. Nearly all pre-public affordable housing changed hands decades ago and if it remains affordable, it is only by virtue of city rent regulations. Nearly all of more recent programs to encourage development of affordable housing have come with expiration dates, allowing owners to convert complexes to market-rate after as few as 15 years.

More important, like a lot of affordable housing today, the model tenements of earlier years were unaffordable for all but the best-paid working families. The most important reason for this is that then, as now, the cost of construction—let alone that of urban land—was too high to be offset by eliminating developers’ and landlords’ profits. Even before costly modern furnishings like electric wiring (not to mention kitchen appliances and air conditioners), second bathrooms, and double-glazed windows became standard, nonprofit apartments were simply too expensive for families living on low wages.

At the same time, the system is cumbersome, relying on multiple small actors, each with its own culture and red tape. Moreover, many programs, like the federal tax credits, were set up in ways that disadvantaged high-need areas because funds were distributed on a per capita basis to the states, without regard for variations in income inequality and housing privation.

The largest problem, though, is the oldest: the system cannot not close the cost gap. From Boston to the Bay Area and the South Bronx to Santa Monica, the Second Gilded Age has brought housing costs to near historic highs. In Los Angeles renters now spend a record share of income on housing, nearly 49 percent. In New York City, this situation led Mayor Bill de Blasio to make housing inequality one of his top priorities, while in San Francisco several initiatives designed to cool the housing market appeared on last year’s ballots.

But what can cities really do?

The Zoning Gambit

Unable to redistribute wealth through taxes—because states restrict cities’ ability to tax and because the bulk of American wealth lies beyond city limits—they have come to pursue this goal about the only way they can: by forcing those who can afford new housing, on a building by building basis, to subsidize it for those who cannot.

This idea first appeared in the United States in the 1970s, when a few progressive suburban counties mandated inclusionary zoning, requiring that all developments over a certain size include a certain share of below-market units. New York and other cities began to embrace the approach in the 1980s, offering density bonuses—and thus the lure of extra profits—to developers who included affordable units. Today, a somewhat more robust variation has become a crucial, if highly contentious, piece of Mayor de Blasio’s affordable housing program in New York.

The controversy—and the program itself—would be worth it if it delivered the volume and depth of subsidies cities need. That is, if it were an adequate substitute for true government subsidies. But it does not and it is not. Between the mid-1930s and 1970s, New York City saw an average of approximately 12,500 units of government-subsidized, below-market housing built each year. About 37 percent (180,000) of them were in low-income public housing and the rest (310,000) were in other kinds of low- and middle-income complexes serving families earning a bit more money. In the peak years of the 1950s and 1960s, as many as 20,000 units were built. De Blasio, by contrast, hopes to see 8,000 units a year built. Most will be too expensive for those at the bottom of the market.

But what if, instead of tax credits, mansion taxes, housing trust funds, community land trusts, block grants, legal aid, and anxiety over gentrification—and what if instead of protesting the good intensions of the mayor—we fought for the one system that really works: deep government subsidies?

And what if people in cities suffering from housing inequality all over the country joined forces to begin pushing for this solution together?

For those who worry about the troubled legacy of public housing—racially and economically segregated “towers in the park,” miles from public transportation, shopping, and other basic amenities, beset by crime and poor management—we do not need to begin building anew places like Pruitt-Igoe, with its 33 towers on 57 windswept acres, or the equally neglected Robert Taylor Homes, built in 1962 on Chicago’s South Side.

Public housing could look and feel very different today than in the past. Like in Northern Europe—where between 20 percent and 60 percent of housing in larger cities is still publicly funded, and where there are often no income ceilings and many upwardly mobile families choose to stay in their apartments—money could be channeled directly to nonprofit providers, including the very firms and community development corporations that have been doing such a good job with limited resources since the 1980s. Housing could continue to be small in scale, planned with community input, and beautiful. It could include a mixture of uses, including retail, as appropriate to its area. It could also include a mixture of income levels, enabling complexes to sustain themselves financially while ensuring robust support for future subsidies and hedging against stigmatization.

The key difference would be that we would have a lot more of this nonprofit-developed housing than now, and it would be a lot more affordable. Every neighborhood could see new buildings for households earning anywhere from minimum wage up to at least 100 percent of “area median income” (AMI), the federal index used to establish income ceilings in subsidized housing. In New York City, that’d be $90,600 for a family of four. Additionally, private developers could be offered subsidies—or required to take them—adjusted to a given market. This would enable every building, no matter how expensive the neighborhood to include below-market units at no cost to the builder—or to their market-rate tenants, and all without the lure of density bonuses.

To realize this vision, activists and grassroots groups need to put considerable pressure on federal and state lawmakers to suspend, after more than four decades, the moratorium on deep housing subsidies. More important, we as a nation must let go of the mistaken idea that housing subsidies ought to be for the poor only, or that accepting a housing subsidy represents a moral failure. Tens of millions of Americans, mostly middle class and well to do, take about $270 billion a year in tax breaks offered to homeowners in part to offset the cost of mortgage interest and property taxes: more than four times what we spend on subsidies for below-market housing. Meanwhile, in virtually every other rich country it is well understood that housing subsidies are essential to the wellbeing of cities. In a city without quality housing for working and middle-income families, and where people regularly spend 50 percent or 60 percent of their income on rent, we are all impoverished. The United States is no exception.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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