• A new public housing model is gaining steam among Democratic lawmakers across the United States.

• AOC is behind a new bill to create a federal public housing developer.

• Housing experts support local experiments but are skeptical that a federal approach would work.

Skyrocketing rents and home prices across the country have made housing one of the most pressing issues facing voters this election.

About half of tenants They spend 30 percent of their income on housingduring homeowners They face rising insurance premiums, home repair costs and property taxes. It also provides state housing aid to the neediest people. recently reached a quarter-century low.

Vice President Kamala Harris focused on the issue: promise He will build 3 million new homes in his first term, send $25,000 down payment assistance to first-time homebuyers and spend billions of dollars on housing innovation. But some progressive lawmakers in Washington want to go much further.

Two Democrats — Rep. Alexandria Ocasio-Cortez and Sen. Tina Smith of Minnesota — in September. Introduced a bill called the HOMES Act this would create a federal housing development authority tasked with building and rehabilitating more than one million permanently affordable homes. The housing would be owned and operated by local governments, nonprofit organizations, or some form of cooperative, and rent would be capped at a percentage of income. The legislation aims to solve the fundamental problem plaguing home buyers and renters: a shortage of affordable homes.

“There’s been a lot of talk about building new housing in this country, but often we don’t talk about who’s going to build that new housing,” Ocasio-Cortez said. he said. last month. A spokesperson for Ocasio-Cortez had no comment prior to this story’s publication.

The new developments will be called “social housing”; This means it exists outside of the for-profit market, caps rent at a certain percentage of income, and is owned by the government, a nonprofit organization, or some type of cooperative.

Unlike traditional American public housing, which is generally reserved for low-income families, public housing is intended to be mixed-income. Under the HOMES Act, 70% of the units in a given development will be reserved for low- and extremely low-income people, while 30% of the homes will be reserved for people making up the area’s median income.

But some pro-housing policy experts who belong to the YIMBY, or Yes in My Backyard, movement are skeptical that a federal public housing authority makes sense. They primarily want to see more experimentation at the local level, and they don’t think many state governments, let alone the federal government, have the resources or know-how to do the work of developers and real estate companies.

Local and state governments are experimenting with social housing

A trip to Austria in 2022 changed New York State Assemblywoman Emily Gallagher’s perspective on housing.

Gallagher, a Democrat who represents gentrifying neighborhoods in North Brooklyn, was impressed by the stability created by public housing in Vienna. Residents “weren’t worried about their rent going up. They weren’t worried about displacement and things that preoccupy New Yorkers,” he said.

So earlier this year, he introduced legislation to create a new state housing authority tasked with building permanently affordable housing for both very low-income and middle-income New Yorkers.

Progressive policymakers across the country, including in Rhode Island and Atlanta, are also exploring the model. California passed a bill last year to examine this concept. Montgomery County, Maryland’s affluent D.C. suburb, has already built itself social housing.

In Reno, Nevada, Mayor Hillary Schieve, who is prioritizing housing in a state facing a severe housing shortage, argued that the success of the social housing effort will likely depend on the quality of the local housing authority and the partners it works with. “This concerns me because we are not developers,” he said. “You need to have very knowledgeable people at the table.”

While “high-capacity, wealthy local governments with political will” can make it happen, “many other areas lack the resources or know-how,” said Jenny Schuetz, an expert on urban economics and housing policy at the Brookings Institution.

“The reality is that many states and authorities are not going to be interested in building housing,” said Shane Phillips, a housing researcher at UCLA’s Lewis Center for Regional Policy Studies.

Unlike traditional public housing, which relies on fickle federal lawmakers to provide funding for maintenance and operations, the public housing proposed by U.S. lawmakers would be financed in part by marketing bonds and operated by a range of local organizations, including nonprofits and tenant unions.

Schuetz worries that co-ops and tenant unions may not be able to take advantage of the types of capital that real estate companies have access to and that are necessary to continue investing in buildings. Local housing authorities also have limited budgets. “The challenge is always where are you going to find the money 10 years from now, 15 years from now, when you have real capital expenditures?” he said.

Tough politics in Washington

Federally funded public housing has a flawed history. Government between the 1930s and 1960s reinforced racial discrimination by concentrating public housing in poor Black and brown neighborhoods even as we build highways tearing apart the same communities. The lack of continued congressional funding caused the housing to deteriorate over time and many were demolished.

Over the past several decades, the United States has moved away from the publicly built and owned housing model and embraced federal subsidies for privately built below-market-rate development, supported by the Low-Income Housing Tax Credit.

Under the House Bill, the U.S. Department of Housing and Urban Development would be required to work with states and cities to take on the role of developer. Schuetz argued that the federal government would have to outsource much of the work to local governments and developers, and that a national approach would be quite similar to the Low Income Tax Credit development model.

“Can HUD even hire a team of people who know how to work through land development, entitlement, and construction processes in areas across the country?” Schuetz said. “There’s a reason we moved from public housing to LIHTC.”

Congress likely will not support the federal public housing authority until there is evidence of its success at the state level.

Once states create their programs, “it’s much easier to look back and say, ‘OK, we need a national coordinating body to manage this,'” said one national affordable housing expert who requested anonymity to protect his contacts in Congress.

Schuetz would also like to see HUD invest in a series of local pilot programs to try different versions of public housing, evaluate them, and then help scale which model is most successful. “This won’t make as many headlines and isn’t as sexy as the public housing program, but it will actually be much more effective and more likely to pass Congress,” he said.

Read the original article Business Content