John Edwards for President-Radically Overhauling HUD

Radically Overhauling HUD

Decent, safe, and affordable housing near jobs and good schools is key to economic opportunity, but housing is barely on the national agenda. Programs run by the Department of Housing and Urban Development (HUD) concentrate low-income families far from jobs and schools, and HUD has become a symbol of bureaucracy and mismanagement. It:

Isolates Low-Income Workers. Two-thirds of poor renters live in central cities, far from suburban low-skilled jobs in retail, manufacturing, and wholesale trade. Seventy percent of new jobs are in the suburbs as we shift to the “exit ramp economy,” but urban workers cannot fill them due to a shortage of affordable housing in the suburbs and inadequate public transportation. [Katz, 2004; Kirwan Institute, 2004]
Creates Concentrated Poverty. Over 75 percent of site-based affordable housing units are in central cities, and too many of these urban housing projects have become centers of violent crime and drug use. In 2005, more than 8 million Americans lived in neighborhoods of concentrated poverty, sometimes racially segregated. Concentrating poor people into particular areas undermines every other effort to help the poor. In particular, children in high-poverty schools are far more likely to struggle. [Katz, 2004; Kirwan Institute, 2004]
Allows Bureaucracy and Cronyism. HUD makes more than $1.25 billion a year in improper rental assistance payments and allowed its staff to make more than $10 million in questionable credit purchases in 2001, including computers and department store goods. Now, HUD Secretary Alphonso Jackson is under investigation for claims – since retracted -- that he denied a government contract because of statements opposing President Bush politically. [HUD, 2006; GAO, 2003 and 2005; NYT, 5/11/2006; AP, 5/13/2006]

The Edwards Plan

Just as a new economic and welfare policies helped millions of families achieve independence in the 1990s, a new era at HUD can be an engine of economic change today. Good housing policy can be good anti-poverty policy. Edwards would radically reform HUD, investing more resources while demanding reforms to (1) help low-income Americans escape concentrated poverty to live near good jobs and schools, (2) cut needless HUD bureaucracy to free up resources for families, and (3) require responsibility from recipients of new vouchers.

Promote Housing with Opportunity, Not Economic Isolation

More Housing Vouchers Where They Are Needed Most. Housing vouchers allows families to choose to live near good schools and jobs. Voucher recipients are only one-seventh as likely as public housing residents to live in a high-poverty neighborhood. However, the number of vouchers in inadequate, and families wait over two years on average. At the same time, some vouchers are wasted while there are available units in the suburbs. Edwards proposed 1 million new housing vouchers over five years, targeted to areas that are growing quickly and creating jobs. [CBPP, 2003 and 2005; HUD, 1998]
Get HUD Out of the Business of Housing Projects. Edwards recommended ending existing public housing that ties families to certain locations. Projects are immune from market forces, and they are often worse and more expensive than vouchers. Instead, HUD should give families a housing voucher, which they could use to either stay or move. Housing projects would get a one-time grant to improve their facilities and then compete for tenants. A small number of public buildings could be preserved if necessary to preserve the supply of affordable housing. [GAO, 1997; GAO, 2002; Schnare and Newman, 1997]
Expand and Reform HOPE VI to Revitalize Devastated Neighborhoods. The successful HOPE VI initiative replaced dilapidated housing in areas of concentrated poverty, leading the revitalization of dozens of inner city neighborhoods. Crime rates and unemployment have fallen. Edwards supports restoring HOPE VI from $99 million a year to its previous level of $500 million a year, while reforming the program to hold down costs and ensuring that existing residents benefit from any investments. It is better to invest in these neighborhoods than abandon them. [Housing Research Foundation, 2003; Brookings, 2005]
Require States and Cities to Promote Affordable Housing Near Good Jobs and Schools: Too much affordable housing is built in the wrong places, far from jobs and schools and without good transportation options. Federal subsidies should support housing connected to opportunity. Edwards suggested conditioning federal housing and transportation funds on state and local efforts to create effective transportation policies and reform zoning and housing regulations to allow economic integration.

Promote Regional Decision-Making and Cut the Federal Bureaucracy

Promote Regional Decision-Making. The federal voucher system is administered by thousands of local housing authorities, including more than 30 in the Detroit metropolitan area alone. These bureaucracies overlap with state and federal offices. Jurisdictional lines are not aligned with the realities of housing markets, which are usually whole metropolitan areas, making it difficult for tenants to discover their housing options. Edwards believes that housing policy should be set primarily on a metropolitan basis to better promote economically integrated housing. Regional authorities can develop expertise on leveraging financing, attracting more landlords whose holdings cross current bureaucratic boundaries, opening up new opportunities in hot neighborhoods that currently lack affordable housing, and better recognizing problems in the market like clustering and discrimination.
Cut HUD by at Least 1,500 Employees. With more authority transferred to states, HUD could be more effective as a leaner organization focused on overseeing states and providing expertise and support. He suggested reducing HUD’s reliance on contractors, which cost taxpayers more than $1 billion a year and have been incompetent and even fraudulent at times. He would also reduce its total number of employees by at least 1,500, through buybacks, attrition, and retirements, while also hiring new workers consistent with its new mission of helping regional experts achieve mixed income housing near good schools and jobs. Savings should be put toward expanding housing opportunities for families. [HUD, 2006; GAO, 2003]

Encourage Work:

Dedicate New Vouchers to Responsible Families. Edwards suggested dedicating the 1 million new vouchers over the next five years to working families, as well as the elderly and individuals with disabilities. Working families would be required to sign a contract and work at a steady job, unless prevented by circumstances outside their control. In return for working hard, they would receive help saving money, increasing their earnings, and moving toward independence. A similar program currently enrolls 75,000 families and has been proven successful at raising wages and helping families save. [CBPP, 2004; HUD, 2006; New America Foundation, 2006]