Crisis On the Homefront

What once was a federal problem best understood by the American public in the context of housing the homeless, improving dilapidated public housing and the long-term costs of housing subsidies for low-income families has become an issue with Main-Street implications. Nurses, teachers and retail salespersons are finding it increasingly difficult in many parts of the US to find housing. Businesses are rethinking plans relocation plans based on the availability of housing for their workers, and American families are commuting greater distances to work simply to find decent affordable housing. "Drive till you qualify" is now a more common expression heard in many more areas of the country.

In light of the growing need for affordable housing among a larger and more economically diverse population of working families, what is the direction and possible outcome of this year's housing debate in Washington? Should we expect more of the same from Washington this year or can we hope for a more concerted effort to address what, by most measures, is a housing problem of near-crisis proportions?

While the jury is still out, and anything can happen between now and the end of the year, it is a safe bet that very little will change. Most of the efforts of housing-interest groups and advocates will be directed for the balance of the year at preserving what few resources we now have to work with. If there is a bright spot on the horizon in terms of resources and initiatives to meet the current demand for more affordable housing, it would be in the effort to increase affordable homeownership opportunities. Housing groups including NHC that have advocated on behalf of the passage of a new homeownership tax credit are optimistic that authorizing legislation may be enacted before year's end. As proposed, developers and investors who construct or rehabilitate housing for low- and moderate-income families would receive a substantial tax credit worth up to 50% of the cost of development. But, even here it is necessary that this new initiative not undermine the existing rental-housing credit. In addition, the Administration's so-called American Dream down payment-assistance initiative may be funded this year as well. The initiative, as proposed, would provide upward of $200 million in grants to help homebuyers with down payment and closing costs that are considered to be the greatest obstacles to homeownership. There is considerable tension, however, over whether this will be new money or simply a carve-out from the politically popular HOME program.

With respect to rental housing, the picture is far less encouraging. First, efforts to authorize a new rental-housing-production program, an idea strongly encouraged by the congressionally mandated Millennial Housing Commission and others, will not come to pass in this session of Congress. There simply is no consensus on the terms and conditions of such a program and no resources to fund it without major cuts elsewhere in the housing budget. Similarly, debate over the creation of a national housing trust fund remains stalled, and at this writing it does not appear that legislation to create a national fund similar in concept to a growing number of state funds will move this year. While there is ongoing bipartisan support for the creation of a trust fund, concerns persist over the source or sources of funding. What is under discussion is the Administration's proposal to block grant Section 8 rental assistance funding to the states. The debate over this proposal has been and will likely remain contentious. Some believe that the so-called HANF proposal may represent the first in a series of steps that will be the undoing of the Section 8 program as we know it. Others point out that it could erode the federal government's role and commitment to meeting the housing needs of low-income people.

There are other housing issues that will go largely unnoticed by the masses but nevertheless will be matters of importance to the housing community. Once such issue involves future funding for the so-called HOPE VI program, which in recent years has encouraged the elimination of blighted public housing in favor of more economically mixed housing communities. Critics have argued that the program has run its course and slow spend-out rates on previously approved HOPE VI developments have created a backlog of unspent federal dollars (which is never a good thing when appropriations for other favored initiatives are in short supply). To date, public housing authorities have been making progress to reposition themselves and so too their inventory. More PHAs have adopted aggressive, market-driven approaches to meeting local housing needs and are finding ways to meet the needs of a larger more economically diverse population. Eliminating or reducing the HOPE VI program will not be without longer term consequences, one of which will be that this important and progressive transformation process will be significantly impeded.

At this point, to suggest that the sky is falling is at best premature. In fact, in the face of mounting deficits and continuing budget pressure, our ability to hold off further cuts in federal spending for housing would be in and of itself a victory. But housing advocates have, for far too long, been forced to declare victory simply by adding a dollar here and saving a dollar there. In the larger scheme of things, victory should be defined by our collective ability as a nation to provide the resources and tools necessary to meet the current unmet demand for decent affordable housing. By that measure, understanding that state and local dollars for housing are in short supply and given the questionable direction of negotiations to secure new housing resources here in Washington, we will fall well short of meeting that objective this year.

Conrad Eganis the president and CEO of the Washinton, DC-based National Housing Conference. Prior to being appointed to that position, he served for five years as NHC's director of policy.