The Economic Impact of Public Housing: Ongoing Investment with Wide-Reaching Returns

On January 14, the House Veterans’ Affairs Subcommittee on Economic Opportunity held a hearing to learn about the successes of the HUD-VASH program in reducing veteran homelessness as well as significant challenges that continue to limit the program’s success. In his opening remarks, Subcommittee Chairman Mike Levin (D-CA) noted that since 2010, veteran homelessness has declined nationally by 46 percent and the number of unsheltered veterans has declined by 53 percent. However, success in reducing veteran homelessness and serving veterans through VASH has stagnated more recently. HUD has not requested any new vouchers for VASH in its last two budget requests, and the program is facing serious challenges with low referral rates and finding suitable units for participants in expensive, competitive housing markets.

During the first panel, VA Clinical Operations Director Keith Harris and PIH Assistant Secretary Hunter Kurtz appeared as witnesses. Harris noted that while there has been a 22 percent decrease since 2015 in chronically homeless veterans as a result of VASH, there are currently 14,000 unused VASH vouchers nationally. Harris discussed several strategies the VA is working on to improve referrals and increase the number of case managers, such as increased contracting of services and modernizing its HR procedures to reduce the time required to complete the hiring process. Addressing low utilization, Harris stated that “VA capacity is unquestionably the largest factor contributing to low utilization.” In his testimony, Assistant Secretary Kurtz echoed previous comments on data points demonstrating the success of VASH to date, noting “historic” reductions in veteran homelessness of nearly 50 percent since VASH began in 2010.

During the Q&A period, members probed Harris for more details on the VA’s plan to increase staffing for VA case manager positions, with Chairman Levin noting that 16 percent of current VA case management positions are vacant. In addition to contracting out services and HR modernization, Harris described other staff recruitment and retention efforts such as bonuses and student debt reduction and hiring case managers from related disciplines outside of social work. Some member questions also touched on VASH eligibility and the extent to which expanding program eligibility to veterans with an other than honorable discharge would more effectively end veteran homelessness and increase utilization. Harris noted that an estimated 15 percent of homeless veterans are not eligible for VA services due to their discharge status. On January 13, the House passed HR 2398, co-sponsored by Chairman Levin and supported by the VA, that would expand VASH eligibility.

The second panel of witnesses featured Steve Berg, Vice President for Programs and Policy for the National Alliance to End Homelessness; Kathryn Monet, Chief Executive Officer for the National Coalition for Homeless Veterans; Greg Anglea, Chief Executive Officer for Interfaith Community Services in San Diego; Tamara Kohler, Chief Executive Officer for San Diego’s Regional Task Force on the Homeless; and Gary Cooper, Executive Director of the Housing Authority of the Cherokee Nation. Berg and Monet provided additional examples of the VA’s struggles with providing ongoing case management and housing navigation services, with Cooper detailing specific programmatic struggles within Tribal HUD-VASH. Anglea and Kohler described their experiences with VASH in San Diego. Echoing issues with VASH nationally, they described low referral rates, challenges with landlord participation, and trying to house many homeless veterans in San Diego who are not eligible for VASH.

As described in testimony from each witness, the VA is struggling to fulfill its VASH commitments to provide sufficient staffing, an ongoing problem that has resulted in a number of unused vouchers. The program’s successes in decreasing the number of homeless veterans has also resulted in a remaining population in which many are ineligible for VASH. In addition to finding effective ways to recruit and retain VASH workers, statutory changes that expand VASH eligibility may also help the program to reach a new population in need of housing and supportive services, and further reduce veteran homelessness. CLPHA will continue to work with the VA and other agencies working on veteran homelessness to advocate for changes that will allow PHAs and their local VA partners to most effectively administer their VASH program.

Full witness testimonies and a video of the hearing are available on the Committee’s website.

On January 14, in its first hearing of the year and the 2^nd session of the 116^th Congress, the full House Financial Services Committee under Chairwoman Maxine Waters (D-CA) held a hearing entitled “On the Brink of Homelessness: How the Affordable Housing Crisis and the Gentrification of America Is Leaving Families Vulnerable” with the following witnesses testifying: Karen Chapple, Professor and Chair of the Department of City and Regional Planning, University of California, Berkley; Matthew Desmond, Maurice P. During Professor of Sociology & Director of the Eviction Lab, Princeton University; Priya Jayachandran, President, National Housing Trust; Jeffrey Williams, Tenant Advocate; and, Michael Hendrix, Director of State and Local Policy, Manhattan Institute.

The hearing highlighted and continued to demonstrate Chairwoman Waters’ priorities of affordable housing and the homelessness crisis. As the Chairwoman noted in her opening statement, “We need to do more if we’re going to address the rental housing and homelessness crisis: we need to preserve the affordable housing that we have, and we need to increase investments in programs that develop new housing or provide rental assistance. We know what the solutions are to this problem; we just need the political will and resources.”

Lead-off witness Karen Chapple spoke to the impact gentrification and displacement have on the loss of affordable housing. Chapple noted, “Gentrification means that affluent and high-educated newcomers, usually accompanied by new real estate investment, move into a low-income neighborhood, often a community of color…Displacement may occur not just during or after gentrification, but also before, with gentrification nowhere in sight. Many more low-income neighborhoods are experiencing disinvestment than reinvestment. In these communities, landlords may disinvest in their property and/or displace tenants in order to make way for profitable reinvestment later. Because so many residents have already been displaced, when gentrification finally does arrive, there may be little additional displacement.”

Witness Matthew Desmond identified three main factors causing the affordable housing crisis: stagnant incomes over the last several decades with accompanying loss of jobs that do not pay enough to live on; an alarming rise in housing costs, with rents rising much faster than wages; and, the cumulative impact of years of inadequate federal funding for rental assistance. Citing statistics on the Housing Choice Voucher program, as an example, Desmond testified that, “only  one in six eligible families (16.8 percent) receive housing assistance from the U.S. Department of Housing and Urban Development in the form of public housing, a rent-reducing voucher, or a subsidized multifamily unit…Today, families spend an average of 26 months on waiting lists for rental assistance. In our largest cities, the wait time isn’t counted in years but decades. In October 2018, Los Angeles opened its waiting list for Housing Choice Vouchers for the first time in 13 years. I have two young children. If I applied for public housing today in this city, Washington, D.C., chances are I would be a grandfather by the time my application came up for review.”

Desmond cited his work at Princeton University on evictions, testifying that over sixteen recent years, more than 61 million eviction cases were filed in the U.S. transforming the nation from one where eviction was rare into a nation where losing your home has become commonplace. He also spoke of the toll paid by an eviction. “Eviction causes loss. Children often lose their schools; families lose their homes and neighborhoods; they regularly lose their possessions, too, which are taken by moving companies, piled on the sidewalk, or discarded by property owners. An eviction comes with a legal record, which prevents families from relocating to safe neighborhoods and decent housing because many property owners view such a record as disqualifying. Eviction records also bar families from public housing since Public Housing Authorities count eviction as a mark against their application, systematically denying help to the families who need it the most. This is why research shows that after getting evicted, families relocate to worse housing than they lived in before and to neighborhoods with higher levels of crime and poverty.”

Jayachandran testified to the importance of affordable housing preservation, coupling preservation with increasing the supply of new affordable housing by building new apartments, and the work her organization is doing to spearhead that effort. As Jayachandran noted, “In distressed neighborhoods, preserving affordable housing can catalyze the revitalization of an entire community. Saving decent, affordable housing means protecting a critical community asset. It also signals the reversal of what may have been years of neglect and disinvestments and can spark the public-private investment that is essential for community revitalization. In all communities, preservation protects the billions of taxpayer dollars already invested in affordable rental housing and results in a more environmentally sustainable and efficient use of resources…Without preservation new construction is at risk of only replacing units we lose and squandering scarce resources: preservation costs 30-50 percent less than developing new units. Preservation also frequently can be accomplished more quickly, without the burdens of lengthy regulatory processes and potential NIMBY backlash. We must preserve existing affordable homes and focus our new construction efforts on expanding supply versus backfilling.”

In a quietly powerful, moving, and at times heart-wrenching testimony, Williams, who was employed as a security guard, spoke to his personal journey through the hardships, bitter losses, setbacks, hurt, and feelings of failure as he, his wife and three children were evicted from their rental home. Recounting his experience, where paying their landlord $900 a month in rent was over 50% of their monthly income, Williams said, “Every month, we had to struggle to make that first of the month payment. In our house, the rent eats first. We’d rather go hungry than risk being out on the streets…During this period where my income was going up and down, we sadly fell behind in rent…It was morning time when the knock came on the door. We were getting the kids ready for school. The sheriff’s men were outside. They told us, ‘You gotta get out, get your stuff and get out!’” Williams detailed the experiences he and his family endured for three years along with the stigma, shame and real-life consequences they suffered being classified as “homeless” as they sought to stabilize their lives. Williams and his family finally found a landlord willing to take a chance on them, and two weeks before Christmas 2019 they moved into their new home.

Hendrix testified that “America must allow more housing supply where there is housing demand. Not doing so actively harms low-income and marginalized Americans. State and local governments must lower the regulatory barriers standing in the way of new and more affordable housing. And the federal government can play an important role in informing and incentivizing housing reform…Housing cannot become more affordable without becoming more available…America’s lack of affordable housing has three answers: building more units, subdividing existing units, or subsidizing rents.” Hendrix spoke to existing zoning laws and regulations as contributing to the shortage of affordable housing, saying “communities across America should ease regulations governing land use, full stop…Moreover, housing should not be burdened with unnecessary minimums on lot size or parking or restrictions that have nothing to do with health or safety.” Hendrix concluded his testimony by cautioning, “but whatever we do, we must avoid the temptation to solve a problem rooted in regulations with more regulations. We cannot legislate the laws of supply and demand. But together we can help America’s housing market become both free and fair.”

Today, HUD’s proposed rule on Affirmatively Furthering Fair Housing (AFFH) was published in the Federal Register. The new rule comes after HUD sought comment on amendments to AFFH regulations through its Streamlining and Enhancements Notice in late 2018.

In our comments on the 2018 Streamlining Notice, CLPHA and Reno & Cavanaugh advocated that in a new rule, HUD should implement safe harbors that would provide protection for PHAs making reasonable efforts to affirmatively further fair housing, provide additional resources to PHAs for data collection and other activities required to analyze impediments to fair housing, and incorporate a more nuanced view on fair housing strategies that includes preservation and revitalization efforts.

The new proposed rule contains substantial revisions to the process of documenting, monitoring, and evaluating AFFH compliance. The proposed changes include:

• A new definition of what it means to AFFH;
•  A new compliance process in which jurisdictions would submit at least three goals that it plans to focus on to “advance fair housing choice”;
• A scoring system, using metrics that are yet to be determined, to evaluate AFFH compliance and identify “high-performing” jurisdictions;
• Rewards to those jurisdictions deemed high-performing on AFFH, such as preference points on NOFAs as well as additional program funding from “reallocations of recaptured appropriated funds and other forms of regulatory relief.”

Despite significant proposed changes, HUD has largely ignored comments from CLPHA and other industry groups on ways to create a more reasonable AFFH compliance process and recognize good-faith efforts that PHAs are making to affirmatively further fair housing. Instead, HUD is proposing a new AFFH process that may be just as burdensome and opaque as the 2015 assessment tool. Some of the metrics that HUD is proposing to use in the evaluation scoring system, such as housing prices, are well beyond a PHA’s control while other metrics, such as level of HCV reserves, are far outside the scope of an evaluation of AFFH activities.

CLPHA is also concerned about HUD’s use of a “rewards” system for high-performing jurisdictions that includes NOFA points, program funds, and deregulation opportunities. Such a system would monetize AFFH compliance and allow some PHAs to benefit from AFFH compliance while penalizing others.

Comments are due on March 16. CLPHA and Reno & Cavanaugh will be submitting comments on the proposed rule and CLPHA will announce plans shortly for soliciting member feedback.

Questions about the rule can be addressed to Senior Research & Policy Analyst Emily Warren at [email protected].