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A Brief Historical Overview of Affordable Rental Housing

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A Brief Historical Overview of Affordable Rental Housing A Brief Historical Overview of Affordable Rental Housing ffordable housing is a broad and complex to improve urban infrastructure subject intertwined with many disciplines: and to clear “blight.” This often meant wholesale finance, economics, politics, and social destruction of neighborhoods and housing, albeit services,A to name a few. In spite of the complexity, often low-quality housing, lived in by immigrants advocates may come to an understanding of the and people of color. essential workings of affordable housing, and, in In 1965, Congress elevated housing to a cabinet- doing so, be prepared to advocate effectively for level agency of the federal government, creating the programs and policies that can ensure access to HUD, which succeeded the Housing and Home decent, affordable housing for the people in need in Finance Agency, which succeeded the National their communities. Housing Agency. This article provides a broad, though not HUD is not the only federal agency to have begun exhaustive, overview of the history of affordable housing programs in response to the problems rental housing programs in the United States, and of the Great Depression. The U.S. Department attempts to paint a picture of how those programs of Agriculture (USDA) sought to address the work together to meet the housing needs of low poor housing conditions of farmers and other income people. rural people through the 1935 creation of the Resettlement Administration, predecessor to HISTORY USDA’s Rural Development. USDA’s rural rental and As with any federal program, federal housing homeownership programs improved both housing programs grew and changed based on the access and housing quality for the rural poor. economic, social, cultural, and political circumstances of the times. The programs and The cost of operating public housing soon eclipsed agencies that led to the federal department now the revenue brought in from resident rents. This known as HUD began in the early 1930s with reality is endemic to any program that seeks to construction and finance programs meant to provide housing or other goods or services to alleviate some of the housing hardships caused by people whose incomes are not great enough to the Great Depression. An act of Congress in 1934 afford the prices offered in the marketplace. In the created the Federal Housing Administration, which 1960s, HUD began providing subsidies to public made home ownership affordable for a broader housing agencies (PHAs) that would help make segment of the public with the establishment of up the difference between revenue from rents and mortgage insurance programs. These programs the cost of adequately maintaining the housing. In made possible the low down payments and long- 1969, Congress passed the “Brooke Amendment,” term mortgages that are commonplace today but codifying a limitation on the percentage of income were almost unheard of at that time. a public housing resident could be expected to pay for rent. The original figure was 25% of income, In 1937, the U.S. Housing Act sought to address which was later raised to the 30% standard that the housing needs of low income people through exists today. Advocates often refer to these as public housing. The nation’s housing stock at this “Brooke rents,” for Senator Edward W. Brooke III time was of very poor quality in many parts of the (R-MA), for whom the amendment is named. country. Inadequate housing conditions such as the lack of hot running water or dilapidation was Beginning in the late 1950s and continuing commonplace for poor families. Public housing into the 1960s, Congress created a number of was a significant improvement for those who had programs that leveraged private investment to access to it. At the same time, the post-World War create new affordable rental housing. In general, II migration from urban areas to the suburbs meant these programs provided low interest rates or other declining cities. Federal programs were developed subsidies to private owners who would purchase NATIONAL LOW INCOME HOUSING COALITION 1–7 or rehabilitate housing to be rented at affordable The Department of the Treasury’s Internal Revenue rates. The growth in these private ownership Service was given a role in affordable housing programs resulted in a boom in affordable housing development in the Tax Reform Act of 1986 with construction through the 1970s. However, once the creation of the Low Income Housing Tax Credit, the contracts forged by HUD and private owners which provides tax credits to those investing in expired, or owners decided to pay their subsidized the development of affordable rental housing. mortgages early, those affordable units could be lost That same act codified the use of private activity from the stock. bonds for housing finance, authorizing the use of The Civil Rights Acts of 1964 and 1968 included such bonds for the development of housing for housing provisions that were intended to prevent homeownership, as well as the development of discrimination against members of protected classes multifamily rental housing. in private or public housing. Different presidential The Cranston-Gonzales National Affordable administrations have prioritized these fair housing Housing Act of 1990 (NAHA) created the provisions to varying extents, but their existence Comprehensive Affordable Housing Strategy has provided leverage to advocates seeking to (CHAS), which obligated jurisdictions to prioritize expand access to affordable, decent housing, housing needs to better determine how to allocate particularly for people of color. the various block grants (such as CDBG) that In January 1973, President Richard Nixon created they receive. CHAS is the statutory underpinning a moratorium on the construction of new rental of the current Consolidated Plan obligation. and homeownership housing by the major HUD Cranston-Gonzales also created the HOME programs. The following year, the Housing and program, which provides block grants to state Community Development Act of 1974 made and local governments for housing. In addition, significant changes to housing programs, marked NAHA created the Section 811 program, which has by a focus on block grants and an increase in provided production and operating subsidies to the authority granted to local jurisdictions (often nonprofits for housing persons with disabilities. referred to as “devolution of authority”). This act Beyond changes to the structure of many federal was the origin of the tenant- and project-based housing programs, no significant investment in new Section 8 rental assistance programs, and it created housing affordable to the lowest income people the Community Development Block Grant (CDBG) has been made in more than 30 years, and a great from seven existing housing and infrastructure shortage of housing affordable to that population programs. still exists. Since the creation of the Section 8 Structural changes in the American economy, programs in the early 1970s, no new federal deinstitutionalization of persons with mental program has the deep income targeting necessary to illness, and a decline in housing and other support meet the needs of people with the greatest housing for low income people resulted in the dramatic affordability burdens. As studies from NLIHC increase in homelessness in the 1980s. The shock of show, the federal investment in housing has not visible homelessness spurred Congressional action, increased at pace with the overall increase in the and the McKinney Act of 1987 (later renamed federal budget, and expenditures on housing go the McKinney-Vento Act) created new housing overwhelmingly to homeownership, not to rental and social service programs within HUD specially housing for people with the greatest need. designed to address homelessness. Housing advocates have worked for more than a Waves of private affordable housing owners decade for the establishment and funding of the deciding to “opt out” of the project-based Section 8 National Housing Trust Fund (NHTF), which will, program occurred in the 1980s and 1990s. Housing once funded, build, preserve, rehabilitate, and advocates – including PHAs, nonprofit affordable operate housing affordable to extremely low income housing developers, local government officials, people. NHTF was signed into law by President nonprofit advocacy organizations and low income George W. Bush in 2008 as a part of the Housing renters – organized to preserve this disappearing and Economic Recovery Act, but the original source stock of affordable housing using whatever funding of funding was suspended and the program is not and financing was available to them. yet in operation. In December 2014, the Federal 1–8 2015 ADVOCATES’ GUIDE Housing Finance Agency lifted the suspension so affordable housing development a complicated task. that money can flow to the NHTF. Affordable housing developers, including PHAs redeveloping their housing stock, must combine STATE AND LOCAL HOUSING multiple sources of funding in order to finance PROGRAMS housing development or preservation. These State and local governments play a role in meeting funding sources can be of federal, state or local the housing needs of their residents. The devolution origin, and can also include private lending and of authority to local governments, which began grants or donations. Some developers include in the 1970s, meant that local jurisdictions had market-rate housing options within a development greater responsibility for planning and carrying out in order to generate revenue that
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