A Study on Public Housing and Housing Voucher Program in the US 63
Abstract
In the U.S., mass construction of public housing for low income families was stopped in
1973 and housing policy has been mainly transformed to the housing voucher policy. The distressed conditions of many public housing sites left a negative image of general public housing. Voucher’s flexibility in choosing houses by low-income families is a big merit which public housing rarely has. The voucher program’s positive impact on neighborhoods is generally greater than that of public housing. Despite these facts, public housing is still a valid housing policy and it is necessary to reform the program to make it more effective and compatible to housing policy’s goals. Public housing mainly contributed to increase in affordability for housing of low-income families and quality housing supply.
Korea can learn a lot from the U.S. experiences in housing policies and programs. First, it is necessary to assess the impact of excessive concentration of low-income families as a result of massive public housing construction. It is necessary to develop smaller public housing sites which are naturally mixed with existing neighborhoods. Second, developing various housing programs and establishing congruence among existing housing programs are needed. Korean housing policy for low-income people is much inclined to providing public rental housing. But it is not sufficient to respond to various different situations of policy demands. Housing voucher, homeownership program must be developed to fit Korea’s situation. And it is also important to establish congruence among these several programs. Third, supporting formation of wealth and enhancing self-sufficiency program must be deeply considered.
Recently, the price of decent housing of middle and upper classes is rapidly raised and the gap between the wealth and the poor is widened now. To make the gap a little closer, supporting formation of wealth and enhancing self-sufficiency policy is needed. 64 HOUSING AND COMMUNITY DEVELOPMENT
I. Introduction
In the U.S., mass construction of public housings for low income families are stopped in
1973 and housing policy is mainly transferred to the housing vouchers program (section 8).
Among existing public housings, severely distressed things are being phased out in some cities and replaced to decent housings in other cities. The transformation of housing policy is mainly a result of severe side effects of public housing such as increased crimes in deteriorated public housing sites, excessive concentration of low income families, low neighborhoods quality, and so on.
In Korea, about 330 thousands of public housing for very low income families exist now, and our government is ambitiously carrying out the policy of mass construction of public housing which is planned to construct 1 million public rental housings for low income families in 10 years (from 2003 to 2012).
Severe problems of public housings which the U.S. had experienced in the past are not reported well in Korea. But as a result of our country’s public housing massive construction policy, excessive concentration of low income families is unavoidable and other incidental problems may happen on the road of carrying out and after the completion of these projects.
By investigating the U.S.’s experiences in housing policies for low income families, the study intends to get some suggestions, implications, and ideas to improve our country’s housing policy.
To achieve the purpose, the study will focus on comparison between direct supply of public housing and the housing voucher program.
II. Goals of Affordable Housing Policy for Low Income Families
To assess housing policy, some studies and debates on goals of housing policy have been done (DiPasquale and Keyes 1990, Husock 1997, Newman and Schnare 1988, 1992 and 1993)1.
1 Newman and Schnare, “…And a Suitable Living Environment”: The Failure of Housing Programs to deliver on A Study on Public Housing and Housing Voucher Program in the US 65
The goal of housing policy described by 1949 Housing Act as “suitable living environment” can be interpreted as dual goal of “decent housing and suitable neighborhoods” and this is still in effect (Newman and Schnare, 1997).
A recent Katz and others’ paper2 describes the goals of affordable housing policy very well.
In the paper, affordable housing mainly indicates rental housing or home ownership for low income families. According to the paper, the ultimate goal of an effective affordable housing policy should be ‘housing that supports and promotes healthy families and communities’, and this overarching goal involves following seven more specific policy objectives.
• Preserve and expand the supply of good-quality housing units.
• Make housing more affordable and more readily available.
• Promote racial economic diversity in residential neighborhoods.
• Help households build wealth.
• Strengthen families.
• Link housing with essential supportive services.
• Promote balanced metropolitan growth.
To express housing policy’s goal, Katz et al. and Newman & Schnare use different descriptions. But they say same things. ‘Healthy families’ and ‘decent housing’ involve same meaning, and ‘healthy community’ and ‘suitable neighborhood’ also deliver same intention. In conclusion, we can say that housing policy have dual goals one of which is supporting healthy and sound family and decent living space (housing) and other one is supporting healthy and sound neighborhood and community.
III. Public Housing and Housing Voucher Program
Neighborhood Quality”, Housing Policy Debate, Volume 8, Issue 4, Fannie Mae Foundation 1997. 2 Bruce Katz, Margery Austin Turner, Karen Destorel Brown, Mary Cunningham, Noah Sawyer. Rethinking Local Affordable Housing Strategies: Lessons from 70 Years of Policy and Practice., The Brookings Institution & The Urban Institute, 2003. p3. 66 HOUSING AND COMMUNITY DEVELOPMENT
Public housing is assisted under the provision of the U.S. Housing Act of 1937 or under a state program having the same general purposes as the federal program. Public housing provides decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities. The size and type of public housing varies from scattered single-family houses to high-rise apartments for elderly individuals. The U.S. Department of Housing and Urban
Development (HUD) administers federal aid to local public housing authorities (PHAs) that manage the housing for low-income residents at rents they can afford. Public housing is limited to low-income families and individuals. There are approximately 1.3 million households living in public housing units, managed by some 3,300 PHAs3.
The main program of housing voucher in U.S. is the section 8 program. The section 8 program is funded by the U.S. Department of Housing and Urban Development (HUD) as a rent- subsidy program that supplements what very low-income families and individuals can afford to pay for housing in the private market through the use of housing vouchers. Housing vouchers allow very low-income families to choose and then lease or purchase safe, decent, and affordable rental housing in the private market. Because housing assistance is usually provided on behalf of the family or individual, participants are most often able to find their own housing, including single-family homes, town houses, and apartments. There are several types of vouchers, and they are administered locally by public housing agencies (PHAs) using federal funds from HUD4.
IV. Literature Review on Public Housing and Housing Voucher Program
There are many debates and studies about public housing and housing voucher’s strength and weakness. In some cases public housing program is severely criticized and voucher program is deeply advocated. In other cases more neutral analysis is being done. Among many debates and
3 http://www.knowledgeplex.org/topic.html?c=239 4 http://www.knowledgeplex.org/topic.html?c=271 A Study on Public Housing and Housing Voucher Program in the US 67 studies some important debates are described below.
A. Katz and Others’ Study5
Katz and his colleagues analyzed very well public housing and vouchers’ correspondence to housing policy goal as summarized in Table 1. According to his analysis, public housing (supply- side production) is mainly contributed to expand good-quality affordable housing units for low income families, and to make housing more affordable and readily available. But it is rarely contributed to promote neighborhoods diversity and promote balanced metropolitan growth, and generally not contributed to build wealth of low income households.
Compared to public housing, the voucher program has mainly contributed to making housing more affordable and expanding good-quality housing units by encouraging landlords to maintain existing housing. He evaluated it to have possibility to increase neighborhoods diversity and promote balanced metropolitan growth those which public housing rarely has. But they analyzed that voucher program also generally not contributed to build wealth of low income households.
Table 1. Rental Housing Assistance Summary Programs’ Performances
Rental housing assistance Supply-side production Demand-side vouchers Preserve and expand the Yes: rental stock has been Somewhat: encourage landlords supply of good-quality expanded, though more units to maintain existing housing
5 Bruce Katz, Margery Austin Turner, Karen Destorel Brown, Mary Cunningham, Noah Sawyer. Rethinking Local Affordable Housing Strategies: Lessons from 70 Years of Policy and Practice., The Brookings Institution & The Urban Institute, 2003. 68 HOUSING AND COMMUNITY DEVELOPMENT housing units need to be produced Make housing more Yes: but affordability depends Yes: primary goal of these affordable and more readily on size and duration of programs is affordability; available subsidies success depends on households’ ability to find units Promote racial and Rarely: depends on where Possibly: if recipients can find economic diversity in new units are located and who units in diverse neighborhoods residential neighborhoods is eligible to occupy them Help households build Generally not: though lower Generally not: though lower wealth rents may lead to increased rents may lead to increased family assets family assets Strengthen families Possibly: but little literature Possibly: but less impact if units exists to confirm program’s are located in distressed ability to strengthen families neighborhoods or occupancy rules discourage family unification Link housing with essential Sometimes: when units are Generally not supportive services designed in conjunction with effective supportive services Promote balanced Rarely: depends on where the Possibly: depends on recipients’ metropolitan growth new units are built ability to find units in suburban areas and close to job opportunities
B. An Analysis of Housing Policy Based on the Neighborhood Quality
Newman and Schnare evaluated the relative performance of housing program in terms of neighborhood quality6. They profile neighborhood characteristics surrounding assisted housing
6 Sandra J. Newman, Ann B. Schnare, “ “…And a Suitable Living Environment”: The Failure of Housing Programs to deliver on Neighborhood Quality”, Housing Policy Debate, Volume 8, Issue 4, Fannie Mae Foundation 1997 A Study on Public Housing and Housing Voucher Program in the US 69 units and assess the direction of assisted housing policy in light of this information 7. As a result of their study, they conclude that project-based assistance program do little to improve the quality of recipients’ neighborhoods relative to those of welfare households and, in the case of public housing make things significantly worse.
In contrast to project-based assistance, they evaluate that certificates and voucher programs reduce the probability that families will live in the most economically and socially distressed areas. But they do not insist that public housing is the cause of a neighborhood’s decline.
According to them, many public housing units were built in the place where the decline had already taken place8. But it is evident that they firmly advocate voucher programs.
There are two significant comments on Newman and Schnare’s study. One says9 that “the least popular housing developments have long been relegated to neighborhoods of least political resistance, a fact that constrains most local efforts to deconcentrate poverty. Furthermore, through the tax code, America spends about three times as much on housing assistance for middle- and upper-income households as it does on assistance to low- and moderate-income households. We have not applied "fair share" principles either to the location of housing assistance or to its allocation across the income spectrum.”
The other one says10 that “Recent research suggests that family characteristics outweigh those of the neighborhood in predicting outcomes for youth. They fail to consider the possible consequences. Voucher recipients will include not only the victims of poor neighborhood quality,
7 Their analysis relies on a housing census database they developed that identifies the type and census tract location of assisted housing units- that is public housing, development assisted under HUD, the Section 515 rural rental housing direct loan program, LIHTC(the low-income housing tax credit), certificates and vouchers, and state rental assistance program. 8 They show Illinois case, in Chicago 80% of public housing built between 1950 and 1965 was located in tracts where minorities constituted more than 75% of the population. 9 Comment on Sandra J. Newman and Ann B. Schnare's "... and a Suitable Living Environment': The Failure of Housing Programs to Deliver on Neighborhood Quality" By Xavier de Souza Briggs 10 Comment on Sandra J. Newman and Ann B. Schnare's "...And a Suitable Living Environment': The Failure of Housing Programs to Deliver on Neighborhood Quality" By Heather MacDonald 70 HOUSING AND COMMUNITY DEVELOPMENT but the perpetrators as well, who may then spread social problems to marginal but stable working-class neighborhoods”
C. Howard Husock’ s Study
Husock is considered as one of the most critical scholars to public housing. According to him, public housing is harm to city. He said, “Public housing spawns neighborhood social problems because it concentrates together welfare-dependent, single-parent families, whose fatherless children disproportionately turn out to be school dropouts, drug users, non-workers, and criminals.”11
He says that in its early time after the World War II public housing was a way to redistribute wealth by making houses affordable for low-income families. At that time majority of residents of public housing was working-low-income families. But after 1960’s they moved out to middle class neighborhoods. Those who left behind were the poorest, most disorganized, non-working families and almost all of them were headed by single women. As a conclusion he suggests to phase out public housing and to make private housing market work for low-income families.
D. Comparison of Public Housing and Vouchers’ Cost Effectiveness
McClure compares tenant-based assistance to project-based assistance in terms of long-term cost efficiency12. He shows that to cost premium associated with project-based assistance may be lower than conventionally believed, around 40%, and may get even lower if the cost comparison could extend to longer time periods and could control for the quality of the housing units.
11 Howard Husock, “How public housing harm to cities”, city journal, 2003winter 12 Kirk McClure, “Housing Vouchers versus Housing Production: Assessing Long-term Costs”, Housing policy debate. Vol.9, issue 2, Fannie Mae Foundation, 1998 A Study on Public Housing and Housing Voucher Program in the US 71
Source: Kirk McClure, 1998
E. Implications of Public Housing and Voucher Program
Voucher program was introduced as an alternative program to public housing program.
Many public housing sites are in a severely distressed situation providing with a negative image of public housing. Some scholars insist to demolish the entire public housing units in the nation.
Voucher’s flexibility in choosing house by low-income families is a big merit which public housing rarely has. Voucher program’s impact on neighborhoods is generally better than that of public housings. Despite these facts, public housing is a still valid housing policy and it should be reformed to be more effective and to be more compatible to housing policy goals. Public housing mainly contributed to increase in affordability of low-income families and quality housing supply. It is very important to stabilize economically low-income families’ life. 72 HOUSING AND COMMUNITY DEVELOPMENT
Consequently, changing distressed public housing to decent housing policy (as HOPE IV) is more important than phasing out all public housing units.
V. Housing Challenges and the Policy Direction in the US
The millennial housing commission broadly gathered ideas for addressing the U.S. housing challenges from public hearing, numerous focus group meetings, commissioned papers, and solicits input on policy positions and program recommendations from a myriad of individuals and organizations13. The consistent ideas were expressed in the various forums as follows:
Affordability and lack of decent housing are a growing problem, particularly for low-
income families;
Housing must be financially and physically sustainable for the long term;
Housing issues are predominantly local issues, and programs must reflect the variations
from state to state and community to community;
Housing exists in a broader community context, and programs must consider the
relation and impact of housing on education, economic opportunity, and transportation;
Private-sector involvement in the production of affordable housing must be increased;
Mixed-income housing is generally preferable to affordable housing that concentrates
and isolates poor families;
Consistent enforcement of the nation’s fair housing laws is a vital part of making
housing a part of the ladder of economic opportunity;
Congruence among existing housing programs is essential;
Homeownership counseling is necessary to make homeownership programs work well
for low-income families.
These gathered ideas show very well that ‘what housing policy is to be’. These ideas can also
13 The Millennial Housing Commission, “Meeting Our Nation’s Housing Challenges”, WashingtonD.C. 2002 A Study on Public Housing and Housing Voucher Program in the US 73 be exactly applied to Korea’s housing policy too.
VI. Housing Policy for Low-income Families in Korea
A. Housing Situation in Korea
The housing supply rate14 in Korea is over than 103% (2004) nationally. Considering the supply rate it can be said that Korea’s housing condition is generally good. But in Seoul metropolitan area, housing supply rate is still remain in 83%15 and housing stock’s shortage problem exists now. Korea also has public housing for low-income families. Its stock is about
330,000 units in 200416.
B. Housing Policy and Programs for Low-income Families
The essence of the housing policy for low-income people is to construct public rental housing similar to that of other countries. Public rental housing is classified into two types. One takes the government’s financial assistance, and the other receives subsidies from the National Housing
Fund without the government’s financial assistance. Rental housing with financial assistance includes permanent rental housing constructed as a part of the two million housing unit construction plan and the national rental housing started by the present government. The permanent rental housing is worthy of close attention:
i. public finance is first invested in housing programs, and
ii. the government’s financial support reaches 85% of the construction cost.
This financial support enabled the monthly rental fees to be reduced to 77,000 won ($69), and
10% of the lowest income class can occupy housing of this type.
14 Housing supply rate means housing unit per household. In Korea this index mainly used as a basic index for housing policy 15 You may ask “ 17% of Seoul citizens are homeless?”. No, in Korea some housing units were made to be used by several households independently. Therefore actual housing units are not deficient and homeless problem is not familiar in Korea. 16 Presidential Committee on Social Inclusion, “public rental housing policy reformation scheme”, Seoul, 2005 74 HOUSING AND COMMUNITY DEVELOPMENT
The present government has initiated the construction of 1,000,000 public rental housing units from 2003 to 2012 due to the decision that it is necessary to provide financial support again to the rental housing project. This ambitious housing policy’s goal is the support of low-income families’ residential environment improvement, especially removing substandard housing.
According to 2000 census in Korea 1,600,000 households in urban regions are living in substandard houses. To respond to this housing problem, present government decided to build massive rental housing, annually 100,000units for 10years.
C. Issues and Problems of Housing Policies & Programs
Providing appropriate amount of public housing is generally regarded necessary, but massive construction of rental housing in short time makes some difficulties and problems as follows.
First, excessive concentration of low income families cannot avoidable. To build massive rental housing in short time, the situation that several thousands of public housings are constructed in one site is not avoidable.
Second, conflicts between national government and local government happen frequently.
Local governments are tends to avoid public rental housing construction. Instead of the development, they often want other types of development, such as business and commercial, and other economic or public facilities developments.
Third, location mismatch problem happens. Most parts of substandard housing residents are living in metropolitan area. But in that area, there is no much land which can be developed for rental housing sites. For this reason many public rental housings sites are located in the area which is about 20~50km far from center of big cities, especially in Seoul metropolitan area.
VII. Recommendations for Korean Housing Policy
The U.S. experiences in public housing can provide many meaningful lessons to Korea.
First, government officials and policy makers need to be aware of the impact of excessive A Study on Public Housing and Housing Voucher Program in the US 75 concentration of low-income families. To avoid the negative impacts of public housing concentration, it is necessary to develop smaller public housing sites that are naturally mixed with existing neighborhoods. Korea’s public rental housing policy tends to concern only about increasing housing stocks for low-income families. The policy rarely addresses concerns about neighborhoods and communities. But both housing and community need to be treated as equally important goals of housing policy. Mixed-income development must be enhanced for achieving a healthy family and neighborhood.
Second, developing various housing programs and establishing congruence among existing housing programs is needed. Korea’s housing policy for low-income people is much inclined to providing public rental housing. But it is not sufficient to respond to various different situations of policy demands. Housing voucher, homeownership, self sufficiency program must be developed to fit Korea’s situation. And it is also important to establish congruence among these several programs. Third, supporting formation of wealth and enhancing self-sufficiency program must be deeply considered.
Korea government want to change citizen’s thought about housing from wealthy asset to living place. Because wealth making housings continually have bordered government and people who do not have wealthy housing assets. In spite of government struggle, major thought on housing has not changed yet. On the contrary recently the price of decent houses of middle and upper-class is rapidly increased and the gap between the wealth and the poor is widen now. To make the gap a little closer, supporting formation of wealth and enhancing self-sufficiency policy is urgently needed now. 76 HOUSING AND COMMUNITY DEVELOPMENT
References
Newman and Schnare, “… And a Suitable Living Environment: The Failure of Housing Programs to deliver on Neighborhood Quality”, Housing Policy Debate, Volume 8, Issue 4, Fannie Mae Foundation, 1997
Bruce Katz, Margery Austin Turner, Karen Destorel Brown, Mary Cunningham, Noah Sawyer. Rethinking Local Affordable Housing Strategies: Lessons from 70 Years of Policy and Practice, The Brookings Institution & The Urban Institute, 2003
Xavier de Souza Briggs , Comment on Sandra J. Newman and Ann B. Schnare’s “… And a Suitable Living Environment: The Failure of Housing Programs to Deliver on Neighborhood Quality”, 1997
Howard Husock, “How public housing harm to cities”, City Journal, 2003 winter
Kirk McClure, “Housing Vouchers versus Housing Production: Assessing Long-term Costs”, Housing Policy Debate. Vol.9, issue 2, Fannie Mae Foundation, 1998
The Millennial Housing Commission, Meeting Our Nation’s Housing Challenges, WashingtonD.C. 2002
Presidential Committee on Social Inclusion, Public Rental Housing Policy Reformation Scheme, Seoul Korea, 2005