Elizabeth Warren's Housing Policy

ELIZABETH WARREN’S HOUSING POLICY

American Housing and Economic Mobility Act Full Bill Text Reintroduced - March 13, 2019 (See our blog about it here)

Data for Progress is keeping a running tab of housing policy proposals for announced or likely 2020 Presidential contenders. This is not a horse race, process-story exercise - we’ll be providing play-by-play policy analysis, ideological context, and suggestions to improve candidates’ policies, to help both campaigns and voters get to the best American housing policy. OVERVIEW community groups that will rehab and sell to owner-occupants. Warren’s updated housing proposal retains the three major focuses from her 2018 ►► Adds $3.6 billion in new capital plan and adds an important fourth focus funding for public housing - cracking down on institutional investors’ authorities – this is a key addition ability to buy single-family homes backed by from the previous bill and is an the federal government. The three original amount intended to fully fund public focuses - funding the construction of more housing preservation for one year. private affordable housing for extremely ►► Creates incentive fund for local low-income households, combating cities and towns to remove exclusionary zoning that racially and exclusionary zoning policies that economically segregates communities, and prevent affordable and workforce addressing decades of racism in federal housing (also known as apartment housing policy - remain largely intact with bans), to encourage building more some promising additional details added. homes with better transit accessibility.

Key Points: ►► Adds renter protections to the incentive funds for local cities and ►► Dedicates $470 billion over ten towns, including rent stabilization, years to provide states with bans on no-cause evictions, and right funding to build, rehabilitate, or to counsel for tenants facing eviction. preserve private affordable housing for extremely low-income (ELI) ►► Extends Fair Housing Act households over the next ten years protections to LBGTQ communities, through the Housing Trust Fund, low-income families of color, Native a program started by the Obama American populations, and Section 8 Administration in 2016 and the (housing assistance) recipients. Capital Magnet Fund, a private capital matching program. The updated ►► Creates a new down-payment bill retains the same basic funding assistance program for first- structure, which has become the time homebuyers in low-income benchmark for the 2020 race. communities and communities of color and expands Community ►► Cracks down on real-estate owned Reinvestment Act powers of (REO) mortgages and speculation. enforcement and institution eligibility. Calls for the Federal Housing Administration to provide new ►► Restores estate tax rates to Bush assistance for keeping families in Administration levels and increases distressed homes and to sell no less rates for $10 million estates. Moody’s than 75% of single-family properties estimates that this would cover the that it acquires through foreclosure cost of the bill. to owner-occupant buyers or to

ELIZABETH WARREN’S HOUSING POLICY 2 WHAT IT REVEALS 75% of single-family properties that it acquires through foreclosure to owner- ABOUT WARREN: occupant buyers or to community This updated bill is vintage Elizabeth Warren groups that will rehab and sell to - deadly serious about economic inequality, owner-occupants. It goes as far as displaying nerdy insights into the origins of giving these types of entities right of stagnation and poverty, and ultimately inclined first refusal at any housing auction. to rewrite the rules of capitalism to make it Another key section guarantees new work, rather than replace it root-and-branch. assistance to keeping families in The focus on increasing homeownership rates distressed homes in the first place. for low-income families of color reflects Warren’s ►► Throws real money, real measures, and pre-politics academic focus on bankruptcy and real accountability at the problems. inequality. Her focus on racial and social justice in housing indicates an earnest interest in the $470 billion would be a serious unique economic plights of people of color infusion of money for low-income and other oppressed groups. And her interest housing, resulting in over 3 million new in using current structures of public-private homes. partnership to fund affordable housing conveys reformist instincts. She also demonstrates the A $10 billion incentive program to ability to respond to feedback and to grow from end apartment bans offers a good- it. This bill includes several tweaks that we called faith attempt at ending exclusionary for our in original analysis and it has particularly zoning practices that could further embraced our call to crack down on Wall Street produce significantly more workforce speculation in single-family homes. housing. The updated bill has added stronger renter protections as qualifying policies to earn those WHAT’S GOOD: incentives. These include rent control/ stabilization, eviction prevention, and ►► Faces the core problems head- right-to-counsel as qualifications to on. Warren’s proposal offers serious, receive the additional funding. thoughtful efforts to address the core problems facing the American housing By including some funding for public supply – a shortfall of affordable homes, housing that was absent from her especially to the poorest Americans; 2018 proposal, Warren is at least widespread, persistent housing acknowledging the importance of discrimination; and yawning racial gaps publicly owned homes. $3.6 billion in in access to homeownership and the new capital funding for public housing economic security and mobility it has authorities is not a lot of money (the historically provided. New York City Housing Authority, the nation’s largest collection of publicly The biggest update in the bill is the owned homes at 176,000 has a capital focus on cracking down on real- budget gap of $32 billion alone) but estate owned (REO) mortgages. It it offers the program a foothold on calls for the FHA to sell no less than the national stage for much needed attention.

ELIZABETH WARREN’S HOUSING POLICY 3 Expanding Fair Housing Act WHAT NEEDS WORK: protections is the most time-tested way to address long-standing ►► Affordable housing investment is still discrimination, and Warren’s bill too small. Although Warren’s proposal thoughtfully includes communities presents a marked expansion in state- most often facing housing funded low-income housing, it still falls discrimination today. short of America’s housing needs. The U.S. currently lacks some 7 million homes The bill’s focus on racial needed to house low-income individuals homeownership gaps is quietly one and families.1 A growth of 3 million new of the most radical proposals of the homes for this population would go a bill. The racism built in directly and long way toward addressing the problem, indirectly to 20th-century federal but it still would meet less than half the housing policy is well documented need (not even accounting for likely and has had a massive impact on growth in the low-income population). racial and wealth inequality. Very few previous proposals have attempted ►► Incentives to undo exclusionary zoning to meaningful address this and help may be too soft. While Warren deserves communities that have been impacted credit for attempting to unravel the by it. deeply entrenched exclusionary zoning in more affluent cities and suburbs, the The updated bill importantly outlines incentives she has created may prove new categories of eligibility for insufficient to change the behavior of homeownership assistance that the worst offenders. When spread across more explicitly target homeowners the country, $10 billion in incentive of color who experienced block grants may simply not be enough contemporary racial discrimination. to compel communities to confront They now include victims of subprime their powerful NIMBY elements. This is mortgages, residents displaced especially true of the most exclusionary through natural disasters, and HUD- communities - affluent places that defined areas of high poverty, high- seldom struggle to fund their parks or minority populations. schools. ► Earnestly attempts to pay for itself - ► ►► Down-payment assistance program with winning politics. Warren’s pay-for risks excluding already-displaced is both serious and poetic – taxing the people. Much like her attempt to unwind estates of the extremely wealthy to pay for exclusionary zoning, Warren’s down- homes for the middle class and poor. payment program is a smart response to a pervasive problem but could be partly

ELIZABETH WARREN’S HOUSING POLICY 4 undermined by imperfect construction. WHAT WE WOULD ADD: It is fantastic that Warren is focusing on corrective measures for formerly redlined ►► More funding for affordable housing. areas yet by establishing a last-four-years Doubling the $470 billion investment residency qualification, the proposal may would likely offer enough financial unintentionally exclude families that have backing to adequately address the total already been displaced from gentrifying housing shortfall. We were hoping to see communities. The updated bill addresses more funding included in the updated some of this by targeting a wider set of proposal, but Warren still gets credit for victims that are likely to be minorities, but creating the benchmark that others are still doesn’t have a clear answer for those catching up to. displaced by gentrification. ►► More sticks to go with the carrots. ►► Public housing authority funding still Getting wealthier communities to end too little. Warren’s original bill received exclusionary zoning has been a thorny pushback (including from us) about issue for all of the candidates tackling ignoring publicly owned homes, so she land-use (though Castro and Booker gets some credit for including the $3.6 have made real strides). We remain billion in capital funding. Still, this falls unconvinced that the carrots in Warren’s dramatically short of the needed funding bill will be enough to change this and puts into question the senator’s behavior. We continue to suggest limiting interest in having public housing play a the availability of highway and other central role in solving the crisis. Under transportation funds to communities that Warren’s bill, the controversial Rental retain exclusionary zoning policies. We Administration Demonstration (RAD) would also like to see Warren make the program presumably remains the main MID available only to municipalities that source of funding for PHAs, which keeps enact strong rent stabilization measures. in place the slow privatization of publicly There are other policy ideas to consider, owned homes in America. but Warren’s plan has not evolved here.

►► Support for local rent control efforts ►► Explicitly encourage states and needs to be expanded - While Warren’s localities to adopt both equitable 2018 proposal lacked any attention to zoning and renter protections renter protections, her new bill includes simultaneously. As currently written, some good-faith effort to encourage local localities could quality for new incentive action. That said, her proposals could funding by adopting a variety of policies go much further. One possibility would to help middle class and working class be to only offer the Mortgage Interest people afford housing – including Deduction (MID) for states or localities equitable zoning and rent stabilization – that include protections for renters. but there is nothing to encourage them to adopt multiple good policies at the

ELIZABETH WARREN’S HOUSING POLICY 5 same time. Since renter protections and ►► Invest in expanding public housing equitable zoning are regularly pitted in addition to (or instead of) publicly against one another at the local level, funded private affordable housing. it is important to incentivize that these No candidate has offered a bold vision mutually beneficial policies be adopted for public housing yet (Julián Castro is together. The most straightforward way the first to call for new public housing), to accomplish this would be to prioritize but the public supports it broadly and funding for localities that adopt both it would be an immediate economic types of reforms, or offer increased stimulus, which incidentally, was funding for localities that do so. the original selling point for public housing during the Great Depression. ►► Offer down payment support for As a baseline, Warren should support displaced residents of once-redlined, protecting and upgrading the existing now-gentrifying neighborhoods. In stock by passing Rep. Maxine Waters addition to the 4-year residency recent bill (now part of the Better Deal for requirement, Warren should offer down Public Housing plank) that calls for full payment assistance to individuals who funding for public housing authorities.3 can provide evidence they previously But we would like to see her, and every lived in the neighborhood for a prolonged other candidate, call for expanding the period before gentrification. Creating construction of publicly owned homes requirements for landlords to share by repealing the Faircloth Amendment, previous rents and maintain records for which bans new public housing tenants as part of their federal tax filings construction, and ending the RAD could be a way to start this process. program, which privatizes public housing. ►► Rent payment assistance - Most of Warren’s proposal, while impressive and impactful, will take years to provide a tangible benefit to Americans. Experience suggests that sweeping reforms prove more popular when they come with immediate relief. Rent payment assistance to cost-burdened renters could provide some of that relief. Other proposals from 2020 contenders include this, but Warren has yet to offer an explanation about why she has not.2 We would like to see Warren come around on rental assistance at least until her building program starts to produce material results in bringing down rents.

ENDNOTES

1. National Low Income Housing Coalition, “The Gap: A Shortage of Affordable Homes 2019,” 2019, accessed 06/26/19 2. Diana Bubbs, “Two senators are proposing national rent relief bills. Here’s why it matters,” Curbed, 08/10/19 3. US Congress, H.R. 3160, accessed 02/01/19

ELIZABETH WARREN’S HOUSING POLICY 6