Public Housing Authorities Under Devolution

Abstract

Problem: Local public housing authorities (PHAs) in the United States face a different set of mandates and opportunities today than they did before 1980; PHA financing and program authority are more flexible, while federal funding has shrunk, and new obligations have arisen. Taken together, these changes in federal policy have so diversified PHAs' responsibilities that they risk organizational incoherence and ineffectiveness in trying to fulfill all their obligations.

Purpose: To understand the future prospects for public and assisted housing in the United States, we trace the influence of the last two decades of federal policy on the obligations and discretion of public housing authorities.

Methods: We coded the federal policy actions that have affected affordable housing policy since 1980 to identify their likely implications for PHAs' organizational strategies. Our coding distinguished initiatives likely to prompt strategic innovation by PHAs from those likely to prompt a reactive posture or defense of existing arrangements.

Results and conclusions: In combination, the most prominent and binding federal initiatives push PHAs toward reactive and defensive organizational strategies. More federal initiatives foster changes in PHAs' services, revenues, and internal capacities than in their markets and external partnerships. The federal initiatives with the most dramatic and far-reaching impacts on PHAs' strategies are the Quality Housing and Work Responsibility Act, voucher expansion, voucher funding formulas, and cuts in public housing funding. By comparison, other federal initiatives have had a more limited and diffuse impact on PHAs' statefies.

Takeaway for practice: Reports from individual cities suggest that PHAs have responded to these federal policy changes by choosing to focus their organizational strategies on achieving specific aims for narrow subpopulations. These choices about organizational strategy matter because federal housing policy outcomes now depend both on what PHAs choose to do and on what they are capable of doing. PHAs that strive for organizational coherence may choose both to diversify funding streams and to serve fewer poor clients, while those attempting to fulfill all their federal policy obligations risk excelling at none. In the future, PHAs struggling to survive may reduce services to the poorest households to an even greater extent than federal policy now dictates.

Research support: None.

Keywords:

• housing policy
• public housing
• public housing authorities
• federal housing policy
• affordable housing

Notes

* Limited influence

** Limited availability and limited influence

1. We are grateful to an anonymous JAPA reviewer for this formulation.

2. The Internal Revenue Service, rather than the U.S. Department of Housing and Urban Development, sets basic program guidelines, including the provision of a 10-year credit to project investors in exchange for at least 15 years of use by low-income households, with a minimum proportion of units set aside for low-income residents. State housing finance agencies, who administer the credit, often set additional targeting guidelines and expand the term of affordability to meet local goals. According to federal guidelines, developers can choose to set aside 20% of the project's units for tenants at or below 50% of the area median family income or 40% of the units for tenants with incomes no higher than 60% of the area median family income (Black-Plumeau, 1998).

3. The authors' analysis of the LIHTC database indicates that of the 24,504 projects allocated nationally between 1987 and 2003, only 149 have PHAs as managing partners. PHAs may be involved in other capacities in some cases, so this number may understate their use of LIHTCs.

4. PHAs in the five cities issued Section 8 certificates or vouchers to a randomly assigned treatment group of public housing residents. The PHAs partnered with community-based organizations to provide counseling to help these residents find private rental units, but restricted the use of vouchers or certificates to neighborhoods where 10% or less of the population lived below the poverty level. The PHAs also issued Section 8 vouchers to a comparison group of residents, who could use their vouchers without restriction but who received no counseling. An in-place control group who volunteered for the program continued to receive rental assistance in their public housing units. This quasi-experiment was designed to test (1) whether tenant-based assistance with or without counseling and use restrictions enabled public housing residents to move to areas with less than 10% poverty, and (2) whether such moves were beneficial for child and family outcomes. For a discussion of the outcomes, see Goering & Feins (2003), and Orr, Feins, Jacob, Beecroft, Sanbonmatsu, Katz, et al. (2003).

5. The program was voluntary in 1991 and 1992, and very few PHAs had programs that began in those years (Rohe & Kleit, 1999).

6. The U.S. General Accounting Office (2002) noted that from 1993 to 2001, 79% of non-HOPE VI financing was from federal sources, such as HOME, CDBG, and LIHTC.

7. Twenty-four PHAs now participate (HUD, 2007).

8. This section draws heavily on Sard and Lubell (2000) and Devine, Rubin, and Gray (1999).

9. HUD issued final regulations on the PHA Plan on October 21, 1999 (64 Fed. Reg. 56,844). The rules are found at 24 C.F.R. Part 903.

10. The requirement to serve extremely low-income tenants (those at 30% of area median family income or less) could be even lower if the PHA gave more than 75% of all new vouchers to extremely low-income clients (Schwartz, 2006).

11. Since 1996, for example, an estimated 170,000 units have been lost to deterioration and decay; many of the remaining units need significant repair and rehabilitation (Rice & Sard, 2007).

12. In the 2003 appropriations act, Congress stopped funding all authorized vouchers, and instead funded only the number of vouchers an agency was actually using. This approach has proven effective when estimates of voucher use are sound, but when HUD's estimates are weak (as they were for the 2004 appropriations bill), they result in funding well below PHAs' actual use levels. While this method of funding appeared to continue in 2004 appropriations, a new rule came out April 22, 2004 (HUD, Office of Public and Indian Housing, 2004) that instead based appropriations on an average of a three-month sample of usage plus an inflation adjustment. This late announcement and retroactive implementation to January 1, 2004 “caused some agencies to face an immediate funding shortfall” (National Low-Income Housing Coalition, 2005, p. 6). Although $152 million in reserve funds were redistributed to local PHAs, many agencies did not receive enough funds to restore vouchers to previous levels. In 2005 and 2006 it appeared HUD would go to a dollar method of accounting, although this did not occur. In 2007 Congress implemented rules that take into account voucher levels for the previous 12 months plus an inflation factor, and the U.S. House approved H.R. 1851, the Section 8 Voucher Reform Act (SEVRA), that would institute changes to restore the program and its continuity year to year (Sard, 2007). As of November, 2007, however, the president's proposed HUD budget would again reduce funding for the voucher program (Rice, Fischer, & Sard, 2007).