HUD has been in the news more than usual lately and housers are wondering what its future holds. The changes underfoot also led us to ask: What does HUD normally do, anyway? It might not be what you thought.
A Cabinet-level agency established in 1965 by President Lyndon B. Johnson, HUD was originally to be named the “Department of Urban Development and Housing” — but when the National Home Builders Association protested, the phrases were flipped. Part of Johnson’s signature War on Poverty, HUD was founded to improve the health of cities. As suburbs boomed in the postwar era, cities suffered from population loss, fiscal crises, and racial segregation — problems enabled by decades of government policy.
Fifty years on, HUD subsidizes housing, produces policy research, and funds dozens of anti-poverty and community development programs to benefit low- and moderate-income households. In addition to housing programs, HUD works to end homelessness, takes on discrimination, responds to climate change and natural disasters, acts on hazards of lead-based paint, addresses the digital divide, and more.
CDBG: Bread and Butter CDBG (Community Development Block Grants) is one of HUD’s largest programs targeting the “urban development” portion of its mission. The “bread and butter” of HUD funding and “probably the most flexible money that the federal government gives,” according to Holly Leicht, CDBG can go toward community services and economic development as well as housing. Any city with a population over 50,000 or any county over 200,000 is eligible for CDBG funds, with allocations based on number of residents, poverty levels, and other factors. (“Non-entitlement” communities — those that don’t clear the formula’s thresholds — may also receive some CDBG funds through the state.) In New York City last year, $150 million in CDBG dollars primarily funded housing but were also used for youth programs at the Beacon School, services for victims of domestic violence, and recreational activities at Van Cortlandt Park, among many other programs.
HUD suspended all subsidized housing programs in 1973 as President Nixon looked to rely more on the private sector. The federal government hasn’t built new public housing since. Today, only about 1% of the country’s housing stock is owned by federal or state government, according to Leicht, and HUD mostly supports private housing, not traditional public housing. HUD’s considerable involvement in the private housing sector extends from subsidies like Section 8 vouchers and Low Income Housing Tax Credits to the insurance offered by Fannie Mae and Freddie Mac’s underwritten mortgages.
Section 8: Facts and Figures There are about 135 million housing units in the United States. Of those, about 5 million units (or less than 4%) are directly subsidized by HUD, primarily through three programs: 1.1 million are public housing, 1.2 million are project-based Section 8, and 2.5 million are rented using tenant-based Section 8 vouchers (now technically called Housing Choice Vouchers). Section 8 vouchers, enacted in 1974, are given to the tenant and subsidize the difference between the private-market rent and 30% of the tenant’s income, while project-based Section 8 subsidizes certain privately-owned units. The vast majority of HUD’s funding today goes to Section 8: In 2016, more than $30 billion of HUD’s $47 billion budget was allocated to that program alone. In contrast, about $6.5 billion funded capital and operating costs for public housing. In recent years the move toward Section 8 has continued, as the Rental Assistance Demonstration (RAD) program, enacted in 2012, encourages public housing agencies to convert public housing to permanently affordable Section 8 units through public-private partnerships. The program (which Leicht called a “Hail Mary” to save public housing) allows authorities to leverage private capital toward the $26 billion backlog of capital needs nationwide. In New York City, 40 RAD conversions are currently underway or planned. Here the program is called Permanent Affordability Commitment Together (PACT) (because one acronym is never enough).
We may associate HUD most strongly with programs for tenants, but the agency serves people across the housing spectrum.
Homes and Homelessness When HUD was established, the largest agency it inherited was the Federal Housing Administration (FHA), which insures mortgages for people who might not otherwise qualify for credit. Today HUD is the largest mortgage insurer in the world, with more than 40 million loans guaranteed since 1934. This insurance is provided through Ginnie Mae (a division within HUD) and Fannie Mae and Freddie Mac (privately-held corporations, regulated by HUD), which purchase and guaranty mortgages made by banks and other financial institutions. For those that lack a fixed address, the federal government launched its first comprehensive strategy to prevent and end homelessness in 2010. The plan, called Opening Doors, set ambitious goals for ending veteran homelessness in 2015, chronic homelessness in 2017, and family and youth homelessness in 2020, awarding funds for permanent, transitional, and supportive housing as well as data collection, homelessness prevention, and other programs. At the end of 2015, HUD declared that New York City had “effectively ended chronic homelessness among veterans” — all chronically homeless veterans had been housed, were on a path to permanent housing, or had been offered but refused housing assistance. Overall, however, homelessness in New York City is at its highest level since the Great Depression with more than 62,000 people homeless in the city — three-quarters of whom are families.
Both HUD’s organizational structure and the way it distributes funding locate a lot of key decision-making outside of Washington. HUD divides the country into ten geographic regions, each of which is overseen by a Regional Director. About two-thirds of HUD’s more than 8,000 employees are located in regional and field offices.
HUD’s major roles include funding, regulation, and technical assistance, mostly leaving the responsibility for program implementation to states and cities. CDBG funds go directly to state and local government — when it was instituted, CDBG cemented HUD’s identity as the “mayors’ agency.” HUD’s major housing subsidies, including public housing and Section 8, are also given local control — here, both of those programs are administered by the New York City Housing Authority (NYCHA).
Only in New York New Yorkers love to think of themselves as exceptional, and in this case it’s true! The city’s size, density, economic production, and large public housing stock make its dealings with HUD totally unique. Even veteran HUD officials struggle to wrap their minds around the peculiarities of New York, New York — especially the size of NYCHA. When national HUD administrators were invited to tour New York’s public housing, “Career policymakers in public housing just could not believe it,” Leicht recalled, “They were blown away.” As another example, take disaster recovery. Following Hurricane Sandy in 2012, New York and New Jersey were the subject of a new type of experiment from HUD, a design competition to improve coastal resiliency. The Rebuild by Design competition “stimulated a lot of interest, but implementation has been tough,” said Leicht. However, seven winning projects are moving forward with about $1 billion of CDBG-Disaster Recovery funds, including SCAPE’s Living Breakwaters project off the coast of Staten Island. (Overall, New York City has received more than $4 billion in specially-allocated CDBG-Disaster Recovery funds.) With revisions, the Rebuild by Design competition became the model for the National Disaster Resilience Competition, which is doling out another $1 billion nationwide.
Lots of American policy is getting a makeover in 2017 under the Trump administration, but other than frequent dog whistles bemoaning the state of America’s “inner cities,” the President hasn’t said much about housing or urban development. (Some are hoping that housing will be included in Trump’s desired $1 trillion investment in infrastructure.)
Neurosurgeon Ben Carson has been nominated as the new Secretary of HUD; many Senators seemed to treat his confirmation hearing as a formality, and Carson will likely be confirmed soon. (“I got to thinking, it seems to me that running this department is not really brain surgery,” said Republican Senator Mike Rounds of South Dakota.) A housing policy neophyte, Carson has yet to set a clear agenda. New York City Council Member Ritchie Torres worries that Carson, who has spoken out against government assistance, might see NYCHA as a “natural target.”
Predicting the Future Many housing advocates are concerned that Carson might undo anti-discrimination and desegregation efforts advanced under the Obama administration. After decades of turning a blind eye to the portion of the Fair Housing Act that states federal grantees have an obligation to “affirmatively further” fair housing, in 2015 HUD finally issued a rule for municipalities, public housing agencies, and others to address barriers to fair housing. In his only public statement about housing before being nominated as housing secretary, Carson decried this ruling as a “social-engineering” effort in a 2015 op-ed. Leicht echoed fears about the future of fair housing enforcement and public housing — “I think the downward trend in funding public housing will continue,” she said, and predicted that Carson’s apparent disdain for fair housing law would find plenty of support among Republicans in Congress. But she also offered a note of optimism: “HUD has a very mission-driven, dedicated career staff. I have concerns about funding cuts, but I don’t have concerns that people are going to fall off and not care about working with their cities. In so much of what HUD does, the rubber hits the road at the local level, not in Washington. People are going to keep doing what they’ve been doing — though maybe with less money. But it’s a visionary place where people want cities to be better, so I’m cautiously optimistic on that front.”