The Free Market 18, no. 11 (November 2000)
For decades, the Department of Housing and Urban Development (HUD) has been renowned as one of Washington's biggest boondoggles. HUD Secretary Henry Cisneros admitted to Congress in June 1993: "HUD has in many cases exacerbated the declining quality of life in America." Vice President Al Gore denounced public housing projects in 1996: "These crime-infested monuments to a failed policy are killing the neighborhoods around them."
HUD Secretary Andrew Cuomo, appointed after Cisneros's indictment on perjury charges, conceded in 1998 that HUD used to be "the poster child for failed government." As the Washington Post callously noted in 1999: "For three decades, HUD has been a notorious symbol of welfare-state government run amok, better known for sweetheart deals, wasteful programs and bad management than for improving the lives of the poor."
HUD has launched one public-relations scheme after another to try to squander enough billions to buy itself a better image. In 1993, HUD launched HOPE VI, authorized by Congress in late 1992. HOPE stands for Housing Opportunities for People Everywhere. Four previous "HOPE" programs failed to achieve Valhalla but HUD is very hopeful about VI. (Congress skipped HOPE V for some mysterious reason.)
HUD has awarded over $3 billion since 1993 to local public housing authorities to destroy existing housing projects and replace most of the units with top-notch new single-family homes or townhomes seeking to attract more affluent residents to live amidst welfare recipients.
Announcing a bevy of demolition grants in September 1999, Cuomo declared: "These developments represent the worst of the public-housing stock in the United States. By tearing them down, we're making room for neighborhood revitalization." Cuomo expected to be hailed as a great benefactor for announcing plans to remove some of the pestilence his agency had injected in cities across America.
In Nashville, many residents of the Preston Taylor project have received keys to fancy new townhouses. They pay an average of only $112 a month in rent. In Los Angeles, the Pico Aliso project is being replaced with townhouses with two bedrooms, two bathrooms, and all the latest appliances, including a built-in washer and dryer. Some of the townhouses will be sold for roughly $120,000-but lucky public housing tenants will be able to rent the new units for less than $200 a month. Elinor Bacon, HUD's deputy assistant secretary for public housing investments, explained: "It's about transforming the lives of the people, not just the real estate. It's a whole new way of looking at public housing."
In Tulsa, HUD spent roughly $100,000 for each replacement unit for the Osage Hills project; for the same price, someone could "buy almost three existing homes in the urban renewal area near the project, or almost any single home almost anywhere in Tulsa," according to Rep. Tom Coburn (R-Okla). A local HUD spokesman explained the reason for the relatively fancy homes: "We want you not to think that this is public housing."
A HOPE VI project on Capitol Hill in Washington will provide very cheap housing to low-income families-and will sell other townhouses for up to $260,000. James Didden, a top executive of the National Capital Bank on Capitol Hill, observed, "What they're calling homeownership is really just public-housing rentals." Didden was not optimistic: "My suspicion is that it will deteriorate into a ghetto. The developer has no ongoing responsibility for the project."
Once the value of the land is included, the per unit cost of this development is close to $400,000-vastly more than was spent on public housing in the pre-Clinton days. When Cuomo announced a $30 million grant to the D.C. Public Housing Authority to raze and replace ragtag public housing in Anacostia, he declared: "We are making public housing a launching pad to opportunity, jobs and self sufficiency, instead of a warehouse trapping people in poverty and long-term dependence."
Apparently, the only reason that poor people are not self-sufficient is because government has not given them fancy enough housing. John Milchick, HUD's Kentucky coordinator, commenting on a Louisville HOPE VI project, declared that economic diversity "stabilizes an area and people are not afraid to invest in their community, to spend in their community, to keep their properties up."
Milchick implied that poor people could acquire a "sense of ownership" simply by having middle-class neighbors-not by having had to work and earn the money to buy a house. In the same way that forced busing presumed that black kids could not learn unless they were in the same classroom as white kids, HOPE VI and mixed-income projects assumed that welfare recipients won't act civilized unless they live next to middle-class folks.
Because HOPE targets the most dilapidated public housing projects in the nation, the program creates an incentive for local housing authorities to allow housing projects to further deteriorate. For example, HUD awarded a $215,000 grant to demolish 43 public housing units in Weymouth, Massachusetts-the same units that it had spent $2 million on renovating only a few years before. HOPE presumes that people with a history of public-housing residency deserve to have middle-class housing status handed to them on a silver platter.
HOPE is a slap in the face to the working poor and lower middle class who stayed out of public housing. The notion that HUD can give away housing to some people without having any adverse effects on their fellow citizens and neighbors is the ultimate left-liberal pipe dream.
This is not the first time that the feds have sought to buy welfare recipients into the middle class. A 1966 GAO report condemned HUD for the inclusion of balconies and frills such as hardwood floors, marble interior window sills, costly kitchen cabinets, and ornamental walls in new public housing projects.
As Harvard University's Howard Husock observed, "As a practical matter, the greater the amenities provided for public-housing residents, the less the likelihood that the private, lower-income housing market could match them. Thus the incentive to move up and out would be undermined. In effect, the goal of fixing up the projects works at cross purposes with the goal of encouraging residents to find private-housing alternatives."
HUD has never examined the effect that receiving housing subsidies has on the incentive to take care of the property under one's feet. Apparently, it is politically incorrect to even consider whether the basic problem is housing subsidies per se, not the design of subsidized housing. At best, HOPE is another expensive Band-aid to camouflage the continuing damage from perverse federal incentives and to postpone the next HUD fiasco until the current political appointees have long since left town.
Secretary Cuomo declared in 1998: "Ultimately, the vindication of progressive politics will come only when people believe the government is competent." Alas, progressives are in for a long wait. It is only a matter of time until the next HUD scandal screams across the front pages of the nation's newspapers. The only solution to HUD's problems is to bulldoze the agency itself.
James Bovard (jbovard@his.com) is the author of the just-published "Feeling Your Pain": The Explosion & Abuse of Government Power During the Clinton-Gore Years (New York: St. Martin's Press, 2000).
