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Thread: Is it time to just 'deep six' the USA's federal Department of Housing and Urban Development ('HUD')?

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    Cyburbian mgk920's avatar
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    Is it time to just 'deep six' the USA's federal Department of Housing and Urban Development ('HUD')?

    I'll just post this article from the Saturday, 2011-05-14 edition of the Washington Post and see where the discussion goes.

    http://www.washingtonpost.com/invest...h3G_story.html

    Over my lifetime, I have seen very little long-term positive in the properties that HUD has touched - and all at a staggering cost of public treasure and decay of urbanized places. Should we be getting government out of housing subsidies of all kinds and at all levels? Some levels (perhaps keep elderly and handicapped housing subsidies and/or the mortgage interest deduction)? At all? Etc?

    (Thanks for moving this, I wasn't sure whether to start this thread here or in the FAC. MGK)

    Mike
    Last edited by mgk920; 15 May 2011 at 4:15 PM.

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    Cyburbian CJC's avatar
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    I don't have time to put together a full comment on this, but just some numbers to begin with:

    HUD's total 2010 budget (much of which is associated with FHA loans [for better or for worse] and section 8 vouchers, not the projects discussed in the article): $46.344 billion (pdf)

    Mortgage interest deduction cost in 2011: $88.7 billion (source)

    I am all for getting the federal government out of housing price distortion, though not necessarily subsidization entirely (explicit subsidization through vouchers has some merit in some circumstances, IMO). However, any conversation that doesn't start with eliminating the mortgage interest deduction first is not a serious conversation.
    Last edited by CJC; 15 May 2011 at 4:08 PM. Reason: clarification added
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  3. #3
    HUD has always struggled showing what it does well. It isn't that HUD doesn't do a lot of things well, but that the public isn't usually impressed with rehabbing low-mod owner-occupied housing; building sidewalks and drainage improvements in target areas; providing emergency shelter for the homeless; ensuring that landlords, lenders, and insurers don't discriminate based on race, religion, disability (and so forth) or redline neighborhoods; providing recreation, education, and job opportunities for low-income youth; and, a lot of other community projects and programs created at the local level. HUD also hasn't been very good showing how much private investment its funds have leveraged and the impact of those public-private partnerships.

    No, HUD will always be remembered for public housing projects and tea party bean counters that have never benefited from any HUD program will say that HUD hasn't been worth it.
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    Cyburbian ColoGI's avatar
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    Quote Originally posted by CJC View post

    I am all for getting the federal government out of housing price distortion, though not necessarily subsidization entirely (explicit subsidization through vouchers has some merit in some circumstances, IMO). However, any conversation that doesn't start with eliminating the mortgage interest deduction first is not a serious conversation.
    I agree: it is innumeracy that drives this argument, not reality.

  5. #5
    Cyburbian Plus Whose Yur Planner's avatar
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    This strikes as yet another conservative/tea party talking point. Kinda like selling all the national parks and federal lands idea they periodically try to float. The private sector won't/can't fill the void if you eliminate it. The private sector isn't the final answer to everything. The markets don't take into account social issues. HUD benefits too many people and fills a niche. Again, just another conservative/tea party talking point.
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    Cyburbian
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    The article states that in two decades the HOME program has disbursed $32 billion; and that after the worst real estate crash since the 1930s, $400 million in projects are idle. Not a terrible record. I've worked with HOME and can say the oversight and auditing requirements are onerous if anything. I'm not sure how accurate this article is as, in my experience, HUD can and will make you give back the money if the affordable housing is not produced.

    Here in the U.S. we certainly have convoluted systems whereby one level of government grants and oversees funds to another who are then required to grant the funds to local non-profits, housing authorities or even for profit companies. No doubt the transaction costs are significant, as is the case with Low Income Housing Tax Credits. Perhaps if we were Denmark (the least corrupt nation per Transparency International) we could simply dole out money to local authorities (or housing coops in the case of the Netherlands) with little oversight and expect results. We would not face the conservative pressure to make everything a public-private partnership. Unfortunately I think we work in a different, if sometimes frustrating, reality. But overall, I think the record of the HOME program has been good. We don't go scrapping the military when we find out about procurement scandals, and HUD is no doubt a hidebound D.C. agency, but I'm not sure I know enough to offer any easy answers. It would've been hard for these local grantmakers to foresee the 2008 meltdown.

    There's so much baggage with HUD and other federal urban efforts, from urban renewal tearing apart our cities, to the conscious choice to build high-rise low-income housing in cities while subsidizing mortgages for new suburbanites, that sometimes it is easier to conclude they do more harm than good, but I think that the affordable housing programs we have now, and that are evolving, play an important role in housing our population, and most of what is getting built today is of high quality. Given the wide gap in affordable rental units in particular, it seems we will need more, not less, affordable housing funding as well as sensible zoning codes.

  7. #7
    Cyburbian Cardinal's avatar
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    HUD has been a perpetual target of the right wing since the Reagan era. This is true even though the funds are provided in a right-wing favored block grant. Putting the money in local hands has some merit, but also brings with it the problems of corruption and inexperience. Whether it is in housing or economic development, I have witnessed both. Corruption is usually on the part of elected officials who direct the money to themselves or their cronies. Employees, on the other hand, often lack the background in development and finance. Someone comes along pitching a great idea and they do not know how to look at it critically to see if the person or organization has the capacity to make it happen - or if it is really all that feasible in the first place. Ironically, elected officials are rarely willing to loosen up the relatively minor funding needed to sent their staff to training programs where they might get that knowledge.

    As docwatson mentions, we are still in the midst of the greatest housing crash since the Depression. That a large number of developers failed, others cannot get funding, and projects are stalled should come as no surprise. Low income buyers are having an especially hard time securing mortgages and home prices in many markets are dropping dramatically. Should we even be pushing to add those units at this time?
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    Cyburbian Linda_D's avatar
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    Why does one HUD program with oversight problems justify getting rid of the entire department? Moreover, it seems to me that the oversight problems stem primarily from the CDBG system, so maybe that's what needs to be investigated.

    The article was an "investigative" report to "expose" problems with HUD projects, so it basically recited a list of failed and stalled projects in one particular program. It certainly wasn't a fair analysis of the HOME program based on any objective set of criteria. If you only look for problems, you can make anything look bad.

    I am not willing to pretend that the private sector will step in and provide affordable housing for our poorest and most vulnerable citizens if only the government will get out of the subsidized housing business. I'm also unwilling to leave an aging senior population to the tender mercies of slumlords, and I don't believe that redeveloped urban areas should only be for the wealthy. HUD programs have been pretty successful in providing decent housing for seniors and for low/moderate income people in/near downtown settings.

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    Cyburbian Cardinal's avatar
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    Adding to your comments, Linda, some of the research was conducted by satallite photography. How old are the images they are looking at on Google Earth? (kinda reminds me of the Texas-based market analysis company's report I viewed, which had screen captures from Google Streetview - maybe one way to reduce costs, but sloppy and unprofessional to say the least.)
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    Cyburbian fringe's avatar
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    Quote Originally posted by Whose Yur Planner View post
    This strikes as yet another conservative/tea party talking point. Kinda like selling all the national parks and federal lands idea they periodically try to float. The private sector won't/can't fill the void if you eliminate it. The private sector isn't the final answer to everything. The markets don't take into account social issues. HUD benefits too many people and fills a niche. Again, just another conservative/tea party talking point.
    Es verdad!

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    I did a fair amount of research on CDBG and cities in California and found that cities that have a great network of nonprofits do the greatest amount of work. Cities lacking capable (or even informed) nonprofits often choose to focus on projects that are eligible uses but do very little to increase/improve affordable housing or job growth. I've seen a lot of CAPERs where the majority of funding is spent on infrastructure like street lights and sidewalk improvements or code enforcement, which of course goes straight into the public works or building inspection departments.

    CDBG has a lot of potential, but there are several barriers:
    - Lack of capacity/education on behalf of the ED coordinator and nonprofits
    - Fear of taking on large projects that carry significant financial risks (Section 108 loans)
    - Income verification is very cumbersome and requires a lot of information. HUD's Multifamily department has an income verification system that is very easy to use, but is restricted to HUD and affordable housing specialists.

  12. #12
    Here is HUD's response the the Washington Post article...

    http://blog.hud.gov/2011/05/15/home-program-works/

    With this large funding allocation there are bound to be some bad projects.

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