Distressed Public Housing

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Over the past decade, the HOPE VI program has invested over $5 billion in federal funds in the replacement or revitalization of severely distressed public housing developments. These federal dollars have leveraged billions more in other public, private, and philanthropic investments. To date, over 63,000 distressed public housing units have been demolished, with another 20,000 units slated for redevelopment. The current administration at HUD has been critical of the high costs of HOPE VI, and proposes that the program should be cut back dramatically or even eliminated. In effect, they argue that the problem of severely distressed public housing has largely been solved and that the country cannot afford to replace or revitalize more properties. By our estimates, however, between 47,000 and 82,000 severely distressed units remain in the public housing inventory that are not currently scheduled for demolition and replacement.¹ These units may not all need the full treatment of the existing HOPE VI program, but the evidence suggests that they exhibit many symptoms of severe distress and probably require substantial, targeted funding for replacement or revitalization.

Tackling the remaining inventory of severely distressed public housing would be costly. But doing nothing about distressed public housing has costs as well. Severely distressed developments are more expensive for local housing agencies to operate and maintain than normal public housing. Moreover, these developments often blight the neighborhoods that surround them, discouraging private investment and undermining property values. And distressed public housing subjects families and children to dangerous and damaging living environments that raise the risks of ill health, school failure, teen parenting, delinquency, and crime—all of which generate long-term costs that taxpayers ultimately bear.

This paper briefly summarizes the existing research evidence on the costs of doing nothing about the remaining inventory of severely distressed public housing:

• Section 1: A profile of severely distressed public housing properties.
• Section 2: Distressed developments cost more to operate and maintain.
• Section 3: Distressed developments blight the neighborhoods around them.
• Section 4: Distressed developments put families at risk.
• Section 5: Resident distress burdens public programs.
• Section 6: Summary and conclusion.

We do not attempt to produce a "bottom-line" cost-benefit estimate for continuing the HOPE VI program (or something like it). Such an estimate would require more information about the remaining inventory of distressed properties, including their age and physical composition, characteristics of their residents, and conditions in the surrounding communities.² The goal of this paper is to highlight the potential consequences of leaving distressed developments in place—for public housing agencies, for neighborhoods, for residents, and for city, state, and federal governments and taxpayers.

Notes from this section

1. See Kingsley et al. (2004) for a complete discussion of these estimates. The lower bound estimate includes properties with REAC scores below 75 (reflecting serious problems of physical deterioration or mismanagement) where more than 30 percent of residents rely primarily on welfare income (as an indicator of concentrated poverty and resident distress). The upper bound includes properties with REAC scores below 80 and more than 25 percent of residents relying primarily on welfare income. It is important to say that these indicators are not put forward as a true or complete definition of severely distressed public housing. Nonetheless, we think they are enough to suggest that, even affording a fairly wide margin of error, the candidate pool of severely distressed public housing is by no means exhausted.

2. In fact, it seems likely that the cost-benefit calculation would vary by property, and could potentially prove a useful tool for determining which properties warrant HOPE VI-type investments.

Note: This report is available in its entirety in the Portable Document Format (PDF).

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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