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.

Abstract

The HOPE VI program has invested over $6 billion in federal funds for the redevelopment of severely distressed public housing. Drawing on the existing research evidence, this study systematically compares the costs (both monetary and nonmonetary) of maintaining severely distressed public housing developments to the potential costs and benefits of effectively revitalizing them. An effective redevelopment strategy can dramatically improve living conditions for families, resulting in better physical and mental health and increased employment and earnings. Moreover, redevelopment can trigger the revitalization of previously blighted communities. These outcomes also save public resources. In fact, for a typical distressed public housing project, mixed-income redevelopment can save the public more than $20 million over 20 years.

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Introduction

Over the past decade, the HOPE VI program has invested over $6 billion in federal funds for 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 has been critical of the high costs of HOPE VI, proposing 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. However, a growing body of research highlights the damage to families and children of living in dangerous, high-poverty environments and the potential benefits of replacing severely distressed public housing with a combination of high-quality, mixed-income housing and rental vouchers. Drawing on the existing research evidence, this study systematically compares the costs (both monetary and nonmonetary) of maintaining severely distressed public housing developments to the potential costs and benefits of effectively revitalizing them. The analysis focuses on the costs and benefits for which the research evidence is strongest and makes conservative assumptions about the likely impacts of public housing revitalization.

Although the redevelopment of distressed public housing is expensive, in many circumstances, the costs to taxpayers of inaction may be even higher. An effective redevelopment strategy can dramatically improve living conditions for families, resulting in better physical and mental health and increased employment and earnings. Moreover, redevelopment can trigger the revitalization of previously blighted communities. These outcomes also save public resources. In fact, for a typical distressed public housing project, mixed-income redevelopment—effectively implemented—can save the public more than $20 million over 20 years. Although more modest rehabilitation strategies are less expensive in the short-term, they yield lower savings for taxpayers over the long-term.

The level of taxpayer savings generated by mixed-income redevelopment can vary quite widely, depending on the characteristics and location of the project. But in every case, the net public costs of redevelopment (after accounting for the costs of inaction) are much lower than the initial, up-front investment required. Moreover, high quality resident services—including relocation assistance, case management, and work supports—not only yield better life outcomes for families and children, but essentially pay for themselves over the long-term.

The complete report is available in PDF format.

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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