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May 19, 2011

Affordable Housing Exposé

May 19, 2011

The Washington Post'investigation of the HOME block grant program for affordable housing development chronicles long delays and outright failures among federally funded rehab and construction projects. These findings are troubling because – despite the housing market collapse -- the need for affordable housing vastly exceeds the funding available to produce it.  In cities and suburbs across the country, low-income families suffer when they can’t find decent housing in safe neighborhoods at rents they can reasonably afford.

What the Post doesn’t say is that these frustrating delays and occasional failures have been designed into federal subsidized housing policies. The HOME program is a block grant. By definition, that means the federal government hands big sums of money to local governments and lets them decide what to build and who should build it. Block grants let local communities experiment and innovate, often producing better results than top-down, one-size-fits-all solutions administered by a federal agency. But not always.  Some local governments are bound to stumble, so promising projects get bogged down and money is wasted.

Today’s housing policies make the job of affordable housing development even harder by requiring local governments and nonprofit developers to patch together funding from many sources – both public and private.  The HOME program almost never covers all development costs.  So  big projects take a long time to plan and finance, and some deals fall apart after some of the money has been spent, especially now when banks and private investors are still skittish about real estate.

Do the benefits of the HOME block grant outweigh the pitfalls?  Probably.  HUD argues that successful developments far outnumber delayed or canceled projects. But researchers can’t say for sure whether taxpayers are getting their money’s worth because the HOME program hasn’t been rigorously evaluated in almost two decades. Until it is, the bad news will grab all the attention.  

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