The voices of Urban Institute's researchers and staff
May 31, 2017

Proposed cuts to public housing threaten a repeat of the 1980s’ housing crisis

June 1, 2017

The Trump administration has proposed a nearly 15 percent cut to the US Department of Housing and Urban Development (HUD). Similar cuts to public housing the Reagan administration made in the 1980s show how these proposed cuts could be devastating to low-income families, who would face a reduction in the already-limited supply of housing assistance available amid the worst housing affordability crisis in generations.

Although it has not received as much attention as the proposed cuts to the Supplemental Nutrition Assistance Program and Medicaid, the public housing program is one of the biggest targets of the Trump budget. The Public Housing Capital Fund, which provides local housing agencies funds to make essential repairs to aging plumbing, electrical systems, roofs, and elevators, faces a 68 percent reduction.

Cuts in funding over the past decade, especially the Budget Control Act (sequester), have left housing authorities facing an estimated $26 billion backlog in capital needs. The current proposal would leave housing agencies with the lowest levels of funding since those set by the Reagan administration.

History offers a warning against severe cuts to public housing

The Reagan administration cut funds and withheld maintenance and management funds to punish poor-performing housing authorities. The lack of federal support contributed to the spiral of problems that created appalling conditions in public housing in cities like Chicago. By the end of the 1980s, many housing agencies were coping with aging properties that had dangerous problems like broken elevators, malfunctioning incinerators, mold, and leaking pipes that spewed raw sewage.

playground in Chicago's Cabrini Green housing project

A playground in Chicago’s Cabrini-Green housing project, which was demolished in 2011 due to neglect and deplorable living conditions. Photo by Kyle Higgins.

These conditions spurred Congress to establish the National Commission on Severely Distressed Public Housing in 1989, which documented the terrible conditions and called for a major federal initiative to address the worst problems—most of them in big-city housing authorities like Chicago. Through what became the HOPE VI program, HUD spent $6 billion to replace distressed developments with new, mixed-income communities.

Other investments supported rehabilitating traditional public housing stock and cleaning up management problems at local agencies that exacerbated the decline. The result was that more public housing residents lived in housing that was affordable and provided a safe and decent place to live.

Housing agencies across America face mounting challenges

Trump’s budget cuts threaten to reverse the progress of the past 20 years and leave public housing in as bad—or worse—condition than it was in the 1980s. The potential consequences of the proposed cuts for public housing agencies and the low-income households who depend on that housing—most of whom are elderly or disabled—are profound.

The public housing stock is aging, and the problems entailed affect big-city housing agencies and thousands of small and rural agencies. Big-city agencies are coping with constrained maintenance budgets that prevent them from keeping up with major repairs to pipes, heating, and electrical systems. But these agencies can replace at least some of that funding through HUD’s Rental Assistance Demonstration, which allows them to leverage their properties’ value to obtain private-market capital.

Despite promises, rural America faces the largest setback

Housing agencies in small cities and rural areas face the biggest challenges. Nearly 20 percent of the nation’s public housing is in rural areas, and in some states, the share is higher. Like their big-city counterparts, rural agencies’ stock is aging and needs major upgrades. But it is harder for these smaller agencies to handle these complex transactions and to find banks willing to lend.

Some agency directors are managing a staff of only three people, who have to handle everything from maintenance to tenant needs. Without additional funding, these agencies may be left with no choice but to close aging properties, leaving their communities with no deeply subsidized housing.

And because these smaller agencies are sometimes the only social service provider in town, if they close their doors, their communities will lose their emergency food assistance and basic support.

The Reagan-era cuts to public and assisted housing contributed to the crisis that left public housing authorities unable to provide decent, safe, and affordable housing.

The Trump administration’s proposed cuts could do greater damage, sharply depleting the nation’s supply of deeply subsidized housing and exacerbating the shortage of affordable rental housing that confronts communities both large and small.

 

 

A woman walks by the Farragut Houses, a public housing project in Brooklyn on March 16, 2017 in New York City. President Donald Trump's budget calls for the cutting of billions of dollars in funding from the Department of Housing and Urban Development. This is despite a campaign pledge Trump made to help rebuild the nation's inner city communities. Photo by Spencer Platt/Getty Images.

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