“Ojalá no supiera ahora lo que no sabía antes”.

Era un verso al pasar en la balada “Against the Wind” (“Contra el viento”) de Bob Seger de 1980, una reflexión sobre la inocencia y el remordimiento. Si bien le parecía que sonaba raro y no era gramaticalmente correcto, Seger lo conservó porque a sus allegados les gustaba. Desde entonces, el verso ha inspirado a otros artistas para hacer sus propias interpretaciones. A mí me inspira como invitación a aprender, ofrece un marco de reflexión acerca de las consecuencias impensadas y nos permite imaginar cómo podríamos haber actuado de otro modo. En particular, es relevante en el contexto de la crisis nacional actual de viviendas asequibles.

Desde la Gran Depresión, durante cuatro décadas, dirigí y estudié el uso de inversiones públicas, privadas y filantrópicas para producir viviendas asequibles y ofrecer un techo decente a familias de bajos ingresos. Se debatió una gran cantidad de ideas, y muchas se implementaron. La mayoría de las que se implementaron no dieron los resultados esperados, pero todas trajeron consecuencias impensadas. ¿Qué podemos aprender de estos tropiezos del s. XX? Y, más específicamente: ¿qué estamos dispuestos a aprender?

Hace más de ocho décadas, el gobierno federal lucha para cubrir los compromisos básicos contraídos en las Leyes de Vivienda de los EE.UU. de 1937 y 1949: “una vivienda decente y un ambiente adecuado de vida para todos los estadounidenses”. Las leyes consignaban importantes subsidios para construir nuevas viviendas públicas y erradicar los asentamientos informales. Prometían nuevos empleos, ciudades modernizadas y mejores viviendas para quienes las necesitaran. Dado que las Leyes de Vivienda sugerían beneficios para todos los ciudadanos, se ganaron un amplio apoyo del público.

Cuando llegó la hora de implementar, casi todas las autoridades de vivienda pública apuntaron a ofrecer viviendas a quienes estaban en la mitad inferior de la distribución de ingresos: una decisión políticamente popular. Para mantener la disponibilidad de viviendas nuevas, se establecieron alquileres que cubrirían los costos operativos de los edificios. Pero los costos operativos aumentaban a medida que los edificios envejecían, y los alquileres crecían a la par. Hacia fines de los 60, los inquilinos de ingresos más bajos se vieron sobrepasados por los precios: pagaban más del 60 por ciento de su ingreso para seguir teniendo un techo.

El senador Edward Brooke (republicano, por Massachusetts) remedió la situación: en 1969 propuso una enmienda a las Leyes de Vivienda que limitaba los alquileres al 25 por ciento de los ingresos de los inquilinos. El gobierno federal cubría los déficits operativos con subsidios. Para obtener un alquiler reducido, los inquilinos debían declarar sus ingresos. Pronto se hizo evidente que las viviendas públicas no servían para las familias más pobres, quienes tenían las mayores necesidades de vivienda. En 1981, el Congreso actuó de nuevo: reservó las viviendas públicas para familias que ganaban la mitad de la mediana de ingresos y reservó el 40 por ciento de las unidades para familias que ganaban menos del 30 por ciento de la mediana.

El deterioro de los edificios se aceleraba. Esto se debió a que los subsidios operativos federales no cubrían gastos de capital, y los sistemas principales (calefacción, iluminación, ascensores) empezaron a fallar. La austeridad fiscal federal de los 80 agravó los problemas, porque redujo los subsidios operativos. Hacia fines de esa década, la única respuesta razonable a la crisis nacional de viviendas públicas fue la demolición generalizada.

Al mismo tiempo que disminuían los subsidios y dejaba de haber viviendas antiguas disponibles, surgió un contrarrelato, en el cual se culpaba a los propios residentes. La “cultura de la pobreza” y la “indefensión aprendida” se convirtieron en los memes dominantes. Se veía a la pobreza como una enfermedad contagiosa, más que como un síntoma. Los pobres se convirtieron en chivos expiatorios convenientes que cargaban con la responsabilidad de que se rompiera su propio techo, como si se esperara que los inquilinos, pobres o no, se responsabilizaran de mantener sus edificios. Al concentrar a los pobres en las viviendas públicas, reforzábamos los malos hábitos y transmitíamos valores que perpetuaban la pobreza a lo largo de las generaciones. Otro meme dominante de los 80 apoyó este movimiento: los peligros del gobierno grande. Este relato contaba (y cuenta) que el gobierno grande era torpe e ineficaz; el deterioro de las viviendas públicas era culpa del gobierno.

Con los programas “HOPE” que surgieron luego (Vivienda y Oportunidades para Personas en Cualquier Lugar), se reemplazaron muchos proyectos de vivienda pública por desarrollos bajos de ingresos mixtos, que en general sustituían tres unidades demolidas con una asequible. Para estimular la producción adicional de viviendas de alquiler, el gobierno federal creó el crédito fiscal para viviendas de bajos ingresos (LIHTC) en 1986. El programa ofrecía a los inversionistas privados créditos fiscales por una década a cambio de adelantos en inversiones en patrimonio (que suele ser el dinero más difícil de encontrar) para producir viviendas. Los estados controlaban cómo se asignaban los créditos, y las normativas exigían una asequibilidad a largo plazo para las viviendas.

Es importante mencionar que el programa LIHTC prometía superar las dos grandes fallas de las viviendas públicas. Al atraer inversiones privadas, las eficiencias del sector privado superarían la relación de dependencia con el ineficaz gobierno grande. Segundo, las decisiones de ubicación se delegarían a los gobiernos estatales y locales, que podrían asegurarse de que la producción de viviendas no concentraría la pobreza. Además, la competencia por los créditos fiscales reduciría el costo para los contribuyentes y, con el tiempo, el sector privado produciría viviendas asequibles sin necesitar subsidios.

Algunos expertos consideran que el programa LIHTC tuvo un éxito extraordinario. En el transcurso de tres décadas, se construyeron más de 2,5 millones de unidades de vivienda. Pero en ese período, perdimos más unidades asequibles del inventario nacional de las que se construyeron. Además, las rentabilidades prometidas del sector privado nunca se materializaron. Según el año y el mercado, el costo de producción estimado de unidades de LIHTC fue entre un 20 y un 50 por ciento superior que el de las unidades similares sin subsidios. Esto ni siquiera incluye los US$ 100 millones estimados por año para la administración del programa.

Los créditos fiscales para patrimonios de inversionistas privados llegaron a los contribuyentes en tasas de tarjeta de crédito. Y los costos aumentaron cuando el capital público estaba en el valor más barato. Durante la Gran Recesión, los créditos fiscales producían un promedio de ganancias después de impuestos del 12 al 14 por ciento para los inversionistas cuando la tasa de fondos federales era casi cero y la ganancia de Hacienda a 10 años era de cerca del 2 por ciento. El sector privado nunca dejó de depender de los subsidios. Hoy, prácticamente no hay producción de alquileres asequibles sin créditos fiscales. Por último, es decepcionante que se haya aceptado universalmente que la producción de viviendas con crédito fiscal exacerbó la concentración de la pobreza.

¿Cómo puede ser que el programa de producción de viviendas más grande de la historia de la nación, con amplio apoyo de ambos partidos, provoque tanta decepción? Hay muchas cosas de las que no sabía (y no sabíamos) antes, en 1999, en 1979 e incluso en 1949, que me gustaría no saber ahora.

Ojalá no supiera que, aunque seamos muy buenos para identificar grandes desafíos y anunciar respuestas ambiciosas, nuestro compromiso casi nunca sobrevive a los desafíos económicos. Ahora sabemos que solo construir viviendas asequibles no alcanza para ofrecer una vivienda decente y un ambiente adecuado de vida. Se necesita un modelo sostenible que mantenga los edificios, conserve la asequibilidad en el tiempo y construya donde lo necesitamos: cerca de empleos y escuelas buenos.

Ojalá no supiera que el apoyo político es efímero, y que la memoria no perdura. Garantizar que el poco subsidio que hay llegue a quienes más lo necesitan es razonable, pero solo si el subsidio se protege. Los más necesitados son políticamente débiles y es poco probable que obtengan apoyo para defender sus derechos. Y cuando intentan hacerlo, es fácil convertirlos en el chivo expiatorio.

Ojalá no supiera que gastamos decenas de millones de dólares para evaluar programas de viviendas, pero no aprendimos mucho. Contamos unidades, hicimos de cuenta que la cantidad producida es la única medida importante de impacto. Hace veinte años, una de cada cuatro familias que reunían los requisitos para recibir ayuda para la vivienda la recibían. Hoy, es una de cada cinco familias. Aunque según la creencia general los costos de vivienda que superan el 30 por ciento del ingreso son insostenibles para las familias, alrededor de la mitad de los inquilinos pagan más del 30 por ciento de su ingreso antes de impuestos para alquilar, y el 20 por ciento entrega más de la mitad de su ingreso.

¿Cuándo haremos un análisis sincero de ocho décadas de labores para dar un techo a nuestra gente? Debido a la complejidad de los desafíos en cuanto a las viviendas, es imposible aprender algo de las evaluaciones de los programas. Para aprender, debemos revelar los resultados esperados y comprometernos con ellos, compartir la lógica que guía nuestras acciones y conciliar lo que logramos en realidad con nuestras intenciones. Este es un modelo de aprendizaje que adoptamos en el Instituto Lincoln, y espero que se pueda aplicar más ampliamente a análisis de políticas en los sectores de vivienda, desarrollo comunitario y filantropía.

Ofrecer viviendas asequibles para todos no es tarea fácil. Las dolorosas verdades de ocho décadas de trabajo se ofrecen no como una acusación, sino como una invitación para aprender, y pensar y actuar de otro modo. Debemos intentar cosas nuevas y aprender de ellas. Esa innovación puede ser construir departamentos sobre bibliotecas públicas, una tendencia que exploramos en este número. Puede significar forjar asociaciones inesperadas, como están haciendo los servicios públicos y los defensores de viviendas en Seattle. Puede significar rematar derechos de desarrollo o aprovechar el valor del suelo de otro modo.

Deberíamos aspirar a las mismas ambiciones de los confiados gestores de políticas de 1949, que se comprometieron para proveer “una vivienda decente y un ambiente adecuado de vida para todos los estadounidenses”. Pero tendremos que intentar muchas cosas nuevas y aprender de nuestros errores. Y, si nos comprometemos a “buscar un techo una y otra vez”, como canta Seger en la misma canción, podríamos lograrlo.

¿Tiene un ejemplo propio de “ojalá no supiera ahora lo que no sabía antes”? ¿Una política o programa del que podríamos o deberíamos haber aprendido? Queremos destacar algunos en uno de los próximos números. Envíenos el suyo a publications@lincolninst.edu.

Median rent in Brooklyn climbed between two to six percent each month during the first half of 2019, reaching $2,914 by July, according to Bloomberg (Price 2019). As the map indicates, low-income housing tax credits (LIHTCs) tend to be clustered in the northeast section of the borough. Affordable housing is in short supply in the more westerly neighborhoods whose mixed-use library and housing projects are described in this issue: Brooklyn Heights, where average rent increased 53 percent from 1990 to 2010–2014, and Sunset Park, where average rent increased 24 percent during the same period (NYU 2016).

View the PDF version of this map for more detail and a key.

References:

NYU Furman Center. 2016. “State of New York City’s Housing and Neighborhoods in 2015.” New York: New York University. https://furmancenter.org/files/sotc/NYUFurmanCenter_SOCin2015_9JUNE2016.pdf.

Price, Sydney. 2019. “Brooklyn Beats Manhattan for NYC Apartment Rent Increases.” Bloomberg. July 11. https://www.bloomberg.com/news/articles/2019-07-11/brooklyn-beats-manhattan-for-new-york-apartmentrent-increases.

Looking at the South African government’s map of “the social tapestry of Cape Town,” it’s not difficult to see the legacy of apartheid. The map shows many pockets of racial integration, but most nonwhite residents live in the Cape Flats, an expansive area southeast of downtown that extends far out to the urban fringes. This area includes the city’s infamous townships, built in the twentieth century to segregate black and mixed-race residents.

Whites, who make up only 15 percent of the population, occupy the northeastern and southwestern suburbs, the Atlantic shoreline, and much of the urban core, or City Bowl, so-named because it is surrounded by Devil’s Peak, Lion’s Head, and the iconic Table Mountain, the latter of which was voted one of the world’s New Seven Wonders of Nature.

The City Bowl is where Amazon recently moved into a new eight-story office building. Developers advertise newly built projects in the neighborhood like the 17-story Sentinel, “a super-modern glass and aluminum building offering the most contemporary architectural statement in the City Centre,” and the Onyx, an 11-story “jewel in the crown of Cape Town” featuring “hotel-style residents’ amenities in the form of a gym, outdoor cross-training track, a day spa with sauna, bar, and kitchen, as well as a sky terrace with dramatic harbour, city and mountain views.” Two of the Onyx’s penthouses came accessorized with a Jaguar SUV.

In Cape Town and the rest of South Africa, formal racial exclusion—enforced under centuries of colonial rule and sustained during the mid- to late-twentieth century by apartheid—has given way to economic segregation. Whites make up only a tenth of South Africa’s population, but nearly two thirds of its elite, according to the World Bank, which designates the country as the world’s most unequal. The top 10 percent of households possess more than 70 percent of the nation’s wealth.

Land is at the core of the problem, and one potential solution

After centuries of deep social divisions, Cape Town’s jobs, schools, and efficient transportation—sources of economic opportunity—are concentrated downtown and in affluent suburbs. Most residents can’t afford to live in those areas, and endure long commutes from townships and other far-flung neighborhoods, many lacking parks, hospitals, or, in some cases, basic infrastructure for water and sanitation.

Reversing such entrenched inequality will require a massive effort with many different solutions, but the city is poised to adopt a new policy that could help. Known as inclusionary housing or inclusionary zoning, the policy originated as a way to combat segregation in another nation with a history of racial oppression—the United States.

The mechanics of inclusionary housing are simple: owners of real estate projects are required to sell or rent some of the new homes or apartments to lower-income residents at prices they can afford. In some cases, property owners can provide the affordable housing at a nearby location or pay into a housing fund. Cities can specify how much affordable housing is required, and exactly how low the rent or sales prices need to be.

Inclusionary housing is a form of land value return, or land value capture, a type of policy that allows the public sector to tap the gains from rising property values that result from public sector actions—construction of a new road, for example—rather than those of the individual property owner, and use the value increase for the public’s benefit. One common source of property value increase is a change in the density of a neighborhood or individual property.

“Inclusionary housing is rooted in the understanding that much of land’s value is generated by actors other than the property owner,” said Enrique Silva, director of international initiatives for the Lincoln Institute of Land Policy.

Willard Matiashe, a researcher for the Development Action Group, a housing policy organization in Cape Town, described inclusionary housing as “one way of sharing the land value windfalls linked to additional development rights that the city gives to developers.”

Inclusionary can be a tool for spatial justice

Now used in more than 800 U.S. communities, inclusionary housing first gained traction in the 1970s, partly in response to a practice known as exclusionary zoning, by which cities used land-use regulations to prevent less affluent, often nonwhite renters or home buyers from moving to desirable neighborhoods. Common exclusionary measures include prohibitions of apartments or smaller homes.

South Africa enforced its segregation through more explicit land-use laws, most notoriously the Group Areas Act, which established different sections in cities for each race. Beginning in the 1960s under this law, Cape Town forcibly removed 60,000 nonwhite residents from an area near the city center known as District 6, bulldozed their homes, and relocated them to the urban fringes.

^{Cape Town under the Group Areas Act. Illustration by Myriam Houssay-Holzschuch, Olivier Ninot, and Emma Thébault}

After the end of apartheid in 1994, the new democratically elected government immediately recognized the importance of land in addressing inequality. In an early white paper, the government committed to establishing “socially and economically integrated communities, situated in areas allowing convenient access to economic opportunities as well as health, educational, and social amenities.” Two years later, it enshrined these ideas in the new constitution.

But breaking the cycle of segregation has proven difficult. In response to an urgent need for basic housing, the post-apartheid government has built millions of homes for low-income South Africans, but they are located mostly at the urban periphery where land is cheap. These homes provide shelter but little access to opportunity.

“South Africa has acknowledged in law that they need to have a strategy for desegregation and they’re in search of practical tools to achieve that goal,” said Rick Jacobus, who has studied inclusionary housing and recently traveled to South Africa on behalf of the Lincoln Institute to learn and advise public officials.

Momentum behind inclusionary housing in South Africa is building

South Africa’s policy makers first put inclusionary housing on the agenda in 2004 as part of a national housing plan, and in 2007 the Department of Housing produced a framework for national legislation. However, these efforts fizzled in the face of opposition from the real estate industry, a downturn in the housing market, and technical concerns.

In the absence of a coherent national policy, cities have experimented with their own policies. The country’s largest city, Johannesburg, adopted the country’s first municipal inclusionary housing policy in 2008 for high-priority transportation corridors, although the policy was rarely used. Johannesburg recently adopted a new citywide policy, but it allows developers to meet the requirements simply by building market-rate homes or apartments of a smaller size—an indirect way to reduce the rent or sale price.

These initial efforts have been relatively modest, but there is now a stronger legal foundation for inclusionary housing in South Africa, thanks to another piece of legislation enacted a few years ago. In 2013, South Africa’s parliament enacted the Spatial Planning and Land Use Management Act (SPLUMA), which established spatial justice as one of the core development principles that should guide local land use, stating that “past spatial and other development imbalances must be redressed.” Now advocates in Cape Town are relying on that law to push for more aggressive affordable housing policies.

In Cape Town, momentum behind inclusionary housing has been fueled by a real estate boom that began in the early 2010s. Home prices have increased faster in Cape Town than elsewhere in the country, in part because of a strong luxury market and demand from foreign buyers, who are drawn to the dramatic landscape and Mediterranean-style climate. The market has cooled recently amid a national economic slump and a 2018 water crisis, but prices in some neighborhoods are still double what they were just five years ago. Only a fraction of Cape Town’s households can afford the average-priced house in the city.

^{The central business district in Cape Town. Photo by Amy Cotter.}

Building on the legal foundation of SPLUMA, an activist group called Ndifuna Ukwazi (“Dare to Know” in the regional Xhosa language) began in 2017 to file objections against real estate projects for which developers sought changes in the regulations—to build above the allowable height, for example. These challenges have led some developers to voluntarily add affordable housing to their projects, but the process has been ad-hoc, often with weak enforcement.

Last month, Ndifuna Ukwazi escalated its campaign with a lawsuit against the city over its approval of a proposed mixed-use tower called The Vogue, which would become one of Cape Town’s tallest buildings and promises to be “iconic in both form and function,” with “undulating balconies and roof gardens” and “top-level penthouse apartments which will all enjoy panoramic views over the Atlantic Seaboard.”

Among the handful of Capetonians who could afford an apartment in the development, nearly half are white, Ndifuna Ukwazi said in its lawsuit, even though whites make up only a sixth of the city’s population.

“Every new exclusive development that is approved by the city without affordable housing entrenches a system of racial segregation and unequal access to services,” the group said in a statement.

Developers are at the table

Such pressure has made developers more open to an inclusionary housing policy. Last year, developers sat down with advocates, experts, and city officials in a series of dialogues, hosted by the Development Action Group and the Lincoln Institute. Developers said they would prefer the certainty of a citywide policy if it could eliminate the risk of challenges to individual projects, which can create costly delays.

“Developers in the room were saying, ‘give us the number so we can factor that into our proposals,’” said Matiashe of the Development Action Group.

Nigel Burls, a Cape Town planning consultant who works on behalf of developers but did not participate in the dialogues, said developers might support an inclusionary housing policy if it doesn’t make projects infeasible.

“If it seems to be addressing a problem and it’s not seen to be penalizing developers, the developers will jump on the bandwagon,” Burls said. “It has to be carefully structured and it has to be carefully thought through. It has to be done in a manner that it doesn’t kill development.”

The city is making efforts to enact such an inclusionary housing policy. In a concept document released last year, Cape Town proposed to tie inclusionary housing to zoning change or additional development rights that increase property values. A draft policy is expected sometime in 2020.

“If we can get a policy together that speaks to more equitable ownership and benefit from the land and land value, it’s an incredibly important moment,” said Gail Eddy, a research officer for the city of Cape Town who is helping to craft the new policy.

By itself, inclusionary housing would not solve Cape Town’s problems of segregation and unaffordable housing. The policy would only work in neighborhoods that can attract market-rate development, which excludes large swaths of the city where infrastructure is poor. It would not produce nearly enough homes and apartments to meet the needs of the poorest residents.

Nevertheless, an inclusionary housing policy would establish the principle that the whole community has a claim on land and its value, and that the city can use land to redress its inequalities.

“Inclusionary housing is a statement that land should be used for the benefit of the public—in the case of Cape Town and South Africa, to help reverse longstanding patterns of exclusion,” said Silva of the Lincoln Institute.

Will Jason is associate director of communications at the Lincoln Institute of Land Policy.

Photograph: Cape Town, South Africa, with Table Mountain as the backdrop. Credit: kavram/iStock via Getty Images.

A city in the generally take-it-slow Midwest may seem like an unlikely place for the start of a revolution. But Minneapolis has passed some of the most progressive housing policies and zoning reforms in the country, and other cities—including those on the coasts struggling to overcome an affordability crisis—are taking notice.

Minneapolis first attracted attention by banning single-family-only zoning in an effort to usher in more multi-family housing in all neighborhoods. The city also legalized accessory dwelling units, eliminated minimum parking requirements, and dramatically up-zoned for more height and density along transit corridors and around employment centers.

Perhaps most important, Minneapolis tied all up-zoning with increased affordability requirements for new development—based on the idea that changing zoning to allow more housing creates measurable value for private landowners and developers.

It was a singular moment when a political coalition came together to focus on equity, says Minneapolis City Council President Lisa Bender, one of the leaders of the effort and a rising star in local politics. She made time for the Land Matters podcast recently on a trip to Vancouver, Canada, where she was a speaker at Rail-Volution, an annual summit promoting transit and transit-oriented development.

Vancouver—full of residential high-rises and well served by transit, but known as the most expensive city in North America—was a fitting place for the 41-year-old Bender, who has a master’s degree in city and regional planning from the University of California Berkeley and served for a time in San Francisco’s planning department, to reflect on her experiences. Nobody wants a city, she says, that can only be enjoyed by the wealthy.

You can listen to the interview and subscribe to Land Matters on Apple Podcasts, Google Play, Spotify, Stitcher, or wherever you listen to podcasts.

Learn More

Backyard Brouhaha
Inclusionary Housing: Creating and Maintaining Equitable Communities
Land Value Capture: Tools to Finance Our Urban Future
 

Photograph Credit: Kubrak78/GettyImages

“Wish I didn’t know now what I didn’t know then.” 

It was a throwaway line in Bob Seger’s 1980 ballad “Against the Wind,” a reflection on innocence and regret. Although he felt the line sounded odd and thought it was grammatically incorrect, Seger kept it in because the people around him liked it. The line has since inspired other artists to offer their own interpretations. It inspires me as an invitation to learn, providing a frame for reflection on unintended consequences and letting us imagine how we might have done things differently. It’s particularly apt in the context of our current national affordable housing crisis.  

For four decades I directed and studied the use of public, private, and philanthropic funding to produce affordable housing and provide decent shelter for low-income families since the Great Depression. Lots of big ideas were discussed, many of them implemented. Most of those implemented did not deliver the expected results, but they all delivered unintended consequences. What can we learn from these 20th-century missteps—and more to the point, what are we willing to learn?  

The federal government has struggled for more than eight decades to meet the basic commitments it made in the U.S. Housing Acts of 1937 and 1949: “a decent home and a suitable living environment for all Americans.” The acts committed significant subsidies to build new public housing and eradicate slums. They promised new jobs, modernized cities, and better housing for those who needed it. Because the Housing Acts proposed to benefit all Americans, they attracted broad public support.

When implementation time came, most public housing authorities aimed to provide housing for those in the lower half of the income distribution—a politically popular decision. To maintain the new housing stock, rents were set to cover buildings’ operating expenses. But as the buildings aged, operating expenses increased, and rents increased along with them. By the late 1960s, lower income tenants were getting priced out—paying upwards of 60 percent of their income to keep a roof over their heads.

Senator Edward Brooke (R-MA) remedied the situation by sponsoring an amendment to the Housing Acts in 1969, which capped rents at 25 percent of tenants’ incomes. The federal government covered operating shortfalls with subsidies. For reduced rents to be set, tenants had to disclose their incomes. It soon became apparent that public housing was not serving the poorest families with the greatest housing needs. In 1981, Congress acted again, reserving public housing for families earning half of the median income and reserving 40 percent of the units for families earning less than 30 percent of the median.  

The deterioration of the buildings was accelerating. This was because federal operating subsidies did not cover capital expenses and major systems (heating, lighting, elevators) began to fail. The federal fiscal austerity of the 1980s compounded problems by reducing operating subsidies. By the end of the decade the only reasonable response to the national crisis in public housing was widespread demolition.  

As the subsidies declined and our aging housing stock failed, a counternarrative emerged through which the residents themselves were blamed. The “culture of poverty” and “learned helplessness” became dominant memes. Poverty was viewed as a communicable disease rather than a symptom. The poor became convenient scapegoats bearing responsibility for the failure of their own shelter, as if any renters, poor or not, are expected to take responsibility for maintenance of their buildings. By concentrating the poor in public housing, we reinforced bad habits and transmitted values that perpetuated poverty across generations. This was supported by another dominant meme of the 1980s—the perils of big government. Big government was sloppy and inefficient, this narrative went (and still goes); the decline of public housing was the government’s fault.  

In the “HOPE” programs that followed—Homeownership and Opportunity for People Everywhere—many public housing projects were replaced with low-rise, mixed-income developments, typically replacing one affordable unit for three that were demolished. To stimulate additional rental housing production, the federal government created the low-income housing tax credit (LIHTC) in 1986. The program offered private investors a decade’s worth of tax credits in exchange for upfront equity investments—typically the hardest money to find—for housing production. States had authority over how to allocate the credits, and regulations mandated long-term affordability of the housing.

Importantly, the LIHTC program promised to overcome the two biggest failings of public housing. By attracting private investment, the efficiencies of the private sector would overcome dependence on inefficient big government. Second, location decisions could be delegated to state and local governments who could ensure that the housing production did not concentrate poverty. Moreover, competition for the tax credits would reduce their cost to taxpayers and eventually, the private sector would produce affordable housing without the need for subsidies.  

Some pundits consider the LIHTC program extraordinarily successful. Over three decades, more than 2.5 million units of housing were built. But through that period, we lost more affordable units from the national housing stock than we produced. Moreover, the promised private sector cost efficiencies never materialized. Depending on the year and the market, production of LIHTC units was estimated to cost 20 to 50 percent more than similar unsubsidized units. This does not even count the estimated $100 million spent annually to administer the program. 

Tax credits for equity from private investors came at credit card rates to taxpayers. And the costs went up when public capital was cheapest. During the Great Recession, tax credits were yielding average after-tax returns of 12 to 14 percent to investors when the federal funds rate was near zero and the 10-year Treasury yield was around 2 percent. The private sector never was weaned from subsidy dependence. Today, virtually no affordable rental production happens without tax credits. Finally, disappointingly, it is universally accepted that the production of tax credit housing exacerbated the concentration of poverty.  

How can the largest housing production program in the history of the nation, with broad bipartisan support, produce such disappointment? There are a lot of things I wish I didn’t know now that I (and we) didn’t know then—in 1999, in 1979, even in 1949.  

I wish I didn’t know that as good as we are at identifying big challenges and announcing ambitious responses, our commitment rarely survives economic challenges. We know now that simply building affordable housing is not sufficient for providing a decent home and a suitable living environment. One needs a sustainable model that maintains the buildings and preserves their affordability over time and builds where we need to—close to good jobs and schools.  

I wish I didn’t know that political support is evanescent, and memories are short. Ensuring that scarce subsidy reaches those who need it most is reasonable, but only if the subsidy is protected. The neediest are politically weak and not likely to marshal support to defend their entitlements. And when they try, they are easy to scapegoat.  

I wish I didn’t know that we spent tens of millions of dollars evaluating housing programs, but we haven’t learned very much. We counted units, acting as if the number produced is the only important measure of impact. Twenty years ago, one in four families who qualified for housing assistance received it. Today, it is one in five families. While the general wisdom says housing costs that exceed 30 percent of income are unsustainable for families, about half of renters pay more than 30 percent of their pretax income for rent, with 20 percent handing over more than half of their income.  

When do we take an honest reckoning of eight decades of effort to shelter our people? The complexity of housing challenges makes it impossible to learn anything from program evaluations. To learn, we need to reveal and commit to our intended outcomes, share the logic guiding our actions, and reconcile what we actually accomplish with our intentions. This is a learning model that we’ve embraced at the Lincoln Institute and I hope it can be applied more broadly to policy analysis in housing, community development, and philanthropy.  

Providing affordable housing for all is no easy task. The painful truths of eight decades of work are offered not as an indictment, but as an invitation to learn, and to think and act differently. We need to try new things and learn from them. That innovation might take the form of building apartments above public libraries, a trend we explore in this issue. It might mean forging unexpected partnerships, as public utilities and housing advocates are doing in Seattle. It might mean auctioning development rights or otherwise leveraging land value.  

We should aspire to the same ambition of the confident policymakers of 1949, committing to provide “a decent home and a suitable living environment for all Americans.” But we’ll need to try a lot of new things and learn from our mistakes. And if we commit to “searching for shelter again and again,” as Seger sings later in the same song, we just might get it done. 

Have your own example of “wish I didn’t know now what I didn’t know then”? A policy or program we could have, or should have, learned from? We hope to spotlight a few in an upcoming issue—send yours to publications@lincolninst.edu.

George W. McCarthy is the President and CEO of the Lincoln Institute of Land Policy.