House Bill Makes Significant Improvements In “Hope Vi” Public Housing Revitalization Program
Provisions to Overcome Employment Barriers Need Strengthening
January 30, 2008
On January 17, the House of Representatives approved H.R. 3524, the HOPE VI Improvement and Reauthorization Act of 2007, by a vote of 271 – 130. The bill reauthorizes the program for 7 years, while making a number of important improvements.
Historically, HOPE VI — which provides grants to public housing agencies to revitalize severely distressed public housing projects — has received broad, bipartisan support. In recent years, however, in response to Bush Administration proposals to eliminate the program and to the overall drive to cut domestic appropriations, Congress has reduced annual funding for HOPE VI by more than 80 percent. (For 2008, the program is funded at $100 million, down from $625 million in 1999.)
There continues to be bipartisan interest in boosting funding for HOPE VI, however, and before significant new investments are made, it is important to reform the program to address weaknesses that have become evident over HOPE VI’s 15-year history and to ensure that the program significantly improves families’ lives, including the most disadvantaged families. The House bill would make many of the changes that are needed. (A substantially different reauthorization bill, S. 829, has been filed in the Senate but has not yet been fully considered by the Banking Committee.)
HOPE VI is an ambitious program. It aims to rebuild housing, improve economic conditions in the surrounding neighborhood, and help very poor families progress towards self-sufficiency. In many localities it has achieved at least the first two of these goals, but its impact on residents has been mixed. As experts from The Urban Institute and The Brookings Institution stated in a 2004 comprehensive review of the program:
The [HOPE VI] program has achieved substantial success; it has demolished some of the most distressed and destructive housing environments, replaced them with much higher-quality housing and, in many cases, with mixed-income communities. Many residents who relocated with vouchers are living in higher-quality housing in safer neighborhoods. … However, the evidence also points to the urgent need for reforms in the HOPE VI program if it is to realize its full potential to improve the circumstances of very low-income families and communities.[i]
The Bush Administration has argued that HOPE VI should be ended because it has achieved the initial goal of demolishing 100,000 severely distressed public housing units. However, some of the 1.2 million remaining units of public housing nationwide have deteriorated further because of persistent underfunding of public housing’s operating and capital needs, and are now severely distressed. There are between 47,000 and 82,000 such units, according to a 2007 Urban Institute analysis.[ii]
The Administration also has argued that HOPE VI’s approach to addressing distressed public housing costs too much per unit replaced. But the Urban Institute analysis found that in many cases, it would cost the public sector more to do nothing about these housing developments than to make the investments needed to revitalize them. And doing nothing should not be an option when families are living in federally assisted but very substandard housing.
More modest rehabilitation — or simply demolishing the units and providing tenants with replacement vouchers to find new apartments — would require less in federal housing funds. But it would be unlikely to yield equivalent benefits for neighborhoods and cities, unless the private sector were poised to redevelop the area without government intervention. And if the area were undergoing such gentrification, vouchers alone would probably not permit families to remain in their neighborhood if they wished to do so.
Most importantly, no response to severely distressed public housing is likely to achieve HOPE VI’s goal of better life outcomes for very poor families if it does not include comprehensive services to help them overcome substantial barriers to employment and, if they receive vouchers, to move to low-poverty communities if they wish to make such moves.
Given the major investment represented by each HOPE VI grant,[iii] policymakers should aim to maximize the program’s positive results and minimize any negative impacts it might have on people who are displaced when their homes are demolished. As this report explains, the House bill would make significant changes in each of the key areas in which HOPE VI needs improving.
[i] Susan J. Popkin, Bruce Katz et al., “A Decade of HOPE VI: Research Findings and Policy Challenges,” Urban Institute, 2004, p. v.
[ii] Margery Austin Turner et al., “Severely Distressed Public Housing: The Costs of Inaction,” Urban Institute, March 2007. For both estimates, the Urban Institute researchers looked only at public housing developments not scheduled for demolition or replacement in census tracts with poverty rates above 30 percent. The lower figure is based on the developments considered to be seriously deteriorated (based on a HUD REAC score below 75) with more than 30 percent of residents relying primarily on welfare income. The higher figure assumes somewhat less stringent measures of physical deterioration (REAC score below 80) and welfare dependency (more than 25 percent).
[iii] HUD figures indicate an average cost per unit developed with HOPE VI of $153,441, of which $63,114 (or 41 percent) is contributed by the HOPE VI program. These figures include demolition and site preparation as well as construction of all units, including market rate and tax credit-assisted units as well as public housing. It appears that the figures do not include relocation costs, housing voucher assistance, or resident services and are not adjusted for inflation of expenditures in earlier years. Statement of Orlando J. Cabrera, Asst. Secretary, U.S. Department of Housing and Urban Development, Subcommittee on Housing and Community Opportunity of the House Financial Services Committee, June 21, 2007, p. 6. The Urban Institute found a median per unit development cost of $160,400, with 37 percent of the cost covered by HOPE VI, and an additional median cost for resident services per original resident of $7,620. Margery Austin Turner et al., “Estimating the Public Costs and Benefits of HOPE VI Investments: Methodological Report,” July 2007, p. 16. Estimates by GAO were considerably higher: $223,190 per unit for development alone (without demolition etc.), and $248,720 including all costs. GAO’s estimates are based on HUD and housing agency data for HOPE VI projects funded in 2000 and earlier. GAO, “Federal Housing Assistance: Comparing the Characteristics and Costs of Housing Programs,” GAO-02-76, January 2002, pp. 21, 62. It is unclear whether the difference in time period covered is sufficient to explain the considerable difference in these cost figures.