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By Howard Husock

America’s Trillion-Dollar Housing Mistake: The Failure of American Housing Policy.

Eye on the News

Howard Husock
Three Bedrooms, One Tenant
New York confronts underoccupancy in subsidized housing.
June 21, 2011

It’s a familiar scenario for those whose children have grown up and left home: a house or apartment, once the right size for a family of four or five, becomes more than a middle-aged parent or parents need. The cost, whether it’s in property taxes or rent, doesn’t seem worth it any more. And so a household makes the hard decision to downsize, perhaps moving to another neighborhood or even another part of the country to save money. This process doesn’t just help families adapt to changing life circumstances; it keeps cities dynamic, as the aging make way for ambitious newcomers.

Things are dramatically different, however, in public housing, especially in New York. In Gotham’s projects, either tenants pay a percentage of their income in rent, or else their apartments have fixed rent ceilings. Property taxes and utility bills may rise for others, but not for them. So it is that one person may inhabit a three-bedroom apartment with no incentive to leave. The New York City Housing Authority (NYCHA) estimates that 40,000 units in its 180,000-unit system (the nation’s largest) are “underoccupied,” with one or more empty bedrooms. Meanwhile, 144,000 families, mostly single parents with young kids, languish on the waiting list for an apartment.

NYCHA recently announced that it will start taking steps toward moving some of the overhoused out of their apartments. “It’s a constrained resource,” says NYCHA chair John Rhea. “Resources should be scaled to the need.” It’s Rhea’s hope to make more of these apartments available to those who truly need them, such as “the hard-working immigrant with a family of four, struggling to make ends meet.” Rhea deserves applause for confronting the issue, but NYCHA has instead been attacked in some quarters. TAKE THAT, GRANDMA: CITY HOUSING AUTHORITY TARGETING TENANTS WITH MORE SPACE THAN THEY NEED, declared the Daily News.

It will be a major management challenge to “create mobility for people,” as Rhea delicately puts it. Rhea, who brings a sterling business-management background to his post, must deal with the fact that NYCHA has limited leverage over those thousands who prefer to stay put. It’s understandable why some don’t wish to leave; after all, they won’t save any money in rent by moving to a smaller place. So NYCHA is forced to consider either building more one-bedroom units for overhoused residents—a difficult prospect for an agency already facing a steep structural budget deficit—or dangling a housing voucher to allow them to move to one of the city’s 100,000-plus voucher-paid units (for which there is also a long waiting list).

Rhea concedes that NYCHA will ultimately need to wield some sort of “stick” to force tenants to move, which is bound to set off a public backlash. He promises “to be very transparent, to provide appropriate notice,” and other steps designed to soften the blow. But coming up with a way to do it won’t be easy. The U.S. Department of Housing and Urban Development rules currently prohibit the most obvious solution: paying tenants to relocate. “We are not going to put money in their pocket,” says Rhea, and he has no cash to spare even if the rules permitted it. If HUD could be convinced to allow NYCHA to make such relocation payments, however, one way to raise the needed funds would be to start selling off some of the many high-value properties that NYCHA owns in lower Manhattan and on the Brooklyn waterfront. Such sales would net hundreds of millions, which could be used for both relocation expenses and the huge maintenance backlog that plagues the aging public-housing system. Adopting a time limit on new tenancies, similar to the five-year limit on public cash assistance, is another approach that could work.

The city’s addiction to “affordable housing” extends beyond its projects. New York’s 1 million–plus rent-stabilized apartments are also plagued by underoccupancy, and for the same reason: tenants have no incentive to make normal life-cycle transitions. Generations of public officials cannot seem to accept this truth. State Comptroller Thomas DiNapoli, for instance, has found that 64 percent of the city’s 2.1 million rental apartments enjoy protection from market forces—but like so many before him, he sees this as a good thing. He concludes that “rent regulations keep the price tag of living in New York within reach for millions of working men and women. That’s good for the city and the city’s economy.”

DiNapoli has things exactly backward. So-called affordable housing leads to inefficient use, to shortages, and to waiting lists. Building more and more subsidized units is not the answer. It is far better to free tenants from the false benefits of a dependency that shelters them from choice and change. For any city that hopes to remain vigorous, housing must be free to change hands. Only that way can we make room for those, rich and poor, who will build the city anew.

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