Most policy experts agree these days that big public housing projects are noxious environments for their tenants. What’s less well understood is how noxious such projects are for the cities that surround them. Housing projects radiate dysfunction and social problems outward, damaging local businesses and neighborhood property values. They hurt cities by inhibiting or even preventing these rundown areas from coming back to life by attracting higher-income homesteaders and new business investment. Making matters worse, for decades cities have zoned whole areas to be public housing forever, shutting out in perpetuity the constant recycling of property that helps dynamic cities generate new wealth and opportunity for rich and poor alike.

Public housing spawns neighborhood social problems because it concentrates together welfare-dependent, single-parent families, whose fatherless children disproportionately turn out to be school dropouts, drug users, non-workers, and criminals. These are not, of course, the families public housing originally aimed to serve. But as the U.S. economy boomed after World War II, the lower-middle-class working families for whom the projects had been built discovered that they could afford privately built homes in America’s burgeoning suburbs, and by the 1960s, they had completely abandoned public housing. Left behind were the poorest, most disorganized, non-working families, almost all of them headed by single women. Public housing then became a key component of the vast welfare-support network that gave young women their own income and apartment if they gave birth to illegitimate kids. As the fatherless children of these women grew up and went astray, many projects became lawless places, with gunfire a nightly occurrence and murder commonplace.

The crime and disorder didn’t stay within the confines of the blighted projects, as residents in neighborhoods dominated by public housing know only too well. Joe Petrone, a longtime resident of Philadelphia’s East Falls neighborhood, where his family owns a real-estate business, has watched the whole life cycle of America’s experiment in subsidized housing play out on his doorstep. The now demolished East Falls housing project opened some 40 years ago as housing for working families. “We’d celebrate people ‘graduating’ from the projects,” Petrone recalls of neighbors in those days. “We viewed it as an up and out situation.” But as non-working residents replaced the working ones, explains Petrone, a director of real estate for the city of Philadelphia, kids from the project began menacing the long blocks of privately owned row houses on adjoining Calumet Street and the neighborhood shopping area along Ridge Avenue. “You’d have bricks coming through windows on Calumet Street, thrown from high-rises,” he says. “Ninety percent of the robberies involved a perp who would disappear into the project.”

The disorder exacted a huge toll on the neighborhood’s economic vitality, Petrone says. “It got to the point where you wouldn’t sell a three-story house in the area for more than $600”—a house that had once taken a whole working-class lifetime to own free of debt and that represented a family’s life savings.

Some might dismiss Petrone’s grumbling as the intolerance of a white ethnic for minority newcomers in his once overwhelmingly Italian-American neighborhood. They’d be dead wrong. You’ll hear exactly the same complaints from hardworking minority residents of project-dominated neighborhoods, too. “When you have single parents, you have lots of unsupervised teenagers and lots of drugs and gangs,” observes Laurena Torres, an Italian-Hispanic East Harlem real-estate agent and property owner, whose rental brownstones look out on the Robert Wagner Homes, a spine of projects looming over First Avenue. “It affects your everyday life—you have to avoid the projects just to get to the cleaners, the laundry, or the grocery,” she says. “None of us goes into them, or crosses through them—even at 1 in the afternoon—as a short cut.”

Fear of those who live in housing projects can drive neighbors who can afford it to move—another drain on urban vitality, since these are often the striving, upwardly mobile people who make neighborhoods flourish. Torres remembers a day three years ago when the valued tenants living in one of her apartments—“a professional couple,” she says—moved out, after finding blood splattered on their stoop from a drug dispute that had (quite literally) spilled over from the projects. “They got up that morning,” recalls Torres, “and said, ‘This is enough.’ ” It’s her upwardly mobile minority tenants, says Torres, who complain most about the “undesirable element from the projects.”

Earnest Gates, founder of Chicago’s Near West Side Community Development Corporation, once would have pooh-poohed the worries of Torres’s ambitious minority tenants. During the late 1980s, he tried to transform the Near West Side, a respectable lower-middle-class neighborhood with a substantial number of black homeowners, into an all-black community where all social classes would live side by side. Gates’s experiment in racial social engineering required keeping white gentrifiers out, and he decided to use what he calls “the stigma of public housing” to do it. In exchange for dropping his organization’s opposition to the construction of a new basketball stadium in his neighborhood, Gates won from the city the right to develop some 75 vacant, city-owned lots in the area. Working with the Chicago Housing Authority, he proceeded to mix new, owner-occupied homes with buildings featuring new public housing units.

Gates’s gambit kept out interloping whites, all right; but it also enraged law-abiding minority homeowners, who didn’t much care for their new publicly housed neighbors, some of whom had turned their subsidized residences into crack dens. Gates had hoped that the hardworking poor would move into his subsidized units. Instead, he says ruefully, “We got the bad players.” Today, the middle-aged Gates, whose demeanor remains that of a stern, subtly confrontational sixties black militant, admits that he made a serious mistake. “I have regrets,” he says, “and a lot of the homeowners here are pissed off at me.”

To understand more fully how much damage public housing can inflict on neighborhoods like the Near West Side, consider what can happen when it disappears from a troubled area of a city. After northern Philadelphia’s bleak Richard Allen Homes met with the wrecking ball two years ago, developer Lawrence Rust pounced, putting together a detailed development plan for the derelict area near the demolished project. Soon he was gutting and renovating previously vacant buildings, and selling to yuppie gentrifiers. “I took 15 dumpsters filled with trash out of here,” Rust tells some prospective buyers of a three-story loft he is renovating—a 20-something graphic designer and a singer, both from New York. He’s selling the row house he restored next door for $225,000, on a block where a few years ago houses went for $1,500, and property taxes were negligible.

The prospect of this kind of urban improvement has led Mayor Edward Lambert of Fall River, Massachusetts—a formerly depressed New England mill town starting to revive as a home for high-tech manufacturing and for Boston and Providence commuters—to push for the demolition of the 100-unit Watuppa Heights housing project, despite a state offer to provide $6 million (or about $60,000 per apartment) to upgrade it. (State—and not, as is usually the case, federal—funds had originally bankrolled construction of the project.) He plans to replace the project with new owner-occupied homes, though developers may get city subsidies to keep the prices low.

Lambert, a Democrat, argued that Watuppa Heights was a magnet, drawing households with social problems to his city from Boston and other cities with large numbers of residents eligible for subsidized housing. His office discovered that, out of 1,700 households waiting to receive public housing placement in Fall River, only 200 actually lived in the city (and most of those had passed up available units in Watuppa Heights while waiting for apartments in newer, more desirable public housing). A Boston Globe article, reporting that Boston social workers were encouraging low-income households to move to the old mill town, where there was greater vacancy in the public housing system, provided further evidence that Watuppa was filling up with out-of-towners.

And they were disproportionately a bad lot. Statistics showed crime falling citywide but spiking in Watuppa Heights. New project residents coming from other cities, the mayor pointed out, brought with them “more police calls, more special-needs kids, more crime, and more drugs.” As one mayoral aide noted, “The mayor wouldn’t put it this way, but the basic argument was that you had people coming from all over to use our services and make the place trashy.”

Perhaps surprisingly in a state where “affordable housing” is a mantra, the Massachusetts State Legislature recently gave Lambert the green light to demolish the project. The vote represented a big win for the mayor and for Fall River’s state legislators—and a major turning point for a city fighting hard to improve its schools and its economy.

The destruction of a project like the Richard Allen Homes or Watuppa Heights, however, remains a relatively rare event. And this fact points to a second, more subtle, way that public housing harms cities. Unlike privately owned buildings, public housing becomes property permanently fixed in a particular, low-value use, even as cities change and renew around it. Many projects have loomed over their neighborhoods for decades now. The names of some even suggest that the racial makeup of their residents will always be the same: the two Borinquen Plazas in the Bushwick section of Brooklyn seem forever intended for Puerto Ricans, the Langston Hughes Apartments in Brooklyn’s Brownsville neighborhood for African-Americans, as if some races are fated disproportionately to be poor, dysfunctional wards of the state—a mistaken and racist assumption that has characterized so much harmful social policy over the last several decades. All the while, cities never discover what new, imaginative uses the free market might invent for these frozen areas.

In New York City, the sheer quantity of property locked into service as public housing works as a significant drag on the city’s economy. In East Harlem, where no fewer than 13 huge housing projects stand (“the world’s greatest concentration of public housing,” city officials once boasted), almost no part of the neighborhood escapes their intimidating, prosperity-squelching presence. “We’re surrounded on all sides by them—they’re an eyesore, and there’s an awful lot of run-off, whether crime or drugs,” says one prominent property manager, whose firm owns 1,300 units in some 60 buildings in the area. “If we had even half the number of projects,” he laments, “we’d be the next East Village, with our proximity to midtown and the Number 6 subway train going right through the neighborhood.”

But East Harlem isn’t the only place in New York with an excess of public housing. Gotham has vastly more public housing units than any other city in the nation—nearly 200,000 of the national total of 1 million or so. (Chicago is a distant second, with 38,000 units.) Public housing occupies an astounding 2,500 acres of real estate in New York, the equivalent of 156 World Trade Center sites: a city within the city.

This profusion of public housing also reduces the space available for private housing—a real problem in a city where private housing, especially in the middle-income price range, is in perennially short supply. One New York neighborhood facing this problem is the Brooklyn Navy Yard area, home of a former shipbuilding operation that’s now an industrial park, with 3,500 employees working for dozens of small businesses. Many more firms will probably join these companies once a planned new movie studio opens in the neighborhood. Yet there’s virtually no housing available in the vicinity for the industrial park’s middle-income workers, because two big public housing projects use up much of the area’s space and discourage residential development in the rest. Says Richard Drucker of the Brooklyn Navy Yard Development Corporation, the nonprofit that runs the yard under lease from the city, “There’s a great demand for middle-income housing in the area. If you could build it, it would sell.” And if such housing replaced the projects? Replies Drucker: “Brooklyn would be better off.”

Nevertheless, the challenge of freeing the Brooklyn Navy Yard and other urban neighborhoods across the nation from public housing is daunting. The belief that “public housing ye shall always have with you” is sacrosanct among housing advocates and officials. Like public housing’s originators more than a half-century ago, they are convinced that the private housing market will always exclude the poor, making public housing permanently essential.

It is this assumption that drives the Department of Housing and Urban Development’s ongoing multi-billion-dollar Hope VI reform initiative—the latest in an endless series of HUD efforts to remedy the endless failures of its earlier housing programs. Hope VI has demolished 70,000 aging public housing units nationwide (including Chicago’s notorious Robert Taylor Homes), only to replace many of them with new units of a different design, in the belief that this time HUD will get the formula right.

As has been the fantasy of public housing officials from the beginning, HUD bureaucrats believe that the right kind of public housing can cure the ills of the “severely distressed.” In this oft-disappointed belief, Hope VI is replacing many of the alienating high-rises that it is tearing down with more comfy town houses, and it seeks to get higher-income families to move into the new units along with the very poor, thinking that the more successful families will set a good example for the less successful. “Hope VI will strike a balance and create stable communities,” explains HUD deputy assistant secretary Milan Ozdinec, a career bureaucrat in the agency. “It has the very low income side by side with the family earning 60 percent of median,” he says. “That’s where connections are made, examples are set, and social capital built.”

But this is mere wishful thinking. Why assume that the poor and dysfunctional will learn from the more successful? Isn’t it just as likely that the children of the dysfunctional will set a bad and potentially damaging example for the children of the successful? Did Earnest Gates’s public housing tenants learn from the more prosperous blacks of Chicago’s Near West Side? The burned-out crack houses suggest otherwise—as do the noisy, unkempt properties rented by federal housing-voucher tenants in respectable working-class neighborhoods nationwide. Moreover, it is far from certain that many Hope VI projects will be able to attract a mix of households in the first place. Why would those with the means to live elsewhere choose to move, say, into new Hope VI public housing going up in the badlands of Chicago’s South Side?

Hope VI only perpetuates public housing’s ill effect on cities. On the former site of the closed East Falls public housing project, the Philadelphia Housing Authority is building 304 new Hope VI units. In this new development, christened Schuylkill Falls, half the units will go to low-income tenants, even though the site borders Schoolhouse Lane, some of the most desirable real estate in the city. Real-estate official Joe Petrone, part of a citizens’ group seeking to block construction of the new units, says, “We live in fear right now of them duplicating what we had for 40 years. They’re just putting a tuxedo on a pig. It’s still a pig.” Petrone estimates that privately developed, unsubsidized condominiums built on the site could sell for $300,000 or $400,000 each—high for Philadelphia. “The tax ratables for the city would be tremendous,” he adds. “God knows the city of Philadelphia needs them.”

You’ll hear similar complaints about lost opportunity in Chicago. A black candidate for alderman scoffs at plans to replace the Robert Taylor Homes with new mid-rises on the site. “What I’d really like to see there,” says the candidate, “is an Ikea. The site is right off the expressway. It’d be perfect for retail.”

Even in a Hope VI development widely regarded as successful—Chicago’s North Town Village—missed opportunity abounds. North Town Village went up several years back on what had been vacant land adjacent to the infamous Cabrini-Green project, and it provides the model for what is to come in Chicago’s public housing system. The city required the developer to include a mix of income levels in the project. And here, at least for now, it has happened—no doubt because the land is in the heart of one of the hottest real-estate markets in the city: nearby North Avenue, once derelict in the long shadow of dangerous Cabrini-Green, today pulsates with national chain stores and sparkling restaurants. But by mandating that 79 of North Town Village’s 261 apartments rent to Housing Authority tenants, and that another 39 rent for below-market rates, the city has greatly diminished the prices of other units in the buildings and the property tax that the buildings generate. “We could be selling condos here for $800,000; instead we’re selling them for $425,000,” observes Peter Holsten, the developer—though he’s not complaining, since public funding ensures steady profits for his company. “We’re paying $2 million in taxes,” he adds. “But it could easily be double that.”

Not that such mundane considerations seem to matter to housing officials. HUD deputy assistant secretary Ozdinec happily—even proudly—concedes that many public housing sites could support higher-end uses. He rattles off examples of Hope VI sites in recovering neighborhoods that private builders would snap up in a heartbeat if HUD would just let them. In Houston, he observes, land values around the demolished Allen Parkway Village “went up so fast, we had to scramble to put together enough land to build something else”—that is, public housing instead of higher-value private development. In San Francisco, the North Beach Hope VI project borders the famed

Fisherman’s Wharf. “If something else had been built there,” says Ozdinec, “it would have been a tremendous economic boon for the city of San Francisco.” Under a Republican administration, such cavalier dismissal of urban prosperity, even by a career HUD official, is dispiriting.

If HUD officials, in their unimaginative bureaucratic way, can’t conceive of life without public housing, “affordable housing activists” would view any effort to shrink the size of the public housing system or phase it out entirely as outrageous heresy to be opposed tooth and nail. In Fall River, for example, a legal services advocacy group, the Massachusetts Law Reform Institute, has pledged that it will try to block the demolition of Watuppa Heights “every step of the way,” as the Boston Globe puts it. In Chicago, the local housing authority faces constant pressure from tenant organizers such as the Community Renewal Society, a “social justice” organization that has pushed for one-to-one replacement of any public housing unit that the city happens to tear down and a lifetime “right of return” for any tenant displaced by project demolitions.

Housing officials and angry activists notwithstanding, however, the truth is that any two-income working family can afford private housing in the U.S. For example, the average rent for an apartment in New York City, excluding pricey Manhattan, is just $604. That means that for a two-income family at the minimum wage, fully 40 percent of the apartments in the outer boroughs would cost them no more than 30 percent of their income to rent. In New York, of course, the average dishwasher makes $2 or so above the minimum wage; nationwide, few workers, except for illegal aliens, stay at the minimum wage for long.

When housing advocates say that the private housing market will inevitably fail the poor, then, it’s really low-income unmarried mothers and their children whom they have in mind. And it is true that many of these families pose real problems for anyone who proposes to do away with public housing. Anyone who had visited Chicago’s Robert Taylor Homes before their demolition would have wondered whether many of its residents could ever establish their own, financially independent households. It was a place of the rankest degradation, where the crumbling, graffiti-covered walls and urine-reeking stairwells signaled the breakdown of order and civility, where young men freely used drugs in the common areas, where 38-year-old mothers wheeled around 22-year-old sons left crippled by drug-related shootings, where work and marriage were abstractions—and yet where many dependent tenants, inured to the misery surrounding them, never wanted to leave.

It would be a boon to cities if they could get rid of such misbegotten places. By incubating social pathology, and by keeping so much property permanently off the property-tax rolls, public housing has sapped urban vitality. Though affordable housing activists deny it with their last breath, the gentrification that public housing inhibits is a good thing for cities, the urban poor included. It provides the housing that growing, high-paying businesses need if they are to attract the highly skilled workers who are their lifeblood—and whose high wages provide economic opportunity for so many other workers at all income levels. It is this economic dynamism that creates the opportunity city, in which there is a job for everyone, and no one has to depend on government for his income or his housing.

How then might we dismantle the public housing system, without hurting its most fragile residents? Any attempt to do so would have to be gradual, especially in a place like New York, where subsidized housing is such a large part of the residential real-estate system. Some housing projects would have to remain as de facto poorhouses for the most dysfunctional. But by placing time limits on new tenants entering public housing—as the city of Charlotte, North Carolina, has done (see “How Charlotte Is Revolutionizing Public Housing,” Spring 2000)—it would be feasible to reduce the overall number of subsidized housing units steadily. Knowing that the promise of a lifetime of subsidized housing was gone (along with a lifetime of welfare payments since the 1996 reform), young single mothers would be less likely to enter the system—and perhaps less likely to have children out of wedlock in the first place. Some current tenants (the least dysfunctional) could be offered housing vouchers that they could use in the private housing market in exchange for vacating public housing. The voucher would come with a time limit, too, to discourage dependency. As the number of tenants fell, it would then become possible to sell some public housing buildings (or at least the sites, after the demolition of the emptied buildings) to private buyers, bringing more property back onto the tax rolls.

This does not mean that government would have no role to play in the creation of affordable housing. A compassionate conservative housing policy would work to dismantle the myriad government-made obstacles to the creation of housing by the private market—such barriers to building as rent control, irrational zoning regulations, expensive permit requirements, and overly demanding building codes. With such obstacles out of the way, newly dynamic urban economies could then be free to create private housing for all income groups, as they did decades ago, in the days when Boston three-deckers, Chicago two-flats, Brooklyn brownstones, and Oakland bungalows housed so many millions of struggling working families on their way toward the middle class. Cities would be better places for it—at all income levels.


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

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