Monday, June 2, 2008

The Affordable Housing Trust Fund

A New York Times editorial calls on the Senate to pass legislation creating a national Affordable Housing Trust Fund:

Modeled on systems already employed successfully by the states, the trust fund would be used to preserve, rehabilitate and construct housing, primarily for extremely low-income families.
Housing trust funds "already employed successfully by the states"? If there's a successful state affordable housing trust fund, I've never heard of it. Is there some secret state trust fund, known only to advocates of a national affordable housing trust fund? In reality, giving housing commissions a dedicated revenue source and telling them to go fix the affordable housing problem hasn't turned out to be such a great idea. Take Florida's housing trust fund (SHIP), which gives local governments housing assistance in the form of guaranteed block grants, and is thus a miniature version of the proposed national affordable housing trust fund. Even this generally sunny paper assessing SHIP is forced to conclude that housing trust funds, and SHIP in particular, just don't work as advertised:
While the diversity of homeowner rehabilitation and downpayment assistance strategies has increased since FY 92-93, other strategies are rarely implemented, or if they are, funded at minimal rates. Minimal evidence exists to indicate that local administrators are informing their expenditure of SHIP funds based on local goals, objectives, and policies as outlined in planning documents such as the Housing Element. Further, the focus on assisting moderate income households has increased since the inception of the program, raising the question of whether these funds target a local community's most critical housing needs. Altogether, these findings suggest a more narrow local focus than that encouraged by the legislation. ... Yet, lack of resources, political constraints, and in many cases failure to address the most pressing housing challenges continue to characterize these programs, despite their flexible program design. [emphasis added]
Afforable housing is a very serious problem. It deserves serious policy solutions. Demanding that money be set aside in a trust fund for poorly-defined and poorly-performing affordable housing programs, and then calling any opposition to the trust fund "[d]unning impoverished people," only hurts the cause of affordable housing. You want to promote an affordable housing policy that actually works? Call on the Senate to ramp up the federal Family Self-Sufficiency program. But I suspect the New York Times editorial board will continue to mindlessly sermonize about affordable housing instead. As Brad DeLong would say, "Why oh why can't we have a better press corps?"


Anonymous said...

Do you think affordable housing is important?

There is a simple, logical, wise way to incentivize the private sector to create it.

Reform the property tax. Lift the tax burden off buildings, and increase the millage rate on land value. Underused land will get put to better use. Vacant land in choice locations will blossom with buildings which meet market needs, including housing which is affordable to people at various ages and stages, and people of various income levels.

We aren't going to fix the housing problem without this reform, and if we enact this reform, we won't need to do much else.

Check out for more on these ideas

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