The Creation of a Federal Partnership: The Role of the States in Affordable Housing

1: INTRODUCTION

1 INTRODUCTION “Affordable housing” and “workforce housing” are terms identified with housing for low- and moderate-income working people—people who are working, fall above the poverty line, yet cannot afford to buy or rent decent housing in areas near a supply of jobs. The working poor are the service providers of our nation, the teachers, nurses, firefighters, police officers, restaurant servers, and coffee-shop baristas—the people we need living in our communities so our communities can thrive and grow and we can get those café lattes we so love. Whatever term is used, however, housing for low-income households still has a bad reputation. It brings back images of old news stories of ugly high rises and blocks of sterile housing. It’s associated with crime and gangs and garbage in the streets—communities in which no one cares because no one is responsible; because federal oversight is too high up to see the local problems. In the last thirty years, the oversight of affordable housing has come down much closer to the local problems. Today, how affordable housing is developed, where it is placed, who it benefits, and even what it looks like is determined by state and local housing officials, not by the federal government. But, while affordable housing policy has devolved to the states, the national government still plays a vital role. This book is about the federal partnership that developed between the national government and the states beginning in the 1970s. It looks at this partnership in a unique way: through the state housing agencies that implement affordable housing policy. Affordable housing policy in the United States encompasses a wide variety of issues, such as segregation, gentrification, displacement, and homelessness. At the state and local level, issues related to zoning and land use also affect affordable housing. But, while each of these issues is important to solving the affordable housing crisis, each is complex 1 enough to merit individual study and therefore beyond the scope of this book. Clearly, more scholarly attention would help lead to a better understanding of many of the issues surrounding the devolution of housing policy. This book examines the role state housing agencies play in the federal housing partnership. It uses three in-depth case studies of housing agencies in Maryland, Minnesota, and Texas, supplemented by a survey of thirty others. This book details the history of these three state agencies and the policies and program they developed to answer three questions : How did the federal housing partnership evolve? What role do state housing agencies play? What kinds of programs and policies have developed at the state level? THE DEVOLUTION OF AFFORDABLE HOUSING POLICY For most of the twentieth century (1937 to 1980, to be exact), affordable housing was provided by the federal government in a principalagent relationship with local governments, primarily through their public housing authorities. Principal-agent relationships are found throughout the layers of American government. As Terry Moe points out, “the whole of politics is . . . structured by a chain of principalagent relationships.”1 But at any one time, the chain may be made up of different participants. During the “federal era” of affordable housing policy, the federal government was the principal, dominating all aspects of policymaking save the actual delivery, which was done by local agents—cities and their public housing authorities. In part, the federallocal relationship was based on the fact that most aspects of housing are determined at the local level: zoning and land use policy are primarily local issues. In part it was also due to the fact that the greatest visible poverty problems were located in urban areas. Starting with the housing act of 1949, federal housing policy was primarily concerned with the problems of urban deterioration. States were left out of this principal-agent relationship. Not until the early 1960s, when first New York, then a handful of other states, began issuing tax-exempt mortgage revenue bonds, did states begin to play a role in developing affordable housing. Otherwise, their role was limited to writing pass-through legislation when necessary that allowed local governments to implement federal housing programs. States did not put their own resources, either financial or bureaucratic, toward addressing the housing needs of their citizens. 2 THE CREATION OF A FEDERAL PARTNERSHIP States began to play a more active role after the Nixon Housing Moratorium in 1973. Concerned that the moratorium would lead to the complete...