What Mitt Romney got right about housing

By Rolf Pendall :: May 1st, 2012



Republican presidential candidate Mitt Romney recently expressed the sentiment that social issues would be better left to state and local governments, without federal involvement. Among those issues, he included housing and urban development, even stating a preference for getting rid of HUD. While I disagree with that position, I agree that state and local governments ought to have more autonomy over their urban development programs and policies than they currently do.

Some housing programs—the Community Development Block Grant, HOME, and the Low Income Housing Tax Credit—already grant substantial discretion at the state and local levels about which investments, communities, and neighborhoods get funding. This discretion allows slow-growing places to buy, renovate, and rehabilitate established housing and allows fast-growth locations to build new housing. It also fuels a local process that, even though sometimes flawed, creates a potentially important forum for deliberating about the future of cities and neighborhoods.

But this latitude isn’t enough. Most of our housing and homelessness policies and programs are still locked into particular purposes, with separate funding streams, offices, and even agencies (HUD, USDA, Treasury, the VA, and so on), not only reducing the reach of these programs but also often conflicting with state and local priorities. Local governments clearly want more flexibility even among their HUD programs, as shown by the wild popularity among housing agencies of the Moving to Work demonstration.

Beyond this lock-in within the housing domain, the status quo makes it difficult or impossible to develop programs and deploy resources across domains. In particular, stable and affordable housing might be the ounce of prevention that avoids a pound of cure in areas ranging from health to criminal justice to education (HUD calls this “housing as a platform”). But state and local governments can’t redirect federal funds—or large streams of state and local matching funds—from education or health programs into housing, even though doing so might save costs and (more important) prevent harm. For another example consider housing and transportation, which are complementary expenses—it costs more to live in a location with many opportunities, but if you already live there, you don’t have to spend as much to get there. But states and cities can’t easily transfer transportation funds into community redevelopment, even though doing so could cut down on the need for more highway lanes or miles of transit provision in the long run.

Both examples suggest that a dollar spent on housing can meet more than a dollar’s worth of some non-housing goals. Any government has a host of goals to reach; in principle, it should be able deploy resources in ways that minimize costs and maximize benefits. So, what should the federal role really be in housing and urban development? Should there be any at all? That will be the subject of my next blog.

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