National Housing Law Project Housing Law Bulletin

CLPHA's Goals for the 105th Congress

by David B. Bryson

In December, the Council of Large Public Housing Authorities (CLPHA) issued its goals for the 105th Congress, setting out what legislation it would like to see enacted.¹ During the 1980s, CLPHA focused exclusively on funding for public housing and almost single-handedly made sure that Congress appropriated sufficient operating subsidies for public housing, raised the public housing modernization funding to a manageable level and kept funding for incremental units from falling below 100,000 units a year. That was an amazing feat that earned CLPHA the respect and admiration of many housing advocates.

Since that time, CLPHA has gradually expanded its focus beyond funding issues to include statutory provisions that affect the rights and obligations of tenants and PHAs as landlords. More importantly, as the specter of federal funding cuts has loomed even larger, CLPHA has chosen to have public housing transformed into a program primarily for moderate-income people as the way to make up for the lost federal subsidies.

CLPHA's goals for the 105th Congress reflect that change in mission. They deserve to be reviewed critically for two reasons. First, of all the housing organizations, CLPHA has been the most effective in securing from Congress what it wants and probably has as much influence with moderate Republicans and Democrats as HUD does. Second, because many of its proposals would adversely affect people who are poor, one must ask whether they are morally just.

CLPHA's Funding Proposals and Moral Justice

As was true in the 1980s, CLPHA's proposals regarding funding are morally just and deserve full support. CLPHA recommends that Congress appropriate the following funds for public housing:

Operating Subsidies	$3.5 billion, up from $2.9 billion in FY 1997
Modernization	$3.5 billion, up from $2.5 billion in FY 1997
Revitalization	$500 million, down from $550 million in FY 1997
Drug Elimination	$300 million, up from $290 million in FY 1997
Support Services	$75 million, up from $60 million in FY 1997

²

As usual, CLPHA supports these recommendations eloquently and effectively. It explains that OMB's passback³ would fund operating subsidies at 79 percent of what the PHAs need, as determined by HUD's own Performance Funding System, and that, since operating subsidies cover 60 percent of the PHAs' costs, underfunding at that level would "doom PHAs and their residents to reduced security, inadequate maintenance and fewer services of all kinds."⁴ Similarly, CLPHA points out that OMB's recommendation of $2.35 billion for modernization is barely half "the amount recommended by all reliable studies as annually needed to meet regular reserves needs and to bring the stock up to current standards within a decade."⁵ Finally, in condemning OMB's proposal to shift all HUD housing programs to states and local governments in a block grant, CLPHA points out that "[h]istorically, PHAs with the greatest problems have been those corrupted by local governments."⁶

Other Recommendations

Once CLPHA leaves the funding issues, its recommendations begin to fail the moral justice test. On the merits, they often work to the extreme disadvantage of the poorest people. They seem driven more by the PHAs' interest in surviving as governmental institutions than by the best interests of poor people who need housing assistance. In their manner of presentation, the recommendations border on propaganda.

Making Appropriations Act Provisions Permanent

CLPHA's first point is that the administrative changes included in the appropriations acts for the last two years - changes that it labels as useful and non-controversial - should be made permanent.⁷ The provisions CLPHA would like to see permanently enacted are:

• Replacement of the federal preferences with local preferences;
• Repeal of the one-for-one replacement requirement for units sold or demolished;
• Repeal of the tenants' right to buy projects slated for demolition or sale;
• Ceiling rent formula revisions;
• Flexibility to use modernization funds for development and operating subsidies;
• Use of public housing subsidies in private-public partnerships; and
• Minimum rents of up to $50 per month.

Possibly public housing authority directors would view most of these provisions as non-controversial, but CLPHA cannot conscientiously call a minimum rent of up to $50 non-controversial.

Federal preferences

The first wrong step CLPHA takes is its attempt to justify repeal of federal preferences by asserting that they "led to the ghettoization of the poor."⁸ That allegation has often been made over the past six years, but it is not true. The economic ghettoization of public housing cannot be blamed on federal preferences because the drop in the average income of public housing tenants from 30 percent of area median to 18 percent occurred between 1979 and 1986, long before the federal preferences became effective. The federal preference regulations were not finalized until January of 1988, and PHAs were not obliged to conform to them until July 1988.⁹ The drop in public housing tenants' incomes compared to area median incomes had much more to do with larger economic trends than tenant selection factors. They include the fact that median incomes have risen significantly since 1979, but poor people's incomes - whether from welfare or from minimum wage jobs - have not, and the fact that since 1979 many decent paying jobs have disappeared from the areas where much of public housing is located.

The racial ghettoization of public housing has nothing at all to do with federal preferences for tenant selection. It began with de jure plans to assign tenants to different projects on the basis of race, during the period from 1937 through the 1950s. It was also produced by deliberate decisions by local governments, with the acquiescence of officials in HUD's predecessor agencies, to locate public housing projects likely to be occupied by people of color only in racially segregated neighborhoods. That ghettoization was firmly ensconced before anyone even began to think about federal preferences for admission.

This point is made not in an effort to save the federal preferences from permanent repeal. That battle is virtually over. The point is that CLPHA, to achieve its legislative goals, is willing to use rhetoric that its superficially convincing, but not sound when analyzed carefully. As a result, assertions that CLPHA makes to justify its legislative positions must be carefully scrutinized to ensure that they are accurate. The high level of respect that CLPHA worked hard to earn in the 1980s can no longer be accorded to everything that CLPHA endorses.

Tenants' right of first refusal

In this same section of its goals, CLPHA argues for permanent repeal - as if that provision had been suspended by the appropriations acts in the past two years - of the tenants' right-of-first-refusal on buildings slated for demolition or disposition. The truth of the matter, however, is that the law granting tenants the right to buy their buildings before they are demolished or sold to outsiders has not been suspended.¹⁰ Repeal of those rights, especially the right to buy buildings that are being sold, would hardly be a non-controversial change. Public housing tenant organizations have fought hard to keep that statutory right and even HUD does not endorse loosening controls on the sale of public housing projects and sites.

Minimum rents

The most controversial and disappointing of CLPHA's recommendations in this section is its endorsement of minimum rents of up to $50.¹¹ Minimum rents affect only the poorest of the poor in America. Only public housing tenants with adjusted incomes below $165 a month are affected by a $50 minimum. All other tenants pay at least $50 under the 30 percent-of-adjusted-income test. Those with adjusted incomes below $165 are people living in states with the very lowest welfare grants, people who have been disqualified from welfare, such as lawful immigrants, people who never qualified for AFDC because they have no children, and people who are caught temporarily without income during the transition from earned income to welfare, SSI or unemployment compensation. A policy that kicks those people when they are down is not worthy of endorsement by any organization.

Rent-Setting

Claiming that lower levels of federal funding will drive public housing into bankruptcy if changes are not made, CLPHA argues that Congress should authorize PHAs to use varied rent systems - including flat rents, tiered rents, different rents for different unit sizes and different rents for different locations - for tenants whose income exceeds 30 percent of the area's median.¹²

This partial repeal of the Brooke Amendment has many flaws. First, although people with incomes over 30 percent of area median in some high-income areas, like Boston, Washington, D.C., and San Francisco, may have enough money to pay more rent, in many parts of the country, people with incomes at 30 percent of the median are really poor. Because incomes in many parts of the country are extremely low, taking Brooke Amendment protections away from people with incomes above 30 percent of the area median would mean that many minimum wage workers would lose their Brooke Amendment protection, as would even more people with incomes below the poverty level. The fact of the matter is that a 30-percent-of-median-income cutoff does not accurately measure people who need the Brooke Amendment's protection.¹³

Second, notwithstanding CLPHA's claim that Brooke rents are a work disincentive, CLPHA's proposal to repeal the Brooke Amendment cap for tenants with incomes above the 30 percent cutoff is even worse. Tenants who seek jobs, promotions or longer working hours that would take them over the 30-percent limit face not just the prospect that 30 percent of their increased income will go for paying increased rent. Their rent will jump above 30 percent of adjusted income. Even more than 30 percent of their new income will be eaten up by the rent increase The larger the share of increased income that will got toward rent, the greater the work disincentive will be.

Third, the Brooke Amendment cap is not the work disincentive. It merely keeps the PHA from charging more than 30 percent of a tenant's income for rent. It does not prevent the PHA from setting a rent that is less than 30 percent of the tenant's income in order to avoid rent increases that would discourage people from going to work. The ban against charging less than 30 percent of income for rent was enacted in 1981 as part of the Gramm-Latta Omnibus Budget Reconciliation Act,¹⁴ not as part of the 1969-1974 Brooke amendments. The work disincentive problem and the PHAs' alleged need for flexibility could be answered by Rep. Barney Frank's unsuccessful floor amendment to H.R. 2406, which would have preserved the Brooke cap but repealed the Gramm-Latta floor.¹⁵ One wonders why CLPHA is not recommending that solution.

Fourth, there is no need for any cut-off of the Brooke Amendment cap. As long as the Gramm-Latta floor is eliminated, PHAs would be allowed to set flat rents, tiered rents, unit-sized rents or any kind of rents they liked. They could also be collected from all of the tenants as well, except in cases where the unit rents exceed 30 percent of the household's income. In those cases the tenants would pay the 30-percent figure. Once their incomes rose so that 30% of them would equal or exceed the PHA's unit rents, they would pay the unit rent set by the PHA.

Targeting

CLPHA's proposals on targeting reflect its long-term goal of transforming public housing from a program that provides housing to people who are poor into one that primarily serves moderate-income people.¹⁶ It proposes "for now" that at least 40 percent of each PHA's units must be occupied by people with incomes below 30 percent of the area median and that all other units could be rented to anyone with incomes beneath 80 percent of the area's median. At least 15 percent of each development's tenants should have incomes beneath 30 percent of the area median. In the long run, CLPHA would like the percentage of public housing tenants at each income level, up to 80 percent of area median, to be equal to the percentage of the population with those incomes living in the PHA's jurisdiction.¹⁷ This is the "profile targeting" proposal that CLPHA released last summer, when the House and Senate were trying to reconcile H.R. 2406 and S. 1260.¹⁸ The charts included in that proposal indicated that CLPHA's desired result was to transform public housing from a program that serves nearly one million households with incomes below $10,000 and 300,000 households with incomes above that level into one that did just the opposite. It would serve about 300,000 families with less than $10,000 incomes and one million families with higher incomes.¹⁹

This proposal puts at issue the fundamental question whether public housing should be primarily for moderate-income or poor people. Transforming public housing into housing for moderate-income people would save it from bankruptcy. On the other hand, the 700,000 poor families who would otherwise have lived in public housing will be left out on the street or paying exorbitant portions of their incomes for overcrowded, substandard firetraps. The pittance that Congress is willing to spend meeting this country's low-income housing needs should not be spent so disproportionately on moderate-income people. Transforming poor people's public housing program into another housing program for the moderate-income households would add insult to the injury being visited on the poor every day by the homeowner's income tax deductions.

Beyond the fact that this proposal is morally wrong, it is also misleading. Suggesting that the distribution of incomes of public housing tenants should mirror the distribution of incomes among the area's eligible population sounds commonsensical at first blush. A closer examination, however, reveals two fundamental flaws. First, 80 percent of area median income is very high, given the reality of who needs housing assistance and who needs it most. The 80-percent-limit is based upon the median income of all households, not just the one third who are renters, even though nearly all public housing tenants are renters. Renters' incomes are lower than homeowners' incomes, so 80 percent of all incomes works out to an even higher percentage of renters incomes. More importantly, in the high-income areas of the country where many of the CLPHA members are located, 80 percent of area median is far above the income level at which most of us would consider the provision of governmental housing assistance justifiable. For a four-person family, 80 percent of the Metropolian Statistical Area median is above $41,000 in Los Angeles, Hartford, Wilmington, Atlanta, Chicago, Baltimore, Boston, St. Paul, Newark, and Seattle;²⁰ $40,000 in Detroit; $39,000 in New York City, Richmond (Va.) and Philadelphia; $38,000 in Dallas and Milwaukee; $37,000 in Indianapolis, Las Vegas and Kansas City (Mo.); $36,000 in East St. Louis; $35,000 in Miami and Cleveland; and above $31,000 in Louisville.²¹

Making the distribution of incomes of a PHA's tenants mirror the distribution of incomes in the eligible population, when the 80 percent of income figures are that high, means that the percentage assigned to truly poor people will be much smaller than it otherwise would be. There will be many more people in a universe that includes families with incomes up to $40,000 per year than there would be if $25,000 were the cutoff, and people with minimum wages and welfare will make up a smaller percentage of that larger universe.

In addition, the portions of the population with incomes at different percentages of the median are not equally distributed over the range from 1 percent to 80 percent of the median. In most areas, there will be more people with incomes in the 70-to-80-percent-of-median range than in the 0-to-10-percent range. Thus, following CLPHA's formula, there would be more public housing tenants with incomes between 70 and 80 percent of median than between 0 and 10 percent. Similarly, there would be more between 50 and 80 percent of median income than between 0 and 30 percent of median. Just because there are more people with incomes in the 50-to-80-percent range does not mean they should get a higher percentage of the scarce public housing units that are available. When one throws in consideration of their relative ability to secure decent housing on the private market, people in those higher income ranges should get less, not more of the public housing units.

Offering to reserve 40 percent of a PHA's units for people with incomes beneath 30 percent of the area median also is deceptive. It suggests that this device will guarantee poor people a fair share. However, in the relatively high-income Metropolitan Statistical Areas (where most of CLPHA's members are located), 30 percent of the median income is far above the income level of people working for minimum wages or on welfare. For example, it would be $14,000 in Indianapolis and Los Angeles, $14,800 in Philadelphia, $15,000 in Detroit, $15,600 in Atlanta, $15,700 in Baltimore, $16,200 in Chicago, $16,400 in St. Paul, $16,600 in Wilmington, $17,000 in Boston and Hartford, and $18,100 in Newark.²² In these high-income areas, PHAs could meet their quota for people under 30 percent of median income without ever renting a unit to a person on welfare or earning the minimum wage or one or two dollars above the minimum wage. What is more, since CLPHA's proposal targets occupancy profiles, not admissions, the PHAs would not have to admit any tenants with incomes beneath 30 percent of the area median until 60 percent of their tenants had incomes above these $14,000-to-$18,000 levels. In no way does that proposal ensure that poor people have access to a fair share of the public housing in this country.

Site-Based Waiting Lists

CLPHA proposes that Congress authorize PHAs to use separate waiting lists for each development and allow applicants to apply and wait for units only in the developments into which they want to move.²³ That system would replace the current system, under which there is a single list for all the PHA's developments, and applicants are allowed to reject up to two units without being sent to the bottom of the list.

Making such a change would certainly make it easier for PHAs to transform public housing into moderate-income housing. Under CLPHA's proposal, 85 percent of the new public housing units built on sites of demolished public housing projects could be marketed to moderate-income applicants.²⁴ Applicants for those projects would not be penalized for refusing to move into the PHA's other, less desirable developments. The same tactics could be used to attract moderate-income applicants to older developments being thoroughly renovated and thinned out under the modernization program. And, of course, if PHAs had separate waiting lists, any projects that are already located in moderate- to middle-income neighborhoods could also be more easily transformed to predominately higher income projects. With more moderate-income applicants on the waiting lists, PHAs would be able, even more often that under the new local preference law,²⁵ to skip over poor people who had been on the lists longer.

Centralized waiting list requirements were developed in the early 1960s as a way to guard against racial discrimination in tenant assignment. HUD's predecessor agencies were concerned that PHAs, which had been barred from assigning tenants on the basis of race, would use separate waiting lists for separate projects to achieve the same end. The concern was that PHA employees would steer applicants to different lists on the basis of race or that applicants would apply only for the projects which were identifiable as projects for people of their own race. In arguing for restoration of separate waiting lists, CLPHA claims that centralized lists have been "a total failure at desegregating or integrating public housing," that someone at HUD "conceded that such centralized lists have no fair housing basis," that they exist "to perpetuate some regulatory shibboleth for which HUD can articulate no rational basis," and that "if centralized lists served a useful governmental purpose, they would be required in other federal and state housing programs."²⁶

Such gross overstatements, especially on issues related to fair housing where PHAs' conduct historically has been so abysmal, make one wish to scrutinize more carefully this proposal for site-based waiting lists without limits. Centralized waiting lists grew out of PHAs' racially discriminatory practices, both overt and covert, from the 1930s to the 1960s. Racial discrimination in housing may be illegal, but it is not yet dead in this country. It is true that large numbers of public housing developments are 90 to 100 percent African American and thus pose no risk that African Americans will be denied access to them. Nonetheless, there are still some projects, especially projects for the elderly, away from which improperly motivated PHA employees might steer African Americans. Moreover, there is also the possibility that PHAs, in their zeal not to "ghettoize" the new HOPE 6 and other private/public projects being developed, will steer people of color away from them and toward other PHA developments. Given this context, rushing to throw out centralized waiting lists while suggesting no alternative to protect against discriminatory practices is far from advisable.

It is unfortunate that CLPHA left its position on funding to the end of its goals statement. There is where CLPHA's contribution has been the most important historically and where it has the most to contribute in these budget-slashing times. CLPHA's position should have been put right up front where it would have been most effective. When one reaches its supportive arguments for adequate funding after reading through all the questionable proposals on policies that would shift most public housing units away from poor people, one cannot help but ask whether more funds should be poured into this new kind of public housing. Does this country need another moderate-income housing program when so many people are living in the streets?

¹CLPHA, CLPHA's Goals in the 105th Congress (Dec. 18, 1996) (hereinafter CLPHA's Goals).

²Id. at 6.

³For background on the passback, see OMB Delivers One-Two Punch to Low-Income Housing, 26 HOUS. L. BULL. 163 (Dec. 1996).

⁴CLPHA's Goals at 6.

⁵Id. at 7.

⁶Id.

⁷Id. at 2.

⁸Id.

⁹53 Fed. Reg. 1,179 (Jan. 15, 1988).

¹⁰42 U.S.C.A. § 1437p(b)(1) (West Supp. 1996), as amended by Pub. L. No. 104-19, § 1002(a), 109 Stat. 235 (1995).

¹¹CLPHA's Goals, at 2.

¹²Id. at 3-4.

¹³For a more extensive discussion of this point, see Proposed Changes to Brooke Amendment Will Not Work, 26 HOUS. L. BULL. 79 (June 1996).

¹⁴Pub. L. No. 97-35, § 322, 95 Stat. 400 (1981).

¹⁵142 CONG. REC. H4662 (May 9, 1996).

¹⁶By "moderate-income people," we mean people with incomes between 30 and 80 percent of the area median income, which will vary from place to place. As the discussion below shows, for many CLPHA members 30 percent of median income is in the $14,000-to-$18,000 range, and 80 percent is in the $35,000-to-$40,000 range. See text at notes 20-22, infra.

¹⁷CLPHA's Goals, at 3-4.

¹⁸CLPHA, Impact of Income Targeting on Public Housing Reform (July 12, 1996).

¹⁹Id. at 3-4.

²⁰HUD Notice PDR-95-04 (Dec. 14, 1995), Attachment. The 80-percent-of-median figure in these metropolitan areas would be even higher if HUD had not set an absolute maximum at the national median income.

²¹Id. These figures are high because they are based on incomes of the entire Metropolitan Statistical Area.

²²HUD Notice PDR-95-04 (Dec. 14, 1995), Attachment. CLPHA's 30-percent-of-area-median limit does not use the same language that enabled HUD to impose an absolute maximum on the 80-percent test, so these 30-percent figures appear high when compared to the 80-percent figures for the same cities.

²³CLPHA's Goals at 4-5.

²⁴CLPHA would allow Congress to require that 15 percent of the units in every project would have to be occupied by people with incomes beneath 30 percent of the area median. Id. at 5.

²⁵Pub. L. No. 104-99, § 402(d)(6)(v), 110 Stat. 42 (1996).

²⁶CLPHA's Goals at 5.