National Housing Law Project Housing Law Bulletin

For the past four years, with variations in intensity at different times, HUD has been pushing the "vouchering out" of its subsidized projects, both public housing and privately owned, subsidized developments. The most extreme advocacy for vouchering out came at the end of 1994 and the first half of 1995, when HUD was trying to prevent the Department from being abolished by the new majority in Congress.¹ In those early stages, HUD went so far as to propose converting all public housing and most of the privately owned HUD-subsidized housing to vouchers. Since then, HUD has backed off quite a bit and Congress certainly did not buy the sales pitch that vouchers are better than project-based subsidies in all cases.

Nonetheless, there is still much vouchering out going on. Congress established a special program for vouchering out large, deteriorated public housing projects that are more than 10 percent vacant and cannot be revitalized at a cost that is cheaper than vouchers.² Many of the 100,000 public housing units that HUD has promised to have demolished by the year 2000 are occupied by families, some of whom will be given vouchers as if the projects were being vouchered out. Many of the privately owned projects whose owners are prepaying their mortgages or choosing not to take renewed Section 8 contracts are in effect also being vouchered out, as their current tenants are being given vouchers to find relocation housing. Other privately owned projects that have failed financially are being sold by HUD after foreclosure without any project-based subsidies, and the current residents are being given vouchers, another form of vouchering out.

There are several reasons given by HUD and others for promoting vouchering out. One is that vouchers are allegedly less costly than project-based subsidies. The second is that vouchers give tenants a chance to move from neighborhoods of highly concentrated poverty and from racially segregated neighborhoods. The third is that vouchers give tenants more choice about where they live, both in terms of the actual units and the neighborhoods in which they are located. Finally, vouchers give tenants a chance to move to better homes and better neighborhoods and to locate closer to employment opportunities.

As the dialogue about vouchering out has progressed, it has become clear that not all these reasons hold up under careful scrutiny. In many cases, vouchers are not cheaper than project-based subsidies over the long run, especially if the projects can be insulated from the increases in equity values that the private market stimulates over time and that the voucher program cannot guard against. Even in the short run, some projects are cheaper than vouchers. Not all projects are located in areas of concentrated poverty or racial segregation. Not all are isolated from jobs. Sometimes it is the subsidized project that provides the opportunity for poor people and people of color to live outside a poor, isolated, racially segregated neighborhood. By the same token, certificate and voucher holders cannot automatically use their housing subsidies to move to neighborhoods that have better services or greater racial or economic diversity. They often encounter discrimination on the grounds of race, income or their receipt of housing subsidies that effectively confines them to racially and economically concentrated neighborhoods just as much as the subsidized projects do.

Recently, HUD released a report on the experiences of tenants who moved from four projects that were formerly privately owned and that HUD had decided to demolish.³ The four projects were Eutaw Gardens in Baltimore; Woodsong Apartments in Newport News (Virginia); Creston Place in Kansas City (Missouri); and Geneva Towers in San Francisco. HUD hired private contractors to collect information from a sample of the tenants who were displaced. The information included where they had moved, how difficult their housing search had been, where they had looked, how long it had taken them to find a place, the characteristics of their new homes and their new neighborhoods, their satisfaction with those homes and neighborhoods in absolute terms and in comparison with their previous homes, and their satisfaction with the relocation process. The information was then compiled into the report that HUD has just published.

If one read only the report's Foreword, one would come away with the idea that this study confirms everything that HUD has been saying for the past four years about how good an idea vouchering out is. The Foreword sets the stage by indicating that HUD is reinventing its approach to providing affordable housing and that much of the change involves vouchering out. The report is touted as offering an early look at how the residents of vouchered-out projects will fare. The Foreword presents the message:

The report shows, overall, that vouchering out can work efficiently and effectively. Residents have moved out of the four distressed properties to better housing and neighborhoods. Two-thirds of the residents are more satisfied with their homes than with their units at the previous development. Nearly all residents rented a new unit with a large fraction at each site moving from apartments to single-family detached houses. Residents overwhelmingly preferred the new neighborhood to the old one.⁴

That message is an overwhelming endorsement of vouchering out. No mention is made in the Foreword of any possible adverse consequences of the process.

The introductory paragraphs of the Executive Summary continue the same rosy tone. The rationale for vouchering out is summarized, the methodology of the study is described and then the verdict is delivered. The verdict is that vouchering out worked efficiently and effectively. Residents moved to better housing and neighborhoods, and the process occurred smoothly, with few mistakes.⁵ For those who read no farther than that, which will be most of the important policymakers, the overall impression will be that vouchering out not only does not hurt tenants who are displaced, it improves their lives.

However, if one bothers to read a little farther, the other side of the story begins to emerge. Even in the Executive Summary some of the downsides of vouchering out are revealed. In the description of the neighborhoods to which the tenants moved, the Executive Summary notes that:

• In Baltimore, 40 percent of the tenants remained in West Baltimore, which, depending upon the block to which one moves, may or may not represent an improvement in the quality of life. Three of the four other destination neighborhoods were characterized by the report as a predominantly black, low-income rental community, a neighborhood with serious crime and drug problems, and an economically depressed part of Baltimore County.
• In Newport News, about 50 percent of the tenants remained in their old neighborhood, which was described as one with a higher concentration of poor minority households.
• In Kansas City, many tenants stayed in their section of the downtown area, where crime is a serious problem, and larger families who moved to single-family homes experienced poor housing conditions.
• In San Francisco, one of the two neighborhoods to which people moved was characterized as having a lower socioeconomic level that the old neighborhood and as having relatively poor multifamily building conditions.⁶

The Executive Summary also reveals that the housing search was not easy, especially in tight housing markets like San Francisco. While tenants in the other cities were able to move within two months, the average search in San Francisco was 3.5 months and obviously many tenants exceeded that average. In addition, from 20 to 40 percent of the displaced tenants in all of the sites said that the housing they moved to was selected by default, because of lack of time or other difficulties.⁷

Given the conditions of the buildings from which they were moving — ones HUD had decided to demolish because they were in such poor condition — it is not surprising that most of the tenants reported that their new homes were in better shape than the old ones. However, the report acknowledges that one third of the tenants said that their new home was in the same condition as their old one, or worse. In addition, the details of the Executive Summary reveal that half of the tenants were unhappy with having to move or would have preferred to stay in their old homes.⁸

Perhaps the most significant contrast between the Foreword and the introductory paragraphs of the Executive Summary and the greater detail in the latter part of the Executive Summary and the body of the report is the following observation:

[I]t should be stressed that even though vouchering out has been shown to be effective and efficient, this does not mean that vouchering out is widely needed. Subsidized housing developments provide an important affordable housing resource, especially in tight housing markets. Consequently, the approach can be used selectively for developments where physical and social decline has gone so far that rehabilitation is no longer feasible.⁹

This should have been the message readers take from this "early look" at vouchering out, not the one-sided view presented in the Foreword. A thorough reading of the entire Executive Summary and the report itself reveals that, while vouchering out may work "efficiently and effectively" for some tenants, it fails to improve the housing and neighborhoods of many others.

¹  For background, see To Be or Not to Be: A Time of Reckoning for National Housing Policy, 25 HOUS. L. BULL. 1 (Jan. 1995); A Critique of HUD's Reinvention Blueprint, 25 HOUS. L. BULL. 29 (Feb. 1995); and HUD's Reinvention: From Blueprint to Action — Proposed Changes for Public Housing, 25 HOUS. L. BULL. 71 (Apr. 1995).
²  Pub. L. No. 104-134, § 202 of § 101(e), 110 Stat. 1321, 1321-279 (Apr. 26, 1996).
³  HUD, Office of Policy Development and Research, Case Studies of Vouchered-Out Assisted Properties (May 1998).
⁴  Id., Foreword.
⁵  Id. at xiii-xiv.
⁶  Id. at xiv-xv.
⁷  Id. at xvi.
⁸  Id. at xviii.
⁹  Id. at xxiii.