This is the 5th article in the Tribune’s affordable housing series. The first part is about what public housing is like today. In the second part we discuss the history of public housing in the U.S.
 NASHVILLE, TN – Imagine you lived in a rat-infested apartment building with holes in the ceiling, mold inside the walls, with leaky plumbing and no electricity. Imagine your landlord wouldn’t do anything about it. Imagine if the Department of Housing and Urban Development (HUD) paid your landlord $10 million to keep dozens of families, just like yours, in such dilapidated buildings for seven years.
Trapped is a better word because HUD knew about the dreadful conditions in 26 apartment buildings in Harford’s North End because the same slumlord owned buildings in New York.

Emmanuel Ku called himself a good Christian who housed the poor but he was just a slumlord who hid his profits in numerous shell companies.

In 2009 Emmanuel Ku paid $2.4 million at a foreclosure auction for 150 units of affordable housing in Hartford. According to one housing official, Ku’s New York buildings had violations “at a rate 10 times greater than prior to his ownership”.
Ku’s 150 Hartford apartments racked up thousands of violations and warnings. Tenants organized and they pressured HUD for 11 months to sack their slumlord. HUD finally cancelled Ku’s contract in May 2018.
“The thing that has made a real difference around the country is organizing around the issues and the thing that has driven broader systemic legal change around these issues,” said Shamus Roller, Executive Director of National Housing Law Project.
Ku’s Hartford tenants were given relocation vouchers so they could move. For years they were locked into bad housing because their Section 8 vouchers were project-based, meaning they stayed with the building if they moved out. And market rate rents in Hartford, like Nashville, are very high.
Public housing is a very simple and decent idea but how it is financed, operated, and who qualifies for what type of subsidized housing gets enormously complicated.
Public housing, aka “the projects” are funded by Congress every year. HUD sends money to local public housing authorities (PHAs) to lease units to low-income families and collect rent. Congress also funds project-based rental assistance through its PBRA program. HUD sends money to private owners who lease apartments to low-income tenants and collect rent. The difference is that HUD and private owners sign a 20-year contract.
Issues of supply and demand for affordable housing are interrelated. On the supply side, low income tax credits (LITC) and HUD held mortgages insured by the FHA help pay for construction costs. They provide the financing to help private owners or non-profits build low-income housing. Despite this, the supply of affordable housing stock is shrinking just about everywhere.
There are different kinds of rental assistance and different kinds of housing voucher programs for different categories of low-income renters. But there are two basic types. Project based rental assistance (PBRA) and project-based vouchers (PBVs) tie subsidies to the housing unit. Housing Choice vouchers (HCVs) allow renters to take their voucher with them if they move.
According to HUD, there are now about 80,000 PBV units nationally. That is less than 4% of the approximately 2.2 million vouchers that are in circulation. More than 2 million households use Housing Choice Vouchers (HCVs) but they are less stable because what tenants gain in portability they lose in permanency because landlords are increasingly reluctant to accept them.
Low-income families face long waiting lists to get into a public housing project. And even though there are more HCVs vouchers than any other kind, there aren’t nearly enough to use in the private sector for all who qualify.
“It’s a sector that is in perpetual crisis because the contracts are time-limited and when they expire owners can get out of the HUD system and convert to market. If it’s a gentrifying neighborhood or city, that’s a risk,” said Michael Kane, Executive Director of the National Alliance of HUD Tenants.
Michael Kane is Executive Director of the National Alliance of HUD Tenants. The alliance represents Section 8 tenants living in privately owned housing in 17 states.

The alliance represents tenants living in privately owned housing in 17 states whose rent is subsidized with Section 8 vouchers. Kane said when an owner opts out, Section 8 tenants move out, and the city loses one more building of affordable housing. That is happening in Nashville. (See Tenants)
“We’ve lost 300,000 apartments by that method since the 90’s. So it’s a slow loss of housing. There is no new Section 8 housing being built for the most part. There  hasn’t been since the early 80’s so that‘s why there’s a crisis in the lack of affordable housing,“ he said.
Kane said that Congress has not treated housing as a right or treated Section 8 as an entitlement. He said getting a Section 8 voucher and moving into a Section 8 apartment is kind of a crapshoot because only one in four people are able to do it.
“The rest are out of luck and they are the ones who are overcrowded, doubling up, sleeping on sofas, or homeless, or paying exorbitant amounts of their income on rent. That’s the fundamental crisis of low income housing in the country,” Kane said.
Unfortunately, HUD’s Hartford’s experiment with Ku was repeated in places like Chicago, Newark, Atlanta, and other major cities. Project-based vouchers guarantee a steady return to owners but they also invite neglect, the very problem they are supposed to solve. Critics say PBVs don’t guarantee decent affordable housing and result in segregated neighborhoods with poor schools, no jobs, and high crime rates.
So HUD started issuing housing choice vouchers (HCVs) that are portable. But as we reported last week, that hasn’t worked out well for tenants at Village West apartments in the Nations.
Studies have shown that only about 10-15% of families with HCVs leave impoverished neighborhoods. By the time a family gets one, their kids have grown and life goes on. In addition, moving into a better neighborhood can be like sitting down at a segregated lunch counter. It’s not particularly easy to do, especially if you’re poor.
A Brief History of HUD
The Department of Housing and Urban Development was created in 1965 as part of President Lyndon Johnson’s “Great Society” program.

Public housing began during the Great Depression in 1934. The Public Works Administration was part of FDR’s New Deal. It’s housing division built 52 projects by 1937. The Wagner-Steagall Housing Act (1937) created a model for public housing. Fifty thousand units were built in 1939. Home construction decreased dramatically during WW II.
After the war, veterans returned home and many used the G.I. bill to buy homes insured by the Federal Housing Administration. Those developments became the first suburbs. So, the federal government supported two kinds of housing: home ownership with mortgages and public rental housing for the poor, disabled, and the elderly.
Urban Renewal programs eliminated a lot of blight but cities didn’t invest much in new pubic housing. By 1957, 425,000 units of housing were demolished, but only 125,000 units were built.
In 1965 Congress passed the Housing and Urban Development Act that created HUD. It was part of President Lyndon Johnson’s “Great Society” program and the HUD Secretary became a member of the President’s cabinet.
The act also introduced rent subsidies and brought the private sector into public housing for the first time. The act shifted policy away from the government building public housing towards privately constructed low-income housing. Such public private partnerships became favorite policy prescription of Democrats and Republicans alike and they still are.
During the Reagan years, the idea of letting the free market solve social problems became HUD’s guiding principle. Reagan’s HUD Secretary Samuel Pierce, started a coinsurance program in 1983 to rehabilitate multifamily units. It turned out not to be free enterprise but rather a free lunch for favored mortgaged lenders who inflated the value of their properties so they could collect excessively high fees. They spread the risk of loans through a network, which left taxpayers on the hook. The program was shut down in 1990. An investigation into HUD corruption and graft during the Pierce years yielded 17 convictions, including three former HUD assistant secretaries.
Samuel Pierce served as Ronald Reagan’s Secretary of HUD from 1981-1989.

Another HUD scandal of that time was the  “Mod-rehab” program launched in 1979. It was a modest program to finance repairs to housing units for rent to low-income tenants. Mod-rehab was pure graft to GOP insiders with connection to the official who ran the program, Deborah Dean. A Wall St. article published in 1989 was titled “Favored Friends: Housing Subsidy Plan for the Poor Helped Contributors to GOP”.
These experiments with public-private partnerships and federal programs, which enriched insiders while wasting tax dollars, were abject failures. And they were entirely Republican affairs. But HUD’s history has an even bigger scandal from the Clinton era.
During the Clinton administration HUD’s mandate was to increase home ownership especially among minorities and low-income families. HUD was given authority over two government-connected mortgage finance giants, Fannie Mae and Freddie Mac. HUD got them into the subprime lending business.
This was accomplished via changes to the Community Reinvestment Act (CRA). Lenders started making more loans to moderate-income borrowers and buying more CRA mortgage-backed securities. It was a coercive policy to lower bank loan standards and it backfired.
Henry Cisneros was President Bill Clinton’s HUD Secretary from 1992-1997.

HUD Secretary Henry Cisneros told the Wall St Journal in 1995 that “underserved” areas did have a higher risk of default, but he did not see that “there need be any safety and soundness impediment to the policy”.  Under Cisneros, HUD agreed to allow Fannie and Freddie credit toward its affordable housing targets by buying subprime mortgages, according to Carol Leonnig’s front page story in the Washington Post, How HUD Mortgage Policy Fed the Crisis,” June 10, 2008.
In 2008 the subprime loan market collapsed. It caused a major recession and by 2011 thousands of Black families lost their jobs and then their homes to foreclosure. Clinton’s attempt to pull minorities into the middle class was an abject failure. It didn’t build Black wealth it squandered it.
In the next article in our series on Affordable Housing, we will take a look at how HUD policies  have shaped the segregation of American cities.