The New Leader The New Leader - America's Housing Challenge Introduction

AMERICAN'S HOUSING CHALLENGE WHAT IT IS ANDHOWTO MEET IT BY ROGER STARR INTRODUCTION Although no one seems prepared to say so, the American housing achievement since World War II has been...

...AMERICAN'S HOUSING CHALLENGE WHAT IT IS ANDHOWTO MEET IT BY ROGER STARR INTRODUCTION Although no one seems prepared to say so, the American housing achievement since World War II has been mighty, endmg the days when the President of the United States could describe a third ot the nation as ill-housed The tremendous net increase in the number of standard dwellings reflects the enormous amount of resources—land, materials, labor, and capital—devoted to housing over the past three decades A significant part of the success has been due to public pohcy The Federal government accepted responsibility for a national housing program in 1937, a decision practically obliterated by the outbreak of World War II, but the commitment was renewed in 1949, when the so-called Wagner-EUender-Taft Act set a goal of 810,000 publicly owned housing units and launched the major effort known as urban renewal The postwar years have seen, as well, vast private accomplishments in housing, sometimes with government help m the form of mortgage insurance but more often not These have changed the very look of the United States Immense suburbs have risen where no one lived before, new apartment complexes have appeared all across the land, the rural shacks that disgraced the rights-of-way of every major Southern highway have disappeared As a result of direct public involvement, the character of some of the most depressing urban slums has been drastically altered, and major emphasis has been placed on racial integration Institutional changes have occurred, too State and local governments have established agencies for financing housing developments A Federal department at Cabinet level has emerged Mortgage institutions, most notably the Savings and Loan Associations—with their affiliated Federal Home Loan Bank Board?have grown to a size no one had expected Other national agencies have been set up to assist the marketing of mortgages and to encourage capital investment in housing The effects of all this activity are evident in the 1970 Census figures While no one is quite clear about what precisely defines a substandard unit, the simplest test remains dilapidation or absence of full plumbing By those criteria the third of the nation found to be ill-housed in 1936 was down to less than 10 per cent in 1970 Substandard units dropped by 8 million and the total number of dwelling units increased by 10 million during the '60s alone The Census further reported that only 15 per cent of the country's dwelling units were overcrowded, using the very rigorous standard of one person per living room In spite of these cheery statistics, the public perception of American housing indicates continuing dissatisfaction, both with the shape and quality of the largely private suburban developments and with the work still undone in the older cities And for good reason Leaving aside the perhaps overintellectualized condemnation of the suburban one-family home, no visitor wandering through the mean streets of the South Bronx, or viewing the Dorchester section of Boston, or poking his way about parts of Woodlawn in Chicago, or touring sections of Philadelphia, Washington, San Antonio, Oakland, or a dozen other U S cities, large and small, would take very much pride in the nation's housing achievement Obviously, the census figures must be adjusted to produce a complete picture of the remaining problem To begin with, the Bureau of the Census tallies the presence of plumbing fixtures, but it does not report whether they are actually working or whether they will be six months hence (and the deterioration of existing houses quickens with the pace of rising costs) Then, too, census takers do not count the number of abandoned buildings (no one lives in them to answer questions) or estimate the rate at which usable buildings may become abandoned, as sometimes happens without clear warning For example, there is an empty lot in the Hunt's Point section of the Bronx at an address where the city once invested $400,000 in a loan to rehabilitate a tenement house, three years later, the building was demolished as a physical danger to the neighborhood Similarly, the Census tails to depict the decaying buildings m the side streets, the miserable quasi-hotels where hundreds of thousands of elderly Americans subsist on their Social Security and SSI payments Nor does it remind us that 10 per cent living in patently substandard housing amounts to approximately 20 million people Nor does it note, in easily assimilable form, that this national average becomes a much larger proportion of the population if one discounts the new suburbs and boommg urban areas, and focuses instead on the multiple dwellings that are over 75 years old or are located in neighborhoods where racial shifts have changed investment patterns Nor do the statistics tell us how many families are about to live in unsatisfactory housing because their incomes cannot keep pace with the rents needed to cover the cost of operating the buildings they occupy at present A New Disparity The contrast between the New York City tenement house and the luxury apartment was dramatized by Sidney Kingsley in Dead End 35 years ago Today the disparity between the quality of housing in the new suburbs and in inner-city ghettos is just as staking, although the polar opposites of very rich and very poor that provided the dramatic confrontation of Dead End have become more subtle The new suburbs are not the province of the wealthy, but of middle-class union members, small businessmen, sub-professionals, and junior (in rank, not age) private and government managerial employes The steady improvement in the quality of housing enjoyed by this immensely wide band of Americans makes it more rather than less difficult to summon the resources and the political will power to alleviate the deprivation of those forced to live in substandard older urban dwellings Whereas reformist efforts in housing were formerly intended to benefit the working population at the purported expense of the rich, further progress will necessarily benefit the nonworking population at an apparent cost to the power, comfort and even safety of the middle class The high coincidence of bad housing with low income or membership m a minority group carries an unmistakable political message The poor can no longer expect to obtain better homes m the wake of a general drive to improve housing standards for the middle class, as was the case during the first 20 years after World War II A recent study by the Harvard-MIT Joint Center on Urban Affairs emphasizes yet another aspect of housing inequality the difference in the portion of income that must be spent on housing by Americans of different income ranges At the very top of the economic pyramid, the wealthiest and most extravagantly housed families allocate less than 10 per cent, often less than 5 per cent, of their budgets to housing The percentage is so low because there are limits to the amount any family can spend on housing, just as there are limits to the number of calories a person can eat m a day Secondly, home-owning families (including those who occupy cooperative or condominium apartments) may deduct their mortgage interest and real property taxes from their gross income before calculating its taxability, thus further reducing the net cost of their housing Some economists would apply an even sterner test to the cost inequalities of housing Henry Aaron of the Brookings Institution believes that home-owning families are being given a mammoth housing subsidy because the government fails to tax them on the income they might be deemed to receive if they paid themselves in cash for the use of their own houses This "imputed rent," according to Aaron, means that the Federal treasury foregoes a possible $10 billion in income taxes annually, and increases the disparity in the cost of housing between the wealthy and the poor The imputed rent theory is controversial among economists, and it can be argued that from a practical point of view the social advantages of home ownership justify this "tax break " Still, there is no denying that the income tax deductibility of directly paid real property taxes and mortgage interest tends to offset the progressive nature of the income tax system, and this in itself constitutes an inequity The Three Packages Thus, despite the magnificent accomplishment of the past 30 years, major problems remain in the field of housing, centering around the way our resources have been distributed This raises the very real question of whether it is possible to improve the distribution pattern and thereby reduce the existing inequality, bringing us immediately to the first reality of housing It is extremely expensive For purposes of illustration, we may assume that the total development cost of an apartment in a fireproof building on New York's Lower East Side, lived in by a family of four whose father is an unskilled hospital worker earning $8,500 annually, is $45,000 The basic expense of running the apartment, without considering interest on the original investment or taxes, comes to $310 per room per year If the $8,500 worker were to pay for the total cost of his apartment, it would consume more than 60 per cent of his gross income In an industrialized society, housing is by far the most complex item the economy is asked to supply for the exclusive use of a single individual or family In the climatic zone occupied by the United States, unlike the tropics, adequate shelter involves more than a roof over one's head It must shield its occupants against heat and cold, against snow, ram and wind, against disease and accident, and against fire and burglary Moreover, local, state and national governments have entered the market place by enacting very specific building and housing codes that impose minimum standards on the builder, both to protect the buyer from shoddy construction and to pro'?U the community against fire, plague and other hazards The role of government goes much further, however, for in an industrialized society housing has to be regarded as a bundle of three packages In addition to the shelter package, already alluded to, it must include a utility package, comprising all of those external services modern life depends upon electricity, running water and the network of pipes and reservoirs it requires, and the transportation system that moves people from their homes to their working places, their schools, their recreation It encompasses also public services like the police, fire, health, and sanitation departments Then there is the social package If housing is to be of use to anyone except perhaps an eccentric descendant of Henry David Thoreau, it cannot stand in isolation, but must offer its occupants a setting to complete their lives The social package begins with access to a job, a way to earn a livelihood, and extends to the living environment that reflects the values of the social group in a particular residential area Educational institutions form a very important part of the living environment, second after jobs, Americans tend to try to choose housing on the basis of the educational opportunities its location will make available to their children Generally speaking, when people say they want to live in a "good" neighborhood, they mean among those who resemble them in income, education and cultural aspirations The utility and social packages bear most importantly on the formulation of national policy As we shall see, the cost of the utility package is of vital significance in deciding whether the Federal government should favor the rehabilitation of existing older cities or the creation of new utility packages on vacant or near-vacant lands outside This, m turn, involves matters of social policy, including the place of socioeconomic distinctions in American life and the connection between racial discrimination and social class One of the major frustrations in the actual execution of public housing policy arises from the fact that no official is permitted to admit in public that no answers to these questions now exist For obvious political reasons, it is difficult to acknowledge openly that no one knows how to create a neighborhood where different social classes will live together harmoniously, unless the area possesses remarkable advantages for which families with choice would be ready to abandon some of their other natural preferences Nobody who has responsibility for local housing policy can comfortably state m public that we do not yet have a cure for the emotional problems and behavior patterns of many troubled urban families No one may base policy on the frank admission that the minority has become the majority in vast sections of our cities and no way has been found to desegregate the schools under such conditions In the preamble to the National Housing Act of 1949 (as amended on frequent occasions), Congress declared that every American family should have not only a "decent" home but a "suitable living environment " The crucial word, "suitable," was probably selected in the hope that it would be totally neutral in defining the qualities of neighborhoods With luck, in America, people may eventually be willing to accept neighbors who differ from them in color, national origin and religion Now, though, ethnic and racial considerations help to shape the demand for a specific social package, as do the institutions?schools, churches, movie theaters, clubs, etc —that give families the opportunity to interact The promise of environmental suitability m the Housing Act preamble also contains an irony that the nation has so far been unwilling to face What is to be done with those households or individuals who tend to destroy for others the suitability of the neighborhood to which they have been moved'' Another bitter truth about housing, and a contribution to its inequalities, is that there is little consistency in the way the utility and social packages are financed Our accounting system for municipal expenditures tends to externalize many utility and social costs of one-family-home neighborhoods, so that they are paid for largely out of the general tax rolls, and to internalize the same costs in the case of multiple-dwelling-elevator structures, so that they are paid for in greater part by the residents themselves In a private home area, the public street is laid down at the general expense of all the local taxpayers, industrial and commercial as well as residential In an apartment building containing as many individual units as would be found on four or five or more blocks of one-family houses, the elevator transportation that substitutes for the public street is paid for solely by the tenants In fact, each pays a share of the property tax on the assessed value of the elevator, too, while no one pays a tax on the value of the public street he uses As for solid waste removal, the individual home owner is frequently entitled to public garbage collection, especially if he lives in a large city The garbage truck must stop at every house, where the cans or bags of uncompacted and unincinerated waste are hoisted on board, and the cost of this service comes out of the general tax revenues The apartment house resident must pay in his rent for the internal collection of garbage, and often for its incineration or compaction No one has tried to justify this allocation of the price of the utility package, but a number of writers on urban economics, including Coleman Woodbury, have pointed out that no single-family-home neighborhood contributes enough revenues to the municipal government to cover all the services its residents receive The processes by which public and private resources are transformed into the housing packages tend to conceal the real costs of different kinds of housing for families at different income levels Any attempt by government to equalize the "hidden" subsidization of housing among all citizens would undoubtedly encounter loud political objections Private home owners do not like to be informed that apartment house dwellers are taxed more per room than they are, and refuse to understand that the street they get free is the equivalent of an elevator paid for by the tenants of a high-rise Americans, consequently, have been inclined to overemphasize the cost of multistory housing in the central city and to underestimate the total social cost of building on the vacant land outside Yet no people can live only on economics While the questions of where and for whom housing should be built rank among the central public policy concerns of this era, they cannot be separated from what is perhaps the most crucial question of all What are the proper and practical limits of government action in the social sphere...

America's Housing Challenge Introduction

STARR, ROGER