Introduction to Public Housing

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February 13, 2014

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Introduction to Public Housing

Summary

“Public housing” is often used as a generic term to refer to all publicly assisted housing, but the

term “public housing” actually refers to a specific federal program. Created in 1937, the low-rent

public housing program was the first major federal rental housing assistance program. The

program initially subsidized the construction, and later the ongoing operation and maintenance, of

multifamily rental housing properties for low-income families. While public housing is a

federally created and funded program, the properties are owned and managed at the local level by

quasi-governmental public housing authorities (PHAs) under contract with the federal

government. Given this unique federal-local relationship, the program is governed in part by

federal rules and regulations and in part by policies set at the local level.

The public housing program serves some of the poorest families in the nation, including persons

who are elderly, persons who are living with disabilities, and other families with and without

children. Families who live in public housing generally pay rent equal to 30% of their adjusted

gross income; average rents paid by public housing families lag substantially behind private

market rents paid by similar families.

Public housing properties themselves can be high-rise buildings, low-rise buildings, scattered site

properties, and even part of mixed-income housing developments. Construction and acquisition

of new public housing units effectively ended after the federal government stopped funding new

development in the mid-1990s, although they began significantly decreasing much earlier as other

models of providing housing assistance grew in popularity. As public housing properties have

fallen into disrepair and been demolished, the number of public housing units has begun to

decrease. Today, there are roughly 1.2 million units under contract and receiving federal funding,

down from over 1.4 million units at the program’s peak. Federal funding comes from two main

formula grants—the Public Housing Capital Fund and the Public Housing Operating Fund—

which are meant to supplement the rents collected by PHAs to meet the operation, maintenance,

and capital needs of public housing. There have also been several competitive grant programs that

provide additional funding to PHAs, including the HOPE VI program. In recent years, regular

annual appropriations for public housing have generally been in the range of $6 billion to $7

billion per year, with an additional $4 billion provided by the 2009 economic stimulus legislation.

In response to concerns about the adequacy of federal funding levels—paired with federal

restrictions on tenant rents—to meet the capital needs of public housing, proposals have been

introduced to promote private investment in public housing in order to preserve the existing

stock. An increasing number of PHAs have pursued private financing to meet their capital needs

in recent years. However, recent proposals calling for an expansion in the role of private finance

in public housing have been met with concerns about the potential for the “privatization” of

public housing and a loss of affordability. As the program continues to decline in terms of the

number of families it serves, questions are arising about the role the program plays, and should

play in the future, in terms of federal housing policy.

This report is meant to serve as an introduction to the federal public housing program. It provides

information on the history of the program, how it is administered and funded, and the

characteristics of public housing properties and the households they serve. While it introduces

current policy issues, a full analysis of those issues and discussion of current legislation is not

included in this report.

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Introduction to Public Housing

Contents

Introduction...................................................................................................................................... 1

Brief History of the Public Housing Program.................................................................................. 1

The Housing Act of 1937: The Beginning of Public Housing................................................... 2

The Housing Act of 1949: Expansion and Ties to Urban Renewal ........................................... 3

1960s: New Forms of Assistance and the End of Legal Discrimination ................................... 4

The 1970s and the Rise of Section 8 ......................................................................................... 5

The 1980s: Withdrawing Further from Public Housing ............................................................ 6

1990s to Present: The End of Public Housing Development and Decline in Units................... 7

Overview of the Program................................................................................................................. 9

Administration ......................................................................................................................... 10

PHAs ................................................................................................................................. 10

PHA Plans ......................................................................................................................... 11

Resident Involvement ........................................................................................................ 13

Public Housing Assessment System .................................................................................. 14

Demolition, Disposition, and Conversion ......................................................................... 15

Eligibility, Rent, Terms of Occupancy..................................................................................... 17

Eligibility........................................................................................................................... 17

Application, Waiting List, and Preferences ....................................................................... 18

Targeting and Deconcentration.......................................................................................... 18

Screening ........................................................................................................................... 19

Rent ................................................................................................................................... 19

Utilities .............................................................................................................................. 20

Reexamination................................................................................................................... 20

Termination of Tenancy..................................................................................................... 21

Additional Programs and Services .......................................................................................... 22

Resident Supports.............................................................................................................. 22

Section 3 ............................................................................................................................ 23

Public Housing Homeownership ....................................................................................... 23

Moving to Work ................................................................................................................ 23

Trends in Units and Characteristics of Properties .......................................................................... 24

Characteristics of Tenants .............................................................................................................. 28

Funding .......................................................................................................................................... 34

Operating Funding ................................................................................................................... 34

Public Housing Drug Elimination Grants ......................................................................... 35

Capital Funding ....................................................................................................................... 35

Leveraging and Mixed Finance Development .................................................................. 36

HOPE VI/Choice Neighborhoods Initiative ...................................................................... 37

Recent Trends in Funding ........................................................................................................ 37

Policy Issues .................................................................................................................................. 39

Funding Levels ........................................................................................................................ 39

The Role of Public Housing .................................................................................................... 41

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Figures

Figure 1. Public Housing Units Over Time ................................................................................... 25

Figure 2. Public Housing Units Removed from Inventory and Type of Removal ......................... 26

Figure 3. Geographic Location of Public Housing Properties and Units, 2012............................. 28

Figure 4. Families in Public Housing by Household Type, 2010 .................................................. 29

Figure 5. Tenure in Public Housing by Household Type, 2010 ..................................................... 33

Figure 6. Funding per Unit, FY1999-FY2010 ............................................................................... 39

Tables

Table 1. PHAs, by Size .................................................................................................................. 11

Table 2. Public Housing Property Characteristics, 2009 ............................................................... 27

Table 3. Race and Ethnicity of Heads of Household, 2010 ........................................................... 30

Table 4. Median Family Income of Households Living in Public Housing, by Household

Type, 2010 .................................................................................................................................. 30

Table 5. Source of Income by Household Type, 2010 ................................................................... 31

Table 6. Income from Welfare and Work Among Not-Elderly,

Not-Disabled Families (NEND) in Public Housing, 2010 ......................................................... 32

Table 7. Comparison of Rent Paid by Families Living in Public Housing to Local Market

Rents by Household Type, 2010 ................................................................................................. 32

Table 8. Appropriations for Public Housing, FY1999-FY2013 ..................................................... 38

Contacts

Author Contact Information........................................................................................................... 42

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Introduction to Public Housing

Introduction

Housing is primarily a private market enterprise in the United States. Most housing in this

country is privately built and owned and most regulation of that process is done at the state and

local level. However, the federal government has played a role for many years in assisting in the

provision of safe, decent, and affordable housing for families of modest means. The low-rent

public housing program was the original effort through which the federal government supported

this policy goal. While public housing is a federally created and funded program, administered at

the federal level by the Department of Housing and Urban Development (HUD), the properties

are owned and managed at the local level by quasi-governmental public housing authorities

(PHAs) under contract with the federal government. Given this unique federal-local relationship,

the program is governed in part by federal rules and regulations and in part by policies set at the

local level.

The program was controversial from the start, with opponents contending that it subverted local

control and interfered with private enterprise. Later, criticism grew about the conditions of the

housing the program provided. Concern was expressed about the quality of life public housing

provided to the families it served, as well as the character of the tenants the program served and

the effect public housing was having on the communities in which it was located. Over time, in

response to these critiques and others, the public housing model—publicly owned and subsidized

apartment buildings for poor families—was replaced with other models of assistance. While no

new public housing is authorized to be funded and built, much of the existing stock of public

housing built under the original program remains.

Today’s roughly 1.2 million units of public housing are home to some of the poorest families in

the nation, including persons who are elderly, persons living with disabilities, and other families

with and without children. In some cases, these families live in high-quality housing in

neighborhoods of opportunity; in other cases, these families live in housing that is physically

decrepit, socially isolated, and plagued by social ills. The federal government currently pays

roughly $6 billion to $7 billion per year to support the remaining stock of public housing and

there are differences of opinion about whether this program is a worthwhile federal investment or

whether recent funding levels reflect an inadequate federal investment.

This report is meant to serve as an introduction to the federal public housing program. It provides

information on the history of the program, how it is administered and funded, and the

characteristics of public housing properties and the households they serve. While it introduces

current policy issues, a full analysis of those issues and discussion of current legislation is not

included in this report.

Brief History of the Public Housing Program

In order to understand today’s public housing program, and the issues surrounding the program, it

is useful to know the background of how it evolved. The following section of this report provides

a short history of the public housing program. It should not be considered a comprehensive or

exhaustive treatment of the topic.

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The Housing Act of 1937: The Beginning of Public Housing

The idea of a federal public housing program began taking shape in the 1930s during the Great

Depression. Its purpose was intended to be twofold: the housing created would respond to a lack

of sanitary housing available at a low cost to families who had fallen on hard times, and the

construction of the housing would lead to the creation of jobs and economic growth.1 However,

the idea of the federal government providing housing proved to be controversial. Opponents saw

government involvement in housing as a step towards socialism, the building industries thought

that they could handle the nation’s housing problems without government intervention, and some

local governments were concerned that federal housing would encroach on their sovereignty.2

The Housing Act of 1937 (P.L. 75-412) attempted to balance some of these concerns in the way

that it designed the low-rent public housing program. Under the terms of the act, public housing

properties would be built and owned only by state-chartered and locally governed public housing

authorities (PHAs). This gave states and localities the right to choose whether or not to participate

in the program by deciding whether or not to create PHAs. The federal government would

provide capital financing under long-term Annual Contributions Contracts (ACCs). These

contracts would spell out the federal requirements of the program; however, many of the

decisions about how the housing was designed, where it was located, and who could live in it

would be left to the PHAs. Public housing’s operations would be sustained primarily on tenant

rents, which meant that families would be required to have incomes high enough to pay the rents

charged for public housing units. However, in part to prevent competition with the private market,

the authorizing statute dictated that families who wanted to live in public housing could not have

incomes that exceeded five times the rents (six times in the case of large families). Further, the

law required that for each new unit of housing built, an unsafe or unsanitary unit had to be

eliminated (a concept often referred to as “slum clearance”).3

Not long after the program was created, World War II shifted the focus of federal involvement in

housing. The Lanham Act of 1940 halted new development under the low-rent public housing

program in favor of government construction of housing for war workers.4 The act also gave war

workers priority for existing public housing units.5 By the end of the 1940s, around 200,000

public housing units had been built and were under contract.6

The earliest residents of public housing were primarily working class families who were

“temporarily poor” because of the Depression. Later, many war workers moved into public

While the low-rent public housing program was not authorized until the Housing Act of 1937, the federal government,

through the Recovery Finance Corporation and Housing Division of the Public Works Administration, built roughly

21,800 units of low-rent housing between 1932-1937. The majority of these units were transferred to the public housing

stock. Robert Moore Fisher, Twenty Years of Public Housing (New York, NY: Harper and Brothers Publishers, 1959),

Chapter 4. (Cited hereafter as Fisher).

For more information about the origins of public housing, see Elizabeth Wood, The Beautiful Beginnings, The Failure

to Learn: Fifty Years of Public Housing in America, National Center for Housing Management, October 1982, Chapter

1; and Fisher, Chapter 1.

Lawrence Vale, From the Puritans to the Projects: Public Housing and Public Neighbors (Cambridge, MA: Harvard

University Press, 2000), Chapter 3.

This war worker housing was eventually converted to public housing by the Housing Act of 1950.

Ibid.

Housing and Home Finance Agency, 16th Annual Report, 1962, p. 212.

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housing. As the nation began to prosper again, many families in public housing had income above

what was considered to be low income.7

The Housing Act of 1949: Expansion and Ties to Urban Renewal

After being diverted to support the war effort, the low-rent public housing program was restarted

at the end of the decade by the Housing Act of 1949 (P.L. 81-171). That act created a federal

policy goal of “a decent home and suitable living environment for every American family.” It

authorized the Urban Renewal program—formalizing the policy of slum clearance evident in the

1937 act—and required communities to give preference for public housing units to families

displaced by Urban Renewal. The act expanded the authorization for new public housing units,

calling for the creation of 810,000 units by 1954 (or 135,000 units per year). At the same time, the

act added new requirements. Out of concern about crowding out private market housing, the act

instituted construction cost limits and added a requirement that public housing rents be at least

20% below prevailing market rents for safe and decent housing. Given that upper income

eligibility limits were tied to rents (i.e., incomes could not exceed five times the rents), this meant

that income eligibility limits would be lowered. Additionally, the act required that the Annual

Contributions Contracts be amended to require the eviction of tenants whose income exceeded

the limits.8

While the 1949 act restarted the public housing program, its goal of 810,000 units in six years

was not met. The year after the enactment of the 1949 act, President Truman lowered the rate of

construction to roughly half the authorized level in response to concerns about materials

shortages resulting from the outbreak of hostilities in Korea.9 Congress followed suit by further

lowering the authorized annual level of public housing construction starts each year in the

appropriations acts.10 Also, opposition from local communities made it difficult for some PHAs to

get approval to build public housing.11 As a result, fewer units were built in the 1950s than were

envisioned by the 1949 act. By the end of 1957, only about 210,000 of the 810,000 units

authorized by the 1949 act were under management.12

The characteristics of the tenants served in public housing also began changing during this period.

The policy changes included in the 1949 act, taken together, would mean that public housing

would serve families with income lower than what was originally required under the 1937 act.

This change in the income character of tenants is evident in the fact that from 1952 to 1962, the

number of families in public housing receiving income from private or public assistance

programs rose from 29% to 46%. Further, given that public housing development was explicitly

Fisher, Chapter 6.

See Alexander von Hoffman, “A Study in Contradictions: The Origins and Legacy of the Housing Act of 1949,”

Fannie Mae Foundation, Housing Policy Debate, vol. 11, issue 12, 2000; and Elizabeth Wood, The Beautiful

Beginnings, The Failure to Learn: Fifty Years of Public Housing in America, National Center for Housing

Management, October 1982, Chapter 2.

See Alexander von Hoffman, “A Study in Contradictions: The Origins and Legacy of the Housing Act of 1949,”

Fannie Mae Foundation, Housing Policy Debate, vol. 11, issue 12, 2000, p. 315.

Fisher, Table 7.

Elizabeth Wood, The Beautiful Beginnings, The Failure to Learn: Fifty Years of Public Housing in America,

National Center for Housing Management, October 1982, p. 44.

Fisher, Table 1, p. 14. This number includes only those units built under the authority of the 1949 act; it does not

include all of the units created under the previous authorities.

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tied to Urban Renewal after 1949, the program began to house more families of color, particularly

black families, who had been uprooted and displaced by Urban Renewal. From the beginning of

the 1950s to the end, the percentage of nonwhite families living in public housing increased from

36% to 46%.13 In an era of legal segregation and discrimination, the increasing proportion of

black families living in public housing led to great opposition to new public housing development

in some predominantly white communities and to the perpetuation of segregation in public

housing properties themselves.

1960s: New Forms of Assistance and the End of

Legal Discrimination

The 1960s brought a new vision with regard to federal housing assistance. Several new programs

were developed to subsidize privately owned rental properties, as opposed to publicly owned

properties, including the Section 236 rent supplement program serving low-income families and

seniors; the Section 202 program serving the elderly; and the Section 221d(3) program serving

families with incomes too high for public housing but too low to afford housing in the private

market.14 Another program, the Section 23 leased housing program, was a new public housing

program designed to utilize private market units. It permitted PHAs to lease private market units

on behalf of public housing-eligible families. Also, by the late 1960s the Turnkey model of public

housing began growing in popularity; under the Turnkey approach, a private developer builds

housing on land he owns and then sells the property to a PHA to use as public housing.15 These

new models of assistance, because they utilized private market participants, were thought to be

more efficient and timely. Despite the introduction of new programs, the number of public

housing units increased significantly during the 1960s to over 800,000 units, an increase from

about half a million units at the beginning of the decade.16

The 1960s brought other important changes for public housing related to the social aspects of the

program. A presidential order, Supreme Court cases, and civil rights legislation worked to make it

illegal to deny public housing assistance to families based on their race and to systematically

segregate public housing residents by race, which had been common since the inception of the

program.17 While such discriminatory actions were officially outlawed during this period,

desegregation and changes in community attitudes towards integrated public housing were not

immediate and courts had to intervene.18 Out of concern about the ramifications of concentrations

Elizabeth Wood, The Beautiful Beginnings, The Failure to Learn: Fifty Years of Public Housing in America,

National Center for Housing Management, October 1982, p. 67.

For more information about these programs, see CRS Report RL34591, Overview of Federal Housing Assistance

Programs and Policy.

Richard F. Muth, Public Housing: An Economic Evaluation, American Enterprise Institute for Public Policy

Research, Washington, DC, 1973, pp. 44-45.

Figures from the beginning of the decade taken from the 16th Annual Report of the Housing and Home Finance

Agency, 1962; figures from the end of the decade taken from Richard F. Muth, Public Housing: An Economic

Evaluation, American Enterprise Institute for Public Policy Research, Washington, DC, 1973, p. 13.

See Alexander von Hoffman, “A Study in Contradictions: The Origins and Legacy of the Housing Act of 1949,”

Fannie Mae Foundation, Housing Policy Debate, vol. 11, issue 12, 2000, p. 315.

For an illustration of the troubled history of race in public housing, see Lawrence Vale, From the Puritans to the

Projects: Public Housing and Public Neighbors (Cambridge, MA: Harvard University Press, 2000), Chapter 4.

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of poverty, the Housing and Urban Development Act of 1968 prohibited the construction of new

high-rise public housing projects for families.19

The Housing and Urban Development Act of 1969 made a fundamental change to the rent

structure in public housing; the Brooke Amendment capped tenant contributions toward rent at

25% of family income.20 This change was made out of concern that rents charged for public

housing were becoming too high for poor families to afford. To help meet the operating needs of

public housing, the 1969 act also authorized HUD to begin providing operating assistance to

PHAs, in addition to capital funding to cover the costs of the bonds they had issued to build

public housing.21

Over this period, the income character of the tenants in public housing had also continued to

change. Policy changes (such as the limit on the number of over-income families who could live

in public housing, reductions in income eligibility standards, and preferences for families

displaced by urban renewal) partnered with market changes (such as the post-war housing boom,

increasing rates of homeownership, and suburbanization) resulted in public housing serving the

poorest tenants, many of whom were receiving other public assistance.22 Until passage of the

Brooke Amendment, the rents these very poor families paid were, in many cases, higher than

what might be considered “affordable” to them, but not high enough to provide sufficient income

to allow PHAs to properly maintain public housing properties. Although Congress eventually

began providing additional operating subsidies to public housing after passage of the Brooke

Amendment, some public housing developments, facing inadequate rental income and

insufficient federal subsidies to maintain their properties, fell into severe disrepair. These

realities—poorer tenants paying lower rents, insufficient operating income, and deteriorating

units—shaped the public housing debates of the decade to follow.

The 1970s and the Rise of Section 8

By the early 1970s, construction programs were subject to growing criticism for taking too long

to develop and being too expensive. The Housing and Urban Development Act of 1970 required

that at least 30% of new public housing units be created through the Section 23 leased housing

program, which utilized the existing housing stock rather than new construction.23 The act also

authorized a demonstration, called the Experimental Housing Allowance Program, to test the

feasibility and effectiveness of giving families housing allowances in lieu of subsidized units. In

1973, President Nixon imposed a moratorium on all new housing construction commitments,24

including those under public housing. He argued that the existing programs needed revisiting

P.L. 90-448

P.L. 91-152

Richard F. Muth, Public Housing: An Economic Evaluation, American Enterprise Institute for Public Policy

Research, Washington, DC, 1973, p. 18.

From 1955 to 1972, the percentage of families not receiving public assistance declined from over 70% to just 25%.

“The Report of the Task Force on Improving the Operation of Federally Insured or Financed Housing Programs,

Volume II: Public Housing,” National Center for Housing Management, 1973, p. 12.

P.L. 91-609

An exception was made for the Section 202 Housing for the Elderly program.

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because they did not provide decent housing to families and cost the federal government too

much to build and maintain.25

The Nixon Moratorium was ended as Congress authorized funding for new units of public

housing and created new housing assistance programs.26 The Housing and Community

Development Act of 1974 created the Section 8 program, which continued the shift to subsidizing

privately owned housing by pairing rental subsidies with private market housing units.27 The

Section 8 program was designed to respond to the criticisms of the earlier programs by including

subsidies for private units and relying less heavily on new construction.

After the moratorium, the focus of federal housing assistance policy had shifted away from

constructing new public housing units to new models using the existing and private housing

market through the Section 8 program. Public housing averaged fewer than 37,000 reservations28

for new units of public housing per year between 1975 and 1979, compared to an average of more

than 275,000 reservations for new Section 8 assisted units per year over the same period.29

The 1980s: Withdrawing Further from Public Housing

The Omnibus Budget Reconciliation Act of 1981 made several significant changes to public

housing.30 It raised tenant rent contributions toward rent (as established by the Brooke

Amendment at 25% of family income) to 30% of family income. Estimating that increased rents

would decrease the need for federal operating subsidies, the act limited increases in funding for

operating subsidies. At the same time, the act more deeply targeted assistance to the poorest

families. Eligibility was largely31 restricted to families with incomes below 50% of the local area

median income and federal preferences were set to target assistance to the households assumed to

have the greatest need, including those who were homeless, those who were severely cost

burdened, and those living in substandard housing.32

The trend away from public housing continued with the Urban-Rural Recovery Act of 1983,

which limited new construction of public housing to instances in which it would be less than the

cost of acquiring existing housing.33 At the same time, the act limited the ability of PHAs to

For more information, see President Richard M. Nixon, State of the Union Message to Congress on Community

Development, March 8, 1973.

While public housing construction restarted as Congress authorized funding for new units, the moratorium

effectively ended the contracting for and construction of new units under the Section 236 and Section 221(d)(3)

programs.

P.L. 93-383

A reservation reflects a commitment to build or put under contract a unit of public housing. Not all reserved units are

necessarily built or occupied eventually.

CRS Report 91-369E, Trends in Funding and Numbers of Households in HUD-Assisted Housing, Fiscal Years 19751991, by Grace Milgrim (out of print; available upon request).

P.L. 97-35

Up to 5% of new units and 10% of existing units each year could be provided to families with income between 50%

and 80% of area median income.

Under federal preferences, applicants who met certain criteria (such as living in substandard housing) were to be

given preference in admission and selection for assistance over other families. Congress suspended the system of

federal preferences each year in annual appropriations acts beginning in 1996; federal preferences were repealed by

P.L. 105-276.

P.L. 98-181

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demolish or dispose of public housing to cases where the unit could not be reasonably

rehabilitated or the demolition/disposition would result in the acquisition of new housing. The

1983 act also authorized a demonstration testing a new form of Section 8 assistance, a portable

voucher with more flexible standards. The voucher program was made permanent in 198834 and

fully replaced the original Section 8 program.35 The Housing and Community Development Act

of 1987 further limited new public housing construction to only those cases where the PHA could

certify that family housing demand could not be met through Section 8.36 New public housing

starts dropped off significantly during the 1980s in favor of the new Section 8 program.37

During the 1980s, concern continued to grow about the state of the existing public housing

stock—both the physical soundness as well as the social health of public housing communities. In

1989, Congress established a National Commission on Severely Distressed Public Housing.38 The

commission was mandated to identify those public housing projects that were in a severe state of

distress; assess the most promising strategies for improvement; and develop a national action

plan. In 1992, the commission issued its findings and recommendations on the state of the

nation’s public housing. It reported finding residents living in fear of crime, high unemployment

and limited opportunities for employment, insufficient resources to address the needs of residents,

disincentives to self-sufficiency, and housing that had deteriorated to the point that it was

physically dangerous. The commission issued a wide range of recommendations, including

increased social services for residents, increased funding for public housing capital needs, better

performance assessment for PHAs, and experimentation with new forms of public-private

partnerships. The commission labeled 6% of the public housing stock as severely distressed; at

the time, this equaled 86,000 units.

1990s to Present: The End of Public Housing Development

and Decline in Units

The National Affordable Housing Act of 199039 reacted to some of the concerns about public

housing echoed by the National Commission. It authorized the Family Self Sufficiency program,

designed to provide incentives for assisted families to increase their employment. It also required

HUD to establish a formal PHA management assessment system, including mechanisms for

intervening in cases of troubled housing authorities, and it established a new source of safety and

security funding, the Drug Elimination Grant program. Shortly thereafter, the Housing and

Community Development Act of 1992 created the Revitalization of Severely Distressed Public

Housing program—commonly referred to as HOPE VI—which authorized HUD to make

competitive grants to PHAs to undertake major redevelopment of distressed public housing.40

P.L. 100-242

The 1983 act (P.L. 98-181) had repealed authority for new contracts under the prior forms of Section 8.

P.L. 100-242

CRS Report LTR 83-1647, Trends in Funding and Numbers of Households in HUD-Assisted Housing, Fiscal Years

1974-1984, by Grace Milgrim (out of print; available upon request).

P.L. 101-235

P.L. 101-625

P.L. 102-550

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In 1995, the Clinton Administration proposed the “Reinvention Blueprint,” which called for most

public housing developments to be converted to vouchers.41 At the same time, some Members of

Congress were calling for the abolition of HUD.42 While the Blueprint was not fully undertaken

and HUD was not abolished, reform proposals, many of which were included in the Blueprint,

were considered throughout the 1990s.

These efforts culminated with the passage of a major reform bill in 1998, the Quality Housing

and Work Opportunity Reconciliation Act of 1998 (QHWRA; P.L. 105-276). QHWRA included

provisions designed to promote local control, including the elimination of federal preferences. It

established a requirement that PHAs develop annual and five-year plans detailing how they were

using their local discretion. It gave PHAs the authority to convert their public housing properties

to vouchers, and in some cases, required that conversion if it proved cost effective. Influenced by

the welfare reform debates of the mid-1990s that were focused on promoting work,43 QHWRA

established a requirement that non-elderly, non-disabled residents be working or participating in

community service or self-sufficiency activities for eight hours per month and created a disregard

of newly earned income for some families. The act included authority for PHAs to leverage their

public housing properties and funding in order to secure private resources (loans) for

redevelopment. It also required HUD to develop a new formula for distributing operating funding

to PHAs. Importantly, the act prohibited PHAs from using any federal capital or operating

funding to develop net new public housing units.44 While Congress had not provided funding for

the development of new public housing units since FY1994,45 this provision of QHWRA

effectively prohibited any net new development,46 even if funds were available.

More than a decade after enactment of QHWRA, the number of public housing units nationally

has declined steadily, as more units are torn down than are rebuilt (see Figure 1). The HOPE VI

program, which had become at least partly responsible for declines in the number of units, has

had its funding reduced substantially, in part in reaction to concerns about slow spending, and in

part in reaction to concerns about displaced residents. With the exception of an infusion of

funding from the economic stimulus legislation in 2009,47 capital funding has remained relatively

U.S. Department of Housing and Urban Development (HUD), “HUD Reinvention: From Blueprint to Action,”

March 1995.

According to testimony of John C. Weicher, Assistant Secretary for Housing-Federal Housing CommissionerDesignate, U.S. Department of Housing and Urban Development (HUD), before the Senate Committee on Banking,

Housing and Urban Affairs, May 15, 2001: “[T]here were numerous proposals from Republican members of Congress

to abolish HUD, among them: a group of freshmen Congressmen; Sen. Faircloth, who was chairman of the HUD

Oversight subcommittee of this Committee; and Sen. Dole, the majority leader and leading Presidential candidate. [] In

1996, the Republican platform included a plank to abolish HUD.”

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; P.L. 104-193) abolished

the Aid to Families with Dependent Children (AFDC) program, which had provided a cash assistance entitlement to

low-income families. PRWORA replaced AFDC with the Temporary Assistance for Needy Families (TANF) program,

a flexible block grant to states that required states to implement time limits and work requirements for cash assistance

recipients. For more information, see CRS Report RS20807, Short History of the 1996 Welfare Reform Law, by (nam

e redacted) and (name redacted).

See 42 U.S.C. 1437g(g)(3)

Christopher Logan, Hin-Kin Lam, and Seth Cooper, et al., Analysis of Total Development Costs in Public Housing,

Abt Associates, Inc., for U.S. Department of Housing and Urban Development (HUD), Final Report, Washington, DC,

July 1998, p. 1.

Net new development refers to the development of additional units of housing, as opposed to units built to replace

other units that were demolished or disposed of.

American Recovery and Reinvestment Act of 2009, P.L. 111-5.

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level, despite a backlog in unmet capital needs. While PHAs have begun leveraging their public

funds to raise private capital, the potential for leveraging sufficient funds to meet the full backlog

of needs is limited. Given the reality of declining units, questions remain about the future of the

public housing stock and the program’s role in the future of federal housing assistance.

Overview of the Program

The following section of this report provides basic information about today’s public housing

program. It begins with a discussion of the unique administrative structure of the program,

followed by a discussion of the program’s policies and rules as they apply to public housing

residents. For a more detailed description of program policies, see the program regulations at 24

C.F.R. Parts 901-972 and in the Public Housing Occupancy Guidebook.48

Note to Reader: Recent Legislative Changes

The FY2014 Consolidated Appropriations Act (P.L. 113-76) included several legislative provisions that affect public

housing. They are summarized below; however, the remainder of this report does not reflect these changes. This

report will be updated once the new policies are fully implemented by HUD.

From Division L, Title 2 of P.L. 133-76

•

Section 210: Flat rents for public housing

Higher-income residents of public housing can currently opt to pay market-comparable flat rents established by their local

PHAs. Flat rents are intended to counteract the implicit tax on increased income inherent in income-based rents. Section

210 amends the law establishing flat rents to require that PHAs set flat rents at no less than 80% of local fair market rent.

The new policy is to take effect by June 1, 2014, but PHAs are to phase-in the increase so that no family’s rent increases by

more than 35% annually. A similar minimum flat rent policy has been included in prior assisted housing reform legislative

proposals. HUD is to establish the requirements of this new policy by notice, then commence rulemaking within six months

of the issuance of the notice.

•

Section 212: Redefinition of “public housing authority" to include consortia

There has been a recent trend toward consolidation or forming of consortia among PHAs to gain administrative efficiencies,

especially in light of reductions in federal funding for the administrative costs of federal rental assistance programs. Section

212 adds a consortium of PHAs to the definition of PHA. This change has been requested by the Administration and is

intended to further encourage the creation of such consortia, which, prior to this change, were recognized for the purpose of

administering the Section 8 voucher program, but not for the administration of public housing. HUD is to establish the

requirements of this new policy by notice, then commence rulemaking within six months of the issuance of the notice.

•

Section 238: Redefinition of “extremely low-income”

Currently, the term “extremely low-income” (ELI), which is used for eligibility and targeting provisions in various federal

housing assistance programs, is defined as income no greater than 30% of local area median income. This provision

expands the definition such that the term is defined as income that is no more than the greater of 30% of local area

median income or the federal poverty level. This effectively sets the federal poverty level as a national floor for the definition

of ELI, meaning anyone who has income at or below the federal poverty level will be considered extremely low-income. This

provision was included in earlier assisted housing reform legislation. HUD is to establish the requirements of this new policy

by notice, then commence rulemaking within six months of the issuance of the notice.

U.S. Department of Housing and Urban Development (HUD), Public Housing Occupancy Guidebook,

http://www.hud.gov/offices/pih/programs/ph/rhiip/phguidebook.cfm.

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Administration

Public housing has a unique administrative structure that pairs local administration and local

discretion with federal funding and federal regulations. Public housing properties are owned and

managed by quasi-governmental local public housing authorities (PHAs). PHAs have contracts,

called Annual Contributions Contracts (ACCs), with the federal government. Under the terms of

their contracts, PHAs agree to administer their properties according to federal rules and

regulations, and in exchange they receive federal funding in the form of operating and capital

grants (discussed later in this report under “Funding”). These federal rules and regulations

provide PHAs with more discretion in developing some policies (such as the admissions process),

but less discretion in developing other policies (such as the income determination process). In

areas where PHAs do have discretion to set local policies, they are required to develop those

policies through a public process that allows for—and responds to—community feedback.

PHAs

PHAs were, for the most part, created by states in response to the federal government’s creation

of the low-rent public housing program. Their authorities and structures are dictated by the state

laws under which they were chartered. PHAs typically have an executive director as well as a

governing board. The board generally has members appointed by local government officials, but

it may also have elected members. The board’s role is generally to approve policy, clarify goals,

and delegate responsibility and authority to the executive director, who acts on its behalf. While

PHAs’ governing structures are dictated primarily by their state charters, federal law mandates

that, unless otherwise exempted, PHA boards must include at least one resident.49

While PHAs were created for the purpose of administering the federal low-rent public housing

program, their missions have expanded over the years. Some PHAs administer state and local

housing programs50 and act as affordable housing developers in their communities. PHAs are also

responsible for administering the federal Section 8 Housing Choice Voucher program;51 in fact,

some PHAs no longer administer public housing and only administer the voucher program.

There are over 3,000 PHAs, and they vary in size from the very small to the very large. Table 1

provides a breakdown of PHAs that administer public housing by size. The vast majority of

PHAs—75% of all PHAs—are small (administering fewer than 250 units), but small PHAs only

administer about 18% of all public housing units nationally. Over half of all units are

administered by large PHAs (1,250+ units). One PHA, the New York City Housing Authority

(NYCHA) is noticeably larger than most other PHAs and accounts for over 17% of all public

housing units nationwide.

42 U.S.C. 1437(b).

Some PHAs also own and manage state-funded, non-federal public housing. In the early years of the public housing

program, some states—including Massachusetts and New York—developed their own state-funded public housing.

State-funded public housing is not under contract with the federal government, and therefore it does not receive federal

funding and is not subject to federal program rules. Over the years, many units of state-funded public housing have

been “federalized” by Congress and HUD, meaning they have been absorbed into the public housing stock.

For more information on the Section 8 voucher program, see CRS Report RL32284, An Overview of the Section 8

Housing Programs: Housing Choice Vouchers and Project-Based Rental Assistance, by (name redacted).

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Table 1. PHAs, by Size

Categories of Size

Number of PHAs

Percentage of PHAs

% of Units

NYCHA

17%

1250+ units

124

38%

500-1249 units

225

15%

250-499 units

423

14%

13%

50-249 units

1541

50%

16%

Less than 50 units

782

25%

3,096

100%

Total

Source: Based on data available from HUD at http://www.hud.gov/offices/pih/programs/hcv/ogddata/lowrent-s8units.zip, accessed on December 20, 2012. Data represent units under management as of December 9, 2012.

Part of the reason there are so many small PHAs is the way they were created by states; they were

typically tied to a specific locality, such as a county or unit of local government. In recent years,

there has been an increase in the number of smaller PHAs that have merged or formed consortia.

In some cases, these mergers or consortia are designed to allow the agencies’ programs—

particularly the Section 8 voucher program—to be administered across a metropolitan region that

crosses jurisdictional boundaries. In other cases, these mergers and consortia are meant to reduce

administrative costs—for example, by requiring only one executive director for the consortia

instead of one for each PHA—and to achieve efficiencies of scale. Academic researchers,52 as

well as the Bush53 and Obama Administrations,54 have encouraged further PHA consolidation.

However, PHA consolidation can lead to a loss of local control for municipalities, and may

therefore be unpopular with local leaders.

PHA Plans

As a condition of receiving federal funds, PHAs agree to administer their low-rent public housing

properties according to federal rules and regulations. However, those rules and regulations give

PHAs the discretion to develop their own local policies and procedures in many aspects of the

program. Those local policies and procedures must be included in the PHAs’ plans.

PHA plans are meant to provide information about how PHAs administer both their public

housing and voucher programs as well as their intentions for the future. For anyone interested in a

particular PHA’s intentions, goals, and policies, the PHA plans can be a valuable resource.

According to HUD’s regulations:

Bruce Katz and Margery Austin Turner, “Who Should Run the Housing Voucher Program? A Reform Proposal,”

Working paper prepared for the Brookings Institution Center on Urban and Metropolitan Policy, November 2000. This

report is focused on PHA consolidation for the purposes of the Section 8 voucher program.

In his FY2008 budget request, President Bush requested up to $5 million for a PHA bonus fund to encourage PHA

consolidation. HUD’s Congressional Budget Justifications argued that consolidation of small PHAs would lead to

greater efficiencies. The bonus fund was not enacted by Congress.

The Obama Administration’s Preserving, Enhancing and Transforming Rental Assistance (PETRA) proposal,

discussed briefly later in this report, initially included priority in consideration for funding applications to PHAs that

had voluntarily chosen to consolidate.

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The purpose of the plans is to provide a framework for local accountability and an easily

identifiable source by which public housing residents, participants in the tenant-based

assistance program, and other members of the public may locate basic PHA policies, rules

and requirements concerning the PHA’s operations, programs and services. (24 C.F.R.

903.3)

PHAs are required to establish two plans: the five-year plan and the annual plan. Both plans must

be developed with resident input and public participation, and the plans are subject to HUD

approval. The five-year plan describes the PHA’s mission, goals, and objectives and the PHA’s

progress towards meeting those goals and objectives. The goals and objectives are generally

related to both the agency’s physical housing stock as well as the agency’s role in meeting the

housing needs of lower-income families in their communities. The annual plan describes the

PHA’s day-to-day operations and policies. The policies and procedures spelled-out in the annual

plan are expected to be consistent with the goals and objectives outlined in the five-year plan.

Specifically, the annual plan must include information regarding, among other things,

•

housing needs in the PHA’s community;

•

the PHA’s policies that govern eligibility, selection, and admissions (as described

in the agency’s Admissions and Continued Occupancy Plan);

•

the PHA’s financial resources, as well as its most recent audit;

•

the PHA’s rent determination policies;

•

the PHA’s operation and management, including rules, standards, and policies

that govern maintenance and management of housing owned, assisted, or

operated by the PHA;

•

the extent of capital improvement needs at the PHA’s properties;

•

any public housing developments designated as housing for the elderly or

disabled;

•

any plans to demolish or dispose of public housing, or convert any public

housing to vouchers;

•

the PHA’s community service and self-sufficiency programs; and

•

the PHA’s safety and crime prevention measures. (24 C.F.R. 903.7)

PHAs are also required to establish Resident Advisory Boards to provide input in the planning

process. Members of the Resident Advisory Boards are elected and are public housing residents

and, if applicable, voucher holders. PHAs are required to consider Resident Advisory Board

recommendations while they are developing their annual and five-year plans.55

In addition to soliciting input from residents, PHAs are required to solicit broader community

input on their PHA plans. Specifically, PHAs are required to make their draft plans publicly

available and hold public hearings on their content. The PHA plan cannot be formally adopted

until the public hearing has been completed, the recommendations have been considered, and any

changes have been made.56

24 C.F.R. 903.13

24 C.F.R. 903.19

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PHAs submit their plans to HUD and they are subject to HUD’s approval. HUD reviews the plans

to ensure that they are complete, consistent with any other local HUD plans,57 and consistent with

federal law.58

Some PHAs are exempted from the annual and/or five-year planning process, and some are

eligible for a streamlined annual plan process. Specifically, high performing PHAs, small PHAs

(250 or fewer units), and Section 8 voucher-only PHAs are eligible to submit streamlined annual

plans. Streamlined plans are not required to contain as much information as full plans, although

PHAs must still give notice of how interested parties can obtain the information not contained in

the streamlined annual plan. The Housing and Economic Recovery Act of 2008 (P.L. 110-289)

included a title that exempted PHAs that administer 550 or fewer combined public housing units

and Section 8 vouchers from filing an annual plan. PHAs that are considered troubled are not

eligible for this exemption.59

PHAs participating in the Moving to Work Demonstration (MTW) may also be exempted from

the standard annual and five-year plan requirements, although they are required to submit

alternate annual MTW plans. (For an expanded discussion, see “Moving to Work” later in this

report.)

Resident Involvement

According to HUD regulations, “residents shall be involved and participate in the overall policy

development and direction of public housing operations.”60 There are several ways in which

resident participation in the government and management of public housing is promoted or

required. As noted already, most PHAs are required to have at least one resident on their

governing boards and PHAs must establish Resident Advisory Boards to provide input in the

PHA planning process.

Additionally, public housing residents have the right to organize and elect a resident council to

represent their interests.61 Most PHAs are required to set aside funding for resident participation

activities, at least some of which is to be provided specifically for resident councils.62 PHAs are

required to recognize resident councils, and resident councils may provide input in all areas of

PHA operations, including but not limited to occupancy, general management, maintenance,

security, resident training, resident employment, social services, and modernization priorities.

Taking resident participation one step further, public housing residents may form resident

management corporations, which are resident-sponsored entities that may enter into contracts

with PHAs to undertake some or all of the management activities at a property (or properties).

HUD’s regulations state that HUD

Such as a community’s Consolidated Plan, which is required to be developed as a condition of receiving HUD grant

funds such as Community Development Block Grant (CDBG) funds.

24 C.F.R. 903.23

HUD published implementing guidance on November 13, 2008, in PIH Notice 2008- 41(HA), “Public Housing

Agency (PHA) Five-Year and Annual Plan Process for all PHAs.”

24 C.F.R. 964.135

24 C.F.R. 964 et seq.

24 C.F.R. 964.150.

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encourages [P]HAs, resident councils and resident management corporations to explore the

various functions involved in management to identify appropriate opportunities for

contracting with a resident management corporation. Potential benefits of resident-managed

entities include improved quality of life, experiencing the dignity of meaningful work,

enabling residents to choose where they want to live, and meaningful participation in the

management of the housing development. (24 C.F.R. 964.15)

Public Housing Assessment System

HUD annually assesses the performance of the local PHAs that are administering the public

housing and Section 8 Housing Choice Voucher programs. The current assessment of public

housing program administration is called the Public Housing Assessment System (PHAS). PHAS

includes reviews of indicators pertaining to the physical condition of an agency’s housing stock,

the financial condition of the agency, the agency’s management performance, and their spending

of capital funding.63

PHAs that score 90% or better overall, and at least 60% on all individual indicators (50% on the

capital fund indicator) are considered high performers. High performers are eligible for reduced

federal oversight (including a stream-lined annual plan, less frequent physical inspections) and

may be eligible for bonus funding.64 PHAs that do not meet the requirements to be considered

high performers are considered standard performers if their overall score is at least 60% and they

score at least 60% on all of the sub-indicators (50% on the capital fund indicator).

PHAs that score less than 60% overall, or on two or more of the PHAS indicators, are considered

“troubled.” Once a PHA is designated as troubled, the Secretary must notify the PHA of its

status.65 At the outset of a PHA’s designation as troubled, it must develop a plan for its

improvement with HUD.66 In addition to helping agencies develop these plans, HUD has a

number of options for aiding troubled agencies.67 HUD can appoint a recovery team to help

develop remedies, provide technical assistance and training, impose financial sanctions, or

develop flexible arrangements with agencies tailored to their specific conditions.68

If a troubled PHA fails to make adequate progress, it may be found to be in substantial default of

its Annual Contributions Contract (ACC)69 with HUD.70 A PHA can be found to be in substantial

PHAS is governed by regulations at 24 C.F.R. 902 et. seq. HUD adopted new interim regulations governing PHAS in

mid-2011 (HUD, “Public Housing Evaluation and Oversight: Changes to the Public Housing Assessment System

(PHAS) and Determining and Remedying Substantial Default; Interim Rule,” 76 Federal Register 10136 et. seq.,

February 23, 2011). The interim rule made several changes, including eliminating a component of PHAS that required

a survey of residents’ satisfaction.

High performers may be eligible for bonus funding under the Public Housing Capital Fund. For more details, see 24

C.F.R. 905.10(j).

42 U.S.C 1437d(j)(3)(B)(I).

24 C.F.R. 902.75.

Section 565 of the Quality Housing and Work Responsibility Act of 1998 (QHWRA; P.L. 105-276) revised and

expanded HUD’s powers for dealing with troubled PHAs (codified at 42 U.S.C. 1437d (j)(3)).

24 C.F.R. §902.83.

The ACC is the contract between a PHA and HUD under which the PHA agrees to administer its public housing

program in accordance with federal rules in exchange for receiving federal funding.

HUD may determine that a PHA is in “substantial default” if it is acting in violation of federal statute, if it is in

violation of its contract with HUD, or if it has been deemed troubled but has not shown substantial improvement. (24

C.F.R. §902.79)

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default for violations of the Fair Housing Act (including maintaining segregated public housing),

physical deterioration of the public housing stock, management difficulties (ranging from

unwillingness or inability to follow HUD’s program rules to fraud), or any combination of these

factors.

One of the options available to HUD is to place a troubled PHA that is found to be in substantial

default in a receivership. Under a receivership, a PHA is stripped of all or part of its authority and

that authority is granted to another party, referred to as a receiver. Under an administrative

receivership,71 HUD can either serve as the receiver itself and take temporary possession of all or

part of the PHA, or the HUD can select another PHA or private housing management corporation

to serve as the receiver and manage all or part of the PHA.72

According to HUD data from May 2012, 48% of PHAs administering public housing were

considered high performers, 26% were considered standard performers, and 23% were considered

substandard, most frequently for management reasons. About 2% of PHAs were considered

troubled (with an overall score below a certain threshold and substandard scores on at least two

indicators).73

Demolition, Disposition, and Conversion

As noted earlier, PHAs have contracts with the federal government governing their public

housing properties. Under the terms of those contracts, PHAs must receive HUD’s permission to

make changes to their public housing stock. Specifically, PHAs must receive HUD’s permission

to either demolish or dispose of (sell) public housing units that are under contract.74 Demolition

and disposition of public housing is governed by Section 18 of the U.S. Housing Act.

In some cases, a court may find a PHA in violation of its Annual Contributions Contract, and may choose to place

the PHA in a court-ordered and designed “judicial receivership.”

For more information, see CRS Congressional Distribution Memo, Public Housing Authority (PHA) Receiverships,

by (name redacted) (contact the author for a copy), July 11, 2008; and U.S. Government Accountability Office (GAO),

Information on Receiverships at Public Housing Authorities, GAO 03-363.

Based on data available from HUD at http://portal.hud.gov/hudportal/HUD?src=/program_offices/

public_indian_housing/reac/products/prodphas/prodphas-scores and accessed on December 20, 2012.

The use restrictions associated with the annual contributions contracts renew each year when a PHA accepts public

housing funding through the capital and operating funds (described later in this report).

Property acquired or developed with funds from the U.S. Housing Act of 1937 must be operated as

public housing for a 40-year period that begins on the date on which the project becomes available

for occupancy, as determined by HUD. This 40-year period is extended if PHA receives other

funding, such as Capital Funds or Operating Funds…. Property modernized or receiving assistance

of Capital Funds from the U.S. Housing Act of 1937 must be operated and maintained as public

housing for a 20-year period that begins on the latest date on which modernization is complete or

assistance is provided with Capital Funds covered by the Capital Fund ACC Amendment. The 20year requirement may extend the use of the property as public housing beyond the original 40-year

ACC requirement or beyond any requirement incurred as a result of receiving Operating Funds.…

Property that receives Operating Funds from the U.S. Housing Act of 1937 must be operated as

public housing for a 10-year period beginning upon the conclusion of the fiscal year for which such

amounts were provided. The 10-year requirement may extend the use of the property as public

housing beyond the original 40-year ACC requirement or beyond any requirement incurred as a

result of receiving Capital Funds.

U.S. Department of Housing and Urban Development (HUD), http://www.hud.gov/offices/pih/centers/sac/demo_dispo/

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In order for a demolition to be approved, the property must be found to be “obsolete as to

physical condition, location, or other factors, making it unsuitable for housing purposes, and no

reasonable program of modifications is cost-effective to return the public housing project or

portion of the project to useful life.”75

The criteria for approving a disposition are broader, but PHAs face restrictions on how they can

use the proceeds from a disposition. In order for a disposition to be approved, the property must

meet the following criteria:

(a) Conditions in the area surrounding the project (density, or industrial or commercial

development) adversely affect the health or safety of the tenants or the feasible operation of

the project by the PHA; (b) Disposition allows the acquisition, development, or rehabilitation

of other properties that will be more efficiently or effectively operated as low-income

housing developments; (c) The PHA has otherwise determined the disposition to be

appropriate for reasons that are consistent with the goals of the PHA and the PHA Plan and

that are otherwise consistent with the Act. (24 C.F.R. 970.17)

However, the use of the proceeds from a disposition are limited. Unless waived by HUD, the

proceeds must be used for the retirement of outstanding obligations. Any remaining proceeds

must be used to provide low-income housing, or used for the benefit of the PHA’s residents or to

secure on-site commercial enterprises that are appropriate to serve the needs of the residents.76

If a public housing unit is demolished or disposed of, any displaced tenants must be provided

with relocation assistance,77 including comparable replacement housing. Replacement housing is

generally provided in the form of either a residence in another public housing unit or a

replacement voucher, referred to as a tenant protection voucher, which tenants can use to find

housing in the private market.78

In addition to demolition and disposition, another way in which properties can leave the public

housing stock is through conversion to vouchers. In 1996, Congress enacted a requirement that

any property with more than 300 units and a vacancy rate of over 10% be assessed to determine

its viability. This was referred to as the Section 202 mandatory conversion requirement.79 If the

assessment determined that it would cost more to rehabilitate the property than to provide

residents with vouchers, then the property was to be removed from the public housing inventory

in five years. The Quality Housing and Work Opportunity Act of 1998 (QHWRA; P.L. 105-276)

rewrote and reinforced the mandatory conversion requirement (renaming it “required

conversion”) and added a voluntary conversion policy. Specifically, under QHWRA PHAs are

required to assess for conversion all of their developments with 250 or more units and low

occupancy. Covered developments must be converted to vouchers if the cost of modernizing them

and operating them as public housing exceeds the cost of providing tenant-based vouchers. PHAs

may choose to voluntarily convert developments in cases where it would (1) be beneficial to the

residents, (2) be beneficial to the surrounding area, and (3) not have an adverse effect on the

availability of affordable housing in the area. Voluntary conversions must also be cost-effective.

24 C.F.R. 970.15.

24 C.F.R. 970.19.

However, demolitions and dispositions under Section 18 of the U.S. Housing Act are not subject to the Uniform

Relocation Act (24 C.F.R. 270.21(g); regulations governing the URA can be found at 49 C.F.R. Part 24).

24 C.F.R. 970.21.

Section 202 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (P.L. 104-134).

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Since 2006, PHAs have been required to review their inventory annually to determine whether

any of their public housing units must be removed from the public housing inventory per the

required conversion policy.80 This same assessment may be used by PHAs to determine whether

or not to pursue voluntary conversion, although additional factors (the impact on residents, the

surrounding community, and affordable housing) must be taken into account.

As of 2009, over 180,000 units of public housing had been removed through demolition or

disposition and over 16,000 units had been removed through conversion.81 (For more information

on inventory removals, see Figure 2 later in this report.)

Eligibility, Rent, Terms of Occupancy

As noted earlier, the low-rent public housing program is governed by federal statute, regulation,

and guidance, as well as local discretion and policy making. The following section of this report

describes the federal rules and regulations that govern the basic aspects of the public housing

program. However, given the amount of local discretion in the program, for any particular

community the best place to learn a PHA’s specific policies is the PHA’s plans.

Eligibility

Today’s public housing program is meant to provide assistance to low-income families,82 so

families must meet certain income standards in order to be eligible to live in public housing. In

general, families must be low-income—having gross income at or below 80% of Area Median

Income (AMI)83—at the time they apply to live in public housing. “Income” is defined in federal

statute as income from all sources from all members of the household, including imputed income

from assets, with some exceptions.84

Further, in order to be eligible the family must be comprised of citizens and/or eligible noncitizens.85 If a family has “mixed status” (including members who are not citizens and not eligible

HUD published final rules implementing QHWRA’s required and voluntary conversion requirements in the Federal

separate cost methodology for undertaking the assessment of properties for cost-effectiveness was not available. HUD

published the final cost comparison methodology on March 20, 2006.

Based on data provided to CRS by HUD. Please note that more recent data have not been made publicly available by

HUD.

For the purposes of the public housing program, a “household” is defined as a family, including, where appropriate, a

live-in aide (24 C.F.R. 5.100). A “family” is defined as including, but not limited to, a family with or without children,

an elderly family, a near-elderly family, a disabled family, and the remaining member of a tenant family, and a single

person who is not an elderly or displaced person, or a person with disabilities, or the remaining member of a tenant

family (24 C.F.R. 5.403). This is the extent of the HUD guidance on the subject. Individual PHAs may add further

clarification in their Admissions and Continued Occupancy plans, for example, defining a family as a group of

individuals who have evidenced a stable family relationship. The terms family and household are used interchangeably

in this report.

HUD establishes income limits, based on area median incomes, for all metropolitan areas and counties in the country

each year and publishes those limits on the department’s website.

There are some forms of income that are statutorily excluded from income for the purpose of housing programs.

Examples include income earned by full-time students under age 18, foster care maintenance payments, and the value

of food stamps. See 24 C.F.R. 5.609.

24 C.F.R. Part 5, Subpart E.

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non-citizens), then the family may live in public housing but the ineligible member is not

permitted to receive assistance. This is accomplished by providing the family with a prorated

benefit, which means the family must pay higher rent.86

Application, Waiting List, and Preferences

Families who wish to live in public housing must apply to their local PHA. Depending on the

policies of the PHA, the household can apply to live in a specific property or any property within

the PHA’s inventory.87 Some PHAs have designated properties as being available only to persons

who are elderly or have a disability. Families who wish to live in such properties must be either

elderly or have a disability.88

The demand for public housing is greater than the supply in most communities; as a result, a

family is typically assigned to a waiting list once it applies for public housing. Waiting lists can

be several months long, several years long, or even closed to new applicants. PHAs must

establish policies related to how they will administer their waiting lists and include those policies

in their annual plan. As a part of their waitlist management, PHAs may set local preferences, as

long as those preferences are not in violation of federal civil rights law. Examples of allowable

preferences include preferences for working families, families who are elderly or disabled, or

veterans. Once a PHA has established preferences, it can then choose whether to apply, among

families of the same preference category, a first-come, first-served selection policy or a random

selection process.89

Targeting and Deconcentration

PHAs are charged with balancing two competing priorities in their public housing programs:

serving the neediest families and deconcentrating poverty. Federal law requires that PHAs ensure

that at least 40% of families admitted to public housing in a year are extremely low-income

(defined as income at or below 30% of area median income).90 At the same time, federal law also

prohibits PHAs from concentrating very low-income families in public housing dwelling units in

certain projects or buildings within projects.91 PHAs are required to submit to HUD plans that

explain how their admissions policies promote deconcentration of poverty and income mixing by

For more information, see CRS Report RL31753, Immigration: Noncitizen Eligibility for Needs-Based Housing

Programs, by (name redacted) and (name redacted).

If a PHA wishes to implement site-based waiting lists rather than central waiting lists, it must include that policy in

its annual plan and HUD will approve the change as a part of the annual plan review. PHAs with site-based waiting

lists must ensure that their policies are in accordance with fair housing law and meet other requirements. See 24 C.F.R.

903.7(b)(2).

If a PHA wants to change the composition of a building to only elderly residents, it must submit a plan to HUD to

ask for approval. If the plan is approved, PHAs cannot evict non-elderly residents with disabilities, although PHAs may

help residents relocate if they want to move. The law also requires that if a PHA is unable to rent an available unit to an

elderly household within 60 days, it must make the unit available to near-elderly tenants (where the head of household

or spouse is age 50 or older). If the unit cannot be rented to near-elderly families, then it must be made available to all

families. For more information on housing for persons who are elderly, see CRS Report RL33508, Section 202 and

Other HUD Rental Housing Programs for Low-Income Elderly Residents, by (name redacted).

24 C.F.R. 960.206.

42 U.S.C. 1437n(a)(2). PHAs that also administer a voucher program may be able to reduce this targeting

requirement if they exceed the targeting requirement in the voucher program. See 24 C.F.R. 960.202(b).

42 U.S.C. 1437n(a)(3).

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bringing higher-income tenants into lower-income properties and lower-income tenants into

higher-income properties.92

Screening

In addition to ensuring that families meet income eligibility standards, PHAs are also required to

screen families to ensure that they are “suitable for tenancy.”93 Federal law prohibits PHAs from

admitting household members who (1) have been convicted of producing methamphetamines on

federally assisted housing property or (2) are subject to lifetime registration on a state sex

offender registry.94 Federal law also requires PHAs to prohibit admission for household members

who (1) were evicted from federally assisted housing for participating in drug-related criminal

activity in the prior three years and have not undergone rehabilitation, (2) are actively engaging in

illegal drug use, or (3) have exhibited a pattern of illegal drug use.95 These last three categories

are subject to PHA interpretation, in that they leave discretion to the PHA to determine whether a

family member has completed rehabilitation, is currently engaging in illegal drug use, or has

exhibited a pattern of illegal drug use.

In addition to the federal prohibitions, PHAs may adopt additional discretionary screening

criteria.96 PHAs may establish policies that prohibit admission of households who have other

criminal convictions, have poor credit histories, have poor rental histories, or who fail to meet

other criteria set by the PHA. PHAs that choose to adopt elective screening criteria must ensure

that the criteria are not discriminatory or in violation of the Fair Housing Act.

Rent

Federal housing law has generally defined housing as “affordable” to lower-income families if it

costs no more than 30% of family income.97 To ensure that the low-income families in public

housing are paying affordable rents, federal law bases tenant rent on family income. In the public

housing program, a family’s rent is calculated as the highest of the following:

•

30% of the family’s monthly adjusted income;

•

“Adjusted income” is total family income, less any deductions. Examples of

deductions include

•

$480 for each dependent;

•

$480 for elderly or disabled households;

•

any unreimbursed medical expenses that exceed 3% of household

income for elderly and disabled households;

See 24 C.F.R. Part 903, Subpart A for more information on the Deconcentration Plan.

24 C.F.R. 960.203(c).

42 U.S.C. 13663.

42 U.S.C. 13661-13662.

24 C.F.R. 960.203.

For more information about income and rent policies, see CRS Report R42734, Income Eligibility and Rent in HUD

Rental Assistance Programs: Responses to Frequently Asked Questions, by (name redacted) and (name redacted).

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•

certain child care expenses for working families with children;

•

in some cases, 100% of new earnings in the first year of new work and

50% of new earnings in the second year of new work, referred to as the

earned income disregard;98 and

•

additional deductions, at the discretion of the PHA.99

•

10% of the family’s gross monthly income;

•

welfare rent,100 if applicable; or

•

a minimum rent (up to $50) set by the PHA.101

Flat Rents

Each year, PHAs must provide each family living in public housing the option to pay a flat rent in

lieu of an income-based rent. Flat rents are market comparable rents established by each PHA.

The idea behind flat rents is to encourage families to increase their earnings; if a family’s income

increases, the family’s rent does not increase under a flat-rent model. Any time that a family faces

a decrease in income and paying flat rents becomes a financial hardship, the family may request

to switch back to income-based rents.102

Utilities

Federal housing policy considers utilities to be a part of the housing costs of a family. Therefore,

their costs are generally included when subsidizing tenants’ housing costs. If a public housing

development has individually metered units and the utilities are not included in the rent, then the

PHA has the option to either pay a utility reimbursement directly to the family or pay the utility

provider on behalf of the family. Each PHA is required to develop a schedule of utility

allowances.103 Those utility allowance schedules—which can be based on past patterns of

consumption or other estimates of reasonable utility costs—are used to determine how much a

PHA will pay toward a household’s utility bills and to determine if households living in properties

with PHA-paid utilities should pay an additional charge if they have excess consumption.104

Reexamination

Families’ household composition and income are reexamined annually for rent determination

purposes. Families are required to provide any necessary information and PHAs are required to

For more information about the earned income disregard, see 24 C.F.R. 960.225.

Historically, PHAs have not been reimbursed by HUD for the costs of discretionary deductions.

100

42 U.S.C. 1437a: “[if] the family is receiving payments for welfare assistance from a public agency and a part of

such payments, adjusted in accordance with the family’s actual housing costs, is specifically designated by such agency

to meet the family’s housing costs, the portion of such payments which is so designated.”

101

24 C.F.R. 5.628.

102

24 C.F.R. 960.253(b).

103

The utilities for which allowances may be provided include electricity, natural gas, propane, fuel oil, wood or coal,

and water and sewage service, as well as garbage collection.

104

24 C.F.R. 965.506 and 24 C.F.R. 5.632.

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obtain third party verification of family income, asset values, expenses related to deductions, and

other factors. Families may request interim reexaminations if they have a change in income or

family composition. PHAs must adopt policies governing interim reexaminations—such as

whether families are required to report an increase in income or change in family size between

annual reexaminations—and include those policies in their admissions and continued occupancy

plans as well as in the lease.105

Community Service Requirement

At reexamination, families’ compliance with the public housing community service and selfsufficiency requirement is also assessed. Under the requirement, non-elderly, non-disabled

residents of public housing who are not otherwise exempted are required to participate in eight

hours per month of either community service or economic self-sufficiency activities in order to

retain their public housing.106 (For more information, see CRS Report RS21591, Community

Service Requirement for Residents of Public Housing, by (name redacted).)

Termination of Tenancy

There are no federal time limits governing how long a family can live in public housing. As long

as a family wishes to remain in public housing, and as long as they continue to pay their rent and

comply with program rules, they can continue the residency.107 PHAs are authorized to evict

families whose incomes increase above the low-income limit, but they are not required to evict

these “over-income” families.108

As is the case with screening, there are some federally determined, mandatory grounds for

terminating tenancy or evicting families109 and PHAs are also permitted to determine their own

grounds for eviction. Federal law requires that PHAs terminate the assisted tenancy of any

member of the household who is convicted of producing methamphetamine on federally assisted

housing property.110 PHAs are encouraged by HUD, but not required by law, to evict persons

subject to lifetime registration on a state sex offender registry.111

Federal law also requires that PHAs adopt policies establishing that drug-related criminal activity,

illegal drug use, or other criminal activity that threatens the health, safety, or right to peaceful

enjoyment of other residents is grounds for termination of tenancy or assistance. In addition,

PHAs are required to establish standards that allow termination of tenancy for alcohol abuse or

provision of false information related to drug or alcohol abuse. PHAs may also establish

additional grounds for termination of tenancy, such as other criminal conduct.

105

24 C.F.R. 960.259 and 24 C.F.R. 966.4(c).

24 C.F.R. 960 Subpart F.

107

Some PHAs participating in the MTW demonstration program (described later in this report) have adopted time

limit policies for public housing residents.

108

PHAs are not permitted to evict families solely for being “over-income” if they are participating in the Family Self

Sufficiency program or are receiving the earned income disregard (24 C.F.R. 960.261).

109

Termination of tenancy does not necessarily mean eviction in all cases. A unit may be considered unassisted while it

is occupied by an ineligible family.

110

42 U.S.C. 1437n(f).

111

See HUD Notice PIH 2009-35(HA), “State Lifetime Sex Offender Registration,” issued September 9, 2009.

106

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One important aspect of PHA discretion in termination cases relates to how it is applied. First, in

most cases PHAs can determine when a household has met the threshold for termination of

tenancy. Second, PHAs are permitted to determine whether the tenancy of the entire household

should be terminated because of the actions of one member of the household, or even a guest of

the household. PHAs have the discretion to request that an offending member be removed from

the household, that an offending guest be barred from the property, or that the entire household’s

tenancy be terminated.112

Tenant Grievance Procedure

Tenants living in public housing are permitted to challenge decisions made by the PHA regarding

tenants’ individual circumstances as well as PHA policies that may adversely affect the tenants’

rights, duties, welfare, or status. Each PHA is required to develop a written grievance procedure

that includes both an informal process for resolving grievances as well as an informal hearing

process.113

Additional Programs and Services

Resident Supports

The families served by the public housing program are low-income and some may have personal

difficulties or other barriers that mean they could benefit from supportive services. While there is

no dedicated source of funding for providing services for public housing residents, there are

several programs through which PHAs can receive funding to hire staff to connect residents with

services. The Resident Opportunity for Self Sufficiency (ROSS) program provides funding that

PHAs can apply for to hire service coordinators to promote economic self-sufficiency among

families and/or independent living for persons who are elderly or are living with disabilities.

PHAs that wish to receive ROSS service coordinator funding apply to the Notice of Funding

Availability (NOFA) published by HUD each year in the Federal Register. The Public Housing

Family Self Sufficiency (FSS) program is similar to the ROSS program in that it funds the hiring

of service coordinators and uses the NOFA process.114 The main difference is that the FSS

program is specifically designed to link participating families to supportive services aimed at

improving self-sufficiency. Families who agree to participate establish goals to be met within a

five-year period and may be eligible to have any increased rent attributable to increased income

deposited in an escrow account that they can access after five years. Some PHAs have service

coordinator funding built into their operating funding.115

112

The concept of “no fault” eviction was litigated up to the Supreme Court, which ultimately ruled in favor of the

policy. For more information, see CRS Report RS21199, No-fault Eviction of Public Housing Tenants for Illegal Drug

Use: A Legal Analysis of Department of Housing and Urban Development v. Rucker.

113

24 C.F.R. Part 966, Subpart B.

114

In some years, FSS is funded within ROSS, in other years, it is funded separately.

115

Some PHAs received a renewable grant for elderly disabled service coordinator funding in 1995 and the renewal of

that funding has not been built into their annual funding from HUD, called the Elderly Disabled Service Coordinator

program.

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Section 3

Section 3 of the Housing and Urban Development Act of 1968, as amended, establishes a

requirement that certain recipients of HUD funding, to the greatest extent feasible, provide job

training, employment, and contracting opportunities for low- and very low-income individuals,

including residents of public housing, in connection with HUD-funded projects and activities in

their communities. The requirement specifically applies to all public housing funding, as well as

other housing and community development funds spent on housing construction or rehabilitation.

Under Section 3, PHAs and their contractors and subcontractors are required to make their best

efforts, consistent with federal, state, and local laws and regulations, to give to low- and very lowincome persons employment and training opportunities generated by funds from development

assistance, operating assistance, and modernization assistance. These three categories encompass

virtually all federal public housing funding received by PHAs. The act establishes priority

categories for low- and very low-income families to whom such opportunities should be

provided, with the first being residents of those developments for which the assistance is

expended, the second being residents of other developments managed by the PHA, the third being

participants in the Youthbuild program, and the fourth being low- and very low-income persons

residing within the metropolitan area or non-metropolitan county.116

Public Housing Homeownership

PHAs are permitted to promote public housing resident homeownership in three ways: (1) by

selling portions of public housing properties to residents, (2) by using some of their public

housing capital funds to provide assistance to public housing residents wishing to become

homeowners, or (3) by using some of their public housing capital funds to purchase homes to

resell to public housing residents. PHAs that wish to pursue public housing homeownership must

establish a plan that is then submitted to HUD for approval.117 This option has not been widely

used; as of May 2009, about 6,000 units of public housing had been sold to residents.

Moving to Work

The Moving to Work Demonstration (MTW) was authorized by Section 204 of the Omnibus

Consolidated Rescissions and Appropriations Act of 1996 (P.L. 104-134).118 The purpose of

MTW was to provide HUD and PHAs the flexibility to design and test policies to

•

reduce cost and achieve greater cost effectiveness in federal expenditures;

•

give incentives to families with children where the head of household is working,

seeking work, or is preparing for work by participating in job training,

116

The Section 3 requirement is governed by interim regulations, which can be found at 24 C.F.R. 135 et. seq.

The modern public housing homeownership guidelines were established by the 1998 reform act. Public housing

homeownership is governed by Section 32 of the U.S. Housing Act of 1937, as amended. Additional HUD guidance

can be found at 24 C.F.R. 906 and HUD’s Section 32 Desk Guide, which can be found on HUD’s website at

http://www.hud.gov/offices/pih/centers/sac/homeownership/section32deskguide.pdf.

118

QHWRA (P.L. 105-276) authorized a demonstration program similar to MTW, called the Home Rule Grant

Demonstration. Under it, up to 100 local jurisdictions were permitted to take over management of public housing with

increased flexibility and given the ability to mix capital funds, operating funds, and voucher funds. A notice inviting

communities to submit proposals was published in the Federal Register; however, no communities applied so the

demonstration was never implemented.

117

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educational programs, or programs that assist people in obtaining employment

and becoming economically self-sufficient; and

•

increase housing choices for low-income families.

Under Moving To Work, up to 30 agencies could apply to HUD for waivers of most rules under

the U.S. Housing Act of 1937 (P.L. 75-412).119 With HUD approval, MTW agencies can merge

their Section 8 voucher, public housing capital, and public housing operating funds; alter

eligibility and rent policies, modify their funding agreements and reporting requirements with

HUD, and make other changes.

Rules outside of the 1937 act, as amended—such as labor requirements and fair housing rules—

cannot be waived under MTW, nor can rules governing the demolition and disposition of public

housing. Agencies must also agree to serve substantially the same number of people they were

serving before the demonstration and they must agree to continue to serve low-income families.

Agencies participating in MTW have used the flexibility it provides differently. Some have made

minor changes to their existing Section 8 voucher and public housing programs, such as limiting

reporting requirements; others have implemented full funding fungibility and significantly altered

their eligibility and rent policies.120

Trends in Units and Characteristics of Properties

Determining the exact number of public housing units is complicated. The number of units under

contract between HUD and a PHA at any given point in time is not necessarily the same as the

number of physical units currently occupied by eligible families or available for occupancy.

PHAs may be receiving funding for units that are temporarily vacant awaiting occupancy of a

new tenant, temporarily vacant due to litigation, temporarily vacant awaiting rehabilitation, or

permanently vacant awaiting demolition or disposition. There may also be units that are currently

occupied that are slated for demolition or disposition and units that are in the process of being

rehabilitated or built to replace units that were demolished or disposed of (sold or otherwise

removed from the public housing inventory).

Generally, estimates of the current number of public housing units range from over 1.1 million

units to just fewer than 1.2 million units.121

119

Over the years, additional agencies have been added at the direction of Congress.

For more information on Moving to Work (MTW), see CRS Report R42562, Moving to Work (MTW): Housing

Assistance Demonstration Program, by (name redacted).

121

Historically, each year, HUD’s Congressional Budget Justifications have provided an estimate of the number of

public housing units that were eligible to receive federal payments. That document indicated that in FY2009, there

were 1.14 million public housing units eligible for payment. HUD has also published an annual report on the public

housing operating fund in some years. In that report, HUD estimated that 1.18 million public housing units were under

contract in CY2009, but only about 1.12 million were eligible for payments from the operating fund. The Center on

Budget and Policy Priorities (CBPP) attempted to count the number of units available for occupancy in June 2008 by

adjusting data from 2000 for estimates of units removed from the stock and those replaced and then excluding those

units that are planned for demolition or disposition. They counted 1.16 million public housing units in 13,926 projects.

Inventory data available on HUD’s website indicate that in December 2012, PHAs had 1.17 million units under

management, although some of those units may be slated for demolition or disposition and thus are not available to

tenants: http://www.hud.gov/offices/pih/programs/hcv/ogddata/lowrent-s8-units.zip.

120

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Figure 1 displays the trend over time in the number of public housing units eligible to receive

payment. The public housing program peaked at just over 1.4 million units in the mid-1990s,122

and the number of units has declined fairly steadily since. The public housing program today has

about as many units as it did in the mid-1970s.

Figure 1. Public Housing Units Over Time

(1957-2010)

Source: HUD Congressional Budget Justifications, Units Eligible for Payment. Please note that more recent data

have not been made publicly available by HUD.

The stock has been declining for two reasons: (1) PHAs have been demolishing and disposing of

public housing units without fully replacing them; and (2) Congress has not authorized the

addition of new units of public housing except to replace those being demolished and disposed of

since the late 1990s.123

Between 1973 and May 2009,124 nearly 250,000 units of public housing were approved for

removal from the public housing inventory and more than 200,000 were actually removed. As

shown in Figure 2, the rate of removal has increased markedly since the mid-1990s, and the most

122

The peak in public housing units available for occupancy came well after the peak in reservations for new units of

public housing, given the long development periods for many projects.

123

As noted earlier, P.L. 105-276 prohibits PHAs from using federal funding to create net new units of public housing.

Since the time that provision was enacted, there has been one exception: the FY2009 economic stimulus act (P.L. 1115) permitted the construction and acquisition of new units of public housing with the funding it provided. HUD’s

FY2012 Congressional Budget Justifications indicate that nearly 18,000 units of state-funded public housing were

expected to be “federalized” in FY2011 (meaning acquired and converted to federal public housing) under the authority

of P.L. 111-5.

124

Please note that more recent data have not been made publicly available by HUD.

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common way a unit has been removed has been through demolition or disposition, although some

units have been converted to vouchers. The rates of demolition and disposition increased

markedly in the mid-1990s, which coincided with the creation of the HOPE VI program and the

removal of the long-standing requirement that each unit of public housing that is removed from

the inventory must be replaced (referred to as one-for-one replacement). According to HUD:

Although demolition/disposition activity has always been permitted, HUD and its business

partners have begun to actively pursue it as a management strategy option in the last ten

years. This is due to the realization that some developments have difficulties associated not

only with physical deterioration, but also with the overall deterioration of the surrounding

community. It is also true that a large portion of the housing now being proposed for

demolition/disposition was built in the late 1940s and early 1950s, and was built to a

standard that is no longer acceptable for the general public. Developments meeting that

description have very often become the housing of last resort within their communities.125

Figure 2. Public Housing Units Removed from Inventory and Type of Removal

(1973-May 2009)

Source: CRS analysis of data provided by HUD. Please note that more recent data have not been made publicly

available by HUD.

Note: Data in the pie chart reflect the distribution of cumulative removals by type over the full period.

The data presented in Table 2 provide descriptive information about public housing properties.

Despite public housing’s reputation as “the projects,” epitomized by the largest developments in

major cities, the most common form for today’s public housing projects is notably smaller in

scale; high-rise and mixed developments account for less than one-quarter of all public housing

properties, while three-quarters of developments are row houses; townhomes; walk-up, garden

style, detached, or semi-detached homes; and scattered site housing. Further, less than half of all

125

U.S. Department of Housing and Urban Development (HUD), http://www.hud.gov/offices/pih/centers/sac/

demo_dispo/.

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public housing properties are in central city locations and nearly half are located in low-poverty

census tracts.

It is important to note, however, that these data are at the property rather than the unit level.126

Given that high-rise developments have greater density than other forms of housing and are more

often located in central-city and high-poverty areas, the distribution of units is likely to be higher

in these areas than that shown by the property data.

Table 2. Public Housing Property Characteristics, 2009

Size and Age (Projects)

Average Size

162 units

Median Size

111 units

Average Age

27 years

Average Bedroom Size

1.89 bedrooms

Building Type (Projects)

Detached/semi-detached

17%

High-rise/mixed

23%

Row/townhouse

26%

Scattered site

22%

Walk-up/garden

13%

Occupancy Type (Projects)

Family

64%

Elderly/disabled

36%

Location (Projects)

Central city

41%

Non-central city

23%

Rural

36%

Census tract poverty concentrations

0-20% poverty

49%

21-30% poverty

21%

31-40% poverty

13%

>40% poverty

18%

Source: HUD, Office of Public and Indian Housing, Real Estate Assessment Center, Financial Management

Division, Operating Fund Annual Report CY2009, February 24, 2010. Please note that more recent data have not

been made publicly available by HUD.

Figure 3 displays the geographic distribution of public housing across the country. States are

shaded relative to the number of public housing units within their borders. Superimposed dots

indicate the location of individual properties, with the relative size of the property reflected in the

126

At the time this analysis was completed, unit-level data were not readily available.

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diameter of the dot. As shown in the map, New York has the greatest number of public housing

units. New York is home to over 18% of the nation’s public housing stock and has more than

three times the number of units as the state with the next highest number of units (Pennsylvania,

which has about 5.5% of the nation’s public housing units). New York is also home to the largest

public housing projects, with several having well over 2,000 units. While New York has the

greatest number of units and the largest projects, both Texas and Pennsylvania have more public

housing projects than New York. Overall, public housing is predominately located in the eastern

half of the United States.

Figure 3. Geographic Location of Public Housing Properties and Units, 2012

Source: Map prepared by CRS using data from HUD’s Picture of Subsidized Housing 2012 dataset.

Characteristics of Tenants

Unlike other social assistance programs that target specific subpopulations of low-income

individuals and families (such as persons who are elderly, persons who are living with disabilities,

or families with children), public housing is available to all types of low-income families and

individuals. As shown in Figure 4, today’s public housing program serves families headed by

persons who are elderly, persons who have a disability, and persons who are not elderly and not

living with a disability, with and without children. While no one household type accounts for the

majority of public housing families, the most common household type in public housing is

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families headed by persons who are not elderly, not living with a disability, and have children.

These families account for over one-third of all households in public housing. Looking at the

breakout of these families, the vast majority are single parent, female-headed households.

Elderly households without children are the second largest category, accounting for over a quarter

of all households. Households where the head of household is living with a disability (including

both those with and without children) account for about one-fifth of total households. Overall,

there are more families without children (59% of all households) than with children (41%) in

public housing.

Figure 4. Families in Public Housing by Household Type, 2010

Elderly, with children

1% Disabled, with children

NEND, no children

14%

Disabled, no children

16%

Elderly, no children

29%

Single female head

87%

Not elderly, not disabled

(NEND) with childen,

36%

Single male head

Married couple head

Source: CRS analysis of data provided by HUD. Please note that more recent data have not been made publicly

available by HUD.

Notes: Household types are derived by the elderly or disabled status of the household head. Totals may not add

due to rounding.

The over 1.26 million families living in public housing are made up of over 2.7 million people.

The overall average household size in 2010 was 2.2 people; families with children tended to be

larger (an average of 3.5 people per family) and families without children tended to be smaller (an

average of 1.3 people per family). Of the over 2.7 million people living in public housing in 2010,

about 40% were children under the age of 18 and about 15% were adults over the age of 62.

In terms of race and ethnicity, just under half of all households living in public housing in 2010

were headed by a person who identified his or her race as white, and just under half of all

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households were headed by a person who identified his or her race as black. Twenty-one percent

of households were headed by a person who identified his or her ethnicity as Hispanic.

Table 3. Race and Ethnicity of Heads of Household, 2010

Head of Household Race

White

49%

Black

47%

American Indian/Alaskan Native

Asian Pacific Islander

Head of Household Ethnicity

Hispanic

21%

Non-Hispanic

79%

Source: CRS analysis of data provided by HUD. Please note that more recent data have not been made

publicly available by HUD.

With income restrictions on eligibility for public housing, households living in public housing are

low-income. As shown in Table 4, the median family income of households living in public

housing in 2010 was $9,644 per year. To give this number context, it can be compared to the

national poverty guidelines, which are used to define who is “poor” and therefore may be eligible

for a number of other social assistance programs.127 Comparing the median income of all

households living in public housing to the two-person poverty guidelines for 2010 ($14,570),128

the median income of families living in public housing was only about two-thirds of the poverty

guideline. Comparing the median income of non-elderly, non-disabled families with children to

the three-person poverty guidelines ($18,310),129 median family income for these households was

less than half of the poverty guideline in 2010.

Table 4. Median Family Income of Households Living in Public Housing, by

Household Type, 2010

Head of Household Type

Median Gross Income

All households

$9,644

Elderly

$10,704

Disabled

$9,132

Not-Elderly, Not-Disabled (NEND) families w/o children

$8,840

NEND families with children

$8,980

127

The poverty guidelines are issued annually by the U.S. Department of Health and Human Services (HHS) and are a

simplified version of the poverty thresholds developed by the Census Bureau for statistical purposes. The poverty

guidelines are used for administrative purposes such as determining financial eligibility for certain federal programs.

The poverty guidelines are used for this discussion for the sake of simplicity. The full set of guidelines can be accessed

at http://aspe.hhs.gov/poverty/10poverty.shtml.

128

The two-person threshold was chosen for comparison because the median household size in the public housing

program is two.

129

The three-person threshold was chosen for comparison because the median household size of non-elderly, nondisabled families with children in the public housing program is three.

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Source: CRS analysis of data provided by HUD. Please note that more recent data have not been made publicly

available by HUD.

Note: Elderly and Disabled Household Types refer to the elderly status or non-elderly disabled status of the

head of household. Those households may or may not have children.

Different types of families living in public housing receive their income from different sources.

As shown in Table 5, in 2010, over 80% of all elderly households reported receiving income

from Social Security or pensions. Most households headed by persons with disabilities reported

receiving Supplemental Security Income (SSI) and/or other Social Security or pension income.

Non-elderly, non-disabled (NEND) families with children reported receiving income from a

variety of sources. Over half reported income from work, 45% reported some income from

welfare (defined as payments from the Temporary Assistance for Needy Families (TANF)

program or state General Assistance (GA) programs), and over one-fifth reported some income

from child support payments. About 5% of all households reported receiving no income from any

source.

Table 5. Source of Income by Household Type, 2010

(Percentages of households reporting any income from selected sources)

Child Support

Supplemental

Security

Income

Social

Security or

Pension

NEND families

w/o children

NEND families

with children

Household

Type

Work

TANF or GA

(Welfare)

Elderly

Disabled

Source: CRS analysis of data provided by HUD. Please note that more recent data have not been made publicly

available by HUD.

Note: Elderly and Disabled Household Types refer to the elderly status or non-elderly disabled status of the

head of household. Those households may or may not have children. Totals will not sum to 100% because

households can receive income from various sources.

Over the past several decades, social assistance programs have increasingly focused on promoting

work and work activities among recipients of benefits, particularly non-elderly and non-disabled

families. The community service and economic self-sufficiency requirement in public housing is

an example of such a policy. Given the policy interest in increasing work effort among nonelderly, non-disabled families, Table 6 is provided to offer a closer look at the sources of income

for these families. Among non-elderly, non-disabled families, just over half received income from

work. The majority of working families were not receiving welfare income (defined as TANF or

GA) in 2010. Dividing this population into those with and without children, in both cases the

plurality of families received income from work and not welfare, although families without

children were receiving income from work at a higher rate than families with children. Twentysix percent of not-elderly, not-disabled households received income from welfare but not from

work; among those families, those with children were more likely to receive income from welfare

and not work. Given the work requirements in the federal TANF program, it is likely that most of

those families receiving income from welfare are or will be subject to work requirements as a

condition of receiving assistance. Just over a quarter of NEND families with children, and just

under a fifth of NEND families without children, report receiving no income or receiving income

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Introduction to Public Housing

only from non-work and non-welfare sources. These families are the most likely to be subject to

the community service requirement in public housing, assuming they are not otherwise exempt.

Table 6. Income from Welfare and Work Among Not-Elderly,

Not-Disabled Families (NEND) in Public Housing, 2010

Work, No

Welfare

Work and

Welfare

40%

13%

26%

21%

NEND with children

43%

13%

25%

19%

NEND without

children

51%

17%

26%

Household Types

All NEND households

Welfare, No

Work

No Work, No

Welfare

Source: CRS analysis of data provided by HUD. Please note that more recent data have not been made publicly

available by HUD.

As noted earlier in this report, families living in public housing pay income-based rents. Because

the incomes of families living in public housing are quite low, the rents paid by those families are

also quite low. As shown in Table 7, looking at all households, the median rent paid by tenants in

2010 was $224 per month. Non-elderly, non-disabled families with children paid the lowest rent

(under $200), which is not surprising, given that they tend to have the lowest incomes.

In order to provide a sense of the financial benefits to families of living in public housing, Table

7 also compares the difference between what tenants pay in rent each month and the fair market

rent (FMR) in their local communities.130 In 2010, the median difference was $563 per month for

all households. Not-elderly, not-disabled families with children had the greatest difference

between the rents they pay to live in public housing and the local FMR, a benefit of nearly $700

per month, or over $8,300 per year.

Table 7. Comparison of Rent Paid by Families Living in Public Housing to Local

Market Rents by Household Type, 2010

($)

Household Type

Median Monthly Rent Paid

by Household

Median Monthly Difference

Between Rent Paid by

Household and Local FMR

All households

224

563

Elderly

245

482

Disabled

218

481

NEND w/o children

228

505

NEND with children

194

694

Source: CRS analysis of data provided by HUD. Please note that more recent data have not been made publicly

available by HUD.

130

Fair Market Rents (FMRs) are calculated annually by HUD for each metropolitan area and county in the country.

They are meant to represent the cost of modest housing in the community. While not a perfect proxy for the actual

market costs that a family may face, they are a useful measure and are often used as a proxy for local market rents.

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Note: Elderly and Disabled Household Types refer to the elderly status or non-elderly disabled status of the

head of household. Those households may or may not have children. Approximately one quarter of records had

missing values for rent paid or FMR and were thus excluded from this analysis.

The public housing program does not impose limits on the length of time a family can live in

public housing. Once a family is leasing a public housing unit, the family can continue to renew

that lease until it is no longer eligible, either because the family’s income increases too much to

maintain eligibility or because the family violates program rules in some way. The data presented

in Figure 5 provide a snapshot of the length of tenure of families living in public housing in

December 2010. The bars provide a distribution of households by the number of years they have

lived in public housing and household type, and the box in the center of the graph presents

median and mean length of stay by household type.131 More than half of all families living in

public housing in 2010 had lived there for five years or less. The greatest share of households

living in public housing had been in public housing for between one and two years; the next

greatest share had been living in public housing for less than one year, although almost the same

number had been living in public housing for more than 20 years. While families with children

make up the greatest share of those families that have been living in public housing for less than

one year, elderly-headed families make up the greatest share of those families that have been

living in public housing for more than 20 years. Presumably, many of these elderly-headed

families entered the program as a different household type, perhaps families with children, and

their category changed as they aged.

Figure 5.Tenure in Public Housing by Household Type, 2010

Source: CRS analysis of data provided by HUD. Please note that more recent data have not been made publicly

available by HUD.

131

This type of point-in-time analysis has limitations. While it shows the makeup of the current population of recipients

(the majority of whom have lived in public housing less than five years; and a sizeable minority of whom have lived in

public housing for 20 or more years), it does not answer the question of how long a person entering public housing is

likely to stay. That type of analysis requires longitudinal data, which are not readily available.

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Notes: These data present point-in-time tenure data. Such point-in-time data cannot be used for a survival

analysis (how long would a given person entering public housing be likely to stay).

Funding

PHAs sustain public housing through a combination of federal funding, tenant rents, and other

investment income. Congress typically appropriates several streams of funding to PHAs to help

make up the difference between what PHAs receive in rent from tenants and what it costs to

operate and maintain public housing. Operating funds are meant to fund the day-to-day operations

of public housing (administration and staffing, utilities, routine maintenance, etc.). Capital funds

are meant to help pay for modernization needs, such as replacing a roof or a heating and cooling

system, or remodeling units. Both operating funds and capital funds are allocated to PHAs based

on a formula. PHAs can also apply for competitive HOPE VI revitalization grants. HOPE VI

grants are used to demolish and rebuild, or substantially rehabilitate, severely distressed public

housing.

Operating Funding

Operating funds are meant to help pay for day-to-day operations, including utilities, safety and

security measures, resident services, and administration. The operating fund provides subsidies to

PHAs to make up the difference between what it costs to run public housing and what lowincome tenants pay in rent. Under the formula, the calculation for determining a PHA’s operating

subsidy eligibility uses two components: expenses (meant to represent the cost of running public

housing) and income (meant to represent the amount collected in tenant rents). HUD subtracts a

PHA’s income from its expenses, and the amount by which the income is short of the expenses is

the PHA’s operating subsidy eligibility.

For a number of years, the amount of appropriations provided by Congress was not sufficient to

fund 100% of PHAs’ formula eligibility; therefore, amounts provided to PHAs had to be prorated

to fit within the amount of appropriations available. From 2005 to 2009, proration levels ranged

from about 83% to about 89%.132 In 2010, the operating fund proration level was over 100%.133

Due to funding reductions in subsequent years, the proration level was 95% in 2011,134 95% in

2012,135 and 82% in FY2013.136

132

U.S. Department of Housing and Urban Development (HUD), Office of Public and Indian Housing, Real Estate

Assessment Center, Financial Management Division, Operating Fund Annual Report CY2009, February 24, 2010.

133

U.S. Department of Housing and Urban Development (HUD), Office of Public and Indian Housing, Real Estate

Assessment Center, Financial Management Division, Explanation of Final Obligations under Public Housing

Operating Fund Program for Calendar Year (CY) 2010, updated November 1, 2010.

134

U.S. Department of Housing and Urban Development (HUD), Office of Public and Indian Housing, Real Estate

Assessment Center, Financial Management Division, Explanation of July-September Obligations Calendar Year 2011

Estimated Eligibility, June 29, 2011.

135

U.S. Department of Housing and Urban Development (HUD), Office of Public and Indian Housing, Real Estate

Assessment Center, Financial Management Division, Explanation of Final Obligations Under Operating Fund

Program For Calendar Year (CY) 2012, September 25, 2012.

136

U.S. Department of Housing and Urban Development (HUD), Office of Public and Indian Housing, Real Estate

Assessment Center, Financial Management Division, Explanation of October through December Final Obligations

(continued...)

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As previously noted, operating funds are meant to supplement the funds that PHAs receive from

tenant rents, their own investments, and other sources. As a result, the percentage of a PHA’s

public housing operating budget that is made up of federal funds will vary across PHAs and from

year to year. According to data from HUD, in 2009, an estimated 61% of PHAs’ revenues

nationally came from federal operating funds, 34% came from tenant rents, and 5% came from

other sources (e.g., investment income, fee income). HUD also provided estimates of how PHAs

used their funds: 22% of PHA operating expenditures nationally covered the cost of utilities, 30%

went toward administrative expenses, 31% went toward maintenance costs, 11% went toward

general expenses, and 3% each went toward tenant services and protective services.137

Public Housing Drug Elimination Grants

The Public Housing Drug Elimination Grant program (PHDEP) was funded between FY1991FY2001. The program initially provided competitive grant funding to PHAs, and later provided

formula grants to PHAs, to be used for a variety of safety and security activities. Examples

include funding for security guards or patrols, developing after-school program activities and

other activities designed to reduce the use of drugs, and making physical changes to public

housing to promote security (such as installing security cameras). When the program was ended,

it was argued that all of the activities funded under PHDEP could also be funded using operating

funding.138

Capital Funding

Capital funds are provided via formula to PHAs to help meet the modernization needs of public

housing that cannot be met through the income collected via tenant rents. The formula for

allocating capital funds uses various measures of relative need (e.g., size and age of stock) and

relative construction costs. A portion of capital fund dollars is also generally set aside to provide

Replacement Housing Factor (RHF) funding, which is funding set aside to replace units that are

demolished or disposed of.139

PHAs may use their capital fund dollars for the modernization and development of public housing

and for management improvements.140 Additionally, PHAs may use up to 20% of their capital

funds to supplement their operating funding.141

Until mid-2011, the most recent assessment of the modernization needs of the nation’s stock of

public housing was more than a decade old.142 The 1998 study found that, nationally, public

(...continued)

Under Operating Fund Program For Calendar Year (CY) 2013, September 30, 2013.

137

President’s FY2012 Budget Appendix, p. 561. Please note that more recent data have not been made publicly

available by HUD.

138

See HUD’s FY2002 Congressional Budget Justifications, http://archives.hud.gov/budget/fy02/cjs/part_1/

drugelimin.pdf.

139

24 C.F.R. Part 905.

140

This language is taken from HUD’s website, http://www.hud.gov/offices/pih/programs/ph/capfund/index.cfm. A

final Capital Fund rule was published on October 23, 2013. It amended 24 C.F.R. Parts 903, 905, 941, et al. and can be

accessed at http://portal.hud.gov/hudportal/documents/huddoc?id=CapFundFinalRule2013-23230.pdf.

141

Section 519 of P.L. 105-276.

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housing properties were accumulating roughly $2 billion in capital needs each year, and that there

was a backlog of $18 billion-$20 billion in unmet needs.143 Since that study was done, many

public housing units have been demolished or redeveloped; at the same time, capital fund

appropriation levels have only hovered around the annual accrual needs level144 (see Table 8 for

recent funding levels). In the FY2008 appropriations act,145 Congress directed HUD to conduct a

new Capital Needs Assessment in order to obtain a more current estimate of the capital needs of

public housing. HUD released the results of the new study in mid-2011. It found that the backlog

of capital needs in public housing now stands at about $20.7 billion and that annual needs are

accruing at a rate of over $3.4 billion per year.146 Adjusting for inflation, this would be a decrease

in the backlog, but an increase in the annual accrual rate.147

Leveraging and Mixed Finance Development

An increasing number of PHAs are leveraging their capital funds to secure outside resources to

address their capital needs. According to data available from HUD, as of June 2012 nearly $3.8

billion had been approved to be leveraged by 240 PHAs.148 Under these transactions, PHAs

pledge a portion of their future year annual capital funds toward the debt service payments on a

loan or a bond. The pledge of future capital funds is made subject to the availability of

appropriations, and the loans and bonds secured by the pledge are not backed by the federal

government. PHAs wishing to participate in the Capital Fund Financing program (CFFP), the

pilot program through which HUD has permitted these transactions, must apply for prior HUD

approval. HUD generally restricts PHAs to pledging no more than one-third of their capital

funding toward meeting the debt service needs of a bond or loan. PHAs are not currently

permitted to pledge their operating funding or mortgage their public housing properties.149

(...continued)

142

In FY2008, Congress directed HUD to complete a new capital needs assessment of public housing. That assessment

was underway, but results were not yet available at the time this report was published.

143

Meryl Finkel, Donna DeMarco, Hin-Kin (Ken) Lam, and Karen Rich, “Formula Capital Study: Capital Needs of the

Public Housing Stock in 1998,” prepared for the U.S. Department of Housing and Urban Development (HUD), 2000.

144

With the exception of the one-time appropriation of $4 billion for public housing capital needs provided by the

American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5).

145

Division K of the Consolidated Appropriations Act, 2008, Committee Print of the House Committee on

Appropriations on H.R. 2764 / P.L. 110-161.

146

Meryl Finkel et. al., Capital Needs in the Public Housing Program, Prepared for U.S. Department of Housing and

Urban Development by Abt Associates Inc., November 24, 2010, http://portal.hud.gov/hudportal/documents/huddoc?

id=PH_Capital_Needs.pdf.

147

The report indicates that this change is due to a change the methodology of the study. If the old methodology had

been used, the backlog would appear higher and the annual accrual rate would appear lower.

148

U.S. Department of Housing and Urban Development (HUD), http://www.hud.gov/offices/pih/programs/ph/

capfund/cffp.cfm, accessed December 2012.

149

HUD published a proposed rule governing the Capital Fund Financing Program, as well as an Operating Fund

Financing Program, U.S. Department of Housing and Urban Development (HUD), “Use of Public Housing Capital and

Operating Funds for Financing Activities,” 72 Federal Register 39546, July 18, 2007. The final rule was published on

October 21, 2010, at 75 Federal Register 65198 and it only addresses the use of Capital Funds.

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HOPE VI/Choice Neighborhoods Initiative

HOPE VI is a public housing redevelopment grant program. Through HOPE VI, HUD provides

competitive grants to PHAs to rehabilitate or demolish public housing and replace it generally

with mixed-income housing.

HOPE VI began as a demonstration program, created in reaction to the findings of the National

Commission on Severely Distressed Public Housing. The commission’s 1992 report labeled 6%

of the public housing stock as severely distressed; at the time, this equaled 86,000 units. These

severely distressed properties were characterized by high crime, low employment and few

opportunities for residents, and poor physical conditions.

The purpose of the HOPE VI program is to revitalize severely distressed public housing

developments and transform them into safe, livable environments. As described by HUD, this

includes changing the physical characteristics of public housing from high-rise tenements to

attractive, marketable units that blend in with the surrounding neighborhoods; lessening

concentrations of poverty by reducing density and promoting mixed-income communities;

encouraging partnerships with other agencies and local governments for support and resources;

achieving high-quality management in public housing and enforcing strict eviction rules; and

helping residents to attain self-sufficiency by providing services and educational opportunities,

and by encouraging economic development in the area surrounding public housing.

The program was initially funded in FY1993 and has been funded each year since, although the

overall funding level has declined in recent years (see Table 8 for recent funding levels). HOPE

VI revitalization grants are awarded on a competitive basis to PHAs that apply for such grants.

Through FY2010, HUD had awarded 268 revitalization grants.

While the program has been credited with demolishing some of the most troubled public housing

and replacing it with higher quality, mixed-income housing, it has also been criticized for the

ways in which it has displaced existing residents. The Obama Administration has proposed

replacing the HOPE VI program with a new initiative, referred to as the Choice Neighborhoods

Initiative (CNI), which would expand the concept of HOPE VI beyond public housing to other

distressed neighborhoods and increase requirements related to tenant relocation. Although CNI

has not been authorized, Congress began funding the initiative in FY2010, and in FY2012 and

FY2013, Congress funded only CNI and not HOPE VI.

Recent Trends in Funding

As can be seen in Table 8, total funding for public housing has fluctuated up and down over the

last decade. Total funding was increasing until FY2002. From FY2002 through FY2006, total

public housing funding steadily declined, most rapidly following large reductions in funding for

HOPE VI, which was slated for elimination by the George W. Bush Administration (and later, by

the Obama Administration). Beginning with FY2007, funding began to rise again; apart from the

$4 billion in stimulus capital funding provided in FY2009 by the American Recovery and

Reinvestment Act (ARRA; P.L. 111-5), FY2010 total funding for public housing was at the

highest level since the modern funding system for the program was adopted. The FY2011 yearlong continuing resolution reduced total funding for public housing by about 9% compared to

FY2010, and funding continued to decline in FY2012 and FY2013.

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Table 8. Appropriations for Public Housing, FY1999-FY2013

(Dollars in millions)

Operating Fund

1999

2,818

3,000

310

625

6,753

2000

3,138

2,900

310

575

6,923

2001

3,242

3,000

310

575

7,127

2002

3,495

2,843

574

6,912

2003

3,577

2,712

570

6,859

2004

3,579

2,696

149

6,424

2005

2,438b

2,579

143

5,160b

2006

3,564

2,439

6,102

2007

3,864

2,439

6,402

2008

4,200

2,439

100

6,739

2009

4,455

6,450c

120

11,025

200d

7,475

100d

6,757

5,957

5,945

2011

4,775

4,617

2,500

2,040

HOPE VI/CNI

Total

Public

Housing

2010

Capital Fund

Drug Elimination

Grantsa

2012

3,962

1,875

120e

2013f

4,054

1,776

114e

Source: HUD Congressional Budget Justifications, FY2001-FY2013. Enacted funding figures taken from

subsequent years’ justifications. FY2013 figures were taken from a HUD-produced table of post-sequester

funding levels.

Drug elimination grants were funded and awarded from FY1991-FY2001. They were initially available to

PHAs competitively, and then via formula allocation later.

An accounting change enacted by Congress led to a one-time savings in the public housing operating fund in

FY2005. For more information, see discussion on p. 13 of CRS Report RL32443, The Department of Housing

and Urban Development (HUD): FY2005 Budget (available upon request).

Includes $4 billion in emergency funding provided by the American Recovery and Reinvestment Act of 2009

(P.L. 111-5).

Of this amount, $65 million is set aside for the Choice Neighborhoods Initiative, which is similar to HOPE

VI, but, unlike HOPE VI, the competitive grants are available for other HUD-assisted properties, not just

public housing.

The entirety of this amount was provided for Choice Neighborhoods.

Figures reflect reductions imposed by the March 1, 2013, sequestration order.

Looking at appropriations relative to the number of public housing units eligible for payment in

Figure 6, it appears that per unit funding remained relatively flat150 from FY1999 through

FY2008, with some increases in early years (commensurate with increases in appropriations) and

150

As discussed in the notes accompanying Figure 6 and Table 7, a change in the way operating funds were provided

to PHAs in FY2005 led to appropriations savings without commensurate reductions in the overall program level.

Therefore, the dip in per unit appropriations in FY2005 should not be regarded as a decrease in funding available per

unit.

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some decreases (commensurate with periods of appropriations decreases). The sharp rise in

funding per unit in FY2009 is primarily attributable to the $4 billion in capital funding provided

in the economic stimulus legislation.

Figure 6. Funding per Unit, FY1999-FY2010

(nominal dollars)

Source: See Table 8 and Figure 1.

Notes: As noted in Table 7, there was a drop in funding in FY2005 resulting from one-time budget savings that

did not affect the overall program level. As a result, the decline in per unit funding in FY2005 does not accurately

portray the amount of funding available in that fiscal year. Also, note that this figure has not been updated since

HUD stopped releasing estimates of the number of units eligible for payment after FY2010.

Policy Issues

While the purpose of this report is to provide an overview of and background information about

the public housing program, it is important to also note that a number of policy issues about the

program have been raised in recent years and have been and may be considered by Congress.

While not fully addressed in this report, several of these issues are summarized below.

Funding Levels

There is an acknowledged backlog of unmet capital needs in the nation’s public housing stock.

The majority of the public housing stock is several decades old and much of the stock has not had

the level of ongoing maintenance and major rehabilitation needed to keep it viable and habitable.

Complicating matters, in some cases, is that properties were not built in such a way as to promote

long-term viability (in some cases due to the use of poor quality materials or poor design, perhaps

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resulting from low per unit cost caps). The declining physical state of the public housing stock

may be due in part to federal funding levels that, paired with federal rent collection rules, left

PHAs with inadequate budgets to meet their properties’ capital needs. In some cases, it may also

be due to poor management decisions at the local level. Regardless of the cause, there is an

acknowledged backlog of unmet capital needs in public housing that current federal funding

levels, unless they increase substantially, are unlikely to address (notwithstanding the one-time

increase in funding provided in the economic stimulus legislation in FY2009). As properties fall

into disrepair, they are more likely to be candidates for removal from the public housing stock

through demolition, disposition, or conversion.

The HOPE VI program was designed, in part, to address the unmet capital needs of those

properties that are in the worst condition. As HOPE VI grants became smaller, leveraging

expectations increased and PHAs began using their HOPE VI grant funding to secure additional

private financing. Today, many PHAs have become adept at leveraging private resources, even

without HOPE VI grants, by pledging other federal funding, primarily their capital funding.

However, there are limits to the extent that PHAs can access these private mixed-finance markets.

In order to prevent PHAs from becoming over-leveraged, HUD limits the share of future capital

funding PHAs can pledge toward repaying debt. PHAs are further limited in that they are not

currently permitted to pledge their future operating fund dollars to repay debt, nor are they

permitted to pledge the underlying property itself as security to leverage private funding.

Additionally, PHAs seeking funding in the private market are dependent on the willingness of

lenders to provide them with capital on terms that are agreeable.

If there is a policy desire to preserve the existing public housing stock, additional funding would

likely be needed. This could come in the form of increased federal appropriations. The economic

stimulus legislation in the 111th Congress provided one of the largest infusions of capital funding

for public housing in recent years. At nearly $4 billion dollars, it should have been sufficient to

address around 20% of the estimated backlog in capital needs ($18 billion-$20 billion). These

funds were designated as emergency supplemental funding, meant to stimulate the economy

during the recession, and were therefore provided outside of the budget constraints of the regular

annual appropriations process; it is unclear if similar future infusions will be forthcoming. In light

of tight budget constraints and political questions about the popularity of the public housing

program, future large infusions of federal funding are uncertain.

Federal rent policies could be changed to allow PHAs to collect higher payments from tenants.

However, such a change would violate current standards of affordability and it is unclear, given

the extremely low incomes of residents, if they could pay additional rent sufficient to meet unmet

capital needs. Other options include making changes to existing policies to allow PHAs to better

access private capital markets. These options could include permitting PHAs to leverage their

operating fund dollars, permitting PHAs to mortgage the underlying value of their public housing

properties, and/or creating instruments, such as mortgage insurance programs through the Federal

Housing Administration (FHA), to encourage or provide incentives to lenders to make loans to

PHAs on favorable terms.

Some steps have been taken to increase the ability of PHAs to leverage private capital. The

Rental Assistance Demonstration (RAD) is an Obama Administration initiative designed to test

changes to the way that public housing is funded to permit PHAs to access private capital, in part

by removing the limitations on mortgaging public housing properties. In the FY2012 HUD

appropriations law (P.L. 112-55), Congress authorized a version of RAD, which makes up to

60,000 units of public housing eligible to convert to project-based Section 8 contracts. The law

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provided no additional funding for this initiative. The FY2013 appropriations law continued the

authorization for the initiative, again, with no additional funding.

The Role of Public Housing

In light of the decline in the number of public housing units over time and the lack of authority to

construct new units, the future role of the public housing program in federal housing policy is

uncertain. The public housing program began as a construction program designed to help

stimulate the economy coming out of the Great Depression. Its role evolved over time: first, to

meet housing shortages during and after World War II; later, to address shortages of decent

housing in conjunction with Urban Renewal efforts; and finally, to address shortages of decent

housing that was affordable to the poorest families. In this last role, as a provider of affordable

housing to poor families, the program has declined in prominence as other models of providing

direct housing assistance to the poor have been developed. First, there were programs promoting

the construction of properties owned by private market participants (through FHA insurance

programs and later Section 8 rental assistance contracts), and later there were programs

subsidizing families’ housing costs in the existing housing stock (through the Section 8 voucher

program). This last model, the Section 8 voucher program, is the only direct rental assistance

program serving poor families that has grown to serve more families in the last several decades.

At least part of that growth is attributable to declines in the number of public housing units, as

families being displaced from public housing have received vouchers. These other models were

developed in direct response to perceived shortcomings—lack of mobility, cost effectiveness, and

efficiency—in the public housing program.

With policies like mandatory and voluntary conversion of public housing to vouchers, the

question may be raised as to whether the “vouchering-out” of public housing is an inevitability, or

if public housing itself is valuable enough to warrant taking steps to preserve it. Critics of public

housing point to its often poor locations and conditions and argue that it traps the most vulnerable

families in the worst housing conditions. They point to high rates of crime at some developments

and low levels of social capital development and work effort, contending that public housing

denies poor families choice and the option to live in communities of opportunity. Moreover, it is

argued that the rent structure does little to promote self-sufficiency and may even discourage it.

Advocates for public housing argue that the most vulnerable families are the least likely to have

their needs met by the private market, even with a Section 8 rental voucher. Landlords are not

required to accept vouchers and are permitted to screen families for suitability. PHAs, on the

other hand, have a social mission to serve the poorest families. Further, advocates contend that

high-quality public housing, particularly when it is enriched with services, can itself provide

opportunities for families. They point to successful HOPE VI mixed-income communities and

research on how place-based interventions can promote family success, particularly for persons

who are elderly, but also for families with children.

In addition to the policy arguments for and against preserving public housing, the issue of cost is

relevant. In recent years, the average annual “cost” to the federal government of providing a

voucher to a family has been greater than the per unit funding provided to public housing.151 This

151

Excluding the ARRA funding provided in FY2009, the average annual funding per unit eligible for payment

provided for public housing has been at or under about $6,000 per year, as shown in Figure 6. According to HUD’s

FY2011 Congressional Budget Justifications (p. J-10), the average annual per voucher cost (not including

administrative costs) has been above $6,000 per year since FY2004 and is currently over $7,000.

Congressional Research Service

Introduction to Public Housing

could serve to bolster arguments in favor of retaining public housing as a more cost-effective way

of providing rental assistance to low-income families. However, the low cost of public housing

reflects what most agree is an underfunding of public housing. If public housing was funded at its

full funding needs—particularly in light of the backlog of capital needs—the cost to the federal

government of public housing would likely be much higher, and potentially higher than the cost

of vouchers. However, in order to fully evaluate the costs and benefits of public housing one may

wish to consider the underlying value of the public housing properties themselves, which were

built with federal assistance and maintained with federal funds. Questions about to whom that

value belongs may also be considered when evaluating the costs and benefits of the program in

light of potential changes. These questions about underlying value, which are beyond the scope of

this report, may be difficult to answer and different observers may come to different conclusions.

Author Contact Information

(name redacted)

Specialist in Housing Policy

[redacted]@crs.loc.gov, 7-....

Congressional Research Service

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