In the last issue of this newsletter, I discussed what has gone wrong with public housing in the United States, not necessarily that it has failed, but that it has routinely been plagued by poor policy choices that have contributed to neglect and mismanagement. I wrote about being sabotaged. So this week we’d like to take a look at what successful public housing looks like.
When looking for a model to emulate, many Americans often look abroad for answers. For example, Austria, Denmark and Singapore are often mentioned as places to study. But one of the problems with looking to other countries is that their politics and governments are so fundamentally different that simply copying them isn’t always an option.
That’s why I’m particularly interested in looking at examples of public housing models that work so well here in the United States. After all, if one American city or county can implement an ambitious program, what’s stopping others from doing the same?
What we can learn from the DC suburbs
Earlier this year, my colleague Rachel Cohen highlighted Montgomery County, Maryland, where local leaders are expanding public housing.
Montgomery County has long prioritized affordable housing. For example, developers are required to make at least 15 percent of the units in new housing projects available to people who earn less than two-thirds of the area’s median income.
But the county has gotten creative in how it provides public housing, securing endowments to finance and develop housing projects. The county also partners with private developers, whose investments make it the majority owner of certain projects. As the owner, the county becomes “a kind of benevolent investor who trades profits for cheaper rents,” as the New York Times put it.
By way of background, a county’s Housing Opportunity Commission (HOC) is not just a public housing authority, but also a housing finance agency and public developer. “We have these three different components that ultimately work together to really drive the very aggressive development strategy that we’ve been deploying for over 50 years,” said HOC Executive Director Chelsea Andrews. “It helps.”
Historically, public housing projects in the United States have been available only to very low-income people. This is by design. In 1936, the federal government established income limits for eligibility. That may seem logical, but shouldn’t public housing be available to those who need it most?—The reality is that this rule makes it more affordable for people with middle or high incomes. This limited the ability of housing authorities to increase revenue by charging rents close to market rates. As a result, public housing projects are overly dependent on government subsidies and consistently underfunded.
But Montgomery County is addressing this issue by opening up public housing to mixed-income renters.
“Mixed income accomplishes so many goals,” Andrews said. “This will ensure that housing authorities build inclusive communities. It removes concentrations of poverty.”
Mr Andrews added that mixed-income housing does not prevent people from advancing their careers, as they do not have to worry about losing their eligibility to live in an HOC property. And by making developments mixed-income, local authorities can use profits from some renters to subsidize others and keep buildings in good condition.
In many ways, this model is a rebrand. “They have made it clear that they will not call it ‘public housing.’ To distinguish these projects from the typical condemned, income-restricted, underfunded model, leaders are “Developers have come together to call the idea of mixed income created by ‘public housing’ ‘social housing,'” Cohen wrote. In practice, however, this model still involves renting publicly owned units to residents at subsidized rates.
Montgomery County has had many successes. The Laureate, one of the first developments of its kind in the Washington, D.C., suburbs, had 97 percent of its 268 units leased within its first year of opening in 2023.
Montgomery County isn’t alone.
Housing advocates and local governments across the country are taking notice of Montgomery County’s example and want to try it themselves.
In Massachusetts, state Rep. Mike Connolly introduced a bill last year that would create a $100 million fund to fund public housing projects. Although that particular bill has not yet been passed, the governor recently signed a housing bond bill that includes funding for the social housing pilot program.
“We are currently working on planning what the initial project will look like, and we are getting a lot of enthusiasm and support. “We are currently working on planning what the initial project will look like, and we are getting a lot of enthusiasm and support. “There could be one or two type projects that emerge,” Connolly said. “If you can develop and build something, people can see it, point it out and expand it. And of course Montgomery County, Maryland, is a modern-day national leader here. It continues.”
As local governments struggle to cope with rising housing costs, this model calls for building more units (which is badly needed) and offering below-market rents. We offer great solutions for both. And as more and more lawmakers approve these projects, America could be on the brink of a new era of public housing, and this time it might actually succeed.
This story was featured in the Within Our Means newsletter. Sign up here.
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