Of carrots, sticks, bootstraps, and cherry-picking
When is a tough compromise not a compromise? When only some parts of it are implemented.
We can consider affordable housing reform legislation as a package of four things:
· Carrots: Rewards for those who behave in new and better ways.
· Sticks: Punishments for those who don’t.
· Bootstraps. Resources and tools to enable those who want to improve to pull themselves up by their own initiative.
· Cherry picking. Doing the easy or pleasurable stuff first, the hard or unpleasant stuff last.
What happens when you exclude the carrots and bootstraps, and include only the sticks and cherry picking?
A lengthy Brookings Institution paper on public housing (Adobe) and its major reform legislation, the Quality Housing and Work Responsibility Act (QHWRA), by old friend and long-time public housing expert Rod Solomon, offers a wealth of insights about public housing’s sorry track record:
By the mid-1990s, a general consensus had emerged that in too many instances, public housing failed to provide quality, affordable housing to the nation’s neediest families. The nation’s worst public housing developments warehoused poor, minority families in isolated blocks of high-rises or overwhelming concentrations of low-rise buildings. The conditions of these developments had so corroded that they attracted drug and criminal activity. The management of public housing in many large cities had become abysmal, resulting in the long neglect of even the most basic building repairs and maintenance needs. Because of these and other factors, the best possible role models in public housing—working families—had mostly left.
While Solomon is ultimately hopeful:
Important strides have been made to correct the unintended mistakes of the past and to restore quality and dignity to the nation’s affordable housing programs.
Almost in passing, he alludes to a curious feature of multi-provision legislation:
The thoughtful reforms and tough compromises made in 1998 were neither perfect nor implemented perfectly, but they provided a basis for significant progress.
Come again? We pass a tough compromise and some parts aren’t included? A chart on the report’s page twelve (page 21 of the pdf) lists fourteen major provisions, among which several are not implemented (or with no implementing regulations):
· Promote leveraging (gearing): allowing borrowing against future capital fund appropriations.
· Promote leveraging: allow mortgaging of PHA property.
· Promote leveraging: allow use of operating subsidy for debt repayment.
· Promote leveraging: authorize mixed-finance public housing developments.
Real estate is a capital consumer — to improve or renovate it requires levering cash flow streams into up-front capital by borrowing with mortgages or otherwise. It’s very hard to see how even motivated housing authorities will be able to make change if they are blocked from the fundamental tool of property improvement — leverage.
