By Charles Tassell, Chief Operating Officer, National REIA

In early December, Howard Husock, The Vice President for research and publications at the Manhattan Institute, a contributing editor to City Journal, and author of the Trillion Dollar Mistake, published an articulate summary of five key initial fixes for the U.S. Department of Housing and Urban Development. Among those following up on the summation was the venerable Wall Street Journal. The article points out that now is the time for action and Dr. Ben Carson is precisely the man to transform a nineteenth century housing hand-out and hammer the institution into a 21st century helping hand organization. For Mr. Husock’s full story please see “Laying a New Foundation at HUD; Five things Ben Carson can do right away to improve public housing and reduce government dependency,” at

Listed below are Mr. Husock’s remedies along with my thoughts as someone who has been in the trenches for over 20 years.

“Time Limits for Public and Voucher Housing: Sending a signal to new subsidized tenants that they shouldn’t expect lifetime housing support—to which they are entitled at present—would be the best way to change the culture of public housing. A time limit, moreover, is not fanciful. As a result of discretion permitted by the Moving to Work demonstration program, eight public-housing authorities have already adopted time limits, with promising results. In San Bernardino, California, incomes among those subject to a five-year time limit—call it short-term assistance if that sounds more compassionate—rose by more than 12 percent since 2008. Employment rates among those in the time-limited program rose by 17 percent. Time limits also free up housing units for those who’d otherwise be stuck on a waiting list. Carson should extend the discretion to impose such limits to all 3,000 of the nation’s public-housing authorities.”

The 1990’s welfare reform effort fell short of addressing the generational sand trap of housing programs. While the Housing Choice Voucher program, often simply referred to as “Section 8” was a step toward reform, the institutional management, archaic rules and underfunding of the program has resulted in communities of able-bodied residents becoming entrenched in generation housing. Having worked with U.S. Rep. Steve Chabot (OH-1) to draft housing reforms, I grant that the layers are complex and many individuals are exempt – with good reason, however, a first rung of the ladder of success is needed for those languishing in poverty. Without the existence of these programs folks needing assistance would either be homeless or holed-up in one of those housing-of-last-resort options – which would not be part of the road to self-sufficiency.

“Stop Work Disincentives for Subsidized Housing: Under current law, a public or subsidized housing tenant must pay 30 percent of his income in rent. That may sound like a good deal, but it means that, for every $100 that a tenant’s income increases, his rent goes up by $30. This creates an obvious disincentive to work, and sends exactly the wrong message to those at the bottom of the income ladder. Moving to Work has allowed 20 housing authorities to treat subsidized tenants like other citizens by letting them sign a fixed-rent lease. This approach, too, should be expanded across the public-housing system.”

As a property owner and a former property manager, I have seen this disincentive in action many times. An even more subtle form of the disincentive to work is the standard work hour demands by inspectors and programs on the residents. These demands are notorious for requiring recipients to take time-off from work, and then often having to reschedule because of housing authority inefficiency. This is especially disrupting for entry-level workers and can mean the difference between making and breaking a budget – or, quite frankly, keeping a job.

“Privatize Management of Public-Housing Properties: There may once have been good reason for government to build low-income housing, but there’s no reason why it should also manage the properties once they’re built. Private management firms can undertake capital repairs through expansion of another fledgling HUD program already on the books. The Rental Assistance Demonstration (RAD) program lets HUD subsidies be used as bond-repayment guarantees for private investment capital. New York’s public-housing authority has considered upgrading its antiquated heating systems, but fears seeing its federal support reduced if it lowers its utility costs. The RAD program can change that, and should be expanded.”

The Public/Private partnership needs to be refocused at HUD as the goal rather than a limited, sidebar experiment. A true reform would include third-party inspectors for HCV voucher holders, or even better, a requirement for a 360 degree video upload of the unit by the resident – because most already have smart phones.

“End “Affirmatively Furthering Fair Housing”: The Affirmatively Furthering Fair Housing rule is premised on the wrongheaded idea that the best way to encourage upward mobility among minorities is simply to relocate poor inner-city households to wealthy suburbs. The rule should be done away with. At the same time, the Community Development Block Grant, designed to support physical improvements to low-income neighborhoods, should come without strings attached. Let localities decide how best to put that money to use.”

The federal over-reach into every US city and county with this CDBG mandate is mind-boggling. The arrogance that drives the displacement of low-income communities from service-rich areas to isolated communities, based upon the value of property completely overlooks the needs and benefits derived by the residents in a service-rich area. The results are similar to the disincentive to work discussed above, and show a complete disrespect and lack of understanding of the communities’ true needs.

“End Affordable Housing Mandates: Fannie Mae and Freddie Mac, the secondary-mortgage market giants supervised by HUD, are charged with fulfilling the federal government’s affordable-housing mandates. They must demonstrate that large percentages of the mortgages they purchase have been made to low-income buyers or neighborhoods. These mandates contributed to the 2008 financial crisis and continue to send the wrong message to banks, which are essentially told to fulfill mortgage quotas even when loans aren’t repaid. It’s time either to scrap the mandates or require Fannie and Freddie to report on the performance of such loans.”

Industry jargon refers to the HUD preferences as NINJA’s: No Income, No Job Applications. The losses to Wall Street were nothing compared to Main Street where there was no bailout. Eight years later housing values are returning, and yet the U.S. housing market, highlighted by the Economist article Nightmare on Main Street (August 2016) has potentially become the largest and most dysfunctional asset class in the world. One that is currently being guided not by legislation or free markets, or even by well-known policies but rather the internal demands of NGO’s like Fannie and Freddie – similar to the Fed, BUT without a true audit trail.

In summary, here are Mr. Husock’s final words:

“HUD has made many mistakes over the years. Instead of pursuing yet another scheme to rebuild America’s inner cities, HUD should instead do what it can to make poor neighborhoods safe and attractive to private investment. The agency should cease ordering banks to make such investments and roll back disincentives for upward mobility. Ben Carson is just the man for that job.”