Commentary: Fed Cuts Threaten Chicago's Affordable Housing Efforts
March 11, 2005 | Commentary | Housing

Originally published in the March 11, 2005 issue of the Chicago Sun-Times, Fanton argues that the President's proposed budget requires scrutiny. 

President Bush has presented a $2.5 trillion budget to Congress, and we are in a period of healthy debate about the nation's spending priorities. Discussions over the next several months will help us focus on what is working, what is not, and what needs improvement. Though there are many elements in the president's plan that promote needed reforms and positive trade-offs, any budget that features cuts to 150 programs should meet with constructive scrutiny.

The Department of Housing and Urban Development will be hit especially hard with $3.7 billion eliminated from its budget. Reform of HUD programs is certainly necessary, but the reductions proposed to Section 8 housing vouchers and Community Development Block Grants would have serious unintended consequences in cities like Chicago. That would be a shame because federal, state, and local initiatives are stimulating private investment and energizing communities to take charge of their own destiny. In Chicago, they are helping transform aging public housing ghettos into dynamic mixed-income communities and expanding the stock of affordable rental housing.

Affordable housing is a national issue. From the mid-1960s through the mid-1980s, the United States made a historic investment in rental housing, building more than 10 million apartments. But since the mid-1990s, the nation has lost almost 20 percent of its most affordable rental housing as long-term federal subsidies and financing agreements expired. Meanwhile, demand in hot markets is driving rents up, and in weak markets deferred maintenance is running many properties down.

Although homeownership stands at an all-time high of 67 percent, the need for affordable rental housing remains great. Ninety-five percent of Americans rent at some time in their lives. Thirty-four million households -- one in three -- currently rent. Of those, 12 million spend more than 35 percent of their income to pay for their housing, beyond the level generally considered affordable.

The availability of affordable rental housing is especially critical in Chicago. Mayor Daley has engaged a two-pronged strategy of public housing transformation and affordable housing preservation. Federal programs are essential components.

The mayor's bold Plan for Transformation is well under way with promising early results. The plan aims to turn Chicago's public housing -- high-rise symbols of despair and isolation -- into new mixed-income communities. More than 8,700 apartments have been torn down and half of the planned 25,000 new and rehabilitated units have been completed. Residents are moving into new communities on and near the sites of former public housing at Cabrini-Green, Henry Horner, Madden Park-Wells and other locations.

The MacArthur Foundation committed $50 million to assist with reconstruction and relocation. While some former residents will return to the new communities, many are choosing to live in private rental housing with the help of Section 8 vouchers. A recent study by the Chicago-based National Opinion Research Center Indicates that at least two-thirds of those who have moved believe they are In better housing and are happy with their decision.

Daley's third Five-Year Affordable Housing Plan is also ahead of schedule in meeting its $1.8 billion production and preservation goals. It costs 50 percent to 75 percent less to preserve an affordable unit than to build a new one. Putting that wisdom to work in its Troubled Buildings Initiative, the city has helped preserve 1,135 multifamily buildings, surpassing its goals. The plan depends on $38 million of Community Development Block Grants and the incentive of federal Low Income Housing Tax Credits to attract additional public and private Investment. Using them, the city intends to generate an additional 1,850 units of affordable rental housing, representing well over $300 million in development. The foundation is supporting an initiative at the Chicago District Council of the Urban Land Institute to help the city leverage these commitments from the public, private and philanthropic sectors.

But the president's cuts will make all of this work more difficult. The 50 percent reduction in Community Development Block Grants would take $47 million away from Chicago's plans for housing and neighborhood improvements next year. Cuts to the Section 8 housing voucher program will deepen doubts about its future, doubts that have already made landlords reluctant to offer apartments to voucher holders -- a challenge in a city like Chicago, where 40,000 families rely on the program for housing assistance.

Cuts like those proposed to HUD's budget may seem necessary at first glance, but ultimately they are shortsighted when one weighs their costs against their benefits.

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