The AOC and progressive allies want the federal government to build more than a million homes. Even YIMBYs don’t think it’s a good idea.

• A new model of public housing is gaining momentum among Democratic lawmakers in the US.

• The AOC is behind a new bill to create a federal social housing developer.

• Housing experts support local experiments, but doubt the federal approach will work.

Skyrocketing rents and home prices across the country have made housing one of the most pressing issues facing voters this election.

About half of the tenants spend more than 30% of their income on housinguntil home owners face rising insurance premiums, home repair costs and property taxes. At the same time, state housing assistance to the most needy recently hit a quarter-century low.

Vice President Kamala Harris drew attention to this issue, promising build 3 million new homes during his first term, send $25,000 in First Time Home Buyers’ Aid and spend billions on housing innovation. But some progressive lawmakers in Washington want to go much further.

In September, two Democrats — Congresswoman Alexandria Ocasio-Cortez and Senator Tina Smith of Minnesota — introduced a bill called the Housing Act it would create a federal housing authority to build and rehabilitate more than a million permanently affordable homes. The housing will be owned and managed by local authorities, non-profit organizations or some kind of cooperative, and rents will be limited to a percentage of income. The law aims to address a fundamental problem plaguing homebuyers and renters: the shortage of affordable housing.

“There’s been a lot of talk about building new housing in this country, but too often we don’t talk about who’s going to build that new housing,” Ocasio-Cortez said. last month. A spokesperson for Ocasio-Cortez had no comment before this story was published.

The new developments will be so-called “social housing,” meaning it exists outside the for-profit market, rents are limited to a percentage of income, and it’s owned by the government, a nonprofit, or some kind of cooperative.

Unlike traditional American public housing, which is typically designed for low-income families, social housing is designed for mixed-income people. According to the Housing Act, 70% of the units in the complex will be reserved for low and extremely low income people, while 30% of the units will be reserved for the area’s median income.

But some housing policy experts who subscribe to the YIMBY, or Yes In My Backyard, movement are skeptical of the point of a federal public housing authority. First, they want to see more experimentation at the local level and don’t think many state governments — let alone the federal government — have the resources or know-how to do the work of developers and real estate companies.

Local and state governments are experimenting with social housing

A trip to Austria in 2022 changed the attitude to housing of New York state representative Emily Gallagher.

Gallagher, a Democrat who represents gentrified neighborhoods in North Brooklyn, was impressed by the stability that social housing has created in Vienna. Residents “didn’t think about raising the rent. They didn’t care about displacement and what New Yorkers were worried about,” she said.

So earlier this year, she introduced legislation to create a new public housing authority to build permanently affordable housing for both very low- and moderate-income New Yorkers.

Progressive politicians across the country, including Rhode Island and Atlanta, are also exploring the model. California passed the bill last year to explore the concept. An affluent suburb of Montgomery County, Maryland, already built his own social housing.

In Reno, Nevada, Mayor Hillary Shive, who prioritizes housing in a state facing acute shortages, said the success of public housing efforts will likely depend on the quality of the local housing authority and the partners it works with. “It just worries me because we’re not developers,” she said. “There should be very knowledgeable people at the table.”

While “high-powered, wealthy local governments with the political will” can do it, Jenny Schuetz, an expert on urban economics and housing policy at the Brookings Institution, says many other localities lack the resources or know-how.

“The reality is that many states and governments are not going to be interested in building housing on their own,” said Shane Phillips, a housing researcher at UCLA’s Lewis Center for Regional Policy Studies.

Unlike traditional public housing, which relies on fickle federal lawmakers to provide funding for maintenance and operations, the social housing proposed by U.S. lawmakers would be financed in part by marketing bonds and managed by a range of local organizations, including nonprofits and tenant unions.

Schütz is concerned that co-ops and tenant unions may not be able to access the capital that real estate companies have access to and that is needed to continue investing in buildings. Local housing authorities also have limited budgets. “The challenge is always where to get the money 10 years from now, 15 years from now, when you have real capital expenditures?” she said.

Tricky politics in Washington

Federally funded public housing has a checkered history. Between the 1930s and 1960s, Govt increasing racial segregation by clustering public housing in poor black and brown neighborhoods even as freeways were built which tore the same communities apart. The lack of ongoing Congressional funding meant that the housing deteriorated over time and much was demolished.

Over the past few decades, the US has moved away from the tainted model of publicly built and owned housing and embraced federal subsidies to build private homes at below-market rates through the low-income housing tax credit.

Under the Housing Act, the U.S. Department of Housing and Urban Development must work with states and cities to take on the role of developer. Schuetz argued that the federal government would have to hand over so much work to local governments and developers that the national approach would look a lot like the low-income tax credit development model.

“Could HUD even hire a team of people who know how to work on the land development, titling and building process in communities across the country?” – said Schütz. “There’s a reason we evolved from public housing to LIHTC.”

Congress is unlikely to support a federal public housing authority until there is evidence of its success at the state level.

Once states develop their programs, “it’s a lot easier to go back and say, ‘OK, we need a national coordinating body to manage this,'” said one national affordable housing expert, who spoke on condition of anonymity to protect his relationship with Congress.

Schuetz would also like to see HUD invest in a series of local pilot programs to experiment with different versions of social housing, evaluate them, and then help scale whichever model is most successful. “It’s not as glamorous and sexy as the social housing program, but it’s actually going to be much more effective and more likely to pass Congress,” she said.

Read the original article at Business Insider