Skip to main content

Reducing Homelessness

In order to reduce homelessness, our country needs to build low-income housing. The federal government used to build both affordable and low-income housing but doesn't anymore. Now the federal government makes deals with private developers and provides tax breaks of all kinds, so that developers build luxury housing and some affordable housing to qualify for tax credits but developers are not building low-income housing. What is the difference between affordable housing and low-income housing?




The federal Department of Housing and Development (HUD) calculates the Area Median Income (AMI) every year for every metropolitan area. AMI is the average household income for a metropolitan area. Let's use New York City metropolitan area as an example. In 2017, the AMI was $85,900 for a family of three. So if a locality defined 50% of the AMI as being low-income, that would mean the maximum income for such a status would be half of $85,900 or $42,950. You can see from these calculations that homeless people who may earn $10,000 to $20,000 in a good year are in the category of extremely low-income and do not earn enough for the affordable housing that is being built. Most developers can get federal and state subsidies if they agree to 20% of their buildings going to affordable housing meaning 100% of the AMI or lower. Hence, federal subsidies usually go to developers who are building luxury housing and providing 20% of their units as affordable housing for the middle and working classes, such as teachers, fire fighters, etc.




So if urban officials wish to solve homelessness, local officials need to create their own strategies. Localities must commit to building low-income housing for the homeless instead of offering tax breaks to developers who are building only 30% of their units as affordable housing. Developers don't wish to build housing for the very poor. They cannot make a profit.




If we are to build extremely low-income housing, we need to use a different set of tools than private developers. These tools are - localities themselves build public housing for low-income people, provide rent subsidies for the very poor so that they can find housing in the marketplace, and/or use nonprofit corporations, such as community land trusts, to build low-income housing. All three of these strategies have worked in the past.


Some will say public housing has not worked well in the past. there are many instances where public housing has worked.               Rent subsidies are an alternative. Localities can provide vouchers to low-income people to go out into the marketplace and find an apartment. The vouchers make up the difference between affordable rents and what poor people can pay. The federal government has provided vouchers in the past (Section 8); however, fewer and fewer vouchers are being provided due to the current conservative administration. Lastly, nonprofit corporations that are not seeking a profit can build low-income housing.

Comments

Popular posts from this blog

Free Trade?

What is free trade? Free trade means that nations agree to trade goods and services without government interference – no tariffs, no underlying government regulation. The concept of free trade is supported by mainstream economics (neoclassical) which assumes that there is a level playing field worldwide; that free trade means governments do not help the private sector.

However, we know that is not the case. China’s government has put enormous investment in certain of its industries. One example is solar energy. China’s government has invested in this industry with the result that China now leads the world in the production of solar panels. There are dozens of examples of governments investing in private companies to help them in the tough worldwide competition that has developed.

America companies who put their manufacturing plants in China benefit enormous. It is called the “free rider.”  American companies with manufacturing plants keep reaping all the rewards of selling…

Mayor de Blasio admits homelessness cannot be eliminated immediately.

After four years of blaming his predecessor, Mayor Bloomberg, for moving so slowly on housing the homeless, Mayor de Blasio finally admitted that it will take years to house so many homeless people. De Blasio discovered this when the homeless population increased from 50,000 to 62,000 during his administration. Perhaps it isn't all of a mayor's fault.


   To add a different perspective, let us take a look at New York State and its inability to commit resources to the city's problem. During the Bloomberg administration, the state cut funding to the homeless from $164 million in FY2002 to $110 million in FY2012, a 33 percent cut.  In addition, the state cut the funding to one of the few programs to permanently house the homeless, the Advantage Program. Not only did the state cut the program, but the state also passed legislation that the city could not use other state funds for the program.


   Then of course there is the federal government that has cut millions of dollars ou…