Low income housing tax credits are distributed among states by formula and then allocated to partic- ular development projects by state housing finance agencies (HFAs). State HFAs must prepare and pub- lish allocation plans, specifying criteria for awarding credits, and prospective project developers compete to receive them. LIHTC projects can be developed (and then owned and operated) by for-profit compa- nies, nonprofits, and public agencies, including PHAs. And some states’ allocation plans give priority to pro- posed projects that are endorsed by local governments. However, once tax credits have been awarded, their developers typically operate them independently, with very limited oversight from the state HFA and the federal Treasury Department (HUD has no role in either funding or oversight of LIHTC projects). Like the privately owned properties with deep fed- eral subsidies, LIHTC properties maintain separate waiting lists and tenant selection procedures. Local government agencies may not even be aware of where all these properties are.
use it very effectively to guide the allocation of fed- eral, state, and city resources. At its worst, however, the planning requirement amounts to little more than a paper exercise, because HUD does not in fact evaluate the local plans or require jurisdictions to adhere to them (Turner et al. 2002).
An assessment of the consolidated planning process conducted almost a decade ago found that the city of San Francisco was using the process effectively by engaging public and private-sector stakeholders to decide strategically about the allocation of federal, state, and local housing resources in a very challenging market environment. In Atlanta, on the other hand, the HUD-mandated process was conducted sepa- rately from an ongoing local planning process. And San Antonio housing planners were frus- trated that the HUD-mandated plan had no teeth and that the real decisions about resource alloca- tion occurred through an entirely separate politi- cal process (Turner et al. 2002).
CDBG and HOME block grants flow from HUD to local housing and community development departments. Big cities and urban counties are clas- sified as “entitlement jurisdictions” under these pro- grams and receive funding by formula. Typically, responsibility for using HOME and CDBG funding falls to the local department of housing and com- munity development, whose director reports to the mayor. These agencies use the block grant funds to support locally designed and operated programs, including programs that provide grants or loans to developers of affordable rental housing, often in con- junction with the LIHTC. HUD provides separate allocations of both HOME and CDBG funding to states for distribution among “nonentitlement jurisdictions.”18
HUD requires jurisdictions that receive HOME funding to prepare affordable housing plans. These plans document the magnitude of housing prob- lems among low- and moderate-income households, describe the distribution of hardship across different income levels and household types, and estimate the size of special needs populations. Jurisdictions then present the city’s strategy for using available resources to tackle these housing needs. At its best, this planning mandate (which includes requirements for public participation) creates a real opportunity for engage- ment and strategic thinking. And some jurisdictions
Current Public Housing Initiatives
Two current initiatives give selected PHAs extra resources and flexibility to better meet the needs of the households and communities they serve. HOPE VI funds the demolition and replacement of severely distressed public housing developments, with the goal of improving outcomes for residents and revitalizing neighborhoods. Moving to Work (MTW) essentially deregulates participating PHAs so they can experiment with new subsidy formulas and occupancy rules that offer promise for encouraging and supporting work. Much of the current policy debate about public hous- ing revolves around these two initiatives; both are controversial.
The first, and probably best known, is the HOPE VI program, an ambitious effort launched in the early 1990s to demolish the worst public hous- ing projects in the country and replace them with housing that is better designed and built, less dense, more economically mixed, and better integrated into the fabric of surrounding neighborhoods and city economies. HOPE VI grants are competitively awarded to PHAs for the demolition and redevelop- ment of particular projects and include funding for
Federal Programs for Addressing Low-Income Housing Needs