New Directions for Federal Housing Policy through Bipartisan Governance?
In early November, USC had the privilege of hosting The Bipartisan Policy Center’s Policy Forum, Housing America’s Future: New Directions for National Policy. Our Bedrosian Center Director, Raphael Bostic, had the pleasure of kicking off the day’s events and introducing his fellow housing expert, Henry Cisneros, which got us thinking that perhaps this wasn’t just another opportunity to talk about housing and urban policy, but a new format in which we could think about governance.
The Bipartisan Policy Center (BPC) and Cisneros are both unique exhibits of governance in their own right. BPC’s mission is to bridge the partisanship divide both in Washington DC and across the United States. It accomplishes this complex and seemingly impossible goal by bringing together dynamic leaders from both sides of the aisle to create robust long-term policy solutions to national governance challenges. BPC’s 2012 annual report zeroed in on energy solutions, economic development programs, health challenges, national security concerns and housing directions for the future. The last of these issues was the topic of interest for their event here at USC.
Similarly, Henry Cisneros is another example of rare excellence in the current world housing policy and governance. As the Mayor of San Antonio in 1981, at the time, he was only the second Hispanic leader of a major American city. He continued to break ground as a leader, when Clinton appointed him as the 10th Secretary of Housing and Urban Development in 1993 and he remains an international housing and urban revitalization leader. Cisneros radiates with warmth, industry know-how and positive energy for governing through community involvement. It’s clear from his demeanor that he has never been fearful of getting his hands dirty at the most basic level, and that he believes housing systems and finance can be redirected at a national level to improve local level housing and health improvements.
Cisneros dived right into the new policy directives for the BPC’s Housing Commission, which of course an evenly split evenly Democrats and Republicans endeavor. Their first goal was to consider housing challenges in light of the Great Recession, and choose 3 major “tent pole” issues. Throughout 2013 they chose to research and dialogue about the immediate necessity for housing finance reform, the imbalance of federal assistance for homeowners versus renters, and the challenge of designing a housing market to service the needs of an aging American population.
When addressing these issues Cisneros made it clear that the Commission strived to incorporate four central missions into each new policy solution. First, that the health of the American economy is dependent upon a strong and growing housing market, second that keeping credit available to all eligible citizens for home purchase is the key to achieving this goal, third that every American family has the right to a safe and healthy living environment and lastly that where public dollars are concerned, federal housing assistance should always be directed fist at the most marginalized Americans, or in other words that 3.5 million Americans that cycle in an out of homelessness each year.
The most striking thing about all of these directives when they lumped together in one schizophrenic and overarching goal to improve housing . . . is that they are indeed, converging from opposite sides of the policy housing debate. The heavily economic priorities of housing finance and housing market revitalization would typically have no place in the homelessness conversation. However, by bridging the gaps and creating a dialogue on the inter-relatedness of these issues, a more plausible comprehensive set of solutions become possible.
The BPC Housing Commission’s final solutions for 2013 boiled down to several basic components. First and foremost, Government Sponsored Enterprise (GSE) Lenders, Freddie Mac and Fannie Mae, will be eliminated in their current role as a public private hybrid lender and investment tool, and consequently the private sector will be forced bear more risk in terms of housing investments. The commission believes that the role of the of government as an insurance backstop or last resort in housing finance, needs to be seriously revamped and reconsidered in light of the sub-prime mortgage crisis and federal bank bailout scandal. In addition, a return to the thirty-year fixed rate mortgage, as the primary housing market tool and growth mechanism should be readopted nationally. Similarly, the commission believes that the Federal Housing Administration should return to only serving first time home buyers and those with limited resources.
Another large necessary transition in federal housing policy is to shift resources towards renters and away from ownership subsidies. The commission found that minimum wage earning families, by in large, couldn’t afford median rent prices in any large metro in 2012. Not only is there a lack of affordable rental units across the country but also, the demand has steadily increased over the past ten years for rental units. Therefore, the commission asserted that for those living in need, at 30% or below of the area median income (AMI) full rental assistance should be provided, and partial assistance should be available for those individuals at 30 – 80% of AMI. In addition, the commission urges the public and private sectors to design safe affordable housing for aging Americans, as this demographic will dominate housing policy for at least the next 20 years.
Several of these items have already been proposed in congress. A bipartisan group of senators have proposed the creation of a public entity that would cover up to 10 percent of losses from loan defaults, after which taxpayers would step in. Similarly, HUD is in the process of changing its rental assistance programs for 2014. While these solutions may sound far reaching, it’s clear that the BPC Housing Commission is doing an excellent job of speaking to the goals legislators in DC. Furthermore, their success in establishing clear problem definitions, and policy priorities across political parties, departments, and varying levels of government shows that consensus building is both possible and effective. It will be exciting to watch what might happen over the next few years to see if housing investments regain some credibility, if renters can find safe and healthy environments, and if the both public and private sectors respond to housing needs outlined of a changing population.