Winter 2004

Practicing Planner

Copyright by American Planning Association

Housing on the Defensive

By Peter Marcuse, FAICP

We are on the defensive on housing worldwide.

Prices are escalating and unaffordability is rising, with people paying more and more of their incomes for housing. Segregation is not declining and often increasing. Using the Tauber Index, a standard measure of segregation, the level of segregation of blacks in New York City today is 75. In 1910, it was 64. Security of tenure is a problem not only in the Third World, but also in Canada and the United States, where foreclosures and evictions are increasing. Thousands are being evicted in Nairobi for road construction. Massive demolition in Rafah in the Gaza strip is leaving hundreds homeless. Almost one billion (924,000,000) people worldwide are estimated to lack housing that provides decent shelter, and safe water and sanitary conditions. In Calcutta, 250,000 children sleep on the sidewalks each night. ¹

In the United States, as this essay was being written, The New York Times carried a story on the first page of its Real Estate Section, October 17, 2004, with the headline, "Losing Your Dream Home in the Shadows of the Boom," describing the accelerating risk of mortgage foreclosure by recent U.S. homeowners. Housing is in short supply almost everywhere. In New York City, the vacancy rate is 3.9 percent, and 217,000 seniors are on waiting lists for subsidized units. In most developed countries, homelessness is a continuing problem. New York today has 25,000 children in homeless shelters each night.

Everywhere, in the face of these problems, there are cutbacks in social provision. In the U.S., public housing, direct provision, has been stopped completely, and new programs reduce what already has been built. The shift to the demand side is complete, and at the federal level that is also being reduced, in part by sleight-of-hand measures that try to conceal absolute cutbacks.

For those of us in the fortunate position of being able to act as advocates for the ill-housed without being ill-housed ourselves, the day-to-day effort to improve housing conditions has been reduced to a detailed understanding of Section 1.42-9 of the Income Tax Regulations, 26 C.F.R. § 1.342-9, which gives limited tax benefits to developers willing to set aside a little bit of what they build for lower-income residents. Housing advocacy is now reduced to pushing for an extension of tax benefits and a reduction of capital gains recapture provisions on one or another housing project. But we did not get into our end of the housing business to become tax experts or accountants.

What explains this situation, 85 years after the first publicly built housing in the U.S., 70 years after the New Deal's housing programs, after more than a century of social welfare programs featuring housing in most developed countries, and after decades of declarations and the setting of ambitious housing goals by international agencies and the United Nations?

We need today a radical back-to-basics review of the housing situation, what explains it, and what can be done about it.

To start with, why do these types of housing problems continue to exist today? Fundamentally, they exist because of a combination of two factors. The first is an economic system that, with all its virtues, results in a very uneven distribution of wealth, leaving many with inadequate incomes to pay for the necessities of life at their actual costs of production. As much as 70 percent of all income growth in the U.S. during the 1980s went to the richest one percent of all families. Worldwide, the richest one percent has as much income as the poorest 57 percent. Income inequality has been growing, not declining, for at least the last 20 years. ² The second factor is the marketization of housing, which means a housing industry and a housing system geared to meet the needs and preferences of those willing and able to pay the most, and uninterested in the needs of those unable to pay even the least,³ not compensated for by the very limited role of government in meeting those housing needs that the provision of housing through a profit-driven market cannot supply.

There does not seem to be any significant possibility of altering either of these factors in the foreseeable future, but let us not forget that these are the reasons why we have the problems we do.

Are these problems new? Fundamentally, no, but in two major aspects, yes.

First, today these problems exist in a global context. That means, for all countries, the penetration of the market, the commodification of housing, has been extended and deepened directly by outside actors in the economy, such as foreign investors, financial intermediaries, businesses establishing their operations and supplying housing for their employees, and speculators seeking a quick profit. Commodification of housing has been extended and deepened indirectly as well, through the penetration of an ideology that holds that the market is the only means of supplying and allocating housing and justifies the unequal provision of housing as an unfortunate but necessary consequence of the drive for economic growth and competitiveness. The poor in the Third World are particularly victimized by these processes.

Second, today these problems can be solved. That might have been questioned in earlier years. It can't be questioned today. Over the large course of human history, aggregate resources, aggregate wealth, even if evenly distributed, would not have been adequate to meet what we would today consider the standards of adequate housing for all. That is no longer true — we have the material resources, the technological knowledge, and the capacity to house all of the world's population adequately. The challenge today is a social, economic, and political one, not a material one or one of lack of knowledge.

And why haven't governments, theoretically democratically controlled, dealt with these problems? This would seem in theory to be exactly why we have governments — to ensure that the basic needs of their citizens are satisfied, that the rights enshrined in the Universal Declaration of Human Rights are met:

Everyone has the right to a standard of living adequate for the health and well-being of himself and his family, including food, clothing, housing, and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. ⁴

The need for governmental action is clear. ⁵ From a global perspective, the simple fact is that nowhere in the world are the poor able to pay for decent housing on the private housing market. And our governments are not willing, or do not wish, to face that simple fact. Why?

Five barriers stand in the way of adequate governmental action. First is the lack of governmental resources. This has to do with priorities, both as to revenues (i.e., levels of taxation) and expenditures (i.e. distribution of benefits), which will vary from country to country, and should influence the pace, but not the direction, of government actions. Second is a political/ideological opposition to government action, which is based partly on a blanket rejection of prior state socialist actions and C old War psychology, and partly on a faith in markets that ignore the concerns of non-market participants. For instance, the main argument of the World Bank's Shelter Policy is that distortions of markets, often well intended, create most of the shelter-related problems low-income families face. But that ignores completely issues of poverty and the social costs of pure market provision.

A third barrier is uncontrolled and inefficient market conditions that increase the cost of housing unnecessarily, including sprawl, speculation, segregation, and complex and inefficient financing systems. Fourth is the dissatisfaction with the manner in which state housing provision was accomplished in the past — large-scale, impersonal, ugly, restrictive, unresponsive. But alternate means of provision and management are available. A fifth obstacle is the power of those profiting from a housing shortage who oppose redistributive measures necessary to deal with it, which would inevitably be at their expense.

All of these are matters of government policy. They can and need to be resolved through democratic political processes. But to resolve them takes courage and power, and the willingness to face the controversies and conflicts that changing government policies require. The quest for consensus, sometimes suggested as central to the role of planners and social policy advocates, is a dead end here. Consensus is a mirage, in an area so fraught with conflicts of interests and needs.

Yet, in this defensive context, we are out of necessity to focus on immediate needs, to deal with the complex programs that do exist, inadequate as they are, to spend our time in the U.S. today dealing with the complex accounting requirements to finance a limited number of partially subsidized housing units through tax credits. Further, because we are dependent on government agencies and individuals and often politicians to obtain even the help we can get, we are reluctant to confront them to criticize, to call for change, for fear of losing that little assistance that we can get. The temptation is to polish expertise, to become technicians, to focus on the fine print and let the big questions go, to master the game and its present rules, to push for refinements and amendments, not to address basics. But housing advocacy is not a technical job, although technicians are needed in day-to-day efforts to achieve at least some small results in the present defensive era.

In the face of this pressure for a defensive stance, I believe those concerned about housing for the ill-housed need to get back to basics and consider some simple and basic points about the kinds of policies that are necessary to tackle seriously the overall problems of housing. Perhaps those who are on the front lines of housing provision day to day cannot raise these issues strategically, but at least those of us who are privileged to have secure academic positions, or are involved in research (more about the role of research and researchers below), can and should, in my opinion, go back to these basic questions and support what seems to me the basic answers to the problems we all face. What would that mean, in terms of programs and principles?

1. To begin with, redistribution is necessary. The World Bank has been pushing as a broad approach to housing, "enabling markets to work," putting that idea forward as the solution to the housing problems of the formerly state socialist countries and other "developing" countries. There is nothing wrong with having markets help in producing and allocating housing for those with the money to operate in it, but it is no substitute for providing the resources and the regulations that are needed to address the situation of those not served by the market, or to correct the inequalities the market accentuates.

2. That means, for instance, progressive taxation at a national level. It could also mean redistribution within the housing system itself — not only skewed rentals within single developments, but also a speculation tax, an excess profits tax, a progressive real property tax, with proceeds earmarked for housing for the ill-housed. Housing trust fund proposals go in this direction.

3. An anti-speculation tax is necessary, not only to produce revenues but also to hold down the price of housing. Increases in land values are, after all, socially brought about, and they should inure to the social benefit, not the private. Profits made from the shortage of housing, in a sense monopoly profits, are not earned, and they should be prohibited or taxed away.

4. At the international level, redistribution means just that — a transfer of resources from richer to poorer countries. Existing international agencies, the World Bank in particular, can help — their role has both positive and negative aspects today. But beyond that, the United Nations, and perhaps the Organization for Economic Cooperation and Development ( OECD) and the Group of 8 (particularly the biggest of them, which shall remain nameless) should contribute significant sums to the improvement of housing throughout the world.

5. Rent controls are necessary. High cost of rentals has a little to do with costs of provision but much to do with the costs of land and the desire to maximize profits. Rents should be held to a level needed for decent maintenance, with an appropriately limited return to reasonable capital invested, if necessary. We have enough knowledge of rental markets by now to know that properly drawn rent controls do not hinder new construction in the market but do help to keep private housing at rents affordable to their occupants.

6. Subsidies of housing units owned by nonprofit organizations, dedicated to low-income households on a permanent basis, are needed. Nonprofits, both charitable and community-based, are excellent participants in providing housing, but their ability to do so for those most in need is entirely dependent on governmental support. Nonprofits are not a substitute for, but an expansion of, governmental action on housing.

7. Public housing, social housing, ownership by government, is an essential component. It assures permanency, has the necessary resources behind it, and should be subject to democratic control. (We know enough about tenant participation now, and how it can and should be done, not to be afraid of excess bureaucratization in a well-designed program.)

8. Public housing that is built must be of adequate quantity, and well designed and located, both to meet physical needs and to avoid the stigmatization and segregation that often accompanies it in today's practice. To the extent necessary, it must provide supportive services to its residents, just as market-provided housing is expected to provide supportive services responding to demand for its residents.

9. Support for public housing, supply-side actions, does not vitiate the need for demand-side subsidies, housing allowances, for those in private housing unable to pay rents adequate to meet the needs of maintenance and utilities, rents at levels rent controls allow. Such housing allowances should be a matter of right. Demand and supply subsidies are not alternatives to each other, but complementary.

10. Metropolitan/regional control of land use is essential. Sprawl wastes public resources, increases the cost of housing, reinforces segregation, and damages the environment. Sprawl cannot be controlled if land-use decisions are made by independent local governmental units.

11. Laws regarding eviction and foreclosure need to be reformed to provide that no person may be ejected from their housing unless they have another place to go. That's the minimum of what security of tenure means, and it's necessary in developed countries as well as less developed.

12. Communities and neighborhoods must be protected. Housing is not only a matter of individual shelter, but also of a social web of relations, services, and facilities. Displacement should be minimized and social values as well as economic values taken into consideration in making choices about public projects and compensation. Sophisticated zoning can do this.

13. By the same token, gated communities should be prohibited, and there should be no privatization or marketization of public services.

14. Gentrification can be a benefit to the housing stock of a neighborhood, but it can also cause displacement, directly or indirectly. Gentrification should be controlled through effective district zoning and planning to avoid displacement.

15. The emphasis on homeownership as a way of providing security of tenure is misleading. Homeownership may have more costs than benefits for many; it may in fact increase insecurity and segregation, and it should certainly not be the only avenue to security.

16. In societies where there is discrimination against minorities, whether immigrants or ethnic or so-called "racial" groups, housing policies must affirmatively recognize such discrimination and make certain that such groups have the same options as all other members of the society.

And: We need all these things. Put together, one might call them simply a right to housing — legally enforceable, not toothless, as the U.S. wanted and Habitat II accepted.

Implementation of any of these measures need not await the findings of further research. We know enough already to take major steps forward in solving housing problems; the difficulties are not lack of knowledge, but lack of the power to implement. Research is needed today as a weapon in the effort to improve housing policy, both to expose the ills of bad policy (or the absence of good policies), and to show the potential of good ones to justify, explain, convince, and legitimate positions we already have enough information to know must necessarily be taken.

However, we already know more than enough to begin to act, to reverse the trends that have led to the current desperate situations; abstract "policy analysis" is not what is most missing. The task for those concerned today is in part to expand what we know, but — I write as an active academic — even more to get its information and findings into the political arena, to help put knowledge into action. There are community groups, citizens groups, residents groups, tenants groups, groups of the landless and the homeless, who are already seeking to bring about those actions that will improve their own circumstances. Further research, where needed, should help support those actions.

What does all this say for practicing planners? One thing stands out — the obligation to tell the truth about real needs and real shortcomings in programs. In budget hearings, when programs are proposed or curtailed, whenever and wherever decisions on housing policy are made, we need to make it clear what the size of the problem is and to what extent the proposed action does or does not solve the problem. That of course does not mean that we should not thereafter implement to the very best of our abilities those programs that are adopted or use the funds that are budgeted; it simply means we have an obligation to transparency, to information, that must make clear the roots of problems at the same time it deals with branches or twigs. We can be imaginative. We can make proposals that in fact deal with the roots of problems. We can make alternatives clear. Even if sweeping new ideas are not accepted, the very raising of them for discussion is part of an educational and learning process that must take place if change is to be achieved. In addition, we have professional organizations through which we can take specific positions on public policy issues, and in doing so again we should make clear what the scope of problems and what their roots are, even as we may lend support to the limited actions that political realities suggest are the limits of the momentarily possible. And we can be active as citizens in support of good policies and political candidates that promote them.

Much, of course, depends on for whom the planner is working, whether in public service or for a private client, and if the latter, profit-motivated or nonprofit and community-based. If it's the third category, the answer is easiest: Use everything that's on the books for your client, but at the same time make clear the limits of what can be accomplished with policies as is, and push for advocacy for change along the lines outlined above. Push for policy advocacy as a necessary correlate to getting immediate results. For those working for private profit-motivated clients, a necessarily split responsibility: Steer the client as far as is compatible with the relationship into actions as helpful as possible to meeting fundamental housing needs, and work, outside of the professional-client relationship, to get policies adopted along the lines above — work as a member of professional associations, as one with access to media and claims to its attention, and simply as a citizen active in politics. For planners in public service, the possibilities should be the greatest: The approach outlined here is, it seems to me, that which best serves the public interest, and pushing for it on the job should be entirely appropriate. Not everyone or every agency will agree; professional organizations of planners, i.e. AICP and professionals in APA, should also use their leverage for the adoption of back-to-basics progressive policies.

Then we might give more thought to how a Code of Ethics for planners might help. The present Code of the American Institute of Certified Planners speaks of aspirations, goals planners should pursue. We are not mandated to succeed in achieving them (equality, participation, sustainability, etc.), but we must try, and that obligation inures to planners in private practice as well as in public service. And there are more limited actions that are mandated or forbidden (disclosure, care, opposition to racial segregation, etc.) where we must not only try but do. The profession and its institutions should support us if we follow the code and get in trouble, which may sometimes be possible. The discussion about revisions to the AICP Code elaborates on this possibility.

And finally, we can (often, if not always!) be selective in who our clients are, and in particular try to work with those community groups and housing advocacy organizations that are committed to dealing with the real problems of housing in our defensive age, for it is ultimately on their strength that changes will come that are commensurate with the real scope of the problems of housing we face today.

But, in the words of the old sages, the individual is not obligated to succeed, for that may be out of his or her control; but neither is the individual therefore relieved of the obligation to try. More can't be asked, but trying, with all the limited power we as planners have, is the least we can do.

Peter Marcuse, FAICP, is the former President of the Los Angeles City Planning Commission. He teaches urban planning at Columbia University and has written widely on housing policy and issues of ethics in planning.

Notes

1. Piketty, Thomas, and Emmanel Saez. February 2004. "Income Inequality in the U.S., 1913-1998." Monthly Review, p. 42. www.nber.org.

2. Piketty, Thomas, and Emmanel Saez. February 2004. "Income Inequality in the U.S., 1913-1998." Monthly Review, p. 38.

3. Achtenberg, Emily, and Peter Marcuse. 1986. "The Causes of the Housing Problem." In Critical Perspectives on Housing, Rachel Bratt, Chester Hartman, and Ann Meyerson, eds., Philadelphia: Temple University Press, pp. 4-12.

4. Universal Declaration of Human Rights, adopted by the General Assembly of the United Nations on December 10th, 1946, Article 25.

5. Marcuse, Peter. The Role of Government in the Housing Sector, Draft Report for Task Force 8, The Millennium Commission, United Nations, July 15, 2004.