A Solution to the Public Housing Problem

Ron Getty
Chair, Initiatives Committee

Public housing in California is an expensive boondoggle which benefits public housing bureaucrats and administrators and not poor families.

California's two largest housing authorities, in San Francisco and Los Angeles, take in almost $700 million of involuntary philanthropy from taxpayers. What does this "charity" get the taxpayers? 

The San Francisco Housing Authority has a $235 million taxpayer-funded budget. SFHA serves 5,500 families in residential units and 9,600 families under Section 8 rent subsidies. The SFHA has 400 employees and spends $7,000 a year for maintenance and management on each of the 6,500 units in 53 projects. If the total budget were equally distributed to current recipients, each family would receive $15,000 a year in subsidy. SFHA currently has 17,000 rental unit applicants and 35,000 on the waiting list for rent subsidies.

The Housing Authority of Los Angeles has a $345 million taxpayer-funded budget. HACLA provides for 20,000 families in 8,000 units in 60 projects and has a waiting list of 25,000 families. Section 8 provides 44,000 units for 95,000 family members, with another 80,000 on the waiting list. The HACLA employs 970. If the total budget were distributed equally to current recipients, each family would receive $7,000 a year in subsidy.

Another 47 housing authorities statewide receive a combined $1 billion from taxpayers with similar results. The fact is we are paying for project housing that benefits no one other than the contractors who build and repair the projects and the well-paid housing administrators. 

Families in these projects endure drug dealers and gangs; rotten, leaky, mold-ridden rooms; indifferent bureaucratic managers; and lowest-bidder-built buildings. Such conditions are unpardonable. 

These families need to take control of their buildings and by extension their local community. They can do so through conversion to private property home ownership.

Private property home ownership of the projects is possible through a new partnership of project families with financial lenders and with insurance company real estate mortgage funds to buy out the project from the Housing Authority. Private property home ownership is the way to assure that people will have a stake in what happens in their local community.

If a project main building is falling apart, it should be torn down and replaced with family-oriented condos or townhouses. If the building is sound, it should get needed upgrades for earthquake, fire safety, insulation, and soundproofing. Capable residents could provide "sweat equity" to reduce construction costs while under the guidance of experienced construction management and construction on-the-job skills training programs. And this approach would further provide construction industry skills for project residents' employment opportunities. 

Private long-term mortgage financing with favorable interest rates could set the mortgage payments at the current rental rates paid by the tenants or less. The value of the units could be based on current market rates of properties of this type based on age and upgrades. Renters could opt out of private property home ownership and continue their current rental agreements. Or rental units, by agreement, could be bought out and sublet back to the renter for as long as the renter resided there at agreed-to rental rates.

Residents purchasing their unit would receive a one-time credit against the purchase price in lieu of a down payment by agreeing not to flip the property for a number of years. Property taxes would be abated on the property to lessen the strain on family budgets. These inducements would strongly encourage the private property homeowners to become long-term residents and put down local community roots. 

Establishing a community based on family-oriented private property home ownership would attract churches, private schools, social clubs and family-oriented businesses and their employment opportunities. The owners' association could hire 24/7 private community police for their families and neighborhood protection.

Extending private property home ownership to low-income people would save billions of dollars in taxpayer-funded housing support. The former project renters would then become proud homeowners in their community. Everybody wins—but the bureaucrats.