Give the Developments a Chance

A Stalled Housing Development (Image Source: Washington Post)

The Washington Post’s new expose that purports to reveal to the public the widespread incompetence affecting the Department of Housing and Urban Development has engendered much controversy. The series ostensibly addresses only a single program within HUD, the HOME Investment Partnership Program, which administers funding to local government and private entities to develop affordable housing projects. In stentorian fashion, the opening sentence of an article titled, “A trail of stalled or abandoned HUD projects,” (part of the multi-article investigative series titled, “Million Dollar Wasteland”), declares, “ the federal government’s largest housing construction program for the poor has squandered hundreds of millions of dollars…and routinely failed to crack down on derelict property developers or the local housing agencies that funded them.” The Post goes onto report that some 700 projects, totaling “nearly $400 million” have been stalled for years, some even for decades, causing widespread blight. The article then lists widespread deficiencies in oversight and accountability within HUD, contending that the agency doles out cash without properly vetting recipients, that money was delivered when projects were only in an inchoate phase, and that HUD should have imposed more regulations on funding recipients, whether they be housing agencies, non-profit organizations, or the partnered developers. Needless to say, we were surprised.

Perhaps the main reason the article surprised us, however, was what appeared to be the intentional misrepresentations of the available housing statistics, most of which were pointed out lucidly by Secretary Donovan. In a response published on June 10, Donovan rebutted the Post by indicating out that HUD has received numerous acclaim in recent years as well introducing his own stats:

Although HUD provided data and information to The Post for more than a year, the paper has not shared with us the list of projects it generated. So after the articles ran, we conducted our own project-by-project review using The Post’s parameters. We determined that more than half of 797 projects that could have been flagged as “stalled” based on The Post’s criteria are finished.

Of the remaining projects, 97 have been canceled and their funding moved to viable projects, while 154 are progressing toward completion. The final 85 properties are experiencing delays, but in the vast majority of cases there is a simple reason for this: the recession.

Donovan goes on to state the conclusions of HUD’s internal study: only four percent of the more that 5,000 Home projects are “delayed” or “cancelled” (employing the metrics used by the Post). Moreover, the Post misleadingly gives the impression that funds were squandered, when in fact HUD policy stipulates that “[if] there are delays, money can be moved to other viable projects or must be returned if it is not used within five years.” Donovan then goes on to defend the decentralized nature of the HUD grants, which give large discretion to local communities and their governments, by suggesting that this framework is a preferable to a “one-size-fits-all” federal mandate.

In addition to what could be blatant misrepresentations or mistakes, the article is unfair in a number of other respects. For starters, it assumes more regulations and requirements are a solution, while ignoring the fact that these could quite possibly further stifle such developments. Moreover, it completely neglects to contrast the HUD programs with the ways in which the private sector has aimed to deliver affordable housing in recent years. While this phenomenon also resulted from public-private partnerships, namely government policies encouraging homeownership and many private entities vying to advantage from government guarantees by engaging in the lucrative process of securitizing credit, the private sector likewise failed, resulting in the financial crisis. The HUD developments, which involve the government to a greater extent than most other housing developments, are one of the few bright spots of economic creation in the housing industry, which many commentators have pointed out is crucial to broader economic recovery. Let’s keep this in mind, and give the developments a chance.

We at St. Ambrose were also particularly chagrined about the fact that the article seemingly attempts to paint the entire Department of Housing and Urban Development in a negative light. The Post does this in part by implying that HUD is a single-faceted organization aimed at the development of new properties for low-income citizens. While it is true that this area comprises a major part of HUD’s activity, the organization also provides other, far different services, many of which remain crucial to mitigating the widespread financial pain incurred by the current financial crisis. These services include both mortgage and foreclosure prevention counseling—we believe that the former type of assistance needs to be implemented on a large scale, as mortgage counseling is often key to ensuring that families understand their commitments, the terms of their mortgages, and what it will take to keep above water over the long term. As for the latter, we know that foreclosure prevention assistance is paramount in enabling families to stay in their homes longer. Take for example our unique study on foreclosure prevention conducted earlier this month, which among other things found that 70% of homeowners that underwent counseling in 2007 reported positive outcomes, and that homeowners who utilized counseling services were 79% more likely to experience a positive outcome. (More insight on the study will appear here next week).

More than anything, in light of Donovan’s straightforward statistics, which serve to debunk much of the Post’s shocking data, we wonder how the Post could have come up with numbers that contrast so sharply with HUD’s. As far as we know, the Post is yet to respond to Donovan, and on this point we think it may be fair to take a hint from one of Baltimore’s great social critics, David Simon. In Season 5 of The Wire, the city’s local paper runs into some problems with balancing sensationalism with thorough, honest journalism. And while we certainly don’t equate the Post series with Scott Templeton, it’s reasonable to suspect that the Post may be guilty of a similar, all too common imbalance.

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