Public Housing Beset with Scandals

The management of the nation's public housing programs is beginning to get some long overdue scrutiny. The closer we look, the more scandalous it appears.

Public housing funds, as originally intended by Congress, are to be channeled through a network of public housing authorities (PHAs) that are mandated to supply "safe, decent and sanitary housing" for needy people. Many of the 3,400 PHAs in the country, it turns out, are havens of abuse, ineptitude, and corruption. While PHAs have devoured billions in subsidies, housing units are routinely "mismanaged into squalor, trapping entire communities in an atmosphere of hopelessness, despair and danger," according to the National Center for Neighborhood Enterprise.

In Michigan, the Detroit Public Housing Authority has been identified by the federal Department of Housing and Urban Development (HUD) as among the "most troubled" agencies in the country. In fact, it has been on the "Troubled PHA List" for 12 years.

As vacancies in public housing increase, potential rental income is reduced, vandalism is encouraged, and building deterioration is accelerated. The standard vacancy rate, as established by HUD, is 3 percent. But within the Detroit PHA, the figure is an astounding 44 percent--3,853 of its 8,757 units.

Another measure of mismanagement is the amount of rent not collected, calculated as a percentage of the rent due from all tenants in one month. The HUD standard for these "Tenant Accounts Receivable" (TARs) is 10 percent. Within the Detroit PHA, the TARs amount to 33 percent. Assuming an average rent of $180, that represents lost revenue of nearly $300,000 every month!

The Detroit PHA's accounts receivable are shocking enough, but they are actually much better than the rates in Cleveland (84 percent), Philadelphia (250 percent) and Washington, D.C. (397 percent).

Incredibly, low rent collections are often cited by these inept authorities as reasons for increased federal subsidies. In 1990, the total federal subsidy for each occupied unit in Detroit amounted to $7,558, according to HUD statistics.

Furthermore, as documented by the National Center for Neighborhood Enterprise, HUD, and other private and public agencies, PHAs waste millions of dollars in sloppy, unmonitored contracts for services that are not infrequently steered to companies with political connections. They keep records so carelessly that documentation for expenses in the millions of dollars has been found to be insufficient or nonexistent. They sit on appropriated funds, refusing to make needed repairs. They overstaff themselves with bureaucrats, exceeding HUD staffing standards by as much as 171 percent. And, because of the distance between their locations and the properties they manage, their employees are often oblivious to the harmful effects their policies inflict upon the poor.

No private providers of rental housing could behave in this fashion and get away with it. Nor could they draw upon the public purse to subsidize and perpetuate it year after year.

This is a scandal of the first order, and one that cries out for massive investigation and drastic reform. The one reform that offers the most promise, tenant management, is already working in several major cities.

A growing number of on-site tenant management companies are springing up among disenchanted residents of public housing. Under contract with housing authorities in places like Washington, D.C. and St. Louis, they are cleaning up housing projects, collecting rents, and exacting the kind of personal responsibility that prevents crises from arising in the first place. It's a form of privatization, the transfer of a function poorly administered by bureaucrats to private citizens who are closest to the problem and have a direct personal and financial incentive to solve it.

Usually, the existing PHAs try to block tenant management because they see it as a threat to their power and budgets. They prefer the status quo for themselves and dependency for their clients over real reform that actually helps the poor and saves taxpayer dollars. HUD Secretary Jack Kemp has been trying to break down such barriers with spotty success. Detroit's elected leaders could do much to clean up the city's public housing act if they would work with tenant management advocates and aggressively pursue the tenant management option.

In any event, the PHA scandal should teach us all a great deal about the nature of government. The best of intentions, when channeled through unaccountable bureaucracy, almost always leads to unintended, and costly, consequences.