Public Housing Requires Private Management

One of the most disastrously mismanaged public housing programs in the nation is in Detroit, Michigan. Even the U. S. Department of Housing and Urban Development (HUD) thinks the program is a failure, prompting The Detroit News to editorialize that "the city is incapable of meeting the needs of the housing poor."

The Motor City's public housing has been plagued with problems for decades, including a chronically high vacancy rate, long waiting lists for people to obtain housing, failures to collect rents on time and enforce leases, and excessive delays in making repairs. The department operates about 9,000 public housing units, more than 50 percent deemed virtually uninhabitable. Despite millions of dollars of subsidies to rehabilitate and update housing units, hundreds of units stand empty while nearly 2,000 families looking for homes languish on waiting lists. The units had a 55 percent vacancy rate in 1994.

In its rush to meet deadlines attached to federal monies for public housing repair and restoration, the Detroit Housing Department (DHD) may have compromised standard contract procurement practices. For example, in 1995, $13 million was spent for studies by private management consultants. In some cases, the contracts were awarded without competitive bids to firms whose principals had previously worked with a DHD official. "It looks to me like DHD is a lot more concerned with handing out million-dollar contracts to fancy consultants from Boston," said public housing resident and activist Lena Bivens, "than it is with fixing up apartments and keeping them livable for Detroit families."

These difficulties provide strong evidence that the current system is not working. The public housing units need professional management, not city bureaucrats placed in positions of authority on the basis of seniority or personal contacts. Yet, in November of 1995, the Detroit Housing Department rejected a $20.5-million offer from the Phoenix Residential Corporation that advocates said would have renovated 240 blighted public housing units at the Parkside Homes housing project and trained dozens of residents for jobs in the construction trades.

In rejecting the proposal, the city cited doubts about the company's financial strength and its ability to follow through on commitments. However, even after funding was firmed up, with $8.5 million in direct loans from the AFL-CIO Housing Investment Trust and $12 million in investor equity, the city still balked. At least one other similar initiative met the same fate. It seems that Detroit's public housing bureaucrats do not want to clean up their act and don't want anybody cleaning it up for them either.

No private owners or private managers 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. When private capital is at risk, the private sector has an incentive to refurbish and maintain housing units on a timely basis and within budget. That's why management and/or ownership by accountable private parties or the tenants themselves would provide direct and immediate incentives to improve the living environment.

Government-provided housing rests on dubious assumptions to begin with, but surely its prime objective should never be to provide employment for bureaucrats. Accordingly, Detroit should liberate public housing from an inept bureaucracy by selling off its housing units to the tenants themselves (as British Prime Minister Margaret Thatcher did with more than a million public housing units), or at least privatizing the management of city housing.

In such cities as Atlanta, Boston, St. Louis, and Washington D.C., private or tenant management has improved living conditions and assisted in turning blighted unsafe projects into places of hope. In 1993, the director of the public-housing department in Dade County (Miami), Florida, Gregory Byrne, unveiled plans to privatize 13 percent of the county's 12,000 public housing units. Evidence thus far indicates that privatizing ownership or management of public housing projects produces improved maintenance and management, as well as less crime, drug usage, and teenage pregnancy. It's not a panacea, but the poor, most importantly, gain more control over their own destinies.

Detroit's continuing failure to make necessary and timely corrections to the management of its public housing stock provides ample evidence that it should get out of the public housing business. The living conditions of its poorest residents hang in the balance.