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U.Va. Economics Professor To Urge Congress To Overhaul Approach To Public Housing

November 28, 2001-- As the United States begins to direct more money toward national defense and domestic security, funding for lower-priority issues, such as public housing, will hold steady -- at best -- in the upcoming federal budget.

So, how can the Department of Housing and Urban Development (HUD) use its limited resources to help the growing number of poor American families find affordable housing?

On Thursday, Nov. 29, Edgar O. Olsen, professor of economics at the University of Virginia, will testify before the U.S. Senate’s Committee on Banking, Housing and Urban Affairs, suggesting an overhaul of the way in which HUD helps impoverished families keep a roof over their heads. He believes his approach -- switching entirely to housing vouchers -- would also stretch taxpayers’ dollars.

Olsen believes that the answer to low-income housing is not in subsidizing builders and apartment managers, but in shifting HUD’s entire budget for low-income housing into housing vouchers that go directly to eligible families so they can seek housing on the open market.

"Research on the effects of housing programs…shows that we can serve current recipients equally well (that is, provide them with equally good housing for the same rent) and serve many additional families without any increase in the budget by shifting resources from project-based to tenant based assistance," Olsen writes.

He cites five major studies, conducted in different markets and at different times, which unanimously found that housing certificates and vouchers provided equally desirable housing at a much lower total cost than any of the HUD programs designed to spur the construction of new public housing. Shifting the structure of funding would significantly expand the reach of public resources, Olsen said.

"Even the smallest estimates of the excess costs of project-based assistance imply that shifting 10 families from project-based to tenant-based assistance would enable us to serve two additional families. Since HUD provides project-based assistance to more than 3 million families, a total shift would enable us to serve at least 600,000 additional families with no additional budget."

Olsen suggests restructuring HUD programs to expand poor families’ access to affordable housing:

    • The money currently spent on operating and modernization subsidies for public housing projects should be used to provide tenant-based, portable vouchers to public housing tenants;
    • Contracts with the owners of private subsidized projects should not be renewed. Tenants should be given modest grants for moving expenses.
    • Construction of new public or private projects should not be subsidized.

"Most people who develop and operate subsidized housing projects will oppose these reforms," Olsen said. "However, they will give taxpayers who want to help low-income families more for their money. Without spending more money, taxpayers can increase the number of families served while maintaining support for current recipients."

Olsen’s Expertise

Olsen has focused in his academic career on the economics of subsidized housing — what works and what doesn’t. Over the past 30 years, he has conducted numerous studies of public housing for state and federal agencies, under Republican and Democratic administrations, and reviewed a large number of other studies.

He was an analyst on the Housing Policy Review Task Force that led to the Section 8 Certificate Program during the Nixon Administration and evaluated the Experimental Housing Allowance Program for the Department of Housing and Urban Development during the Carter Administration. More recently, he has studied low-income housing programs for the National Bureau of Economic Research and served as a consultant to the General Accounting Office on the cost-effectiveness of tenant-based vouchers and major construction programs, such as the Low Income Housing Tax Credit.

Contact: Charlotte Crystal, (434) 924-6858

FOR ADDITIONAL INFORMATION: Contact the Office of University Relations at (804) 924-7116. Television reporters should contact the TV News Office at (804) 924-7550.
SOURCE: U.Va. News Services

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