Flawed foundation for HUD eligibility

July 20, 2004|By Sandra Newman

BALTIMORE AND OTHER cities have a vested interest in making sure they receive their fair share of funding from the vast array of federal programs.

But the eligibility criteria for some assisted housing programs of the U.S. Department of Housing and Urban Development are depriving Baltimore of important federal dollars for housing and community development and the discretion in deciding which neighborhoods are worthy of investment.

HUD's eligibility criteria for placing assisted housing require cities to avoid areas having an "undue concentration" of assisted housing containing a "high proportion of low-income persons."

The criterion for one particular type of assisted housing, project-based vouchers, is much more explicit: Neighborhoods where more than 20 percent of the residents have incomes below the poverty level are ineligible for these subsidies.

HUD's standards seem to be based on the premise that neighborhood poverty is a good marker of neighborhood quality. The 20 percent limit for the project-based voucher program goes even further. It establishes 20 percent as the "tipping point," or threshold beyond which neighborhood quality is assumed to be unacceptably low.

Curiously, other federal housing programs set different thresholds or, as in the regular Section 8 housing voucher program, have no poverty restrictions. This inconsistency suggests confusion about the neighborhood poverty/neighborhood quality nexus.

The 20 percent threshold requirement of the project-based voucher program is particularly problematic for Baltimore, where roughly half of the city's neighborhoods have poverty rates above 20 percent. It is, therefore, of more than theoretical interest to determine whether the relationship between neighborhood poverty and neighborhood quality is speculation or fact and what this relationship looks like in Baltimore.

Graduate students in my course in the public policy program at the Johns Hopkins University recently completed research on this question through a detailed analysis of 25 Baltimore neighborhoods that vary as to poverty rates, location and adjacency to neighborhoods with higher or lower poverty rates.

The study used more than 90 measures of neighborhood quality, covering such domains as neighborhood upkeep, extent of housing abandonment, school quality, crime and safety, economic investment - including trends in median residential sales prices - and neighborhood image as portrayed in the media.

This empirical evidence indicates that neighborhood poverty is not a good marker of neighborhood quality.

There was little support for the notion that as neighborhood poverty increases, quality decreases. There was also little support for a 20 percent poverty threshold beyond which neighborhood quality declines dramatically, as implied by HUD's project-based voucher program.

There was little evidence that either the age or the racial composition of the neighborhood had any effect on the relationship between the neighborhood's poverty rate and its quality. But there was evidence, in at least some of these 25 neighborhoods, that the poverty rates of adjacent neighborhoods may have some effect, with negative spillovers from high-poverty neighborhoods and positive spillovers from neighborhoods with low poverty rates.

This work indicates that using the neighborhood poverty rate as a proxy for neighborhood quality - as HUD's project-based voucher program does - is likely to exclude neighborhoods worthy of inclusion and include neighborhoods that are not.

Unfortunately, there is no easy fix.

Identifying alternative eligibility criteria will require systematic research of neighborhood attributes causally linked to improvement and success (or decline and failure). Relying on census tracts as the representation of neighborhoods will also need to be reconsidered, since a single tract may encompass geographic areas that differ dramatically, as occurred in this study.

And making decisions in Washington about which neighborhoods in a distant city should be targeted for investment of federal dollars - devoid of any local input - also needs rethinking.

This analysis comes at an opportune moment. HUD is reconsidering its regulations for the project-based voucher program, and one outcome of the major class-action public housing lawsuit Thompson vs. HUD is a new set of criteria for HUD's allocation of assisted housing resources. The findings of this study have direct implications for both. Let's hope they are used.

Sandra Newman is professor of policy studies and director of the Johns Hopkins Institute for Policy Studies.

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