Monday, May 2, 2011

More on urban housing projects - lessons from Atlanta

This blog has consistently advocated that the public housing policy for urban poor in India move away from a strategy that aims to provide ownership rights to one that builds up housing stock and then rents them out. I have also argued that the rental allotments should be made through vouchers, with the beneficiaries having the flexibility to redeem them in private housing units.

This is largely similar to the public housing policy in the US, where 2.2 million people live in public-housing units (spending an average of 8 years) and another 5 million live in private, voucher-paid housing (spending an average of 6 years). Public housing rents are fixed at 30% of household income and the vouchers, in place since 1974, costs the taxpayers $18 bn annually.

The public housing is dominated by extremely poor single-parent families (53% of public-housing households nationwide earn less than $10,000 a year, and only 13% have two adult residents), who also have an incentive to remain unmarried or maintain live-in relationships due to the manner in which rents are fixed (as a share of the household income). A large number of these dwellers have lost their jobs and have stopped looking for jobs, and these areas are characterized by high incidence of gangs and drugs, crime and violence.

Howard Husock has an interesting article where he explores the apparent success of Atlanta Housing Authority (AHA) with its public housing project reforms for the past two decades. The city's 14000 public housing units have been razed down to facilitate re-development on public private partnership mode and only 2000 are now left, mostly for the elderly. Private developers dedicated 40% of the new private housing units to tenants who qualified for public housing. Two-fifths of the residents re-located into these "mixed-income" complexes, while the remaining three-fifths received housing vouchers and used them to move into other private apartment buildings.

Further, unlike elsewhere in the US, the AHA also imposed a condition in 2004 that all the residents of these units - both the mixed-income complexes and those using voucher and living in ordinary apartment complexes - should work or atleast be enrolled in training programs. The work-requirement has evidently been successful - recent figures show that 62% of AHA-supported households are employed, up from just 18.5% in 1994, and most voucher recipients are re-certified as being eligible.

In operation for nearly a decade, these mixed-income units are well-maintained, with the remaining 60% of renters paying the market rates. Once the public housing units were razed down, crime has fallen, property values have risen and the hitherto blighted surrounding areas have developed.

Apart from the hardware issues, the re-settlement program was complemented with considerable efforts at "human transformation" - extensive and long-drawn personalized counselling for families to instil a culture of ambition, discipline, caring for children's welfare, healthy lifestyle etc. The services of non-profits and people who have moved out of these units were deployed in this effort. In the 2002-09 period, the AHA has spent more than $25 m in providing such counselling services to nearly 15000 people.

There are important lessons for policy makers, especially those trying to re-develop slums in-situ, even in countries like India with the AHA experiment. The business model of the private developers of the mixed-income housing societies should provide insights for developers in India. This assumes significance given that one of the greatest concerns for private developers is with the commercial viability of such mixed housing estates where atleast some of the existing slum-dwellers are re-settled.

The back-room support mobilization for such projects is an unheralded but critical determinant to the success of such re-settlement projects. It also underscores the critical role of human transformation in ensuring the success of such housing projects. Investments in this direction form the last priority for policy makers involved in such housing projects.

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