Public Housing: An Economic Engine

Washington DC –  February 2007 –  A first-ever study measuring the economic impact of public housing demonstrates that in addition to its role as an essential part of the housing market, it can make significant contributions to the local economy.

“We’ve always known how important public housing is to people on fixed incomes and low-wage families,” said CLPHA executive director Sunia Zaterman. “But this is the first time that its role as an economic engine has been studied, and it’s an excellent reminder that when we fund public housing, we’re making a measurable investment in our communities as well.

The study was conducted by Econsult Corporation and sponsored by the Housing Authority Insurance (HAI) Group.  It was supported by the Council of Large Public Housing Authorities (CLPHA) and the Public Housing Authorities Directors Association (PHADA).

“It is particularly apt that we have the results of this study on the 70th anniversary of the U.S. Housing Act,” said Dan Labrie, Chief Executive Officer of the HAI Group. “This longstanding program is a good example of how the federal government can work in successful partnership with local communities.”

The major findings of the study show that:

Public housing is a critical resource for low wage workers:

• Average wages in some industries, such as accommodation and food service, are too low for workers to afford market rate housing costs.

Public housing plays an essential role in the nation’s efforts to preserve affordable housing:

• The total replacement cost for the 1.2 million units of existing public housing would approach $145 billion, excluding land.

•   The government role in subsidizing this housing is critical because the private sector is not likely to provide equivalent housing at affordable rents.

Public housing expenditures contribute significantly to local economies:

• Direct spending by public housing authorities on capital improvements, maintenance and operations is approximately $8.1 billion a year.

• This direct spending generates an additional $8.2 billion in indirect economic activity in these communities.

Public housing has been significantly underfunded

  • Public housing was underfunded by $6.7 billion between 2000 -2006 compared to actual need.

 “In recent years, we’ve witnessed a sharp decrease in support from the federal government for this valuable asset; we wanted to make sure everyone knows the full story of how public housing benefits the wider community,” said Labrie “We sponsored this study because of our commitment to seeing public and affordable housing thrive.

HUD announced in January that public housing authorities would be receiving only 76% of what they actually need to operate in 2007.  As a result, PHAs across the nation are being forced to sell off stock, cut back on maintenance and security, and close down programs designed to assist residents.

“This study demonstrates that public housing is a smart investment in families and communities,” said Tim Kaiser, Executive Director of PHADA. “It is an excellent example of how the federal government can be a partner in addressing the shortage of  affordable housing.”  

The study examined public housing costs and contributions in 10 cities: Akron; Boston; Charlotte, NC; Dallas; Kansas City; Miami, New Bedford; Oakland; San Diego; Seattle.