Affordable housing: a state rep shows how.

Former President Jimmy Carter swings a big hammer. He proved it to me last year in the mountains of Kentucky. Carter joined hundreds of volunteers in a seven-day Habitat for Humanity blitz that built 155 houses in central Appalachia. Thousands of families in the region live in substandard houses or in units they cannot afford. So the Habitat volunteers built modest frame homes on the hillsides and in the hollows. Since 1976, Habitat has constructed over 65,000 such homes.

But as impressive as this achievement is, it is a drop in the bucket when it comes to meeting the housing needs of 27 million poor Americans. According to the Wall Street Journal (June 17), low-income housing is in such short supply that there are nearly two families competing for every affordable unit. And the situation is not likely to improve as the cost of housing increases nationally, the wages of low-income families remain stagnant, and the federal government continues its retreat from replenishing housing stock. What is needed to address the situation is a sustained, well-financed government/private-sector campaign.

According to current federal guidelines, the cost of a family's housing should amount to less than 30 percent of household income. But for millions of Americans, spending half or more of their incomes on shelter is the rule. That means they have too little left to cover food, clothes, transportation, child care, and medical costs. During winter months they must decide whether to "eat or heat." While 15 million poor households qualified for federal housing assistance last year, for lack of federal funding only 4.5 million received it. And whereas Habitat and other nonprofit housing groups have built more than 450,000 units across the country since 1986, it would take over a hundred years at that rate to provide affordable homes for just 5 million of the most impoverished households in America.

To put flesh on these statistics, I recently volunteered with the Walk a Mile program. For a one-month period, the program matches elected officials with someone on welfare. My match was a recently divorced mother of seven who works full time at $7.15 an hour. Her yearly take-home pay including welfare benefits is about $13,000. Her monthly rent, $425, does not include utilities. At an estimated $100 per month for the latter, total housing costs consume 48 percent of this woman's income, more than twice the national average. The Walk a Mile program helped me to see how damaging the scarcity of decent, affordable housing is to such families, and, by expansion, to whole communities. For affordable housing strengthens both families and neighborhoods by promoting individual responsibility and job opportunities.

Today, despite the demonstrated need, the federal government is largely out of the business of producing low-income housing. In the past, it not only subsidized the construction of such housing, but also augmented the incomes of the poor to meet their housing needs. In recent years, the Clinton administration has cut back on construction allocations and has had a policy of near zero-growth in Section 8 subsidies (although it is seeking authorization of an additional 100,000 subsidized units next year). The Section 8 program was damaged politically over the years by some landlords who were not held accountable for the maintenance or supervision of their units. Still, the federal government has a proper role in assuring adequate and available housing nationally.

As a state legislator, however, I believe the strongest government response to the poor's housing needs should rest with the states. Historically, the states assumed too little responsibility for housing their citizens. In the last thirty years, however, state housing corporations have been formed to provide below-market financing for many low-income home-buyers. By relying on the sale of tax-free bonds, these corporations have been successful in making home ownership a reality for millions of Americans of very modest means, without the use of tax dollars.

Historically, however, states seldom budgeted tax dollars for those who could not afford the purchase of a home, the people at the very bottom of the housing ladder. That is changing. Trust funds for affordable housing have now been established in thirty-three states. They are designed to supplement other funding sources for a variety of low-income housing needs. The largest such fund is Florida's. At $120 million per year since 1992 - earned from a documentary stamp tax - the trust fund has built or rehabilitated tens of thousands of units. One example is the Rio Towers, a combined rehabilitation and new construction site in the Little Havana district of Miami. It consists of efficiencies and one-bedroom apartments for the elderly poor. The Archdiocese of Miami leases space for a children's day-care center in the Towers, and this has created twenty new jobs. The East Havana Community Development Corporation, which built and manages the Towers, has developed a foster-grandparent program that links children in day care with Tower residents. Besides Florida, other states with substantial funds include Washington ($50 million annually), New Jersey ($16 million), Ohio ($16 million), Illinois ($13 million), Vermont ($10.8 million), and Tennessee ($10 million).

States utilize a variety of revenue sources for their trust funds, but many depend on some form of real estate transfer fees. Nonprofit housing coalitions have been able to persuade realtors and homebuilder associations, powerful brokers in any state capitol, to agree to these fees, since they benefit from the trust funds' infusion of capital into their industries. The trust funds have also proven successful in large part because local leaders have designed the programs to meet their communities' needs. Most state criteria for grants have been left broad intentionally to encourage local planning, design, and administration.

Yet while the funds have been successful, they still lack adequate commitment from local decision-makers. For example, during the last six years, my own state of Kentucky allocated $1.6 million for its fund, which in turn leveraged an additional $32 million and helped to provide 819 safe, affordable units in 52 of Kentucky's 120 counties. But to really meet the housing needs of the poor Kentuckians, the state ought to have been providing $20 million a year, which in turn could have leveraged another $100 million.

The challenge of building affordable homes in the United States will not be met by war-on-poverty-type federal programs. Those methods proved inadequate and sometimes socially disastrous. Building housing for America's poor requires that government, on all levels, join with nonprofits and the private sector. State trust funds provide one useful model that needs to be enhanced and supported.

Jim Wayne, state representative for the 35th District in Kentucky, was the 1996 recipient of the Mae Street Kidd Outstanding Service Award from the Kentucky Housing Corporation. He is also a licensed clinical social worker.