Beruflich Dokumente
Kultur Dokumente
Regarding Housing
Ariel Everett
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Politicians, mayors, and city council members make decisions every day that have
lasting impact on our lives. Whether it is choosing to make a bid for a company to move
to your area, or choosing an alternative water source for the city to cut costs, the
decisions they make can impact your health, job opportunities, and even your ability to
own home. Owning a home is an essential part of the American dream and for most
Americans, their home is their largest asset. However, for many low and moderate
subsidies, overtime cities have been afforded more choices that can either increase or
decrease the likelihood of homeownership for over 30 percent of those low and
moderate-income Americans (Census 2017). The question at the center of this research is
how often do cities choose homeownership when presented with options on how to
With the use of a thorough review of housing policy in the United States and a
comparative analysis of two major American cities, this paper will argue that cities more
often choose rental opportunities for low-income households and that in doing so, are
missing opportunities for the positive effects associated with low and moderate-income
homeownership. Following this introduction, the paper will highlight key themes in the
literature and overview major happenings in the cities of Chicago and Los Angeles. This
will then lead into an analysis of the choices in those cities through the lens of the
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literature comparing and contrasting the choices made therein. Ultimately this will lead to
a final assessment of the choices made concerning housing and their impacts and a
Literature Review
Throughout this course we have addressed the various ways in which urban
politics plays a role in our lives. Our elected and appointed officials regularly make
decisions that impact the roads we travel on, the safety of our food, and they even
influence where we live. As was highlighted following the return of soldiers after the
Second World War, those in power saw it fit to make homeownership an achievable
will create positive change in disadvantaged areas and political involvement and
community engagement. The identified themes that will be addressed are the power given
to city and state government, how the choices those entities make affect citizens, and
The housing boom that occurred following World War II was largely directed by
the federal government and was not made available to minorities. Overtime housing has
changed, as with many other political decisions that were made at the federal level, as
now cities and states hold the decision making power. Block grants are federal grants that
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local and state governments can direct the funds where they best see fit so long as certain
directed at housing and neighborhood revitalization and development. These funds are to
70% of which must benefit low to moderate-income households (Schwartz 2010, p. 212).
This openness allows for nearly all of the decisions to be made at the local government or
state level, and about 70% of these grants go to cities (Schwartz, 2010). Cities decide,
with required community participation, what neighborhoods that funding goes to, and
grant, however the parameters differ in that this funding can only be used for housing,
funding must be matched (Schwartz 2010, p. 216). This matching requirement usually
limits the development projects created with these funds, yet 52% of the projects were
rental housing developments (Schwartz 2010, p. 216). The remainder of the funding were
homebuyer activities (26%), owner occupied rehabilitation (17%), and tenant based rental
Housing Trust Funds are another means of “addressing local housing need” and is
one of the most flexible tools available (Schwartz 2010, p. 221). Although the majority
of these trust funds are at the state level, 80%, major cities in the United States like
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Chicago, Los Angeles, and New York City collect more than 10 million annually
(Schwartz, 2010). Similar to the previous examples, the majority of these funds go
towards low and moderate income households but do not offer as much support than
allows for a deeper look that how those decisions play out on a local scale. Alex
Schwartz describes how some of these decisions affect community residents in Housing
Policy in the United States (2010). One major point of contention with some Block
Grants and Trust Funds is that the poorest people in the community do not always see the
benefits of the funding. Moderate income is defined for these grants as having up to 80%
of the median income. With no restrictions on what percentage should go to low income
income, not including the other 30% that can benefit households of any income
planning varies widely from city to city and can leave some people out of the process
(Schwartz, 2010).
about what households are participating in what types of programs. By observing the
chart below, you can see that the majority of the participants in the homebuyer activities
were in the highest category of income while those who received tenant based rental
assistance were in the lowest income category. While not much can be inferred from this
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There have been policies targeting low-income renters looking to buy and
programs to sell public housing units to their low-income residents. William Rohe and
Michael Stegman take a look at the outcomes of a public housing ownership program in
"Public Housing Homeownership: Will It Work and for Whom?" (1992). The authors
focus on the cost effectiveness of the program, those most likely to benefit as a result, and
other elements that may improve effectiveness. Similar to this article, much of the
research that focused on the outcomes of policies noted how the programs could be more
effective (Drew 2013, Rohe 1992, Riley 2012). This example provides for a deeper
Rohe and Stegman (1992) found evidence suggesting that the program did
increase the wealth of the participants in the form of equity although this was dependent
on the conditions of the sale and how far below market value the homes were sold (p.
153). The other positive benefit of the program was that the quality of life for the
participants was seen to have improved (p. 154). Drew (2013) provides commentary on
how these policies are created without insuring the protection of low-income potential
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There is some research showing both the positive or negligible effects of
homeownership on its buyers and specifically what effects homeownership can have on
low-income families. I found multiple mentions of the more personal benefits such as
increased stability and mental well being for low-income homebuyers (Shlay 2005,
Scanion 1998). These articles also noted that although the original focus was on
increasing assets for the family or the improvement of the community, these benefits
appeared to be the most impactful (Shlay 2005, Scanion 1998). Shlay (2005) argues that
these impacts on low-income residents are not only available via homeownership and
how without the degradation of current low-income policies like housing vouchers, these
people could feel secure without homeownership programming. Scanion (1998) is less
critical and focuses more on the community benefits like “increased care of the
properties,” while also noting that more attention should be given to the external factors
Community Based Organizations and Nonprofits and the Role that They Play
Community based and nonprofit organizations are also key players in determining
housing opportunities across the country. These organizations provide opportunities for
the poorest in our neighborhoods and consistently play key roles in policy decisions. The
government often partners with nonprofit groups that provide housing services as they
meet the needs of those with low income, are always affordable, and “have no desire to
reap capital gains” through sales or charging market rates (Schwartz 2010, p. 232).
nonprofit housing sector and are responsible for building or renovating over one million
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homes between their beginning in the 1960s up until 2005 (Schwartz 2010, pg. 233).
CDCs focus on individual communities and offer additional activities such as counseling,
Institutions or CDFIs are community credit unions or banks that “provide basic financial
services at little or no cost to their members or customers,” (DeFilippis and Saegert 2008,
p. 82). Due to discriminatory redlining practices, homes in low-income districts are often
more difficult to purchase and CDFIs help residents stay current on their payments
(DeFilippis and Saegert 2008, p. 82). CDFIs usually don’t offer first mortgages, but
second mortgages and members usually have to undergo education classes prior to
approval (DeFilippis and Saegert, 2008). Similar to CDCs, CDFIs provide other activities
to assist in the continued success of low-income homebuyers with services like “post-
purchase counseling to help buyers make their payments and avoid predatory re-
financing or other deceptive lending practices,” (DeFilippis and Saegert 2008, p. 83).
Chicago
Chicago is the third largest city in the United States with its population of nearly 3
million people (Census 2017). Located in the northeastern part of Illinois, the “windy
city” is commonly known for its beautiful views of Michigan Lake, deep dish pizza, and
being the current home of the 44th President of the United States, Barack Obama. The city
has 50 council members and a mayor with executive powers, a post currently held by
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Rahm Emmanuel. As of 2015, 22.3% of the city’s 2,704,958 residents were living in
poverty with 51% of those people having a salary less than $50,000 (Census 2017).
Now census data will be used to highlight some of the more specific housing
details in Chicago. Of the housing units in Chicago, 13.2% are vacant, not including the
numerous vacant lots in Chicago without housing units (Census 2017). Of those occupied
units, 44.3% own the properties with the remaining 55.7% as renters. The median value
of a home in Chicago is $222,900, which for owners translates into $1,859 monthly costs.
In contrast, the median monthly rental costs amount to $965 (Census 2017).
program. These programs vary from place to place, but some requirements are similar.
For instance, they all require that you fall into a certain income bracket, normally with
the maximum eligible income being 80% of the median income in that area based on
your family size. Some of the things that set Chicago apart with their homebuyer
assistance program are that this assistance comes in the form of a grant rather than the
usual loan. Another interesting thing about their program is that you do not have to be a
first time homebuyer to be eligible. These funds are available to go towards purchasing a
home or refinancing a home so long as no cash is given to the recipient as a result of that
refinancing. Also notable is that this program is titled on the website where the
information can be found as coming from the office of the mayor. This is at a time in
Chicago where Mayor Rahm Emanuel has an announced 5-year plan to address housing
One instance in which Chicago made a decision on how to redirect funds, the
Cook County Housing Authority decided to team up with two surrounding counties to
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fund the Regional Housing Initiative that would integrate low income people in to
wealthier neighborhoods (Semuels 2015). While they would normally have been unable
to create a development with these funds, collaborating made this initiative possible and
opened up opportunities for better jobs, improved schools, and safer neighborhoods than
while it does not lead to homeownership, it does offer insight into the choices made.
Something that was mentioned in the research as being major forces of housing
many CDCs and CDFIs and they have varying focuses. While the Chicago CDC focuses
its effort on the creation and maintenance of affordable housing for low-income people in
the area that they serve (Chicago Community Development Corporation 2017).
Alternatively, the Northside CDC had a much more distinct homeownership approach
Community Development Corporation 2017). Additionally, the CDFIs in the area were
local residents have the option of purchasing empty lots in their neighborhood for as low
as one dollar. This program is intended to benefit both the city and local residents as the
city will have someone to pay taxes on the property and the locals will own property in
their own neighborhood. The main requirement is that the person lives in the
neighborhood for which they are buying property and pay the taxes. The other major
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requirement is some upkeep of the space. If the lot purchased is next to their residence
then they simply have to do basic grounds keeping while if the land is elsewhere in the
neighbor then the owner must place a fence around the property. The upkeep of the
property is intended to add value to the neighborhood and lower crime in those vacant
lots. While this program isn’t directed at low to moderate-income people, it is creating
opportunities for ownership, adding to neighborhoods, and the program does have a
desire to eventually offer housing on the properties (Large Lot Program 2017).
Los Angeles
Los Angeles is second only to New York City in terms of population with its
it popular for its neighbor the Pacific Ocean, amazing weather, and of course Hollywood.
The city has 15 city council members and a mayor with executive privileges, with Eric
Garcetti currently in office. As of 2015 22.3% of the population was living in poverty
with 49.6% having salaries less than $50,000 a year (Census 2017).
Now census data will be used to highlight some of the more specific housing
details in Chicago. Of the housing units in Los Angeles, 6.5% are vacant, which is less
than in Chicago while LA is not plagued by various empty lots (Census 2017). Of those
occupied units, 36.8% own the properties with the remaining 63.2% as renters. The
median value of a home in Los Angeles is $471,000, which for owners translates into
$2,454 monthly costs. In contrast, the Los Angeles gross rent comes to about half the cost
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Los Angeles also features a homebuyer assistance program although there are
distinct differences than the one offered in Chicago. For example this homebuyer
assistance is offered in the form of a loan available up to $60,000. Only first time
homebuyers are eligible and refinancing your home in the future is available under
certain circumstances. The program is made available through the Los Angeles Housing
and Community Investment Department, a department created by the city of Los Angeles
and funded by a CDBG to provide basic human services in 1976 has since combined to
Community Development Financial Institutions as well. For example, the West Angeles
financial institution. Although they began as a CDC, they now offer business and home
The mayor of Los Angeles, Eric Garcetti has announced a new initiative in the
city in an attempt to address one of the major issues in the major city, homelessness.
Mayor Garcetti has rolled out his new initiative titled Housing First as a “new approach
experiencing homelessness (Office of Mayor Eric Garcetti 2017). Rather than provide
people with services to better their situation while still experiencing homelessness,
provide that housing first and proceed to provide any necessary accompanying services.
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Homelessness is a significant issue around the country and particularly noticeable in large
urban areas, making this a very visible issue for the mayor to tackle in a logical manner.
While, again this may not specifically address low-income homeownership, it shows a
choice by a city official on how to best address housing issues in this area.
Analysis
The literature spoke of the many federal funding sources available to cities and
states and the choices they have in determining where those funds are directed. Both the
cities of Chicago and Los Angeles offer public access to their action plans where they
detail how all entitlement funds awarded from the Department of Housing and Urban
Development will be used and fit into their respective goals. This action plan allows for
the determination of the priorities of these cities as can be judged by where they prioritize
the funds. Also given the knowledge on the restrictions of use of these funds, we know
funds and $14,874,943 from the HOME Investment Partnership for 2017 (City of
Chicago 2017 Action Plan 2016). Of those funds, the vast majority were dedicated
towards rental housing projects and programs according to the action plan. The CDBG
funds were broadly described as being used “to support community development
programming,” which is later described by program (City of Chicago 2017 Action Plan
2016). For example, one program is expected to assist 151 households with home
purchasing financial assistance; this project is being allotted $3,476,572 of the CDBG
funds (City of Chicago 2017 Action Plan 2016). All of the HOME funds will be
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dedicated towards the development of affordable rental housing within low and
moderate-income census tracts meaning although the officials had a choice, they chose
rental opportunities (City of Chicago 2017 Action Plan 2016). To illustrate the
budget for homeownership counseling services offered, $90,000 was awarded to the
previously mentioned Northside CDC (City of Chicago 2017 Action Plan 2016).
opportunities as opposed to homeownership in their action plan for 2016-2017 (42nd Year
Action Plan (2016-2017) Findings 2016). For this cycle, the city had a budget of
award, revenues from the programs, and unused funds from the previous cycle (42nd Year
Action Plan (2016-2017) Findings 2016). Through a similar combination of funds, the
total HOME Investment Partnership budget was $31,152,156 (42nd Year Action Plan
(2016-2017) Findings 2016). Of those lines in the budget that showed what programs the
funds were dedicated to, only one was related to homeownership simply titled
‘Homeownership Assistance,’ (42nd Year Action Plan (2016-2017) Findings 2016). The
total amount for homeowner assistance was $5,752,076 with $2.3 million coming from
the CBDG funds and the remaining $3.3 million from the HOME budget (42nd Year
that detailed where cuts and additions would be made if the federal award different from
the projected amount used to create the action plan. This section stated that if the CDBG
funds were more or less than projected, the funds would either be pulled or added to the
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‘Homebuyer Assistance’ line in the budget up to the amount of $250,000 (42nd Year
Action Plan (2016-2017) Findings 2016). If the difference is greater than $250,000, the
next line item is the ‘Affordable Housing Trust’ (42nd Year Action Plan (2016-2017)
Findings 2016). It is also notable that over time, the CDBG awards are decreasing
(DeFilippis 2008). This further illustrates the claim that when offered these choices on
It is evident through this analysis that the prioritization of the funds and the
initiatives within the cities lies with providing affordable rental housing rather than
opportunity to a broader spectrum of people than the comparable program in Los Angeles
Office of Rahm Emanuel 2017, City of Los Angeles “Homebuyers” 2017). While Los
all purchasers, including those who may have previously lost a home.When comparing
the allocation of funds from the HUD entitlement programs, both cities are similar in that
CDBG budget and 10.6% of the HOME budget was for homeownership assistance (42nd
Year Action Plan (2016-2017) Findings 2016). It is more challenging to determine the
percentages of the block grant funds designated towards homeownership in Chicago, but
as a part of their program (City of Chicago 2017 Action Plan 2016). While this is
understandable given that some low and moderate-income households may not be
homeownership, it is not evident that there are enough resources to support those who
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are. This is just to highlight a few of the ways these cities create more opportunities for
Conclusion
This paper serves to argue the fact that when cities are given choices on the
housing opportunities they afford to their low and moderate-income citizens, they often
prioritize affordable rental housing, losing the potential community wide benefits of low-
programs are available and how many choices they afford the grantees. Additionally the
Information on Chicago and Los Angeles, the two cities used in the comparative study
provided a snap shot of what they are currently doing to better set up the further analysis.
That analysis, in turn, allowed a look at the choices they are making with the view of the
literature, showing exactly where they were allowed decisions, and the choice of
affordable housing they both often made. This process allowed for a conclusion that
although options are given, these cities chose to make homeownership a distinctly second
communities, and asset building for less fortunate households (Engelhardt 2010).
Looking towards the future, cities and the officials that run them, should further consider
the impact of their decisions and know that the prioritization of homeownership could
elevate more families out of poverty and decrease the need for the affordable housing
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References
City of Chicago. Office of Mayor Rahm Emanuel. Home Buyer Assistance Program.
https://www.cityofchicago.org/content/dam/city/depts/mayor/general/HomeBuyer
AssistanceProgramFlyer.pdf (November 7, 2017).
City of Los Angeles. Los Angeles Housing and Community Development Department.
“Homebuyers.” http://hcidla.lacity.org/homebuyers (November 7, 2017).
City of Los Angeles. 2016. 42nd Year Action Plan (2016-2017) Findings.
http://clkrep.lacity.org/onlinedocs/2015/15-1041_misc_01-29-2016.pdf
(November 7, 2017).
DeFilippis, James, and Susan Saegert. 2008. The community development reader. New
York: Routledge.
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Engelhardt, Gary V., Michael D. Eriksen, William G. Gale, and Gregory B. Mills. 2010.
"What are the social benefits of homeownership? Experimental evidence for
low-income households.(Report)". Journal of Urban Economics. 67 (3).
Riley, Sarah F. 2012. "Land use regulations and the returns to low-income
homeownership". The Annals of Regional Science. 49 (3): 745-766.
Schwartz, Alex F. 2010. Housing policy in the United States. New York: Routledge.
Semuels, Alana. 2015. “How Chicago Is Trying to Integrate Its Suburbs.” The Atlantic,
July 17. https://www.theatlantic.com/business/archive/2015/07/chicago-regional-
housing-section-eight/398798/ (November 7, 2017).
United States Census Bureau. American Fact Finder. 2011-2015 American Community
Survey 5 Year Estimates.
https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml (November 7, 2017).
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West Angeles Community Development Corporation. “Home.”
http://www.westangelescdc.org/ (November 7, 2017).
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