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Cascade: No. 77, Spring/Summer 2011

Lessons Emerge from 19 Years of HOPE VI Funding

Public housing authority directors, researchers, developers, and HUD officials recently debated the successes and shortcomings of the federal HOPE VI program at a conference cosponsored by HUD and the Council of Large Public Housing Authorities.

HOPE VI grants are used to demolish and rebuild or rehabilitate severely distressed public housing projects into mixed-income communities with homeowners and renters. The program also seeks to transform residents’ lives and help them become self-sufficient. Since the program’s inception in 1992, 132 local public housing authorities have received 254 HOPE VI grants totaling more than $6.1 billion.1

The Obama administration has introduced a Choice Neighborhoods program to build on the lessons learned from HOPE VI and achieve more comprehensive neighborhood revitalization. The Choice Neighborhoods program will target federally assisted housing in addition to public housing and requires that employment, quality education, public safety, health, and recreation be part of a comprehensive neighborhood revitalization strategy.

Some issues raised at the conference included:

  • How did residents who had relocated during new construction or rehabilitation and then returned to the new developments fare long term?
  • How did residents who had left public housing and then used their Section 8 vouchers to obtain private housing fare long term?
  • What was the impact of HOPE VI on the surrounding neighborhoods and real estate markets?
  • Was a sense of community created among homeowners and renters in the new mixed-income developments?

A deteriorated public housing complex in New Orleans that had 724 units, of which only 144 were occupied, was redeveloped with HOPE VI funds and other financing. The new development has 460 rental units, consisting of 193 public housing units, 144 units affordable to residents earning up to 60 percent of the area median income, and 123 market-rate units. Rental townhouses are shown in the photo above. A total of 22 for-sale scattered-site units, affordable to residents with incomes up to 60 percent and 80 percent of the area median income, are also planned.A deteriorated public housing complex in New Orleans that had 724 units, of which only 144 were occupied, was redeveloped with HOPE VI funds and other financing. The new development has 460 rental units, consisting of 193 public housing units, 144 units affordable to residents earning up to 60 percent of the area median income, and 123 market-rate units. Rental townhouses are shown in the photo above. A total of 22 for-sale scattered-site units, affordable to residents with incomes up to 60 percent and 80 percent of the area median income, are also planned.

Several speakers agreed that mixed-income development has as much promise as a poverty deconcentration strategy, although the program has been largely unable to address multifaceted social problems in residents’ lives, such as health and barriers to employment.2 The speakers noted that the percent of market-rate occupants varied widely in HOPE VI developments and observed that the recession has hurt the ability and willingness of market-rate residents to move into HOPE VI developments.

A multiyear study discussed at the conference found that 84 percent of families no longer lived at the original HOPE VI sites but had moved, typically with relocation assistance, to private-market housing, mixed-income developments, or traditional public housing sites. On the other hand, residents who had used Section 8 vouchers to move outside the original sites said they had better housing, lived in safer neighborhoods, and had better mental health.3

Mark Joseph, assistant professor at Case Western Reserve University, said that those residents who were able to move back to new mixed-income developments reported high satisfaction with their units and the surrounding physical environment and described a range of associated benefits, including lower stress due to reduced safety concerns. He also said that the HOPE VI program did not provide one-for-one replacement of units, so there were not enough units for all of the original residents. In addition, the size of the units, rigorous tenant selection, and construction delays of up to five years deterred the return of some tenants to their original HOPE VI sites.4

Joseph found that there was a low degree of social interaction and some self-isolation in the new HOPE VI developments. A contributing factor to the isolation was a lack of clarity on when residents could use public space in the developments. Steve Rudman, executive director of the Portland, OR, Housing Authority, said, “Though HOPE VI finance transactions are particularly complex and challenging, development is actually the easier part. The social aspects are much more difficult. Engaging residents to become part of a mixed-income community is time-consuming, messy, and unpredictable.”

Larry Buron, senior associate with Abt Associates, said that, in the early stages of HOPE VI, public officials assumed that the original residents would return without a concerted effort. A 2003 study found that only about one-third of the original residents moved back to new mixed-income HOPE VI developments5; it also found that the emphasis was on replacing the worst public housing rather than on long-term sustainable neighborhood improvement. Other speakers said that early on the program was mistakenly seen as a “cookie cutter” solution, although cities have very different real estate markets.

Richard P. Voith, senior vice president of Econsult Corporation in Philadelphia, said he found that HOPE VI augmented existing development activity but had only a moderate impact in cities in which there was virtually no such activity. He found significant, widespread gains in property values and notable declines in violent crime in HOPE VI developments.

Speakers debated what is the right “mix” of public housing and market-rate residents and noted that good schools and low crime rates are needed before market-rate residents will move into HOPE VI developments. A point of debate was the “right to return” provision in the Choice Neighborhoods notice of funding availability. Developers said that a major reason for HOPE VI’s success is the strict standards for returning residents and that a proposed one-for-one unit replacement policy will make it harder to have a good mix of market-rate and public housing or federally assisted residents.

Richard Baron, chairman and CEO of McCormack Baron Salazar in St. Louis, said that it’s important to include supportive services for families and children, such as afterschool, arts, and summer programs; however, it is a continuing challenge to find funding for these services. He said anecdotally he knows that many residents and their children move ahead in HOPE VI developments and that it ought to be studied in quantitative research.

Choice Neighborhoods seeks partnerships among public housing authorities, local governments, nonprofits, for-profit developers, private investors, and federal agencies.6 Speakers at the March conference advocated that public housing residents be centrally involved in planning and implementing the new program.

For information, contact Erika C. Poethig, Deputy Assistant Secretary for Policy Development, at 202-402-5613 or erika.c.poethig@hud.gov E-Mail Address; www.hud.gov External Link.

  • 1U.S. Department of Housing and Urban Development, Evidence Matters, (Winter 2011), p. 3, available at: http://www.huduser.org/portal/evidence.html External Link. The issue also includes a list of resources on HOPE VI.
  • 2The Chicago Housing Authority is testing an intensive case management approach serving the “hardest to house” families in a research demonstration with the Urban Institute.
  • 3Susan J. Popkin, Diane K. Levy, and Larry Buron, “Has HOPE VI Transformed Residents’ Lives? New Evidence from the HOPE VI Panel Study,” Housing Studies 24:4 (2009), p. 486.
  • 4A range of publications on mixed-income development are available at http://msass.case.edu/faculty/mjoseph/selected_publications.html External Link.
  • 5Mary Joel Holin, Larry Buron, Gretchen Locke, and Alvaro Cortes, Interim Assessment of the HOPE VI Program: Cross-Site Report (September 2003), available at: www.huduser.org External Link.
  • 6For information on the first Choice Neighborhoods planning grants, go to http://tinyurl.com/66trdcl External Link. The grants include one to Mt. Vernon Manor, Inc., which created a transformation plan for Philadelphia’s Mantua neighborhood with Diamond and Associates.