A public housing success story

In the last issue of this newsletter, I wrote about what went wrong with public housing in the United States — how it didn’t necessarily fail, but was routinely sabotaged because of bad policy choices that contributed to neglect and mismanagement. So this week, I want to look at what successful public housing can look like.

Oftentimes, when looking for models to emulate, many Americans look abroad for answers — Austria, Denmark, and Singapore, for example, are frequently cited as places to learn from. But one of the problems with turning to other countries is that their politics and governments are fundamentally different, and simply copying them isn’t always an option.

That’s why I’m particularly interested in looking at examples of public housing models that have worked quite well here in the United States. After all, if one American city or county can pull off an ambitious program, then what’s stopping others from doing the same?

Earlier this year, my colleague Rachel Cohen highlighted a place where local leaders are expanding public housing: Montgomery County, Maryland.

Montgomery County has long prioritized affordable housing. Developers, for example, are required to make at least 15 percent of units in new housing projects available for people who make less than two-thirds of the area’s median income.

But the county got creative with how it could provide public housing: It set aside a fund to finance and develop housing projects. And while the county partners with private developers, its investment makes it a majority owner of a given project. As the New York Times put it, the county, as an owner, becomes “a kind of benevolent investor that trades profits for lower rents.”

For background, the county’s Housing Opportunities Commission (HOC) is not just a public housing authority, but a housing finance agency and public developer as well. “We have these three different components that ultimately work together to help us really advance a very aggressive development strategy that we have deployed over 50 years,” said Chelsea Andrews, executive director of HOC.

Historically, public housing projects in the United States have only been available to people making very low incomes. That’s by design: In 1936, the federal government set income limits for eligibility. While that might seem like it makes sense — shouldn’t public housing units be available to those who most need them? — the reality is that this rule limited housing authorities’ ability to raise revenue by charging closer to market-rate rents for middle- or higher-income earners. As a result, public housing projects have been overly reliant on government subsidies and constantly underfunded.

But Montgomery County is addressing that problem by opening public housing up to mixed-income renters.

“Mixed income accomplishes so many goals,” Andrews said. “It allows for housing authorities to ensure that they are creating inclusive communities. It takes away the concentration of poverty.”

Andrews added that mixed-income housing doesn’t discourage people from advancing their careers since they don’t have to worry about losing their eligibility to stay housed in an HOC property. And by making the developments mixed-income, the local government can use profits from some renters to subsidize others and keep the buildings in good condition.

In many ways, this model is a rebrand. “They are very clear about not calling it ‘public housing’: To help differentiate these projects from the typical stigmatized, income-restricted, and underfunded model, leaders have coalesced around calling the mixed-income idea ‘social housing’ produced by ‘public developers,’” Cohen wrote. But in effect, the model is still publicly owned units being rented to residents at subsidized rates.

Montgomery County has seen plenty of success. The Laureate, one of these types of developments in the suburbs of Washington, DC, had leased out 97 percent of its 268 units within a year of opening in 2023.

Across the country, housing advocates and local governments have taken note of Montgomery County’s example and are keen on trying it out for themselves.

“We got a lot of enthusiasm and support around us now doing the work of mapping out what these initial projects will look like. It could result in perhaps one or two local, mixed-income social housing-type projects in the coming years,” Connolly said. “If we can develop something and build it, people can see it, and then we can point to it and look to expand it. And, of course, Montgomery County, Maryland, has been the contemporary national leader here.”

As local governments struggle to deal with soaring housing costs, this model is providing a good solution by both building more units (which is very much needed) and providing below market-rate rents. And with more and more lawmakers approving these projects, America could be on the brink of a new era of public housing — and this time, it might actually be a success.