HOUSING AND PLANNING: THE SAGA BEGINS

By World War I’s end Big City worker/immigrant housing was in worse shape than ever. The previous housing reformer strategy, “Regulation of Multi-family Housing,” produced no additional units, and added to the cost of new ones—making them unaffordable to low-income households and immigrants. Low-income households crowded into outrageously deteriorated units in traditional inner-city neighborhoods. Edith Wood issued a call to arms: “Restrictive legislation is only negative. It will prevent the bad. It will not produce the good … at an [affordable] rent” (Wood, 1919, p. 20). The problem, as Wood saw it, was not greedy landlords or insufficient regulation; rather, it was the need for low-income workers to be near employment. Wood linked Big City housing reform to CD neighborhood-based movements. She advocated a national housing commission empowered to make loans to communities and “limited-dividend” private corporations. Following her, lead housing reformers shifted away from regulation of existing units toward the production of new, safe and affordable units.

Municipal governments either lacked the resources or the will to provide funding, so Wood pressured to enroll the federal government as a partner in local housing reform. She urged housing reformers to work with private, limited-dividend development firms (real estate firms/insurance companies that capped their profits by restricting interest paid to their investors). In 1931 Wood and other housing/community development activists formed the National Public Housing Conference (NPHC) to “promote housing through government loans and public construction.” The NPHC subsequently played a major role in future New Deal legislation.

Housing reformers concluded that deteriorating Big City slum neighborhoods could not be remediated by scattered-site rehabbing: “a single good building in a slum area is foredoomed to failure. The development of a whole block is only slightly better … little islands of good housing in a sea of slum.” Langdon Post, future chair of the NYC Housing Authority, asserted: “A complete neighborhood unit, large enough to create and preserve its own atmosphere, should be the minimum size of a development [in a slum]” (Fogelson, 2001, p. 337). Thus, by the late 1920s, housing reformers had shifted away from single-unit rehabilitation to physical redevelopment of slum neighborhoods. They also formed a commitment to produce housing owned by the public sector. For this to happen, however, housing reformers needed new tools and a strategy.

Large-scale redevelopment was out of their league, so housing reformers turned to private developers with the expertise and access to capital. Private developers, however, already recognized the opportunity and were busy developing their own business models. The two groups clashed publicly, and contested politically, how best to conduct slum removal and construct replacement housing. New York State was the primary battleground. In 1922 Metropolitan Life convinced the New York state legislature to allow insurance companies to invest in affordable housing, and in 1924 Met Life opened the doors of its first housing development. The state, earlier, had authorized ten-year real estate tax abatement on all new construction completed by the end of 1924. With this momentum New York City private developers in 1926 achieved their greatest victory to that date—state authorization to use eminent domain to “engage in slum clearance and provide low income housing”:

[Private] companies were given the power of eminent domain, and a partial exemption from state, and, if the cities approved, local taxes, in return for which they had to accept limits on rents and dividends [to shareholders] and strict supervision by the newly formed state board of housing. New Jersey followed New York’s lead in 1929, when the legislature passed a bill that permitted insurance companies to undertake slum clearance and low-income housing and authorized the cities to acquire the land for them by eminent domain. Under these laws only two projects were built in New Jersey and fewer than a dozen in New York. (Fogelson, 2001, p. 337)

Limited-divided corporations, with tax abatement and eminent domain powers, meant that neighborhood-level housing redevelopment was irretrievably linked to slum clearance, and set housing reformers on the back foot by favoring private limited dividend corporations with advantages that potentially neutralized their goal of publicly owned housing. It quickly became evident, however, that limited-dividend corporations could not produce in volume. This inability justified claims by housing reformers that slum housing redevelopment had to mean public housing. On the other hand, private developers needed to fabricate a HEDO that could overcome the inefficiencies of the limited-divided corporation. The two sides, intense rivals and ideological enemies, started slugging it out in Washington even before the Depression in the Republican Hoover administration. They fought over federal financial assistance to defund and fund a hybrid public/private entity. This struggle provided an opening for a federal role in local public housing, and triggered a perpetual, intense conflict between public housers and the private real estate sector. This competition/rivalry escalated into a major fault line in American economic development for the next 50 years.

While housing reformers shifted direction in the twenties, planners had also moved into housing as their next, best thing. Planners were essential allies in the 1920s. They possessed the tools (zoning, codes and comprehensive plans). Planners, as we discovered with the Regional Plan of New York (RPNY), however, had not figured out where the housing should be built—in the suburban garden or the central city. The Regional Planning Association of America (RPAA) planner wing, which arguably held the stronger hand in these years, advocating worker and even middle-class private housing, distanced itself from the “public housers” who were dedicated to redeveloping inner-city slum housing to provide affordable, safe, decent and government-owned/ operated housing to the most disadvantaged low-income city residents. The planner and public houser wings were divided by “class” to be served, ownership of the housing and location of their projects.

Confused as it was, private foundations (Rockefeller, for example) also entered into the fray with their own versions of housing—such as the NYC Paul Laurence Dunbar Apartments in 1928, New York City’s first cooperative housing for African-Americans. Marshall Field in Chicago responded by building the Marshall Field Garden Apartments in 1929. Both RPAA and philanthropist initiatives failed to achieve their objectives: they wound up with houses too expensive to be affordable to workers, never mind new immigrants, and too expensive to produce on scale without some form of subsidy. They too became attracted to some federal role in housing.

So, on the threshold of the Depression/New Deal, public houses, foundations, planners and an antagonistic private real estate sector were locked into a common vision: to develop and acquire federal housing subsidies to their suitably defined HEDO, But there was no consensus as to who would lead; what structures, strategies and tools would be needed to accomplish their goals; and ultimately who would live in the housing. They didn’t even agree on why this housing should be constructed. This began a nearly two-decade intra-legislative struggle that was reconciled only with the Housing Act of 1949.

The Federal Government Becomes Involved

An initial observation might simply state the obvious—in the form of a question. Is this housing debate locally driven or has it already been taken over by Policy World elites? This is clearly not the ED of chambers which is jurisdictional bound, forged by local elites and implemented by local authorities. The Depression, not the New Deal, carried local policy-making to Washington. The mayors went through the Conference of Mayors, and housing advocates used their professional trade associations. An entirely different set of policy influencers play ball in DC—they are not from the neighborhoods or wards. Elites and upper classes are making policy for working and lower classes. There are shifts aplenty—before the New Deal ever steps foot into power. The federal government’s role is also clear: it is there to provide as close to free money as possible.

The Depression thrust the federal government into the position of being an indispensable player in state and local housing policy. In desperation, housers and real estate exchanges turned to their professional/trade associations to design potential legislation and advocate for its approval. Reflecting the policy fault line that housing had become, polarization between business and reform associations was intense and saw a good deal of controversy, infighting and bureaucratic rivalry. The National Association of Housing Officials (NAHO) became the principal advocate for housing and CD activists to press the federal government. The NAHO incorporated the planners’ perspective into its proposals so that planners became allies, joining (loosely) the public housing coalition. The National Association of Real Estate Boards (NAREB)²—the Urban Land Institute (ULI) after 1939³—and the Buildings Office and Managers Association (BOMA)⁴ handled business/real estate advocacy. Municipal governments per se were not involved in housing legislation.

Housing reform by 1932 meant neighborhood, multi-block slum clearance for which eminent domain and some form of tax-exempt bond issuance was required. The core ideological difference was that the private sector believed housing to be its exclusive preserve; government-built or owned housing was considered socialist—in those days a “fighting word.” Our longstanding issue of a hybrid EDO, and who would “control” such an entity, lurked beneath the various proposals that were advanced. Legislation (1) required provision for replacement housing and (2) conformity to municipal comprehensive plans; and (3) the expense of scaling up meant municipalities that had borne the cost to this point needed help to proceed to the next level. Their goal was to get the federal government to pay for as much of the project as possible. Also, municipal powers, tied to judicially approved public purpose—to “clear” slums and rebuild cleared land with private participation—did not exist (Weiss, 1985, p. 256). For various good and “bad” reasons, the private sector desired a broadly defined slum clearance that allowed “mixed uses” besides housing. Housing reformers (and planners) favored a single allowable use—housing—that fit nicely into zoning and building codes.

The first episode of the federal housing/slum clearance chronicle occurred during the last year of the Hoover administration (1932). At a Hoover-initiated conference on Home Building and Home Ownership (August 1930), a sub-committee, “the Committee on Blighted Areas and Slums,” issued a report on housing and slum clearance (April 1932).⁵ This report delinked slum clearance from housing—that is, cleared areas could be used for any purpose and, if used for housing, relocation of existing occupants was not required. The report advocated cleared land be leased or sold to private firms for redevelopment in accordance with a comprehensive plan adopted by the municipality. The committee’s report dovetailed nicely with NAREB’s perspective, but was not to the liking of Progressive housing reformers. Hoover’s loss in the November 1932 elections meant the battle was certain to be refought. The irony of the 1932 report is that it included much of the 1954 federal urban renewal Act.