For years various programs from public housing, section 8, HOME, and the Low Income Housing Tax Credit programs have provided funding or tax incentives to developers to construct or rehabilitate affordable housing. The problem with this approach is several. First the cost of construction is high and most of the benefit of these expenditures go to developers, attorneys, syndicator etc. Second, some of the programs, LIHTC in particular do not house the people who need it the most, very low income people. Third, most of the locations of these properties are in low income communities that do not afford the tenants the opportunities of good schools and safe neighborhoods. Fourth, efforts to construct this type of housing in higher end suburbs results in extreme resistance and political opposition. NIMBYism is alive and well. Finally, low income housing has stabilized the lives of many low income people but has not moved them out of poverty.
A better approach would be to give low income people cash grants which they can use for housing or anything else. This approach has the advantage of being both efficient and effective. The tenant can live where he or she wants and can spend as much money on housing as they can afford. It would eliminate the NIMBY issue because there would not be a program label attached. Also, research shows cash grants such as social security, and the earned income tax credit have transferred millions of people out of poverty. The cash transfer if provided universally would inspire the construction of new housing. The HUD/FHA multifamily programs could be simplified and improved as financing tools for construction. Written by Paul Dribin