What's at Stake in Trump's Pick to Lead HUD

Rumors about the next secretary of the U.S. Department of Housing and Urban Development are not burning down the house. The names for the person President-elect Donald Trump will tap to lead HUD are not swirling as fast as the speculation about his potential picks to lead up State, Treasury, or Defense.

But a few names are buzzing. One is former Massachusetts Senator Scott Brown, whom President-elect Trump floated as a potential vice presidential candidate over the summer. Another is Pamela Patenaude, president of the J. Ronald Terwilliger Foundation for Housing America’s Families, an executive with more than 30 years’ experience working in housing policy.

Both of these individuals have longstanding commitments to fair and affordable housing. (During the Republican National Convention in Cleveland, Senator Brown co-hosted a benefit to support Make Room, an affordable rental housing advocacy organization; the Terwilliger Foundation sponsored that event.) However, another figure whose name comes up in speculation for HUD Secretary, Robert Astorino, is a committed opponent of one of HUD’s signature achievements on fair housing under the Obama administration.

Astorino, the Republican county executive of Westchester County, New York, sailed to victory in 2009 and re-election in 2013 by savagely attacking HUD. While 62 percent of Westchester County voted for Clinton on Tuesday, the more conservative message on housing resonates there for historical reasons. Yonkers, a Westchester County city just north of the Bronx, was the site of terrific turmoil over fair housing in the 1980s and ‘90s. That fight—over an effort to build public housing in white neighborhoods—was the subject of an HBO mini-series last year, Show Me a Hero.

In Westchester County, the battle for fair housing never ended. Astorino has vilified HUD and its new Affirmatively Furthering Fair Housing rule. In his 2015 state of the county address, Astorino pledged that he “would not allow unelected bureaucrats at HUD to create new obligations for the county that were never agreed upon in the settlement.”

Astorino and Trump’s fates have been somewhat intertwined. The New York Times reports that President-elect Trump appealed to Astorino to run with him on a ticket when he was mulling a campaign to be governor of New York. President-elect Trump might have been Governor-elect Trump, or just another also-ran. Instead, Astorino ran on his own as the GOP candidate in 2014 and lost to Andrew Cuomo.

Even though Astorino pushed back on the anti-immigrant rhetoric of the Trump campaign, his hometown newspaper nevertheless thinks he’s a lock for HUD secretary. In June, Astorino told The Daily Caller that Trump confided in him privately that he would rescind the AFFH rule if elected. If Trump were to name Astorino as secretary of HUD, that would strongly signal his intent to do so.

Still, previous GOP efforts to curb AFFH have not been met with perfect enthusiasm. When Republican Utah Senator Mike Lee tried to defund HUD from implementing AFFH, 13 Republican senators joined the Democrats in a 60-37 vote to table that amendment.

“From Trump himself, of course, we haven’t heard much on housing in general and fair housing especially,” says Diane Yentel, president and CEO of the National Low Income Housing Coalition. “But we do have the Republican Party platform to give us a sense on where the party may be headed on AFFH, and in the party platform it says, AFFH seeks to ‘seize control of the zoning process. . . in order to socially engineer every community in the country.’ So I think that gives us a sense of where the Republican Party is headed and feels generally around fair-housing issues.”

Also at stake: Obama’s legacy on fair housing

Fair housing never surfaced as a definitive issue of the 2016 presidential election. But on January 20, President Trump will become responsible for enforcing the same fair-housing rules of which he once ran afoul as a developerwho turned away black tenants.

Two advances in fair housing under President Barack Obama’s administration could be up for review fairly early on. One is AFFH, which requires cities to assess how they distribute low-income housing in order to receive federal housing funds. Aspects of AFFH have yet to be implemented: the Assessment of Fair Housing tool for state governments, for example, will not receive final approval by the Office of Management and Budget before January 20. If AFFH is to succeed, President-elect Trump will have to finish what President Obama started.

The other Obama-era achievement is the Supreme Court’s 5-4 decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, in which the Court affirmed that “disparate impact” is a category of racial discrimination prohibited by the Fair Housing Act. The decision means that housing practices that disproportionately negatively affect a minority group are illegal, even if that impact is not an explicit goal.

“There are conservative business interests and there are conservative government entities that opposed the disparate impact case and filed amicusbriefs against that case,” says John Henneberger, co-director of the Texas Low Income Housing Information Service and a MacArthur Foundation award winner. “But that was a case that, in the end, was affirmed by a full Supreme Court when Justice [Antonin] Scalia was on the court.”

Henneberger adds, “In our opinion, the disparate-impact standard for the enforcement of the Fair Housing Act is a matter of settled law, by a full Supreme Court, and won’t be overturned by a Court even if the president were to appoint a Justice who was opposed to that law.”

Short of broader changes to the Supreme Court’s chemistry that could threaten established precedent, a Trump administration could still undermine a full reading of the Fair Housing Act by not aggressively enforcing it. In Texas, for example, state lawmakers are finding creative maneuvers to prevent low-income housing in their constituents’ communities. The U.S. Department of Justice will be as pivotal to protecting fair-housing standards as HUD.

“Robust enforcement of the FHA at HUD and at DOJ, including through disparate-impact cases, remain critical priorities,” says Kristen Clarke, president and executive director of the Lawyers' Committee for Civil Rights Under Law. “Whomever [President-elect Trump] appoints as Attorney General and Assistant Attorney General for the Civil Rights Division must respect the expertise and discretion of career prosecutors.”

How tax reform could save affordable housing—or spell its doom

Today, the federal instrument that drives the creation of the most housing for low-income and very–low income households is the low-income housing tax credit, or LIHTC. Thanks to the Supreme Court’s decision on disparate impact, this credit cannot be relegated solely to low-income or majority-minority communities. That makes the low-income housing tax credit, or LIHTC, the best tool for creating fair housing, if an imperfect one.

Building affordable housing through tax credits means that tax reform—certainly a priority for House Speaker Paul Ryan, and also one of a few policy goals that President-elect Trump actually named during the campaign—will make or break the future of fair housing.

“The low-income housing tax credit is the only tool we have right now to develop new low-income housing,” says Philip Tegeler, executive director of the Poverty & Race Research Action Council. “Both the low-income housing tax credit program and the Section 8 housing choice voucher program rely heavily on the private market. Section 8, of course, was originally a Republican proposal.”

While housing advocates broadly agree on the changes needed to make the LIHTC program more efficient, a Republican-controlled Congress is unlikely to implement many of them. The program has enjoyed bipartisan support, but reform could introduce changes in nuance that reduce the program’s effectiveness or change the household income range that it serves. Congress could scale back the LIHTC program or eliminate it altogether. (Notably, the LIHTC was one of the few corporate credits retained under the comprehensive tax reform proposal released by House Ways and Means Committee Chairman Dave Camp earlier this year.)

More direct forms of federal spending on housing are certain to decline under a Republican-controlled Congress.

“The federal government support through funding for affordable housing has been declining for many, many years,” says Melora Hiller, chief executive officer of the Grounded Solutions Network. “We’ve been on the defensive in trying to protect things like housing choice vouchers, public housing, and the [HOME Investment Partnerships] program, and I think that assault will continue.”

Finding a dedicated funding stream for the National Housing Trust Fund, another priority for housing advocates, would also seem to be out in a Republican-controlled Congress. However, one target of reform pursued by the National Low Income Housing Coalition and other housing organizations for many years now could finally be on the table: the home mortgage interest deduction.

“For a long time, that’s something we've been pushing to reform in order to both make the [tax] benefits of homeownership available to low-income homeowners, who currently get none, and also to realize some really significant savings that can be reinvested in affordable rental housing programs,” Yentel says. “[Mortgage-interest deduction] reform, for many years, was a third rail. It’s not anymore. In almost all the bipartisan tax reform proposals that we’ve seen, we’ve seen something around reforming MID. And Paul Ryan himself, in his ‘Better Way’ package of policy proposals, leaves open a window for changes to the mortgage-interest deduction.”

Tax reform would be only the first step. Yentel adds, “The challenge from our perspective is finding a way to retain some of those savings and reinvest them back in affordable-housing programs, and not just use them to further lower tax rates.”

Another spending cliff looms—and affordable housing could go over the edge

Federal spending on housing has suffered in particular as a result of budget sequestration. According to the Center on Budget and Policy Priorities, federal support for housing choice vouchers fell $228 million from 2010 to 2016, meaning the loss of housing aid for tens of thousands of vulnerable families.

In September, Trump outlined a goal to eliminate sequestration for defense spending. A Republican-controlled Congress may very well decide that the best or only way to pay for increased defense spending is by corresponding cuts to non-defense discretionary funding. That would mean deep cuts to HOME, Section 8, public housing, and other programs.

Federal housing aid has been steadily declining since 1995. But one proposal announced by President-elect Trump would practically enshrine the decline of federal assistance. His so-called “penny plan,” an annual, cummulative 1 percent cut to non-defense spending, would shred the government’s budget for housing assistance. The Center on Budget and Policy Priorities estimates
that by 2026, federal non-defense spending would be 29 percent below current spending levels, even accounting for inflation.

“That would be devastating to affordable-housing programs,” Yentel says. “Each year, there are inflationary increases needed, especially because so much of HUD’s budget is taken up by rental-assistance programs, and those costs go up every year. Just the inflationary adjustment is necessary to keep programs running as they are.”

Trump has a rare opportunity to serve rural America—and the inner city, too

There are a few ways that a Trump administration could improve upon his predecessor’s record.

Rural America suffers some of the worst housing conditions in the country. It faces depopulation, an aging population, and aging housing stock; programs such as LIHTC, which depend on the private market to spur affordable housing, haven't had much of an impact in rural parts of the U.S.

For more than a decade, federal assistance under the U.S. Department of Agriculture’s Rural Housing programs have faced steep cuts. And rural America played a not-insignificant role in electing Trump.

“These rural-housing programs have basically been starved to death by the last four or five administrations that have come along," Henneberger says. “If rural America is to survive, it’s going to need decent quality housing, or people can’t stay and live in those areas.

A large proportion of the substandard housing in America is located in rural areas, Henneberger says. Rural areas feature large populations of elderly residents, disabled residents, and low-income households. Boosting the fortunes of rural America will mean reinvesting in the housing-aid programs that actually reach them. Those include the Rural Housing programs at USDA, but also HUD programs such as HOME and Community Development Block Grants.

“I think it will be an interesting signal to see from the Trump administration," Henneberger says. “If they just ideologically decide to cut or eliminate those kinds of block programs, they’re really going to starve housing out of rural America. That will be devastating to those communities. These communities feel already neglected by the federal government. They’re going to feel even more cut off when they basically watch their population be unable to stay because there’s nowhere decent for people to live out there.”

During the campaign, President-elect Trump spoke often about America’s inner-city residents. Improving the lots of white rural Americans and black urban Americans means similar investments in infrastructure and affordable housing, albeit scaled to different needs. Many of the tools for doing so can be found at HUD, and President-elect Trump will soon decide whether to embrace them or neglect them.

“If he follows through on this commitment [to inner cities], it is important that his approach address the country’s growing affordable housing crisis and ensure that people of color are not displaced from rapidly gentrifying neighborhoods,” Clarke says.

Taking the broad picture, Henneberger says that racial polarization is the defining issue for which the next administration will be judged. If fair housing is the answer to racial segregation, then the Fair Housing Act is the single best tool that the federal government has available to guide a better future for America’s communities.  

“If President-elect Trump is able to take actions to undo the harm that has been done—and frankly the continuing, multi-decade, 100-year, 200-year problem of racial polarization and racial inequality in this country—then his administration will be a success,” Henneberger says. “If, as many fear, he does not, or if we further go down the path of inflaming and making this polarization worse, then that will be a disaster. It will be a disaster for his administration, for the country, for all of us.”