To Fight Poverty, Tear Down HUD

With the nation embroiled in a housing crisis, one would expect the Department of Housing and Urban Development to be playing a central role. But HUD is a marginal player. Although its Federal Housing Administration division has agreed to underwrite new mortgages, it is merely following the leadership of the Federal Reserve and the Treasury Department.

This is no accident. HUD’s sidelined role is a product of its anachronistic approach to both housing and cities. It might be best to simply close the agency and create a new cabinet-level commitment to urban development.

In 1965, when HUD was created, its mission was to spur growth in and around cities. The agency provided mortgage assistance to veterans and first-time homeowners, it built housing for the urban poor, and the Federal Housing Administration spurred suburban expansion by recruiting developers and home buyers to a relatively new, untested market.

Since its inception, HUD has had a fairly straightforward recipe: develop good relations with mayors and local real estate leaders, then award grants and underwrite loans that affirm local development priorities. The longtime mayor of Chicago, Richard J. Daley, was often credited for creating the “city that works,” but it was the support of HUD and the housing administration that helped him eradicate slums, build public housing and create the vast array of working-class neighborhoods that are now Chicago’s signature.

But in the last four decades the urban landscape has changed from discrete, independent cities to vast, interdependent regions where people and goods move freely. Between Los Angeles and Orange County, Milwaukee and Chicago, Boston and Philadelphia, cities have no choice but to collaborate on decisions over land use and economic development. In taxation and zoning, regional agencies like the Port Authority of New York and New Jersey and the Southern California Regional Rail Authority are as powerful as big-city mayors. And for the first time in our nation’s history, poverty is rising faster in suburbs than in urban cores. In this new era, HUD’s each-city-is-a-separate-whole approach is not only too inflexible and short-sighted, it also hinders effective regional growth.