Target Population

Anyone who has attempted to assist people released (or scheduled to be released from) prison or jail find housing appreciates the extent to which housing systems are unable to meet the overwhelming demand among poor people generally for safe, affordable places to live.

Despite unusually strong income growth in the 1990s, in 2001 95 million Americans were living in crowded, substandard conditions or suffering from severe housing cost burdens, according to the 2004 State of the Nation's Housing report from the Joint Center for Housing Studies at Harvard University. ^[1]   On any given night, 850,000 Americans are homeless. ^[2]   These problems are overwhelmingly associated with the lowest-income families. Nearly half pay more than 50 percent of their monthly income on housing. ^[3]   Full-time workers anywhere in the country earning minimum wage are unable to afford a basic one-bedroom apartment. ^[4]  

In sum, gaining access to safe, appropriate and affordable housing is a serious challenge for all lower-income persons living in and returning to communities in urban, suburban and rural settings alike-a challenge that typically cannot be met without the help of the public affordable housing system.

Key Issues

The deterioration and gentrification of affordable housing is diminishing the stock of affordable housing, which is not replaced as quickly as it is demolished or repurposed. Government programs, including Low-Income Housing Tax Credits (LIHTC), bonds, HOME investment partnerships and USDA Rural Housing Services, have not been funded to address these problems comprehensively. Additionally, public housing agencies face statutory obstacles to developing new units, which were created to curb federal spending on housing subsidies. As a result, the task of meeting the demand for new affordable housing units falls primarily to small, nonprofit affordable housing developers that build many fewer than 100 units per year. Land supplies in metropolitan areas are limited; siting questions remain contentious; and environmental and other regulations on development, plus increasing development fees and community opposition to denser development, have made construction expensive.

Funds used to construct or rehabilitate housing are seldom provided by a single agency for a project. Instead, equity and debt from several funders is coordinated by a developer, who also puts money into the deal. Federal, state, or local funds are said to be "leveraged" when the government's initial investment attracts funds from multiple private and other public sources. Leveraged financing is a practical necessity now because of the high cost of construction and redevelopment, especially in older urban areas and places that are experiencing an influx of people.

Diverse housing-involved organizations, including state, local, and private agencies, increasingly turn to collaborative efforts to seek leveraged financing, as for the past several years Congress has chosen to provide no significant increases in housing and community development programs The complexity of the coordination among funding, policy, planning and building systems essential to the development of affordable housing poses a serious challenge.

These factors-both decreasing supply of and lack of federal funding for affordable housing-have resulted in a national crisis in affordable housing, which some experts and advocates believe to be linked to rising rates of homelessness.

Still more acute than the shortage of affordable housing in general is the shortage of specialized supportive housing for people with special needs, such as people with mental illnesses or substance abuse disorders, people living with HIV/AIDS, survivors of domestic violence, youth and young adults, and people transitioning out of homelessness. Individuals in these groups may require various types of related services in order to access or maintain housing, even when affordable housing is available. People released from prison or jail are likely to fit into one or more of these categories, in addition to facing challenges specific to their criminal records or history of incarceration (see Policy Statement 19, Housing, for discussion of issues specific to released prisoners).

Understanding why people are unable to access housing, are severely cost-burdened by housing, or lack stable housing and become homeless must be understood in terms of both the factors that lead to these problems and the effects of inadequate housing on these populations. Significant research exists on the causes of homelessness and the characteristics of the homeless population. (See sidebar, "Who is homeless?" for brief descriptions of some groups whose rates of homelessness are particularly high).

Inadequate housing impacts a range of other needs. People without housing have difficulty finding and maintaining jobs. Homeless people are at greater risk of becoming victims of violence, they have higher rates of health problems, mental illnesses, and substance abuse disorders, and they are less likely to access services. Several studies on the impact of accessing appropriate housing on prisoner re-entry outcomes show the role of housing in providing a starting point and foundation for engagement and participation in a range of services that increase former prisoners' chances of success in re-entry. These studies indicate that housing is not simply a place to live, but also a service in itself-perhaps the most critical service leading to other services.

Supportive housing in particular is proven to help people who face the most complex challenges-individuals and families who are not only homeless, but who also have very low incomes and serious, persistent issues that may include substance use, mental illness, and HIV/AIDS-to live more stable, productive lives. Supportive housing has positive impacts on health, employment, treating mental health, and reducing or ending substance abuse. Supportive housing has been associated with decreases of more than 50 percent in tenants' emergency room visits and hospital inpatient days; a small Minnesota study showed supportive housing tenants maintained a 90 percent rate of sobriety, compared with 57 percent of those living independently. ^[6]  

System Organization and Funding

A broad array of federal, state, and locally based organizations play a role in addressing key housing issues and connecting as many Americans as possible to appropriate housing.

The US Department of Housing and Urban Development (HUD) is the federal agency responsible for most of the execution of federal housing policy. HUD determines how agency resources are used to create, preserve, or subsidize housing, as well as determining eligibility for its own forms of housing assistance. Since the 1980s, when the federal government began reducing its role in the construction of affordable housing, HUD has primarily provided tenant vouchers (for disbursement by state-authorized Public Housing Agencies) under the Section 8 program and grants to private developers and communities. See chart, "HUD Initiatives," for brief descriptions of some of these programs.

Other federal agencies provide housing assistance to specific groups. The Veterans Administration provides home loan assistance as well as programs for homeless veterans (including permanent supported housing) through the Veterans Health Administration. In rural communities, the Department of Agriculture provides rental assistance programs, home improvement and repair loans and grants, and self-help housing loans to low income individuals and families through its Rural Housing Service (RHS), which maintains state offices. With the help of the RHS Rental Assistance Program, qualified tenants pay no more than 30 percent of their income for housing.

Incentives to developers to create low-income housing are incorporated into the federal tax code, and these credits are monitored by the Internal Revenue Service (IRS) through the Low Income Housing Tax Credit Program (LIHTC). Created by the Tax Reform Act of 1986, the LIHTC program has been recently amended to give states the equivalent of nearly $5 billion in annual budget authority to issue tax credits for the acquisition, rehabilitation, or new construction of rental housing targeted to lower-income households.

State governments contribute additional funds to developing housing and making it accessible, in addition to administrating federal funding, in two different ways: by directly serving as grant recipients and implementing building or renovation projects or supportive housing initiatives; and by allocating federal and state funding (competitive grants) to local government, other public, or private entities to implement such projects. In allocating these funds, they judge applications according to preset criteria, make awards, and monitor the spending of the awards.

Tax credits and federal and state investments in housing development are typically channeled to developers through state Housing Finance Agencies (HFAs). State agencies also serve as the grant recipients for a portion (40 percent) of Community Development Block Grant funds to implement initiatives to revitalize neighborhoods and execute other activities associated with promoting access to appropriate housing.

Among the entities to which states distribute housing-related funds are Public Housing Authorities or Agencies (PHAs), Community Development Corporations (CDCs), and private developers. PHAs, authorized under state legislation to engage in the development or administration of low-rent public housing, typically both manage public housing units and distribute direct rental assistance (vouchers). They may be administrated by a state, county, municipality, or other governmental entity or public body-for example, a PHA may be a public non-profit corporation. CDCs and other developers engage in various types of construction, renovation, and revitalization initiatives but do not control direct rental assistance. They may bring a share of funding to the project themselves, or they may serve as the locus for funding from other sources, such as foundation grants.

Risk and inefficiency in affordable housing development Entities that provide funding for housing development assume a certain level of risk that the project will be completed on time, on budget, and within quality requirements. The developer assumes this risk, too, and provides an assurance that the work will be completed as planned. There is a certain inefficiency in developing affordable housing for extremely low-income families (those with incomes under 30 percent of the area median) driven by complex factors and constraints that have not yet been overcome through legislation, regulation or program design. In order to serve extremely low-income persons (those with incomes below 30 percent of the area's median income), it is often necessary to layer several funding sources in one housing unit. For example, it may cost $100,000 to build a two-bedroom rental unit; using conventional financing to cover this expense, however, creates debt obligations, which translate into rent prices that are unaffordable to a low-income person. In public housing, the average income is about $10,000, well below any area's median income. Traditional public housing built prior to about 1995 is the only example of low-rent housing that can, through a single capital subsidy, exclusively house extremely-low income families. In order to maximize the impact of direct investment, governments must implement policies to reduce inefficiency and risk. If some of the construction cost can be funded with the Low Income Housing Tax Credit (LIHTC), bond revenues, Housing Choice Vouchers, or other low-cost equity or capital or operating subsidy, or if a rent subsidy can be provided, then the rent needed to support the debt on the unit (a primary inefficiency) is greatly reduced, and the unit becomes affordable to a low- or very-low income person or family. When developers collaborate with local communities to reduce regulatory barriers (a practice that HUD favors in awarding grants), they diminish the risk that standards will not be met in an affordable and timely way.

The following recommendations suggest ways in which these diverse organizations can collaborate to improve access to appropriate and affordable housing for all Americans, including those with special needs. Policymakers who understand the stakeholders and challenges of the housing system will be well-positioned to address those challenges as they impact individuals released from prison and jail and the families and communities to which they return.