Revisiting The Apollo Initiative
by nanobot, Thu Jun 02, 2011 at 05:19:53 AM EDT
This is a synopsis of the Housebuilding portion of The Apollo Initiative, cobbled together from The Realignment Project. The portion of The Apollo Initiative this diary focuses on is referred to as The Vulcan Initiative:
If there is any one area of American life that best expresses the adage “poverty in the midst of prosperity,” it must be housing. Homelessness has increased even as thousands upon thousands of homes now stand empty. Vast swathes of speculative suburban developments along the highways and hills of California have turned into ghost towns. In Washington D.C, the number of homeless families has increased by 15%, with similar figures being reported in New York City and other metropolitan centers. In 2006, even when the sub-prime boom was spreading home-ownership wide and far and actually beginning to make headway against the unequal distribution of housing in America, 8.8 million households were paying more than half their income in rent.
Even when the market was flush major systemic problems, the lack of affordable housing, workforce housing near where people work, the need to in-fill versus sprawl, racial and class discrimination, were not being addressed.
The housing market is not flush now. If ever there was a need for proof that “spatial mismatch” and “credit discrimination” exist, we can find it in the fact that at a time when thousands of houses are empty rotting shells, that people who want and need housing are being turned away by banks who have suddenly become paragons of fiscal rectitude.
At the same time, the national unemployment rate currently exceeds 9%. Within the construction industry, unemployment exceeds 20%. Within California, the situation is even worse, with an overall unemployment rate that exceeds 11% and a construction industry that’s down 150,000 jobs from last year.
The Apollo Initiative would establish a Housing Progress Administration (HPA) to employ 5 million unemployed workers, many of whom would naturally be former construction workers. They would be paid $24,000 a year. The program delivery costs would assume an overhead rate of 30%, which is actually 10% higher than the WPA”s historic 20% rate. The housing plan would include a partnership with states and localities to pitch in for the cost of land and materials for a projected cost of approximately $155 billion per year. If we kept the program going for the next two years, at which point economic growth would start to transition into employment growth, it would cost $310 billion – less than half the cost of the stimulus bill. And it would create at least 5 million jobs, nearly the total number of jobs lost during the recession.
In these areas where the housing market had become unaffordable for most Americans and that were “salvaging” speculative development ghost towns, we also have a need to improve the energy efficiency of the 110 million regular residency units in the United States. You could easily put 5 million people to work not merely constructing new, energy-efficient homes and dismantling empty shells along the highways, but also refurbishing homes, far more than the limited weatherization program funded through the stimulus package.
Public employment programs – like the Works Progress Administration (WPA)- have a special affinity for has been called “light construction.” In its eight year existence, the WPA built nearly 40,000 buildings, and improved or rehabilitated another 80,000, despite the fact that most WPA workers actually did road construction. Those 120,000 buildings included 6,000 new schools, 2,170 school expansions, and 31,000 school modernizations, 322 new or improved hospitals, and 6,400 public office buildings. Even if you divide it up yearly, it still comes out to 15,000 buildings a year, done with only a fraction of its 3.5 million strong workforce. The one thing that the WPA wasn’t able to do, that administrators and experts within the WPA like Emerson Ross, Jacob Baker, Alan Johnstone, Nels Anderson and a handful of other forgotten New Dealers wanted to do, was build housing.
The Apollo Initiative encourages the Federal government, along with the state and local governments, to go into areas where the housing market has failed. A failed housing maket is defined by large proportions of renters paying more than 50% of income in rent, housing values far out of sync with median incomes, large numbers of abandoned foreclosed properties, or a lack of affordable housing in general. The program would achieve three things: (1.) Restore and rehabilitate derelict housing. (2.) Build new housing units where new housing is needed in central cities. (3.) Destroy “ghost towns” in such a way that as much of the materials can be saved as possible.
Now the question becomes, what do we do with this new housing? Here are a few suggestions:
Selling At Or Below Cost – the wonderful, undiscovered virtue of the public sector is that it doesn’t have to make a profit. If we were to sell the new/reclaimed housing at or below the cost of construction, we could begin to reverse the impacts of the sub-prime collapse, by getting low to medium income families back into housing with low-rate, FHA-backed mortgages, instead of crooked, ballooning loans. Moreover, by moving thousands or even millions of people back into housing would help defray the cost of the construction program, pushing it well below $155 billion.
Giving Away Housing – in cities with high rates of homelessness, one of the most successful recent programs has been to simply give homeless people housing for free. For the 17% of the homeless who work, it simply gets them over the obstacle of putting together first-and-last plus security deposit; but for many more, getting a mailing address and a phone number, a place to clean their clothes, and so forth is a huge helping hand towards getting a job and staying off the streets. Even if we don’t make any money back on giving away housing, we would be solving a major social problem and a major human crisis.
Establishing Rental Co-ops – finally, we should recognize that home-ownership is not the only route to economic security, and that our public policy needs to do more to ensure that renters get the same kind of government assistance that home-owners get from the FHA, HOLC, tax breaks, and other public policies. Thus, in addition to providing new housing for sale, the HPA should also create a variety of apartment buildings and single homes for rent, working with local housing groups to establish local rental co-ops who would operate and maintain the units.