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NOTES
FROM
THE
15TH
FLOOR
What 3333
Broadway taught
me about the
federal housing
system
on
By Andrew Hamilt
the fact that subsidies secured life-long leviate a housing shortage and provide go up (which cannot happen unless the
advantages for me and helped me attain middle-class families with a temporary landlord justifies the increase to the
educational and career goals make me an leg up. Department of Housing and Urban De-
exception, not the rule. This was some- When the building was removed velopment). Significantly, the vouchers
thing I realized only after moving to New from the program—an action allowable do not expire, continuing to pay out ev-
York: 38 percent of my neighbors live not under the agreement—after 20 years and ery month so long as the tenant stays in
only under the poverty line, according to the prepayment of the balance of the their apartment.
the United States census, but in a vastly mortgage, many tenants faced significant An estimated three-quarters of 3333
different economic reality than I had rent increases. Political pressure from Broadway’s population is comprised of
grown up knowing in Princeton. people “losing their homes” succeeded in Section 8 tenants, and this is not likely
securing a response. A compromise was to change soon because of the enduring
A HISTORY OF GOOD INTENTIONS reached between the government, ten- nature of the assistance, despite the fact
ants, and landlord; tenants received Sec- that one of the objectives of the original
When 3333 Broadway—which was tion 8 “Enhanced” Vouchers—a special law was “the reduction of the isolation of
formerly called the Riverside Park Com- category of subsidies specially distributed income groups within communities.”
munity—was built in 1975, it stood as one to make up for the removal of the Mitch-
of the largest residential buildings in the ell-Lama restrictions and named after the UNINTENDED CONSEQUENCES,
United States. The building was incorpo- section of the U.S. Housing and Commu- UNEQUAL RESULTS
rated into the Mitchell-Lama Housing nity Development Act of 1974 where the
Program, a utopian 1955 scheme, named program was originally authorized. The distribution of housing subsidies
after two members of the legislature, With these vouchers, tenants pay ei- does not seem to correspond with any real
which gave tax abatements, cheap land ther their prior subsidized rent or 30% economic criteria, but is rather scatter-
and low-interest, government-subsidized of their income; the vouchers—financed shot and dependent on luck. For example,
mortgages to developers to build low- by the federal government—pay the rest while I have no significant assets and am
income housing. It was supposed to al- directly to the landlord, even as rents on par or below my neighbors in terms of
March 2010 11
cover story
average American moves every five years, the relationship between the tenant and after renovation, is $2,400 / month.”
and some would say that this is not an is- the City. “The only situations in which Although the issue in this case was
sue of basic fairness. Ms. Barksdale, how- a tenant may lose their voucher due to rent regulation and not housing vouchers,
ever, disagrees: “when you’ve lived some- maintenance or repair related issues is these price ceilings are another example
where for years, you become rooted and if a city inspection finds problems in the of government intervention with far-
active in your community. It’s not fair to apartment and the tenant does not per- reaching and sometimes unexpected con-
have to move because the rent goes up,” mit access for repairs to be made or for sequences. Mr. Hartman’s reaction to all
she said. the reinspection of completed repairs,” of this: “These subsidies create a culture
he added. of entitlement and disincentivize hard
THE LANDLORD Max Hartman, like Mr. Eisenberg, is work. As the economist Thomas Sowell
continuing in his family business. He is a said, ‘all of my housing has always been
The primary target of Ms. Barksdale’s landlord who manages two 20-unit build- affordable, because I only housed where
grievances is Urban American Manage- ings one block north of 3333 Broadway and I could afford!’”
ment Corp., a West New York, NJ-based has encountered problems with the system
firm that purchased the building for $280 of housing subsidies currently in place. THE TENANT
million. The deal was completed in 2007, “In my rent-regulated buildings, the
two years after the previous owner re- City does not allow me to raise rents on Urban American has also been ac-
moved the complex from the Mitchell- certain units—which are already leased cused of colluding with Columbia Uni-
Lama program. “When a tenant moves at rates well below the market—by more versity, with which they say they have no
out, which happens for a wide variety of than a small amount, typically 3% per relationship. Columbia has acquired most
reasons, we improve the apartment and year,” Mr. Hartman said. When, for ex- of the land along Broadway between 3333
charge what the market will bear,” said ample, heating oil prices increase, he has Broadway and its campus to the south,
Urban American. “People choose to pay it no choice but to pass the cost along to and is planning a large campus expansion
because they like the area and want a nice his free-market tenants in order to stay over the next two decades. Dr. Steven
place to live. In fact, the building is bet- afloat. He explains, “This is unfair—I Gregory, Associate Professor of Anthro-
ter off now than it was when we bought it. have regrettably watched hard-working pology at Columbia said, “The spirit and
We’ve put millions of dollars into repairs families and small-business owners move even more or less the letter of housing
and improvements.” out of my buildings and farther away laws and assistance programs are fair and
Douglas Eisenberg, Chief Operating from their jobs because they were unable ought to be left as is. The real issues are
Officer of Urban American, explained to afford the increases.” the documented cases of tenants being
that his company treats all tenants equal- Mr. Hartman has had to resort to harassed, Major Capital Improvement
ly, and there is no reason to treat Sec- some creative strategies to address the applications [landlords’ applications for
tion 8 tenants any differently. A Section unfairness created by the housing system government permission to increase rent
8 voucher is not available to someone like and to contend with rising costs. He nego- based on renovation outlays] being inflat-
me because the program was a special tiated a $15,000 cash payment to a tenant ed, and gentrification.”
measure for people who were already liv- of his, in exchange for their moving out Are these benefits—just like my spot
ing in the building when it was taken out of a 3-bedroom apartment in the building in a highly-desirable Princeton neighbor-
of the Mitchell-Lama program. that they were paying $300 / month for. hood — bestowed in a fair and consistent
Mr. Eisenberg also explained that He admitted, “This was an unusual situa- manner? The answer, as was the case in
although Urban American helps tenants tion, but the unfairness of rent regulation my childhood, is often no; however, it is
deal with the appropriate authorities to made this a win-win for me and my ten- not an easy matter to back away from this
maintain their vouchers, it has nothing to ant; they received fair compensation, and sort of intervention, either.
do with the subsidy, which is a product of I believe the true value of the apartment, The reasons for this, as well as some
March 2010 13