Chance to Buy Into the American Dream : Housing: Tenants of public projects want to purchase their homes. Critics say the plan allows government to duck its responsibility to the poor.

When the massive, crime-ridden Pruitt-Igoe housing project was torn down here in 1972--”the collapse of liberalism,” one columnist called it--its destruction became a graphic symbol of the failure of the nation’s public-housing policy.

Now it’s the conservatives’ turn.

In 1973, two of the projects in the same North Side neighborhood as Pruitt-Igoe became among the first in the country to experiment with tenant management.

Today, tenants of one of those projects are trying to take it a step further. Having succeeded in lowering the crime rate and improving the quality of life in their sprawling, red-brick, low-rise complex, they now are seeking to buy their homes from the government.

It is a controversial concept hatched during the Ronald Reagan years that now has become a centerpiece of President Bush’s housing initiatives. Jack Kemp, Housing and Urban Development secretary who as a congressman sponsored the first legislation allowing tenants to buy their units in the 1970s, has been trumpeting tenant homeownership around the country. He calls it “a very exciting chapter of a new civil rights revolution,” an innovative way to let poor people have a taste of the American dream.

Opponents denounce the plan as little more than an attempt to duck the government’s responsibility to house the poor. “Foolishness,” Rep. William L. Clay (D-Mo.) calls it. “It’s just another big scam that the federal government is perpetrating on the American public.”

The plan, which is being attempted in several cities, essentially is to sell public-housing projects that already are being managed by tenants to tenant-led corporations. The corporations then would be allowed to sell the individual units to tenants who could use government subsidies to pay mortgages.

In St. Louis, tenant organizations have chosen the 658-unit Carr Square housing project for purchase. Under a proposal now awaiting approval by HUD, the complex’s aging 52 two- and three-story buildings would be extensively renovated by HUD at an estimated cost of $33 million before being sold to the tenant management corporation for $1.

An adjacent high-rise housing project would be destroyed under the plan. This upgrading of the neighborhood and the new stability of Carr Square tenants, it is believed, would make it easier to attract economic development projects to the area. The city already has plans to build a $24-million business and industrial park on the 57-acre Pruitt-Igoe site.

But some critics say the plan actually will harm the people it is intended to benefit.

“It is incomprehensible to think that those who can barely afford food, clothing, medical care, transportation and other basic necessities can afford the expenses of homeownership,” Clay said before a House subcommittee studying the issue last month. “For most people--especially those with no place to live--tenant ownership of public housing is a contradiction in terms.”

According to a recent HUD inspector general audit, the average annual income at Carr Square is only $6,500.

The study, issued in October, urged that HUD re-evaluate the feasibility of the program in light of low public-housing incomes. “In some cases, improvement of the housing conditions of low-income tenants may be a more attainable and desirable goal than homeownership,” the report said.

Tenant leaders say incomes will increase after a resident corporation takes control because tenants will be put to work renovating the project. But Clay notes that years of tenant management and job-training programs in Carr Square still have not raised average incomes there. He has vowed to fight the plan in Congress and has asked the General Accounting Office and other federal agencies to look into the sales proposal.

Even some supporters of the homeownership idea caution that it is not the solution for the nation’s public-housing ills.

“It’s not a panacea,” said Thomas Costello, a former St. Louis housing authority director and now a private developer. “It’s only a small answer to the problem.” It is an answer, though, that the Bush Administration is intent on pursuing. Tenant management and ownership of public housing was a linchpin of the $4.1-billion housing package Bush unveiled in November.

A number of tenant groups are preparing proposals to take over their projects, but only two so far have formally applied to HUD. A Washington, D.C., housing project, Kenilworth-Parkside, is further along than Carr Square. The tenant management corporation there hopes to acquire the project this year.

Even so, details on how tenant homeownership would work and how the concept may be applied beyond the first targeted housing projects remain unclear.

Particulars of the Carr Square proposal have been changed a number of times and the plan still has not been finalized. An early Carr Square proposal drafted by the firm for which Costello now is an executive, McCormack, Baron & Associates, was rejected by HUD because, among other things, it provided a 15-year transition period before an individual tenant family could buy its unit.

But beyond the mechanics of transfer, the 1987 law authorizing the homeownership program “isn’t entirely clear” on whether individual tenants necessarily will ever own their own homes, according to the HUD inspector general’s report. Conceivably, based on one’s reading of the Housing and Community Development Act, the resident management corporation could own and manage the housing project without ever offering to sell individual units to tenants. Even within HUD, the report said, there are differing opinions on whether sales to individual tenants are required.

Taking up this point, Clay asserted: “There is no homeownership (under the plan). There is no intention of homeownership. There is no contract between the government and the (individual) tenant under this plan. This (homeownership) is just a euphemism.”

In his eyes, the objective of the proposal is, foremost, to take responsibility for housing the poor out of the government’s hands. It is a continuation, he feels, of neglect fostered by the Reagan Administration.

“We haven’t built any public-housing units in seven years,” he said. “It has exacerbated the problems of homelessness in this country.”

Clay and others say the $33-million renovation cost for Carr Square equals the amount that the entire multi-state region that includes Missouri now receives in Comprehensive Improvement Assistance funds annually. The plan would siphon money away from other public-housing programs while lowering the number of available rental units, he said.

Robert L. Woodson, director of the Washington-based National Center for Neighborhood Enterprise, denounces critics such as Clay. “It’s interesting that as long as (project tenants) are running drugs and crime is high and people are stoned” then critics of homeownership seem satisfied with the projects, he said.

“But it’s when (the tenants) start driving drugs out of the projects and reducing crime that everybody wants to criticize.”

Woodson cited government figures on the high level of fraud in the federal housing program as justification for tenant ownership.

“I think as long as the government is putting money into institutions that have no proprietary interest in poor people then fraud is possible and neglect is possible,” he said. “Poor people want to be in control . . . .

“Developers are getting the benefit of subsidies,” he continued. “Why aren’t we doing that now with the residents who live in public housing?

“There are 100,000 units that are vacant on any one day in America. In Newark they’re tearing down thousands of units. In Chicago they want to tear down units. I don’t see any hue and cry about replacing those units,” Woodson said.

Despite the decrepitude and decay of the area surrounding Carr Square today, it sits on valuable property. The city’s convention center is only a few blocks away. Attractive new market-rate apartments have been built just north of the housing project.

Woodson argues that unless tenants in strategically located housing projects like Carr Square purchase their homes, the projects will be swept away in a tide of gentrification and “in time the inner cities will not have any poor people in them.”

He said public-housing projects in many cities are threatened in this way. “When public housing was first established it was put in undesirable areas,” he said. “But if you look around the country, right now public housing is in some of the most desirable areas in the country. It’s on the lake front in Cleveland. It’s near the airport in Chicago. It’s downtown near the sports arena in St. Louis.

“The only chance of poor people staying . . . is if they own public housing, either as corporations or as individuals.”

Both sides agree that the current public-housing program is a mess.

The program was created in 1937 with the dual purpose of creating jobs and providing temporary shelter to poor working families. Today, in city after city, public-housing developments have to a large extent become crime-ridden, ill-managed, government-created slums, a last refuge for people who do not hold jobs and who have no realistic hope of ever moving out.

The St. Louis experience is a textbook example of how this came to be.

The ghost of Pruitt-Igoe looms over any discussion of public housing in St. Louis, just as its absence haunts the dilapidated North Side neighborhood where it once stood.

It was built in the 1950s, at a time when social changes and city and federal policies were profoundly altering both the face of the city and the role of the public-housing program. In the 1950s and 1960s, the city pursued an aggressive slum clearance program that caused a massive relocation of poor people. Thousands of displaced poor families were given priority access to subsidized housing. At the same time, working-class families who had lived in the projects were moving to their own homes, aided by government programs.

In hindsight, said Costello, who was an official under the combined housing and land clearance authorities and director of the housing authority from 1969 to 1978, the city cared more about clearing slums than helping the people who were displaced. Not enough funds were allocated for social services, he said. “Nobody really faced up to what we were doing with the people.”

In the early years of public housing, people on welfare were prohibited from living in public-housing developments. But in the 1960s a series of legal challenges was mounted against leasing restrictions that barred many of the most needy. One rule that was struck down, for instance, barred admittance to unwed mothers. The effect of these changes was to replace the stable two-parent families that had occupied subsidized housing with the nation’s most destitute.

Looking back on the changes that have taken place since the 1950s, Costello, who presided over the destruction of Pruitt-Igoe, acknowledges: “The system has not worked.”

The one lesson the federal government learned from the Pruitt-Igoe debacle, he said, was that high-rise public-housing projects were unmanageable and should no longer be built. “That was the only thing. So now you have horizontal slums instead of vertical ones,” he said.

The former housing authority director believes now that the federal government should relinquish its housing role. “Everyone would be better off,” he argued, if the funds were to go “directly to the communities in the form of block grants with certain safeguards for the homeless.”

Although Costello is an advocate of increased spending for housing, talk such as his is precisely what concerns opponents of the Bush Administration plan. “The national policy of this country ought to be one that provides decent, affordable housing,” Clay said. He accuses the Administration’s housing initiatives of attempting “the reverse” by moving toward taking the federal government out of the picture.

One other effect of the 1960s changes in public housing should be noted: As housing conditions deteriorated, tenants who couldn’t afford to flee the projects grew more and more frustrated. The push for tenant management grew out of that frustration.

The destruction of Pruitt-Igoe had a profound effect, Costello believes. “They saw that nobody was doing anything (to solve the problems), so they said why can’t we do it?” For a time in the mid-1970s, half of the public-housing units in St. Louis were managed by tenants.

Another result of 1960s tenant activism was federal legislation, enacted after a 1969 citywide rent strike in St. Louis, that limited rent payments to 25% of a tenant’s income (the limit is now 30%). The legislation made public housing more affordable, but it also meant the program--originally designed as a pay-as-you-go system, with the federal government paying the mortgages while local authorities met most other expenses, mostly through collected rents--had to rely increasingly on taxpayer support.

Some of the leaders of the strike, such as Bertha Gilkey, now a nationally known tenant advocate, are in the forefront of the homeownership movement.

But Clay contends that this “extension of tenant management” flies in the face of public housing’s original concept.

Public housing originally was designed to provide temporary housing to the working poor, he noted. But tenant management leaders “have perpetuated and institutionalized a job for themselves. This (the ownership program) would further institutionalize it. There are millions of people eligible for public housing who can’t get in while you have people living in it for 35 years,” he said.