Local Communities, Not Federal Micromanagement, Drive Economic Growth

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The primary responsibility for addressing housing and community and economic development needs always should remain with our state and local governments. Unfortunately, while state and local communities know best what their most pressing housing and economic challenges may be, the federal government more recently had become a major impediment, rather than effective partner, for progress in meeting those challenges. 

Until recently, the paradigm for housing was that it developed and succeeded somehow disconnected from the other community and economic development goals at the state and local level. However, as state and local communities were increasingly burdened by more and more restrictive federal funding requirements, including environment and transportation programs, they were losing their freedom to develop and implement their own longer-term plans for housing and economic growth. The federal government was increasingly criticized for “taking control” of local economic development and growth and failing to meet housing and other local needs and goals.

The worst economic crisis since the Great Depression demonstrated the dire consequences of federal efforts to micromanage housing finance and policy.  This wakeup call has had the positive impact of forcing a fundamental reassessment of the federal role in housing.  Just as housing finance will move back to being primarily provided by the private market, the federal role in housing policy must change to support and not dictate how state and local communities effectively integrate housing into their economic development plans.

Based on these recent lessons learned, the future interaction of the federal government with state and local communities should be limited, streamlined and effective.  This includes the following:

• Reviewing and consolidating existing federal housing programs. A September 2012 report by the U.S. Government Accountability Office (GAO) found that “federal housing assistance is fragmented, with 20 different entities administering 160 programs and activities, costing the federal government an estimated $170 billion in FY 2010.” Remaining programs should be designed to maximize flexibility in use of funds.
• Giving states and local communities greater flexibility in the use of different federal funding streams. The federal government should look at ways that states could be given flexibility across federal programs, such as Medicare and Medicaid, to provide housing related services, such as allowing the elderly to age in place in their homes, and best serve the needs of its population with the potential to reduce entitlement and other program costs. Removing regulatory requirements that act as disincentives to more efficiently use funds should be explored.
• Delivering coordinated federal agency support to local communities. The ability to meet the housing availability and affordability demands of a growing population require governments to respond in a coordinated fashion to challenges not only in housing but also in transportation, energy efficiency and environmental quality. Federal agencies, including HUD, EPA and DOT, should continue to work together to coordinate their programs and grants to more effectively and efficiently support state and local officials achieve their regional development goals.
• Using effectively tools such as program evaluations, pilot programs, and best practices to help spur innovation. The federal government can help disseminate best practices, provide grants to encourage innovation and alternative implementation options, and evaluate new initiatives to make sure they are achieving real, intended results.

The federal government urgently needs to remain focused on restoring long-term fiscal sustainability. There remains considerable room for improvement in the efficiency and effectiveness of federal housing and economic development programs. Success will allow our local communities to use their resources wisely and drive economic growth. Angela Antonelli is a former Chief Financial Officer (CFO) for the U. S. Department of Housing and Urban Development (HUD)

Welcome to the BPC Housing Commission expert forum! This forum is intended to foster interactive and substantive discussion about pressing housing issues. Each month contributors from different parts of the housing sector will be invited to respond to a discussion topic. Guest posts will feature prominently on BPC’s website, as well as be shared regularly with Housing Commissioners to help inform their work. Have a pressing question you’d like us to consider? Please leave it in the comments section. We encourage you and our expert bloggers to add comments, contributing to the national dialogue on solutions for the future of the housing sector. Expert bloggers are not members of the BPC Housing Commission. Any views expressed on this forum do not necessarily represent the views of the Housing Commission, its Co-Chairs, or the Bipartisan Policy Center.