Against Nonprofit Housing
Repoliticizing the state for a mass politics of tenants
by Isaac Harris & Eric Peterson
The politics of affordable housing in the United States today makes for strange bedfellows. Take, for instance, that one of the main venues for architecture and urban planning students to propose housing solutions has not been through a public agency but the Bank of America Merrill Lynch Low-Income Housing Challenge. Or that in the hotly contested mayoral primary election in New York City in spring 2021, the strongest proponent of “red Vienna” style social housing was the chief executive of a non-profit housing provider known for aggressively evicting its tenants and for its union busting (imagine trying to explain this to Viennese municipal socialists in the 1920s!).
The past ten years have witnessed massive uprisings over policing in U.S. cities. We’ve also seen the revival of the militant strike, especially by teachers and healthcare workers. Despite widespread handwringing over unaffordability, however, no comparable mobilization in the realm of housing is within reach. Rather, housing politics seems characterized by extreme dissensus and contradictory position-taking.
Outside of the sphere of homeowners — who, post-Great Recession, constitute about sixty-five percent of households — U.S. housing politics is uniquely challenged by the lack of a coherent organization. Among urban “housers” (advocates and activists), much has been made of the rift between NIMBYs and the upstart YIMBYs, who argue for relaxing restrictions on building. But one of the widest gulfs is between affordable-housing professionals seeking greater production (and therefore sometimes deregulation) and a nascent movement of tenant-rights groups pushing for the expansion of rent control and other tenant protections that are widely said to damper development. Nonprofit housing providers, in particular, sit in a curious position, often working hand-in-glove with massive banks while maintaining little connection to revanchist tenant activism. How did this situation come to be?
Since the 1960s, as philanthropists looked to create an alternative to the beleaguered welfare state and the tumult of mass politics amid the faltering of public housing, the United States has seen the proliferation of housing-nonprofit professionals. Specifically, the community development model that prevails today emerged in the 1970s and 1980s as part of a drive by elites to steer Black Power and other community activists into a pragmatic form of service in response to the real (if underdeveloped) threat to order that Black nationalists posed in the 1960s and 1970s.
Figure 1. Community Development Corporations (CDCs) were promoted by a flurry of philanthropic groups in the late 1960s and 1970s, as in this 1971 book published by The Twentieth Century Fund (today The Century Foundation), at the very moment the federal government was searching for alternative housing finance models to public housing.
With the institutionalization of a whole range of new nonprofit development infrastructures, from LISC (Local Initiatives Support Corporation), launched by the Ford Foundation, and Enterprise Community Partners, by developer James Rouse, to Low Income Housing Tax Credits, this model forged an enduring bond between increasingly professionalized local nonprofits and the corridors of philanthropic and banking power. It is our contention in this article that this institutionalization of nonprofit housing production and management serves as an important barrier to the development of a coherent grassroots politics among low-income renters.
And despite mounting support in many cities for alternative models, change is proving hard because the industry, now nearly half a century old, is so deeply invested in current models. Philanthropists’ successful effort at creating a nonprofit housing market has had the consequence of cementing a coalition of actors (nonprofits, state officials, banks), among which actual community groups (however defined) are increasingly absent or a stand-in. Instead, the legacy of New Left efforts has been a model of advocacy-on-behalf-of marginalized communities rather than the development of meaningful power on the part of these communities. Understanding how this dynamic works is crucial to conceptualizing a new housing politics that eschews elite, top-down models of governance in favor of one that fosters the development of true, and durable, tenant power.
Non-Profit Housing Fills the Vacuum of State ‘Failure’
Such a politics once animated American housers. For much of the twentieth century, until the 1970s, there was a robust, if somewhat patchy and intermittent, tenants-rights movement that fought for both rent regulations and deep public subsidy of low-cost housing often in the form of public housing. By the late 1960s, however, it was beginning to fracture.
Many in the movement began to focus on curbing the excesses of the “federal bulldozer” responsible for facilitating slum clearance, while advocating for local community groups to replace the state in revitalizing their neighborhoods. An early success was the Model Cities program, which made cultivating community groups a central part of President Johnson’s War on Poverty in urban areas. In this all-too brief moment, the ethos of “community control” and empowerment by New Left and Black Power groups was envisioned as the beneficiary of generous government funding previously used mostly for shoring up downtown property values, alongside development of some small amount of public housing.
Community development also increasingly appealed to those in power and led philanthropies like the Ford Foundation to push for nonprofit actors to replace government programs in housing. They viewed government programs as having rarely gotten things right, whether hamstrung by policy compromises, administrative incompetence, or racially tinged malfeasance. In other words, the community development model emerged not merely in opposition to problems with public housing and urban renewal but as part of a wave of experiments to find market-based alternatives to the welfare state.
Figure 2. The Woodlawn Organization (TWO), under the influence of organizer Saul Alinsky (pictured here in 1962) and with generous funding from the Ford Foundation, pivoted from protesting slumlords to developing its own housing. Courtesy The Woodlawn Organization Papers, Chicago History Museum.
Nascent community groups in the 1960s initially struggled to enter the housing field. After successfully defeating the bulldozing of their Chicago neighborhood by Mayor Daley, for example, The Woodlawn Organization (TWO), a Black Power group from the city’s South Side, erected a single housing project using new federal funding programs. It nearly bankrupted them. TWO’s leaders correctly diagnosed that a significant problem with community groups taking over from the federal government was their lack of capital. As one leader exclaimed: “We want black ownership, we want $15 million which we control.”1
As government resources to ameliorate poverty declined in the 1970s, philanthropic foundations positioned themselves to fill that need. Policymakers at Ford, in particular, had two aims meant to address the perceived failure of the welfare state. First, they published and disseminated research intended to help create institutional support (through government and foundation programs) for non-profit financing of moderate- and low-income housing. Second, they worked directly with community groups, including TWO, to professionalize them so that they could carry out the new non-profit programs.
As a growing body of work by scholars like Karen Ferguson shows, Ford Foundation officials, in particular, increasingly viewed Black uprisings as a threat to national security and worked to manage them. Ford economists developed an ideological preference for market-based solutions, which was also pragmatic given the federal government’s persistent underfunding of welfare programs. It was in this context that they and other large philanthropic groups, alongside officials in nearly all presidential administrations from John F. Kennedy onwards, projected the failure of the federal government and worked to create an alternative.
Affordability Mindset Today
In the ensuing decades, officials in Washington, amid fitful recessions, oversaw the systematic defunding of public housing and the creation of the permanent sources of funding that nonprofit developers today rely on. The new model was cemented with the creation in 1986 of a novel program, the Low Income Housing Tax Credit. LIHTC’s ascendance has exacerbated the push away from community needs in affordable housing toward those of professionalized nonprofits. The need for specialized market expertise, in particular, has encouraged consolidation of affordable development and management in increasingly large firms. Legitimate community groups can still get in on the LIHTC game, but they are increasingly crowded out by for-profit outfits, and what sociologist John N. Robinson calls “grassroots for hire” groups.
LIHTC is a post-welfare state program that works in part by catering to corporate entities’ need to find tax shelters. Under it, developers who agree to maintain lower rents and to restrict occupancy to tenants who meet certain income requirements are awarded “credits” by their states which they may then sell to banks and other investors for cash to build. (The buyers of the credits, in turn, use them to offset income when they file taxes.) The LIHTC program has helped build an estimated 3.2 million new units of housing since 1987, an impressive amount when compared with the 2 million units of public housing built between the New Deal and the 1970s.
Housing activists, especially those advancing development of social housing, have discerned many policy flaws—such as how the profit motive can undermine the need to get the highest number of affordable units per government dollar spent. In his study of developers using tax credits in Chicago, Robinson notes that one of the larger for-profit groups worked closely with the city to redevelop public housing projects in a way that reduced the overall number of below market units.2 (As part of public housing redevelopment, many projects are replaced with a mix of market rate housing and subsidized housing. In this instance, the developer gamely used the process to reduce the city’s desired mix of subsidized units in favor of more market rate housing.)
One of most endemic conflicts between tenant and developers’ needs under LIHTC is reflected in how, under the program, the income restrictions of units expire. Under current regulations, properties developed with LIHTC have to maintain affordability restrictions for 30 years (longer in some states). This means that unless property owners are non-profits with a mandate to maintain affordability, they have an incentive to convert their LIHTC properties to market rate and increase rents on their low-income tenants once affordability restrictions expire. This is the situation confronting residents of the tax credit-financed Hillside Villa Apartments in Los Angeles, where landlord Thomas Botz has taken advantage of expiring regulatory agreements in order to raise rents by as much as 200%.
Tenants at Hillside Villa, originally financed with LIHTC funding, have been arguing public officials need to use eminent domain to prevent further predatory evictions following the expiration of the LIHTC affordability controls.
Newly-financed LIHTC projects can also suffer from the perverse incentives held by for-profit developers. This is especially true for acquisition-rehabilitation projects in which developers purchase and renovate an existing, occupied building that previously lacked affordability restrictions and operate it as a LIHTC project. While this use of the program can help preserve the lower rents of housing in gentrifying neighborhoods and prevent displacement, the concept can be turned on its head when developers prioritize profits over the needs of existing residents. The status of existing tenants can complicate acquisition-rehabilitation projects’ execution. These residents often lack experience with complex income qualification processes and may not qualify for or even be able to afford rents under their designated LIHTC AMI (Area Median Income) levels.
In the case of Reliant Group in the Bay Area, the for-profit developer used LIHTC to finance the rehabilitation of over 350 units across four properties. Despite the aims of tax credits dedicated to housing preservation through acquisition-rehabilitation, the physical improvements of these properties came at the expense of residents’ ability to stay in their homes. Reliant Group took advantage of the complexity surrounding LIHTC income qualification and displaced hundreds of low income tenants, raising rents on supposedly “affordable” housing.
Considering the history of community development as meant to address the negative impacts of “the federal bulldozer,” it is ironic that programs like LIHTC can now be used in the same project of displacement. This is not to say that this outcome is inherent in the program, and it is important to point out that there is much good housing developed by legitimate community groups. Instead, we see the flaws as related to the overall invisibility of the program from public consciousness or critique. From a political standpoint, then, we might see LIHTC’s inconspicuousness as inextricably linked to the weakness of U.S. tenants. In other words, in the absence of an actually popular political program for public or affordable housing, it is a stopgap. Unfortunately, it’s flaws now outweigh its utility.
Retaking the State
The most glaring downside of the public-private nature of LIHTC is its total obscurity from public consciousness. The program’s design, in many ways reflecting the nature of 1980 politics, makes it ill-suited for our own era marked as it is by widespread urban inequalities. One of these limitations is that many of the priorities of the nonprofit housing sector have come to serve as an obstacle to building tenant power and to breaking the real estate lobby’s brake on the state. The model of advocacy-on-behalf-of conceived of by foundations and LBJ’s War on Poverty has been instrumental, it now seems clear, in foreclosing the emergence of viable political power for tenants. To advance tenant power, therefore, activists need to confront the concerted effort to create the “depoliticized” financing system.
Tenants and organizers must also model their efforts on successful alternatives: campaigns that led to expansion of the state’s role in housing. In recent years, an often-singular focus by tenants on rent control and the ownership of existing housing stock has left the question of new housing production mostly off the table, or ceded it to pro-development political leaders. Conversely, those advocating for European-style social housing have failed to engage with major questions like the prevalence, and preference for, homeownership in the United States, even among the working classes — and homeownership’s role in generating, and remediating, racial wealth gaps. Both camps have wagered they can win without actively building coalitions with groups beyond just renters. This tactic worked, to a degree, in New York State, where activists successfully fought to expand rent control. But it failed in California, where voters have roundly defeated statewide referenda to do the same.
To get serious about taking on the status quo, one example organizers can look to is the coalition forged between militant tenant groups, organized labor, and certain segments of real estate in postwar New York City. Amid the widespread national housing shortage after World War II, organizing tenants was a key concern of communists and labor unions. Veterans returning to cramped apartments from the war joined them in demonstrations at the Albany statehouse to push for aggressive solutions. Rent control, introduced as a temporary wartime salve, was extended decade after decade, long after it expired elsewhere. In the inflationary 1970s, they led the way again, with introduction of “rent stabilization,” a new rent control program with expanded coverage. The labor movement, led by leaders like Abraham Kazan, meanwhile, focused on new development. Under Kazan’s influence, area trade unions built several “middle income” housing projects, culminating in the massive Co-op City in the Bronx in the 1960s.
Starting with a short-lived municipally financed public housing effort that built at-cost (but unsubsidized) housing for middle-income families, New York policymakers went on to create state-level programs that were in many cases much more successful than any federal one. In the quarter-century after World War II, thirty percent of the nearly eight hundred thousand homes built in New York City were some form of government-subsidized housing. The realization of social housing was very partial compared to much of Europe, but it did not come from the top down. It came from a broader movement strong enough to win both rent control and pro-development subsidies.3
Since the 1960s, U.S. philanthropic foundations, nonprofit professionals, and many politicians, both sympathetic to tenants’ struggles and not, have advanced the illusion that you don’t need mass politics to fix our low-income housing challenges. Nothing could be further from the truth.
In order to enact meaningful change, we must build viable coalitions and divide our enemies. As a start, tenant organizers should broaden their focus to housing production, and to replacing programs like tax credits, which have incentivized community groups to incorporate as nonprofits and participate in the market rather than undertake the political work required to change it. In short, all those concerned about housing — and related crisis like homelessness and displacement, not to mention social welfare period — must politicize the current affordable housing system and pressure the state to create new programs. Only a clear-eyed analysis of how we arrived at the present impasse and of the actually existing political coalitions that sustain the current system will move us to a better path.
Meeting Minutes, November 1969, The Woodland Organization Papers, Box 2, Folder 218, Chicago History Museum.
Robinson, John N. “Capitalizing on Community: Affordable Housing Markets in the Age of Participation.” Politics & Society 48, no. 2 (June 2020): 20.
On postwar New York see Nicholas Dagen Bloom and Matthew Gordon Lasner, eds., Affordable Housing in New York: The People, Plans, and Policies That Transformed a City (Princeton: Princeton University Press, 2015), 144 and Joshua Freeman, Working-Class New York: Life and Labor Since World War II (New York: New Press, 2001).