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It is a profound irony, of course, that public housing,

designed with utopian ideals in mind, has become the locus

of some of the country's worst social problems.  HUD, howev-

er, was not originally intended to have much involvement

with public housing.  Historically, local authorities built

and managed public housing projects, taking advantage of a

U.S. housing authority that agreed to purchase locally

floated construction bonds.  Public housing, except for that

financing aid, was intended to be self-supporting, using

local funds and rents as its income.  But the long-term

exodus of working-class families from public housing, along

with a rent cap imposed by Congress in 1969, has made local

housing authorities dependent on federal operating and

repair subsidies administered by HUD.  Operating subsidies

have risen from $6.5 million in 1969 to more than $2.5

billion today.  HUD also spent an additional $2.8 billion in

1995 to "modernize" what it calls "severely distressed"

public housing.

Part of HUD's original mandate was to coordinate dispa-

rate federal urban aid and housing programs or, as Robert

Weaver called it, "achieving maximum coordination for feder-

al activities with an effect on urban, suburban or metropol-

itan development."45  The much-enlarged public housing

portion of its portfolio, however, raises both administra-

tive and policy questions.  If we are to finance public

housing repairs from general tax revenues, is it necessary

to involve a cabinet-level agency in such transactions?  Or,

as with infrastructure improvements financed by community

development bloc grants, could such activity be handled

through the traditional state and local bonding process?

Legislation proposed by Rep. Rick Lazio (R-N.Y.) and

passed by the House proposes to increase the number of

middle-income residents in public housing projects.  But if

public housing is to become simply another apartment com-

plex, why should it be owned and operated by the government?

Do we really want to lure working-class families into public

dependence?  Is there any assurance that once public housing

complexes have been renovated, public housing authorities

will do the job any better than before?

Alternatives to HUD

Among the great ironies of urban policy in the past 10

years is the fact that even people who continue to endorse