Essays in Honor of Dick Netzer
Studies in Fiscal Federalism and State–local Finance series
Edited by Amy Ellen Schwartz
Chapter 5: The role of cities in providing housing assistance: a New York perspective
Ingrid Gould Ellen*, Michael H. Schill, Amy Ellen Schwartz and Ioan Voicu The current debate over housing policy in the United States takes place against a backdrop of devolution. In recent years, the federal government has increasingly relied upon states and cities to create and administer social policy. Thus, as this devolution continues, it is useful to consider how the responsibility for housing programs and policies should be divided among federal, state and local governments and, given the severity of urban housing problems, city governments in particular. This chapter examines available theory and evidence regarding the appropriate role of diﬀerent levels of government, focusing in particular on the role of cities. Studying the case of New York City, we also oﬀer new evidence on the extent to which investments in aﬀordable housing can help to eliminate externalities and rebuild inner city communities. The chapter is organized as follows. In the ﬁrst section we review relevant theoretical and empirical literature to distill an understanding of whether and under what conditions cities are the appropriate level of government to fund and/or administer housing subsidy programs.1 In brief, we conclude that, although cities should play a major role in administering housing programs, they should be wary about actually funding them. Redistribution of income, a major objective of most housing subsidy programs, should generally be paid for by the federal government, not cities. In contrast, cities should consider funding housing production programs when they are part of a comprehensive strategy either...
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