Public housing is often seen as a program of the past. To the extent anyone talks about it today, the focus is on the need for repairs. New York City, for instance, which runs the nation’s largest public-housing program, has foregone an estimated $40 billion in maintenance.

But public housing sites may offer some opportunities for cities. Across the country, lots of high-value real estate is locked up by public housing. The New York City Housing Authority, for example, estimates the value of the Baruch Houses site on the Lower East Side at $111 million. That’s an outlier, nationally, but valuable public housing sites exist in Philadelphia, in Savannah, Georgia, in the booming Vanderbilt University area of Nashville, and near Buffalo’s potentially lucrative Lake Erie shore.

These and other sites could be sold to private developers, and not necessarily for new forms of subsidized housing. The sites could instead be unfrozen—that is, returned to the private market and put to better use.

This may sound like libertarian fantasy, but it’s actually happening in Newark, of all places. Mayor Ras Baraka announced last month that Hollywood’s Lionsgate Studios would build a production facility on the 12-acre former site of the Seth Boyden Court housing complex, demolished this past February. It’s way too soon to tell whether the promises of jobs for low-income households and internships for Newark students will come to pass, but at the very least, Newark has demonstrated that an open-minded city can repurpose public housing real estate.

Putting such land to productive use can help revive the economies of struggling cities, and cities can use revenues from the sales to address an obvious complication: the potential plight of tenants in projects facing the wrecker’s ball.

Cities could use the proceeds from a sale to buy out tenants, rather than relocating them to yet another project. We could even call these payments “reparations”—not for racism, but for the sins of hubristic progressives (including Eleanor Roosevelt, architect Philip Johnson, and city planner Robert Moses) who felt certain that government would be a good landlord.

The size of these buyouts could be substantial. Divvying up the proceeds of the sale of Baruch Houses, for example, could come to a dizzying $564,000 for each of its 197 households. Even some smaller, less valuable projects could lead to substantial buyouts. Philadelphia’s Martin Luther King Plaza (IV) is valued at just $3.9 million, but, given that it contains only 42 units, a buyout would enable payments of $93,000 per household. Philly’s Parkview project is worth just $2.7 million, but with just 19 units, buyouts would be worth $143,000 per household. Indeed, cities could likely get tenants to agree to payments worth far less than a full share and then use the remaining proceeds to repair remaining public housing.

Selling properties would not only free local government from the burden of managing and maintaining aging housing projects; it would also convert properties from tax-exempt to revenue-producing. And small-property owners in surrounding neighborhoods would no longer face subsidized government competition.

It would also give long-term tenants a chance to start a new life, perhaps using the buyout as a down payment on a home or as a gift to children. In New York, nearly half (47 percent) of all public housing households are black. Blacks had the misfortune of arriving as immigrants to big cities just after World War II, just as enthusiasm for the alleged benevolence of public housing was peaking. Their overrepresentation in public and other forms of subsidized housing has been a barrier to their accumulating wealth—and one reason for the large gap between white and black assets. In public housing, government is the owner, after all. Some 65 percent of white households own their own home, compared with just 38 percent of blacks.

Selling off high-value project sites would, to be sure, reduce the number of “affordable housing” units in a city, but that’s only a problem if you believe that there will always be a need for such housing at the same level or more. Here’s another possibility: that the availability of housing for which one qualifies by being of low-income actually creates its own demand. Think here of the young single parent whose combination of low income and dependents works to qualify her for housing help. It’s no coincidence that only 6 percent of public housing households have two parents with children.

Buyouts should be voluntary. Tenants who prefer a housing voucher to relocate should have the choice, if only for practical reasons. But those who take the buyout would then be on their own—and they would have to agree not to seek to return to subsidized housing. Sure, some might make mistakes with their windfall, but it would be better to trust that they will make good choices when freed from government dependence.

Public housing sales won’t make sense for all the 3,200 housing authorities in the U.S., but cities with large numbers of projects and abandoned houses—Baltimore or Philadelphia, for instance—would be prime candidates for such a policy. The new infusion of capital into the budgets of poor households could be the means to renovate now-vacant properties—and help trapped tenants join other Americans on the path to wealth accumulation.

Photo by Andrew Lichtenstein/Corbis via Getty Images


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