Estimating The Negative Impacts Of Capital Funding Cuts To Public Housing

Econsult Corporation was retained by The Public and Affordable Housing Research Corporation of the Housing Authority Insurance Group (PAHRC) to help estimate the distribution and scale of negative impacts of cuts in capital funding to public housing authorities (PHAs) in the United States. The aim of this joint effort was to inform national policy discussions about whether and how much the US Department of Housing and Urban Development (HUD) should cut federal funding to PHAs for capital expenditures. This study was national in scope, although localized effects are being explored and local examples have been detailed.

To estimate the impact of budgetary cuts to the Public Housing Capital Fund, Econsult and PAHRC used the results of a survey that was distributed to the executive directors of all 3,100 PHAs in the United States. Their responses to questions about how and by how much they would reduce capital expenditures in each capital expenditure category if faced with a budget cut, along with considerable data from the HUD and several industry groups, were used to project the aggregate economic impact of a capital fund budget cut at different levels of magnitude.

Using quantitative and qualitative approaches, Econsult and PAHRC examined the impacts of reduced spending in each capital expenditure category (as legally defined by HUD). Econsult identified and measured the following impacts of reduced capital expenditures by PHAs:

  • Increased cost of living
  • Decreased quality of life
  • Worsening of resident labor skills
  • Reduced Supply to employers of low wage earners
  • Increased crime rate
  • Increased blight on the immediate neighborhood
  • Lower energy efficiency of buildings/higher costs
  • Higher maintenance costs in the long-run
  • Increased resident property damage and personal injury claims
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