Mixed-Income Housing as Pre-Commitment Strategy

by JEFF LESLIE

Crowding poor people together, isolating them from mainstream opportunities, and providing substandard policing, education, and other services constitute bad public policy. Decades of experience with public housing projects that featured just this constellation of attributes have provided ample evidence. It might then seem plausible that we should take the opposite tack. If the poor are evenly distributed across locales, are no longer isolated from mainstream social networks and opportunity structures, and are provided with the same levels of security, civic order, and other amenities that upper income groups enjoy, then surely this would improve the lives of the poor and even help them escape poverty. If concentrations of poverty are bad, then mixing of income groups must be good.
The intuitive appeal of this idea drives affordable housing policy, which has fixed on mixed income housing as the preferred strategy for housing the nation’s poor. Three of the biggest housing policy initiatives since the 1980s—the low-income housing tax credit program, the HOPE VI program for redevelopment of severely distressed public housing developments, and housing voucher programs—are all predicated on mixed-income housing. But the implementation of mixed-income housing has outpaced the development of solid rationales explaining why, and under what conditions, this strategy will be successful in alleviating poverty. In this essay, I want to examine one rationale that shows the most promise as an explanation for why mixed-income housing may help alleviate poverty, and then to point out some of its very significant limitations.
A brief summary of the three programs that most directly promote mixed-income housing is in order. The low-income housing tax credit program, which began in 1986, facilitates private investment in affordable housing projects by offering federal tax credits to owners of affordable rental projects who meet the program’s restrictions on rent levels and tenant incomes. The program is designed to facilitate mixed-income properties. As many as eighty percent of the units in a tax-credit assisted project can be market rate, though it is more common to see much lower percentages of market rate units in order to maximize the tax credits generated by the project. The low-income housing tax credit has become by far the dominant program for financing the production of new affordable housing units.

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