Low-income housing, otherwise known as affordable housing, is a phrase used to refer to the various residential provisions available to individuals or families with a low household income. While a low-income status can look different from person to person, according to the U.S. Department of Housing and Urban Development (HUD), housing is affordable if it costs 30% or less of a family’s annual income. When it comes to affordable housing and providing economic and social support through policy, there is a debate when it comes to whether or not public-private partnerships are effective for affordable housing efforts and reducing the role of government in housing. Public-private partnerships (P3s) are arrangements between public agencies and private companies that exist to serve the public wherein both entities are sharing the risks and rewards. The public side of P3s typically takes the form of a government agency, and private entities can be non-profit organizations, developers or lenders, private civic organizations, or individuals. A toll road that is operated by a private company but is located on private land a classic public-private partnership. In terms of housing, P3s look like public housing authorities contracting private developers to construct affordable housing on private land.
Historical Background for P3s
P3s became possible with the creation of the Department of Housing and Urban Development (HUD) in 1965, and the 1968 Housing and Urban Development Act encouraged cooperation between the government and business by establishing the National Corporation for Housing Partnerships, a public enterprise that acted as a tool for private entities to initiate housing construction programs. P3s became more popular during the period of privatization and regulation in the 1980s because they represented a compromise between government services and private enterprises.
As a federal agency, HUD’s public-private partnerships have produced programs such as the Federal Housing Administration’s mortgage insurance programs and Section 8 project-based housing to provide people with affordable housing options. P3s allow the government to share risks with the private sector, leverage investments for greater effect, take advantage of efficiencies outside of the government, and employ broader knowledge and skills. On the flip side, policies and programs that have public-private partnership structures have their own drawbacks such as opportunities for corruption and increases in the complexity of housing policy due to new intermediaries.
