Marcia Fudge will be the 6th Black person to lead the Department of Housing and Urban Development (HUD) since 1966, so how could she make a difference for Black families that her predecessors haven’t?
I have been homeless. I have received HUD’s services, including Section 8. Against most odds I led housing research for Goldman Sachs before turning 25 and I’ve seen just how rewarding and unforgiving the American wealth equation can be at the same time. I’ve spent nights in both “roach motels” for shelter and at the Four Seasons for client meetings. It’s clear that better systems are needed in the private and public sector. I serve as the leader of a mission-driven real estate investment firm to do my part, but there is so much that HUD, under Marcia Fudge’s leadership, could do to turn the tide for Black families over the next four years.
Make Housing A Healthcare Matter
The single most important thing the HUD secretary could change is to make housing a healthcare matter; housing is healthcare after all. Consider this: over just two days in March 2020, 36% of the guests at a large homeless shelter in Boston tested positive for COVID-19, which is nearly 10-times the 3.8% of Americans that have tested positive for COVID-19 since its inception. Creating the infrastructure for the housing system and healthcare system to intentionally work together could save the country billions or trillions while stemming disease, including squelching the spread of COVID-19.
Remove Racism From Appraisals
Second, while redlining is dead, racism in appraisals is not and HUD could have a heavy hand in removing multiple layers of bias in home valuations. The real estate appraisal industry is faceless and under-the-radar yet one of the most powerful dictators of financial success in our country. Appraisers give every bank in America the power to say “yes” or “no” on lending because appraisers determine the official worth of properties. The correctable problem is that being Black, by itself, lowers the value of your home in the appraisal process in multiple ways. Resolving the bias in the appraisal industry without creating unintended hyper-gentrification could correct a century’s worth of economic value destruction for Black people.
Fix Opportunity Zones
The HUD secretary plays a unique role in Opportunity Zones as the Chair of the White House Opportunity and Revitalization Council. This council’s role is “to target, streamline, and coordinate Federal resources to be used in Opportunity Zones and other economically distressed communities,” and that can be channeled to allow folks that live in Opportunity Zones to participate economically. Over the next four years stronger reporting requirements around Opportunity Zones and an expansion of eligibility so that Opportunity Zone community members can participate, potentially in exchange for extending certain deadlines for the program, could shrink the wealth gap expansion that is occurring in these neighborhoods if this legislation continues as is.
Kill The Cliff Effect
In an ideal scenario laser-focus on housing as healthcare and and adjustment to Opportunity Zones would be paired with a fresh stairwell approach out of poverty: a set of incentives that encourage people in poverty to make more money, not less. For example, if my uncle and his partner earn $1 above $39,840 they will lose their housing because of HUD and HUD-linked policies – this is the “cliff effect.” My family members are disincentivized from earning more money even though those potentially increased earnings remain woefully close to the federal poverty line. Eliminating the “cliff effect” seems ripe for innovation from a forward thinking leader.
Collaborate With The Private Sector to Create Solutions
Last, it would be valuable to see deep engagement with the private sector by the incoming HUD Secretary. Microsoft committed $750 million to affordable housing over the last two years and recently announced a rent-buy down program for properties in Greater Seattle. Health insurers and hospital systems across the country are pushing their care upstream to provide care in homes; the largest health insurer in the country is giving homes to the homeless because it’s financially advantageous to do so, and they can afford to. Even a smaller company like Omicelo, which I lead, is partnering with BNY Mellon to create a financial tool called Community WINs that allows community members to purchase small stakes in individual investment properties, similar to the way one could buy a fraction of a share of stock through ETrade or Robinhood. There are many well-intentioned humans of every creed and color in the private sector who simply want to create strong, sustainable, inclusive communities and quality affordable homes for all, which is HUD’s mission after all.
Ultimately, Black Americans have no desire to remain only the recipients of affordable housing, we want to build it and support it. The foundational changes above, if implemented, would have a life-changing impact on millions and an especially unique effect on those that have been disproportionately impacted by past policies. What my family has had to go through to get close to the American Dream is leaving too many Black families in multi-generational poverty and the incoming HUD Secretary has the power to make a major difference. We all hope she chooses the path of difference making – it is needed.
Joshua Pollard is President & CEO at Omicelo, a mission-driven real estate investment firm.