How a Rent Freeze Helped Destroy Public Housing

New York City democratic socialist Mayor Zohran Mamdani has made “affordability” his top selling point and a freeze on the rents of nearly 1 million city apartments as a key element. Should he prove to be open-minded on the concerning effects of such a policy, he should look back to the story of public housing—specifically events in St. Louis in 1969, where a rent ceiling helped usher in the decay and demolition of housing meant for those of modest means—public housing projects.

The setting was one of the largest such projects ever built in the US—the 33 eleven-story modernist high-rises that comprised the Pruitt-Igoe complex in St. Louis. Like all public housing—although this is generally forgotten—it was meant originally for working-class tenants, whose rents were intended to provide the income and financial reserves necessary to maintain the complex, originally opened between 1952 and 1954, to acclaim as an architectural masterpiece designed by Minoro Yamasaki.

But as the population of St. Louis declined, those with the means to do so left to buy homes.

in the suburbs, Pruitt-Igoe became housing of last resort for the poorest. As the Harvard sociologist Lee Rainwater wrote in 1970, in his book, “Behind Ghetto Walls: Black Families in a Federal Slum”, “Pruitt-Igoe houses 10,000 tenants for which society seems to have no other place. Over half the families are headed by women, over half derive their income from public assistance.”  The St. Louis Housing Authority, owner/manager of the project, faced the fact that a combination of rental income and federal aid provided it $54 per unit—but its costs totaled $57.

To close the gap, as elevators broke down and rodents infested the buildings, the Authority moved to raise the rent—triggering a rent strike and, in turn, a key change in federal housing policy. A 1969 law dramatically limited rent to 25 percent of tenant income—a de facto rent freeze or reduction which applied a tourniquet to crucial income for public housing authorities across the country, sending it in a downward spiral. In 1972, Pruitt-Igoe was “imploded”, demolished in a cloud of dust.  Public housing across the country was set on a similar path toward a 1992 federal report would term “severe distress”– leading to the demolition of hundreds of thousands of apartments meant for those of lower income.

The lesson for Mamdani should be clear: property owners, whether public or private, need adequate revenue to maintain their properties. The opposite is happening in New York, where stringent state regulation already limits rent increases even for capital improvements necessary to bring apartments up to code. The result is harmful for tenants meant to be protected:  Buried in a table in the May 2022 Census Bureau Housing and Vacancy Survey is this: A third of rent-regulated units have “rodents” — almost twice the rate of unregulated apartments. That translates to more than 300,000 rent-regulated units with rats or mice.

Expect more of the same or worse should Mayor Mamdani succeed in convincing the city’s Rent Guidelines Board to follow through on his rent freeze pledge for 960,000 regulated units. The Pruitt-Igoe example teaches us not only that housing conditions will deteriorate but that housing supply could be reduced—as some landlords abandon buildings, as notoriously happened in the 1970s “Bronx if burning” era. There are already an estimated 26,000 NYC apartments being held off the market because the cost of bringing them up to code exceeds the income they would generate. As the political scientist Edward Banfield wrote in his landmark 1968 book, The Unheavenly City (just reissued by American Enterprise Institute Press and to be the subject of a panel discuss this week at the Institute), “Strange as it may seem, the mammoth government programs to aid the cities. Insofar as they have had any effect on the serious problems, it is on the whole, to aggravate them.” A rent freeze is a glib and attractive promise on the campaign trail.  In the real world of housing policy, it will be disastrous.

Howard Husock is a senior fellow in Domestic Policy Studies at the American Enterprise Institute (AEI), where he focuses on municipal government, urban housing policy, civil society, and philanthropy.

Reprinted with permission from AEI.org by Howard Husock.

The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.