Julián Castro, Leveling the Playing Field

HUD file photo

The Supreme Court’s 2015 decision on “disparate impact” in fair housing preserved a reading of the Fair Housing Act that has guided the country for the last half-century, however imperfectly. The 5-4 ruling affirmed that a housing policy that disproportionately negatively affects minorities counts as racial discrimination, even if that isn’t the policy’s explicit purpose. The ruling considers outcomes, not just intent.

That decision ensured that the U.S. Department of Housing and Urban Development, under Secretary Julián Castro, could take an important step toward implementing Affirmatively Furthering Fair Housing, the country’s long-term mission to reverse housing segregation. In introducing a new AFFH community assessment tool in 2015, HUD has made tangible progress toward this goal—by giving communities a blueprint to build a less segregated future.

Both the Supreme Court’s decision and the unveiling of the AFFH tool have made HUD an especially consequential department during President Barack Obama’s second term. The grip of the nationwide rental affordability crisis has made HUD all the more important. This housing crisis is broad and deep, reaching across political and demographic borders, affecting households in every place in the country.

So it came as something of a shock—or maybe no surprise at all—when President-elect Donald Trump named as Secretary Castro’s successor Ben Carson, a former presidential candidate who suggested he didn’t have the experience to run a cabinet-level agency. As Secretary Castro prepares to yield the office to its next leader, he discusses his achievements on fair and affordable housing, the impact of looming tax reform on housing across the country, and his beliefs on what needs to happen next.

How are you spending your last month in the Obama administration?

We’re working until the last day. We just got the smoke-free rule done not too long ago. We have a couple other rulings that we’re working on. The president has charged everyone with, as he said many, many times, finishing strong, so that’s what we’re going to do. We’re going to keep going to the end, and use every last minute of the opportunities we have to serve the American people, and especially families with modest means who need folks working for them.

Have you had any contact with the transition team? Has HUD received any memos asking about policies or personnel, like the memos received by the Departments of Energy and State?

I have met with the four members of the landing team, led by John Bravacos. I met with them about two weeks ago and had a very good meeting. They have met with many different individuals within HUD. There’s a process that the landing team has been going through. I also connected with Dr. [Ben] Carson last week. We had a chance, in a very introductory way, to connect and talk about the importance of the mission at HUD. I assured him we want to do everything we can to have a smooth transition and provide him with any information he or his team needs as he prepares for his confirmation hearings.

To answer your other question, I’m not aware of any similar type requests for that kind of information as we saw with the Department of Energy. As far as I know, nothing of the sort has been requested from HUD.

Did Carson have any questions for you?

Not at this point. It was a very, very introductory phone call. Just a few minutes to say that we would get together soon. I anticipate that when the year turns over, we’re going to get together either in the first or second week of January. We didn’t get into conversations about policy or questions about operations in the department. It was a very high-level call.

This administration has witnessed significant achievements in efforts at housing desegregation. There was the Supreme Court decision recognizing implicit bias in the Fair Housing Act, for starters, and the implementation of the Affirmatively Furthering Fair Housing rule. Can you describe what those efforts looked like from your desk?

We have taken bold steps to ensure that there’s a level playing field when it comes to housing opportunity in America. The best example of that has been Affirmatively Furthering Fair Housing, and specifically the new AFFH assessment of fair housing tool that communities will submit to HUD. Many times folks think of bias in the housing market as something that is yesterday. But it very much is a concern today. Ensuring that there’s a level playing field is something that everyone from individuals to private organizations to nonprofits to the public sector has a role in doing. Affirmatively Furthering Fair Housing is a way for HUD to do its part to ensure that there’s a level playing field. So far, we’ve had a successful rollout with the first communities that are part of the assessment of fair housing. I look forward to that continuing. I conveyed to the landing team or transition team for the next administration the importance of AFFH and of fair housing. My hope is that that strong work will continue.

Are you concerned that the Trump administration will roll back this progress on desegregation?

Of course, it concerns me that the work—maybe the best way to say it is—the idea concerns me of going backward. There’s so much that needs to be done to level the playing field, even in the year 2017. What we see in the housing market, what we see in communities throughout the U.S., we have unfinished business when it comes to ensuring that everybody, no matter their skin color or background, has the same level of opportunity to succeed in America. In this country, we don’t believe in guaranteeing the same results for people, but we do believe in guaranteeing opportunity. That’s what fair housing is about.

Sure, it concerns me that we could go backward. But we’re going to do everything we can to impress upon the next administration the importance of this work. There are also our champions in Congress, there are champions in the advocacy community and the private sector for this kind of work. I’m hopeful that it will continue.

Low-income housing tax credits continue to be the best federal instrument for building new affordable housing. Yet the relative value of LIHTCs could change under tax reform. How can LIHTCs retain their utility and continue to do the work that they do in an environment in which corporate tax rates are greatly reduced, as President-elect Trump has promised to do?

Number one, LIHTC is an indispensable tool to create more affordable housing opportunity out there. It’s needed more than ever. Every year, about 100,000 affordable housing units come up because of LIHTC.

I won’t guess at what kinds of tax reform may or may not succeed, but I will say three things. Your question underscores the need for any tax reform to be done in a way that is thoughtful about the impact to LIHTC and the housing market. Secondly, it underscores the need for states to be smart about their QAPs, their qualified application plans. There is a lot of work that can be done at the state level to get more bang for the buck out of LIHTC, if states are smart about their QAPs. And then third, it highlights some of the importance of the work that we’ve gotten done with LIHTC. Specifically I’m thinking of DDAs, or Difficult Development Areas—basically going to a more nuanced application of a LIHTC boost by ZIP Codes or census tracts instead of whole areas, and truly giving a boost where it’s more difficult to get an affordable housing project done. That kind of nuanced work is going to be more and more important so LIHTC does retain its value.

You mentioned states’ roles. I want to explore that. Based on House Speaker Paul Ryan’s “Better Way” plan, it seems likely that a lot of the aid directed at low-income households in the U.S. will be turned into block grants. That would put these aid programs under greater discretion of the states. Do you think that means these programs are at risk?

That depends on how seriously the states take their responsibility of ensuring that those resources are allocated according to the mission that they’re meant for. It’s just like with any federal program: Some states do a good job, and other states don’t do as well. We see that with community development block grants. It’s a mixed bag. I would be more comfortable leaving the programs the way they are in terms of their approach, because I think we have a good balance of dollars that go directly to the states versus dollars that go directly to local communities. With LIHTC, we have an approach where the federal government is able to work with states on how they administer the program. I’m comfortable with these programs the way they are.

That’s not to say there can’t be improvements. But I don’t believe that massive block granting is the answer. This idea was brought up at least once before in the mid-1990s, after Newt Gingrich and his ‘94 cohort took control of Congress—the idea of turning HUD into basically just a few block grant programs. I don’t think that’s the answer. If anything, we need to be more nuanced than that, with all the complexity of the challenges we have out there.

During the Obama administration, we’ve seen incredible advances in technology, and specifically in the role that technology plays in government. Can you describe some of the ways that technology has transformed the work of HUD?

One of the biggest challenges we have had at HUD is operationally, within the organization. Our IT systems are terrible. They’re relics, many of them, from decades ago. One of the biggest issues we’ve had is just upgrading our systems. We’ve made some good progress over the last few years. We’ve gone to shared services, we’ve improved some of our IT systems. There are many, many information technology needs that we have, internally, that are not being met right now. My hope is that they will be.

I saw the other end of this equation as a mayor. The tremendous benefit that you can get from empowering a community with technology. Whether it’s allowing folks to make complaints or pay fines or find out information about meetings from an app or online. HUD has created a couple of apps, we have a fair housing app. But there’s a lot of stuff that we can still do to empower folks with technology.

Is affordable housing a bipartisan issue? Is fair housing a bipartisan issue?

There are champions on both sides of the aisle. No question, there are more champions on one side of the aisle. But both of these issues should be, because every single congressional district has people, right now, who are priced out of the market. We have a rental affordability crisis out there in big cities and small towns. In red America and blue America. There are a lot of congressmen and congresswomen who have constituents with a tremendous problem when it comes to housing affordability. But there’s a disconnect right now. Those representatives either don’t hear from them, or they’re not necessarily attuned to the issue. They don’t know, or they’re not acting on the urgent nature of that challenge. Somewhere there, that gap has to be closed. There’s a lot of education that has to happen, because there’s no question, when it comes to housing affordability, that [it] affects people regardless of ideology, regardless of how big the community you may live in is. That’s become more and more true over the last several years, as we’ve seen rents spike and as the homeownership rate has gone to one of its lowest levels in five decades.

With regard to fair housing: same thing. Fair housing is an issue that impacts people everywhere. The thing is, when folks think about fair housing, sometimes they limit it to racial bias. But we’ve been very active on bias against folks with disabilities, bias against women who are pregnant, bias against folks who maybe speak a second language other than English. This touches people in the housing market in places big and small, in places conservative and liberal. It should be a bipartisan issue.

Can you discuss the role of the U.S. Attorney General’s office in enforcing the provisions of the Fair Housing Act, the provisions you were just discussing? And how that relationship works, operationally? Who calls who?

HUD and the Attorney General’s office work closely together, particularly our fair housing office. Obviously, these last several years, on lender cases, they’ve worked closely together. But they also worked together on more traditional fair housing cases. As for who calls who, I think that goes both ways. You have professionals who have been at this for a long time, who understand these issues and have partnered with each other. They have close relationships. They have good working relationships in the career ring. That’s part of what gives me hope, frankly, on the issue of fair housing. Most of the folks who work on this issue don’t care about the politics of it. They’re committed to the substance of it, the mission of it. There’s a mutual respect between our HUD professionals and DOJ professionals, and that working relationship will continue.

Given one more term, what are one or two policy issues you would pursue?

There’s a lot. I was here for two-and-a-half years. I feel like we’ve gotten a lot done, but there’s so much to do. A couple things I would mention: Number one, fighting for more resources in a housing market that is very tight. With a rental affordability crisis that is affecting so many families out there, with a homeownership rate that is low compared to recent standards—I believe that we’re at a moment when we can take the lessons from the past 10 years so that we don’t slide backward.

At the same time, I want to ensure that folks who are responsible, who pay on their mortgage, can get good access to credit. I said in my September 2014 Bipartisan Policy Center speech that I believed that it was time to get over the stigma of homeownership. I still believe that. We need to reach a strong middle, a strong balance. So that’s one thing, to continue to work on that.

Second, my reasoning for this department has been a department of opportunity. To ensure that, for families of modest means, that they are like the sun that services of opportunity orbit around, with the goal of boosting their upward mobility and reducing inter-generational poverty. The best example of this was ConnectHome. Getting the Internet service providers together, getting nonprofits together, like the Boys & Girls Clubs and several others, to build a broadband connection, so more of those kids could do well in school and be more likely to graduate from high school and go on to college and avoid inter-generational poverty. I would expend more time continuing to build out that vision.

The third thing: I’ve been frustrated by the lack of hard data that will allow us to judge outcomes when it comes to the dollars that we spend. Especially when we spend money on things like job training and educational initiatives. I want to know what’s working, what difference it is making in each person’s life that we touch, and how are we impacting upward mobility so that people can actually reach their dreams. We are so far away from being able to measure those outcomes as well as I would like.

We have made some progress. We signed a [memorandum of understanding] with the Department of Education to get better about data sharing. There are bright spots within the public housing sector, [such as] public housing authorities that are doing good work with school districts in their areas to better understand the progress that students who live in public housing are making. We invested in something called Project SOAR recently, which was an effort—that will be measured—to fund education navigators in nine different public housing communities across the country to boost the percentage of high school seniors who actually fill out the Free Application for Federal Student Aid (FAFSA). The research is conclusive that the FAFSA is a powerful gateway instrument. You’re much more likely to actually go to college if you fill out that document. Folks get a sense of, “Oh, this is how it works, I can actually get money to go there, it isn’t going to be $20,000 a semester, it’s going to be $4,000”—or something that’s more affordable. We’ve made tremendous progress on this, but there’s still so much to do.

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