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Rebuilding the Research Capacity at HUD 10 Loss of Capacity and Its Consequences The prior chapters have provided a detailed portrait of the history, structure, capacity, achievements, strengths, and weaknesses of PD&R. They have documented how the office has made important contributions—through both in-house and external research—to the development of HUD policy, programs, and topics crucial to HUD’s mission. In addition, PD&R has developed many vital public-use data bases and mechanisms for disseminating HUD-sponsored research. The prior chapters have also detailed shortcomings and missed opportunities. In this chapter the committee describes how PD&R’s capacity has eroded and the consequences for PD&R’s ability to continue to provide high-quality work. LOSS OF CAPACITY The committee has observed three interrelated and coincident trends related to PD&R resources and responsibilities: (1) reductions in financial resources for conducting PD&R’s core functions; (2) reductions in human resources for conducting PD&R’s core functions; and (3) increases in activities unrelated to PD&R’s core functions. Chapter 2 documents how the PD&R budget for research and technology has declined in real terms in recent years. By several measures, the budgetary resources available to PD&R for research and evaluation activities (independent of basic data collection activities) have declined by roughly two-thirds in less than a decade. Chapter 2 also documents that PD&R staff devoted to research, evaluation, or policy development activities has been reduced by about one-fourth since 1989. In addition, key PD&R senior staff members have been retiring at a
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Rebuilding the Research Capacity at HUD rapid rate, resulting in a big loss of expertise and institutional memory that is hard to fully replenish at the younger ranks. Since the mid-1990s the staff of PD&R’s Office of Policy Development has both been cut roughly in half, and the critical position of deputy assistant secretary for policy development has been filled only sporadically. At the same time that PD&R’s financial and human resources have been dwindling, its responsibilities to manage several nonresearch and evaluation activities have expanded. When the Office of University Partnerships (OUP) was transferred to PD&R, it came with both program resources and budget for operational staff. However, over time, these resources have been absorbed into the general budget of PD&R and increasingly squeezed. Similarly, the Office of International Affairs within PD&R has absorbed increasing staff resources. Neither of these offices conducts research or program evaluations, collects data, or disseminates studies. The expansion of such nonresearch and evaluation activities has forced PD&R to allocate increasingly scarce staff away from its core responsibilities, further aggravating the absolute decline in its capacity to perform its core mission. This interrelated triad of trends is portrayed diagrammatically on the left side of Figure 10-1. Declining funds available to conduct major external research studies has led to an internal research agenda-setting process that is isolated from the larger scholarly community and less likely to produce work that will continue to significantly expand the bounds of knowledge about how HUD programs can be enhanced or about other vital urban issues. In addition, the flagship of PD&R’s stable of surveys, the American Housing Survey (AHS), has suffered serious diminution in the number of metropolitan areas and dwelling units sampled and in the frequency of surveys being undertaken. The Residential Finance Survey is threatened with elimination, at the same time that policy makers are wrestling with the most serious problems in the housing finance system in two decades. And although HUD has been successful in developing public-release versions of some administrative data bases, increasingly these data are only being released with significant delay. Budget limitations mean that PD&R constantly has to face a difficult choice between doing more limited studies of a larger number of issues or programs and doing more extensive studies of only a few. With the possible exception of the recently initiated housing counseling study, no new large-scale, external research studies are now in the PD&R pipeline, and a number of medium-scale studies have not provided definitive assessments of the impact of HUD programs because of limited financial and data resources devoted to the investigation. And, although often of high quality and potentially important to many constituencies, in-house PD&R research has not always been produced in a timely fashion because of competing demands on staff time. Moreover, opportunities to exploit administrative
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Rebuilding the Research Capacity at HUD FIGURE 10-1 Erosion of PD&R capacity. SOURCE: Unpublished data from HUD, Office of Policy Development and Research.
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Rebuilding the Research Capacity at HUD data have been missed because of the inability to make the investments needed to make these data sets robust for research purposes. In addition, HUD USER and the other dissemination mechanisms would need to be substantially improved if the visibility of and access to PD&R’s research and evaluation studies and HUD administrative and other PD&R data sets are to reach the audiences their quality and importance warrants. In concert, PD&R’s more limited agenda and data sets; declines in the scale, scope, and significance of its internal and external research, evaluation, and policy development work; and unrealized effectiveness in dissemination have profound consequences for PD&R that have both internal and external dimensions. Internally, PD&R is steadily becoming less ambitious and creative in establishing agendas and developing research projects, no doubt as a function of the diminishing research and technology budget. This may encourage the retirement of veteran staff; it surely makes it more challenging to attract high-quality replacements. Moreover, the declining capacity of PD&R makes it less likely that future secretaries of HUD will be able to make as effective use of PD&R work as past secretaries have been able to do. Externally, constituencies with potentially critical interests in the work of PD&R—the congressional committees, public officials, advocacy and community development organizations, and industry groups related to housing and urban development issues—see PD&R as less relevant and useful than it was in the past. As a result, the work of PD&R is not achieving its potential to contribute in a significant way to the ongoing internal and external discourses over the evolution of HUD programs and broader urban development policy. The erosion in budget and staffing generates a negative feedback effect (portrayed as the dashed line in Figure 10-1). Cuts in funding and reductions in staffing make it harder for PD&R to produce high-quality research and timely policy development. As Congress then finds PD&R less helpful in addressing policy questions, it gradually looks less frequently to PD&R and becomes less likely to commit substantial financial or human resources to the office. Because other potential constituents and users of PD&R’s data sets and research products perceive these to be comparatively less powerful and more difficult to access, they are less likely to press Congress for a maintenance (let alone expansion) of PD&R’s capacity. In sum, PD&R has for some time been enmeshed in a reinforcing downward spiral (as portrayed in Figure 10-1). This process (1) erodes the financial and human resources of PD&R while simultaneously diffusing and expanding its activities; (2) weakens multiple dimensions of performance in PD&R’s core activities; thereby (3) leads to the perception by internal and external stakeholders that PD&R’s output is less useful; and (4) undermines internal and external support for maintaining PD&R’s capacity and encouraging further diffusion of responsibilities.
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Rebuilding the Research Capacity at HUD CONSEQUENCES The downward spiral in which PD&R finds itself comes with significant consequences in at least three major dimensions. The first is a series of missed opportunities to improve the efficiency and equity of the current array of HUD programs and thereby directly serve the interest of U.S. taxpayers. The second is a restricted ability of many constituencies outside of HUD to conduct important research in housing and urban development that ultimately could improve the well-being of many people living, working, and investing in metropolitan areas. The third is a substantial failure to inform the discourse on crucial emerging challenges to urban areas that clearly will affect the quality of life for the vast majority of Americans. Missed Opportunities to Improve Programs The committee was charged to assess how well the current research program is aligned with HUD’s mission, goals, and objectives. The committee concludes that the downward spiral of PD&R’s capacity has produced and will increasingly produce a misalignment in this regard. Chapter 3 describes several instances where the diminished capacity of PD&R resulted in missed opportunities to conduct rigorous, cutting-edge evaluations of important HUD programs. These included investigations of the community benefits provided by the Empowerment Zone Program and the impacts of public housing or project-based Section 8 developments on residents. Without such evaluations, the public cannot be certain that these and other programs are being designed and operated in the most efficient and equitable fashion feasible. Missed Research and Data The committee was charged to assess the allocation of resources to data development. The committee concludes that the scope and usefulness of public-use data sets, particularly AHS, have been systematically eroded by the process described in this chapter. Moreover, potentially valuable administrative data and data produced by external researchers have either not been made available for internal or public use or have been made available only with a long lag, as a result of the same downward spiral. The costs to potential both external users (private housing industry, community development groups, government officials, policy advocates, urban scholars, etc.) and internal users (the secretary, program offices, policy development staff) of such data limitations probably far outweigh the budgetary costs of their provision at appropriate scale and scope.
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Rebuilding the Research Capacity at HUD Failure to Inform Policy Development The committee was charged to identify unmet research needs for which HUD and PD&R could provide unique value or should be active to meet the nation’s future needs. The committee concludes that the research agenda-setting process in PD&R is too insular and has too much of a short-term focus; consequently, it is unlikely to come to grips with many important realms of emerging urban challenges. Thus, PD&R will poorly serve the future national interest if it fails to provide in a timely fashion basic, foundational research on the topics that in a few years will be at the top of the U.S. urban agenda. The list of emerging urban challenges that research sponsored by PD&R has thus far failed to address is long. Below we provide four illustrations, without suggesting that they are the most important. Rather, the committee emphasizes that the following are emblematic of numerous challenges now clearly on the horizon where research by PD&R can contribute to better policy. Sustainable Development PD&R has focused primarily on housing research in the past, but it also needs to focus on the second half of HUD’s charge—urban development and the health of cities. Most of the major emerging challenges, such as global warming, environmental decay, failing infrastructure, and energy shortages, will have profound effects for urban areas. If the United States is to successfully meet these pressing challenges, the country must learn how to build and manage urban communities in a sustainable way. With sufficient capacity, PD&R could embark on an intensive and an extensive research program on what constitutes sustainable urban development. Such a program might well focus on such issues as land use and urban design, urban infrastructure, energy efficiency and green building design, and urban transportation systems and technologies. Metropolitan Labor Markets and Productivity PD&R has not systematically investigated the spatial linkages among urban workplaces and between workplaces and residential areas and the potential gains in the economic efficiency of cities associated with rearranging these linkages through policy interventions. Basic research has documented sizeable efficiency gains from the agglomeration of economic activity in cities, in neighborhoods, and in regions through urbanization and specialization of economic activity. Efforts to realize these potential gains may result in tangible local benefits, as well as increases in regional
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Rebuilding the Research Capacity at HUD and national output. Success would have wide-ranging implications. For example, deeper understandings of the relations between suburban and central city workplace concentrations could provide a framework for more cooperative regional governance and improve the ability to alleviate concentrated urban poverty, while successful formulas for achieving agglomeration could allow for proactive design of transportation systems. These issues related to emerging metropolitan labor market linkages and productivity could be systematically explored in PD&R-supported research. Fiscal Systems Through most of the postwar period, the older cities of the Northeast and Midwest became less attractive places to live in comparison with nearby suburban areas. Strengthening the central cities has been a goal of federal urban policy since the National Housing Act of 1949, but transfers from the federal and state governments, though increasing, were not sufficient to address urban fiscal problems or stem population declines. During the 1990s, however, a number of cities introduced competition into the provision of municipal public services, ranging from such mundane matters as trash collection and pothole repair, to such back-office functions as record-keeping and the maintenance of city-owned vehicles. Some of these cities have been able to reduce municipal outlays and taxes in the process. This fiscal and service improvement coincided with an influx of immigrants to the older cities in the Northeast and Midwest. This experience suggests a possible future for cities as communities of choice for the new immigrants as their economic circumstances improve. A research agenda to investigate systematically the possibilities and limitations of further competition in municipal public service provision could promote the development of new strategies for strengthening the cities and achieving a long-established national goal of urban policy. This could be an extension of PD&R’s past agenda to provide technical assistance to local governments, dating back to the 1970s. Predatory Lending The surge in private lending to previously underserved groups with new and highly complex mortgage instruments has contributed to large numbers of mortgage foreclosures. PD&R is an obvious group to continue to play an integral part of the government’s efforts in combating unfair and predatory lending. Although the 2008 Housing and Economy Recovery Act creates a new regulator for the GSEs that assumes HUD’s responsibility for mission regulation, HUD remains the only federal agency with a broad and primary focus on housing. PD&R could continue work
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Rebuilding the Research Capacity at HUD on overall housing markets that would be relevant to the regulation of the GSEs and other issues. CONCLUSION PD&R’s past shortcomings and missed opportunities are symptomatic of a self-reinforcing structural process that has been systematically eroding the capacity of PD&R. If left unchecked, this process will increasingly limit PD&R’s ability to carry out high-quality research, evaluation, data collection, and dissemination activities. Such a development would poorly serve the public interest generally and the hundreds of millions of people living, working, and investing in metropolitan areas. Despite the systematic erosion that has occurred, there remains a nucleus of highly qualified and dedicated staff in the office who could provide a strong foundation for revitalizing PD&R. In Chapter 11 the committee presents its vision of a future PD&R and offers a set of recommendations directed to PD&R, the secretary, and Congress for moving forward.