Public housing began during the Roosevelt years. In 1937 President Franklin Roosevelt signed the United States Housing Act, known as Wagner-Steagall, to support building low-rent public housing. In the wake of President Truman‘s surprise reelection in 1948, Congress passed the bill now known as the Housing Act of 1949 and re-authorized the public housing program. The GI Bill after World War II supported veterans in securing low-interest loans to own their own homes. In the 1950s Congress passed a second Housing Act focused on conserving and rehabilitating low-income housing. All these laws favored white people.
The 1950s were famous for "urban renewal" which meant that the federal government provided grants for slum clearance that often meant cities would choose the poorest section of town to abolish residences and build new construction.
In the 1960s, public housing became less discriminatory with Kennedy's Equal Opportunity in Housing Act. President Johnson elevated housing to the cabinet level creating the Housing and Urban Development Agency. On April 11, 1968, Johnson signed the Civil Rights Act of 1968, including Title VIII better known as the Fair Housing Act to fight against housing discrimination.
In the 1960s, HUD provided subsidies to public housing agencies (PHAs) to make up the difference between revenue from rents and the cost of adequately maintaining the housing. In 1969, Congress passed the “Brooke Amendment,” codifying a limitation on the percentage of income a public housing resident could be expected to pay for rent. The original figure was 25% of income, which was later raised to the 30% standard that exists today. Advocates often refer to these as “Brooke rents,” for Senator Edward W. Brooke III (R-MA), for whom the amendment is named. Unfortunately, the Brooke Amendment meant that PHAs could not meet their costs because they could not increase their rents. By the early 1970s, the housing authorities in large cities had become caught between the financial scissor blades of falling tenant incomes—and therefore rents—and rising maintenance costs.
Although there was always some interest in the private sector building low-income housing, it wasn't until the Nixon era that building public housing went down to a trickle. In January 1973, President Richard Nixon created a moratorium on the construction of new rental and homeownership housing by the major HUD programs. The Housing and Community Development Act of 1974 produced a complex new program, Section 8, which incorporated both production and rent supplements goals. This act is best known for the creation of the Community Development Block Grant Program and the Section 8 programs. Section 8 vouchers could be used in private housing. The private sector was taking over. And as it did so, homelessness rose.
The rise in homelessness spurred Congressional action. The McKinney Act of 1987 was passed to address homelessness through temporary shelters and social service programs. But none of the funds could be used for permanent housing.
In the Tax Reform Act of 1986, the IRS supported affordable housing development through the creation of the Low Income Housing Tax Credit, which provided tax credits to those investing in the development of affordable rental housing and interested private developers into building some low-income housing for a limited number of years. Unfortunately, it was insufficient to the need.
Unfortunately, by the mid-1990s, a general consensus had emerged that in too many instances, public housing failed to provide quality, affordable housing to the nation’s neediest families. This consensus was not necessarily based on fact. Edward Goetz, in his 2013 book, New Deal Ruins, writes that "although the discourse of disaster dominates discussions of public housing, the reality is that in most places it worked and still does work" (p. 2). But newspaper stories about crime in public housing in a few large cities dominated. Then as the federal, state and local governments subsidized public housing less and less, more problems developed.
Vouchers continued to be popular because it gave low-income renters the freedom to move out of their neighborhoods. One of the most disconcerting actions was when President Clinton in his 1997 proposed federal budget, proposed no new money for Section 8 vouchers, even though Section 8 vouchers had succeeded in transplanting low-income renters to better neighborhoods throughout the nation.
Then, in the Quality Housing and Work Responsibility Act of 1998, officials said they could not build new public housing even if they wanted to because of a 1998 amendment to federal housing law that fixed the total amount of public housing eligible for federal subsidies according to the number of existing units. In New York City, the limit is set at just above 180,000 apartments. That amendment ended any new investment in public housing unless the cities or states were willing to subsidize the construction.