Nila Kartika Wati
The landscape of American housing policy is currently facing a dual transformation: a severe contraction of federal fiscal support and a burgeoning recognition of the informal leadership structures that have long sustained disinvested neighborhoods. In Milwaukee’s North Side, as in many historically marginalized urban centers, the true infrastructure of housing stability is often found not in government offices, but on the front porches of neighborhood stewards. These individuals, predominantly Black women, operate as the primary defense against predatory lending, tax foreclosure, and eviction, often performing these roles without formal compensation or institutional recognition. As the federal government moves toward significant budgetary retrenchment, the reliance on this "cultivated governance" is shifting from a supplemental community asset to the primary mechanism for neighborhood survival.
The Fiscal Landscape: Analyzing the FY 2027 Federal Budget Proposal
The proposed fiscal year (FY) 2027 federal budget outlines a transformative reduction in the Department of Housing and Urban Development (HUD) funding. The request includes a 13 percent reduction, totaling over $10 billion in cuts. This follows a trend of proposed eliminations that gained momentum during the FY 2026 cycle. Among the most significant targets for elimination is the Community Development Block Grant (CDBG) program. Established in 1974, CDBG has served as the primary flexible tool for local governments to address housing rehabilitation and neighborhood revitalization. Its removal would impact over 1,200 local jurisdictions nationwide, including Milwaukee, where the program has facilitated emergency housing for more than 13,000 residents over the last five years.
Furthermore, the HOME Investment Partnerships Program is slated for total elimination. As the primary federal gap financing mechanism for affordable housing, the removal of HOME threatens the viability of Low-Income Housing Tax Credit (LIHTC) developments. Without these funds, the financial architecture of new affordable units essentially collapses, particularly in markets where development costs far exceed the rental income potential of low-income tenants.
The restructuring of Housing Choice Vouchers (Section 8) into state-administered block grants with two-year assistance caps for working-age adults represents a fundamental shift in the federal guarantee of rental stability. In Portland, Oregon, the local housing authority, Home Forward, is already navigating a $35 million budget shortfall attributed to federal reductions. This has resulted in staff layoffs and a freeze on the issuance of new vouchers, leaving thousands of families on waiting lists with no immediate path to housing security.
Historical Context: The Manufacturing of Concentrated Poverty
To understand the current crisis, it is necessary to examine the historical policy decisions that created the existing urban landscape. As documented in Richard Rothstein’s The Color of Law, federal housing policy throughout the 20th century was an instrument of segregation. The Federal Housing Administration (FHA) utilized explicit underwriting guidelines to deny mortgages to Black families while simultaneously subsidizing the construction of white suburbs. This practice, known as redlining, effectively institutionalized a racial wealth gap that persists today.
In Milwaukee, the consequences of these policies are starkly visible. Black homeownership in the city currently stands at 27.2 percent, one of the lowest rates among major U.S. metropolitan areas. This disparity is not merely a historical artifact but a structural barrier; while the median household income for many Black residents is approximately $31,000, the income required to maintain homeownership without being cost-burdened is estimated at $54,000. Current federal cuts to down-payment assistance programs remove the final margin of accessibility for these households, threatening to widen the racial wealth gap even further.
Regional Response: Milwaukee’s 2025 Housing Element
In July 2025, the Milwaukee Common Council took a significant step toward addressing these challenges by adopting the Housing Element of the City’s Comprehensive Plan. The plan was the result of two years of intensive community engagement, with over 80 percent of public meetings held in Qualified Census Tracts—neighborhoods where median household incomes are below 60 percent of the Area Median Income.
The Housing Element prioritizes anti-displacement strategies and homeownership support for existing residents. However, the implementation of such a plan faces significant hurdles. Community organizations, such as Metcalfe Park Community Bridges, have noted that the success of the plan depends entirely on the continued resourcing of community engagement. There is an inherent "implementation gap" between municipal policy and the actual blocks and buildings where residents live. Bridging this gap requires the field to recognize and compensate the neighborhood stewards who hold the relational infrastructure necessary to reach vulnerable households.
The Portland Model: Restorative Redevelopment and Community TIFs
Portland is currently testing new models of housing governance that aim to move beyond traditional top-down development. These initiatives treat community governance as a central architectural component rather than an afterthought.
The Cully Tax Increment Finance (TIF) District
In 2022, the Portland City Council established the Cully TIF District with a maximum indebtedness of $350 million. Unlike traditional urban renewal projects that often lead to gentrification, the Cully TIF was co-created by a coalition of community-based organizations. Its primary objective is stabilization: preventing the displacement of the neighborhood’s remaining Black population, which had already seen a 50 percent decline over the previous decade. Governance of the TIF is overseen by a Community Leadership Committee with the authority to guide investment priorities and sequencing, ensuring that growth does not come at the expense of current residents.
Albina Vision Trust (AVT)
The Albina Vision Trust represents a move toward "restorative redevelopment." The historic Albina neighborhood was once the heart of Portland’s Black community before it was decimated by the construction of Interstate 5 and various "urban renewal" projects in the 1960s. AVT seeks to return both the people and the wealth that were extracted from this area.
A key milestone in this effort is the completion of Albina One, a 94-unit affordable housing complex. The project was constructed by a Black-owned firm and designed by a local Black architect. Under the city’s North/Northeast Preference Policy, housing applications prioritize residents with historical ties to the neighborhood. AVT is also currently negotiating the acquisition of a 10.5-acre parcel to further expand its restorative mission. These projects demonstrate that connection is a form of capital, and community-led governance can transform the economic outcomes of development.
Theoretical Framework: The 3 C’s of Cultivated Governance
The success of these community-led models can be attributed to what researchers call "Cultivated Governance." This is not informal volunteerism; it is a sophisticated and sustained form of leadership that operates through three core commitments:
- Compassion: This involves a deep, lived understanding of the barriers residents face. It allows leaders to intervene before a crisis—such as an eviction or foreclosure—becomes irreversible.
- Communication: Neighborhood stewards maintain a "living map" of their community. They know which landlords are predatory and which properties are at risk of tax default long before this information appears in official databases.
- Consistency: Unlike grant-funded programs that operate on short-term cycles, cultivated governance is generational. This consistency builds the trust necessary for residents to engage with formal housing services.
From an economic perspective, community development organizations have historically benefited from this stewardship for free. A housing counselor entering a new neighborhood must spend months building the trust that a neighborhood steward already possesses. By failing to compensate these leaders or integrate them into formal program design, the housing sector essentially extracts labor from the very communities it aims to serve.
Implications and the Path Forward
The proposed federal cuts represent a forced reckoning for the community development field. While the advocacy for the restoration of HUD funding is essential, it is equally important to acknowledge that the previous system was insufficient. Even during periods of robust federal investment, Black homeownership rates remained low and displacement continued.
The current crisis provides an opportunity to rebuild the housing system with a more resilient, community-rooted framework. This transition requires several key shifts in practice:
- Direct Funding Mechanisms: Creating flexible funding streams that can reach neighborhood stewards without the prerequisite of formal organizational incorporation.
- Compensating Expertise: Formally recognizing and paying for the specialized neighborhood knowledge held by informal leaders.
- Governance Architecture: Building programs around existing relational infrastructure, as seen in the Cully TIF and Albina Vision Trust models.
- Focus on Stabilization: Prioritizing the preservation of existing residents’ housing security as a prerequisite for any new development.
The data suggests that the market alone will not produce affordable housing at the necessary scale, and state and local governments cannot bridge the $10 billion federal gap in isolation. However, the "invisible architecture" of community governance remains intact. The 250-year-old tradition of Black women organizing their blocks and sustaining their communities is a record of resilience that federal policy has failed to erase. The question for policymakers and housing practitioners is whether they will finally organize their institutions around these leaders, or if they will continue to build over them in the name of progress.
