HUD and PD&R’s Early Contributions to Innovation in Building Technologies

HUD and PD&R's Early Contributions to Innovation in Building Technologies

By Kent Watkins, Chair, American Academy of Housing and Communities

This article reviews housing technology research from HUD and the Office of Policy Development and Research (PD&R) from 1965 to the late 1990s. PD&R was often at the forefront of this innovative work, logging successes and facing challenges along the way. A future article will cover PD&R's work from the advent of the Partnership for Advancing Technologies in Housing (PATH) program to the present day.

Housing Technology Research at HUD From 1965 to 1968

Before 1965, federal housing research and demonstration activities were relatively small and scattered among several government agencies. After the creation of HUD in 1965, Section 1010 of the Demonstration Cities and Metropolitan Development Act of 1966 directed HUD to "conduct research and studies to test and demonstrate new and improved techniques and methods of applying advances in technology to housing construction, rehabilitation, and maintenance, and to urban development activities [emphasis added]." This mandate fell to two HUD offices created in 1967 within the Office of the Secretary: the Office of Policy Analysis and Program Evaluation and the Office of Technology and Research. These two offices assumed responsibility for all but the most closely program-oriented of HUD's R&D programs, and they eventually merged into the present-day PD&R in 1973.

In 1967, HUD commissioned a study by the National Research Council (NRC) of the National Academies of Sciences and Engineering that sought recommendations for "long-range planning for R&D" at HUD. NRC recommended that HUD focus primarily on ways to use currently available technology, such as improving factory-produced housing, and only secondarily on pursuing research opportunities in new technology.

During this period, citizen movements to protest housing inequality, among other events, highlighted the need to produce affordable housing at a scale much larger than Congress had previously envisioned. With that need in mind, the Housing and Urban Development Act of 1968 established an ambitious 10-year goal of creating 26 million new homes, including 6 million homes for low- and moderate-income families. Section 108 of the act directed HUD to encourage the use of new technologies in the development of low-income housing.

Section 108: Laying the Groundwork for Operation Breakthrough

Section 108 of the Housing and Urban Development Act of 1968 required HUD to solicit and approve no more than five plans by public or private entities to develop low-income housing "using new and advanced technologies…where local building regulations permit the construction of experimental housing," or where local zoning law permits variances for the construction of experimental housing. Before HUD Secretary Robert Weaver left office in December 1968, he and Undersecretary Robert Wood began implementing Section 108 with three demonstrations: Austin Oaks Demonstration, In-Cities Experimental Housing Project, and Surplus Lands Community Development Demonstration.

Austin Oaks Demonstration. In December 1968, President Lyndon Johnson dedicated the 10-unit building technology demonstration known as Austin Oaks. This housing design competition prized speed, affordability, and energy efficiency and even drew on the talents of space shuttle fabricators from the National Aeronautics and Space Administration to design and build homes in the cul-de-sac. In an interesting juxtaposition of priorities, an interdisciplinary research team from the University of Texas Austin deployed engineers to measure the energy performance of these 10 homes over time, while a team of sociologists and architects used participatory design techniques to answer the question, "Can families of different races live together?"

In-Cities Experimental Housing Project. The outgoing administration also initiated the In-Cities Experimental Housing Project, which studied how zoning, building codes, labor rules, and local financial and administrative policies constrain the rapid adoption of cost-saving housing production technologies.

Surplus Lands Community Development Demonstration. Under the direction of HUD's Urban Renewal Administration, the White House coordinated a Surplus Lands Community Development Demonstration. One of the demonstration's goals was to create a national showcase for the practical application of new systems and technologies in architecture, site development, and construction. Demonstration sites included Fort Lincoln (the former National Training School for Boys in the District of Columbia); Louisville, Kentucky; San Antonio, Texas (Fort Sam Houston); and San Francisco, California (Fort Funston and Fort Miley).

Together, these three demonstrations would form the foundation for the next generation of housing technology: Operation Breakthrough, enacted under HUD Secretary George Romney.

Operation Breakthrough: 1969 to 1975

Running from May 1969 to the mid-1970s, Operation Breakthrough was a three-phase demonstration to test innovative building materials and methods. The effort sought to identify and demonstrate solutions to obstacles preventing large-scale housing production in the United States, with the goal of increasing the production of quality housing for all income groups.

In Phase I (Design and Development), 22 Housing System Producers prepared designs, developed engineering data, and planned the construction of prototype units. Producers used housing systems ranging from precast concrete- or wood-framed modules to units constructed largely of plastic or metal.

Phase II (Construction and Demonstration) involved the construction of more than 2,900 prototype housing units at 9 U.S. sites that represented a range of geographic, climatic, and marketing conditions.

Phase III (Volume Production and Marketing) focused on volume production. Although the demonstration's goal was to build 25,000 subsidized units, only 18,000 units had been completed as of March 1976. Most Operation Breakthrough units were constructed under HUD's Section 236 mortgage subsidy program.

To view a list of Operation Breakthrough site planners, housing producers, and site developers, please click here.

Operation Breakthrough: Success or Failure?

Many researchers have studied Operation Breakthrough. Some have called the initiative an unmitigated failure, whereas others have noted some regulatory successes. Here I provide PD&R's positive assessment of the demonstration, a largely critical U.S. General Accounting Office (now known as the U.S. General Accountability Office, or GAO) review, and my own thoughts.

Operation Breakthrough's Project Feedback Series

In 1975, HUD published the fourth volume of its seven-volume Operation Breakthrough Feedback series. Volume 4 describes Phase II of Operation Breakthrough in detail, but, contrary to some views, it did not represent a eulogy for the program. In the preface, Assistant Secretary Moskow described Operation Breakthrough in optimistic terms: "The Department of Housing and Urban Development launched Operation BREAKTHROUGH in 1969 to stimulate volume production of quality housing for all income levels. Factory building offered a logical means — then as it does now — for the housing industry to grow and progress. We set ambitious objectives for that growth." He also acknowledged the individuals involved and the program’s long-term impact: "The energy and imagination shown by thousands of people who participated in the program likely will stand as a milestone in our housing history." Moskow concluded, "Much can be learned from BREAKTHROUGH, which some have called ‘a unique laboratory for continuous research.’"

1976 GAO Report on Operation Breakthrough

On November 2, 1976, GAO delivered a report to Congress on Operation Breakthrough called Lessons Learned About Demonstrating New Technology. Although the report acknowledges some of Operation Breakthrough’s successes, most readers consider it to be a sharp critique of the initiative.

GAO reviewed Operation Breakthrough "to find out what it has accomplished and the lessons to be learned about planning and managing technology demonstration programs. Experience gained from Operation Breakthrough should be useful to the Congress in authorizing, funding, and monitoring technology demonstration programs in the future [emphasis added]." Using information gathered from questionnaires sent to industry stakeholders, GAO concluded that, although Operation Breakthrough did not lead to major changes in the housing industry, the initiative accomplished the following objectives:

• Exposed builders to new construction methods and materials.

• Explored new methods of evaluating housing construction.

• Encouraged changes in building code requirements.

• Supported statewide building codes.

• Tested new labor agreements for industrialized housing construction.

GAO further noted that Operation Breakthrough failed to meet its objective to "create sufficient housing markets to support the high production level required for efficient industrialized housing construction" because of the following factors:

• Unexpected decreases in the housing market.

• Suspension of HUD's subsidized mortgage housing programs, "which were intended as a housing market by planners and program participants of Operation Breakthrough."

• Lack of cost savings potential for some housing systems.

In addition, the GAO report found that "the program did not document and obtain answers to questions from the Congress concerning the cost savings to be gained by using industrialized construction methods." Overall, GAO found that "Operation Breakthrough provides lessons about planning and managing technology demonstrations that Federal agencies should consider in their present and future progress."

My Personal Thoughts on Operation Breakthrough’s "Failure"

Although I don't personally believe that Operation Breakthrough was a failure, the demonstration followed a trajectory that others considered unsuccessful. These are my own thoughts about the reasons for Operation Breakthrough's perceived failure, based on my personal experiences with the initiative and its precedent activities as well as a review of published research and discussions with others involved in the demonstration.

• Secretary Romney continued to advocate for fair housing intervention policies from the Housing and Urban Development Act of 1968, which raised opposition within the Nixon administration. This tension spread into other efforts that Romney championed, including Operation Breakthrough.

• HUD was under the political microscope of New Federalism, which dramatically changed HUD's multiplicity of grants to a general revenue-sharing model and, further, to special revenue-sharing grants. This change in approach shifted the balance of power from the federal government to state and local governments.

• Even though housing is a significant lever for economic development, Operation Breakthrough's funding did not reflect the importance of the work. Adequately funding Operation Breakthrough proved to be a challenge throughout the life of the demonstration. During fiscal year 1971, Congress approved only $30 million ($192 million in 2017 dollars) for PD&R's research and technology account to subsidize aspects of the demonstration. Carl Coan, Sr., staff director of the Senate Housing subcommittee, tried to improve on those numbers, but the Appropriations subcommittees held more influence. This level of funding was insufficient for an endeavor of this size, even in a private-public partnership.

• After Romney departed and the engineer assistant secretary of PD&R was replaced with an economist, the chief advocates of Operation Breakthrough could no longer defend the program. Other ideas eclipsed the shine of Operation Breakthrough — tenant-based housing allowances, the Moving to Opportunity demonstration, alternative program designs in housing voucher program, the physical and financial condition of multifamily housing that the Federal Housing Administration insures, the measurement of housing discrimination, and the American Housing Survey.

• Stakeholders invested in maintaining institutional and consumer barriers — craft unions, mayors, homebuilders, NIMBY (Not in My Back Yard) neighborhoods, zoning boards, and those responsible for building codes — regained their status quo power.

• Finally, the 1973 merger of the Policy Analysis and Market Analysis offices with the Research & Development office to become the Office of Policy Development and Research shifted HUD's policy priorities.

Although some critics focus on how Operation Breakthrough could have performed better, I was reminded recently of its lasting contribution. In February 2024, I attended a workshop in which participants from the United Kingdom, Sweden, and Japan gathered at HUD with their U.S. housing counterparts to confront a similar affordable housing challenge of demand and supply not unlike the situation 50 years ago that sparked Operation Breakthrough. Part of the workshop was devoted to reflections on Operation Breakthrough, a testament to its lasting value and the lessons it taught us that are still salient and valuable even today.

Small, Directed Research Activities in the 1980s and 1990s

In the 1980s and 1990s, PD&R undertook various research activities in the housing technology field, including but not limited to developing lead paint regulations and supporting improved regulations for the manufactured housing industry. During a time of particularly volatile lumber prices, HUD also examined alternatives to conventional wood framing for housing, with the goal of identifying the advantages and disadvantages of structural insulated panels and concrete insulating forms.

The Beginning of PATH: 1998

The research priorities that had been dropped in these post-Operation Breakthrough studies — building technologies — were taken up again under the Clinton administration, albeit with a different emphasis. Launched in 1998, the mission of the Partnership for Advancing Technologies in Housing (PATH) was to collaborate with public and private housing industry experts to expand the development and use of new technologies to make American homes safer, more durable, and more energy efficient without sacrificing affordability. Unlike Operation Breakthrough, PATH focused on construction quality and sustainability rather than industrial production. Regina Gray will explore PATH in greater detail in the next article in the PD&R at 50 series.

An Industry in Search of a Disruptor

As in 1968, a central role remains today for technology innovations that increase housing production to meet the needs of a growing population. Although Operation Breakthrough and PATH expanded the use of factory-built construction and innovative technologies for small portions of the housing market, HUD must seek solutions that can impact the larger housing industry. The homebuilding sector is ripe for the kind of technological disruption that has emerged in other sectors of the U.S. economy. Whether that disruption involves artificial intelligence or another yet-to-be-imagined technology, the future of housing innovation holds great promise.