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Affordable Housing Crisis Sparks Evolutionary Solutions: More Emphasis Is Being Placed on Preservation of Low-income Neighborhoods, and Preservationists Are Joining with Others to Help the Crisis 

12-09-2015 17:35

On the edge of the Ledbetter Heights historic district in Shreveport, La., sits the McAdoo Hotel--a once proud brick inn built in the 1920s. It had deteriorated over the years, along with the rest of the Texas Avenue business corridor, was abandoned and faced demolition. Now renovated as permanent housing for 45 people of low income, the McAdoo symbolizes a major shift in the country`s approach to low-cost housing.

This housing evolution is a reaction to the nationwide shortage of low-cost housing -- the most severe since the Great Depression and one that continues to grow at an alarming rate. Simply put, more affordable housing is being lost than is being built. (Generally, housing is considered affordable when a household spends less than 30 percent of its gross income for all shelter costs.) From 1973 to 1983, 4.5 million units were permanently removed from the nation`s housing stock; half of those units had been occupied by low-income households. Only one million units were built during that time.

The search for shelter has become a Darwinian struggle for housing; the weakest are losing and falling through society`s safety nets onto the street. And while the exact number of homeless persons is controversial (estimates range from 250,000 to 3 million persons), the extent of their suffering is not. Among the homeless, families are the group increasing in size most rapidly. Homelessness is not seen as an isolated urban phenomenon anymore, for the crisis now extends to suburbs and rural areas.

Harder to quantify but also at great risk are the individuals and families doubling up with friends or relatives. In New York City alone, some 100,000 families are thought to be doubled up at any time. The crisis has even extended into the middle class as home ownership declined in 1987 for the first time since World War II. For more and more people, the only option is to "trickle down" rather than "trickle up."

Who is responsible for this crisis? Both the private and the public sectors are at fault. Basically, during the 1980s there has been little or no incentive for the private sector to construct or renovate low-cost housing; meanwhile, construction of federally sponsored housing has slowed to a standstill, and federal subsidies to owners of existing housing have declined significantly. That`s not surprising, though, since the Department of Housing and Urban Development`s budget dropped from $35.7 billion in fiscal year 1980 to $7 billion in 1988. In 1986 Congress adopted the Stewart B. McKinney Homelessness Assistance Act, but the $442.7 million appropriated in FY `87 and $617 million in FY `88 is targeted for the creation and maintenance of shelters and services for the homeless.

At the same time that the federal government is backing away from the housing business, hundreds of thousands of affordable, private-sector units have disappeared through arson, abandonment, urban renewal and gentrification. As many as one million persons are thought to be displaced every year.

This crisis has wrought a nationwide reexamination of what constitutes decent housing. In fact, there has been a resurgence of an old housing type--the residential apartment or, in modern terms, the single-room-occupancy (SRO) hotel. Once considered flop houses, half the country`s supply was demolished by 1982 in the name of urban renewal. Now, ironically, the benefits of SROs are being heralded, particularly for singles of all ages, the elderly and the chronically mentally ill. As the name infers, the prototype SRO has single rooms for its guests and residents. Living, kitchen and dining areas and bathrooms are shared, although many variations exist.

As federal dollars for low-cost housing declined during the Reagan Administration, the McAdoo and many other similar projects have been feasible only with extra support from nonprofit and for-profit organizations, local and state governments, and professionals dedicated to increasing the supply of low-cost housing. These newly formed coalitions provide funding for the renovation or new construction of low-cost housing, social service support, management of the property and the design and operation of shelters for the homeless. For example:

  • Greater Miami Neighborhoods provides development services to six neighborhood and citywide low-income housing groups. Since 1985 it has raised more than $1.5 billion from local government and the business community for loans, grants and operating expenses for 266 units.
  • Founded in 1988, the Massachusetts Housing Partnership consists of state agencies giving local housing partnerships financial and technical support. Efforts are geared toward: (1) increasing the supply of affordable housing; (2) identifying local urban resources-- vacant lots and buildings, properties whose taxes have not been paid and property owners holding dilapidated structures or vacant land; (3) encouraging local governments to combine growth management and affordable housing initiatives; and (4) encouraging the development of housing for special needs.
  • The state of California has six housing programs for low-and very-low income persons: (1) the rental housing construction program; (2) the emergency shelter program; (3) the special user housing rehabilitation program; (4) the California self-help housing program; (5) the farm labor housing rehabilitation program; and (6) the senior citizens shared housing program.
  • The Chicago South Shore Bank linked deposit program supports neighborhood housing and community development. Basically, individuals, government agencies, corporations and foundations invest funds in a bank at low or no interest based on the bank`s commitment to use the money for community development.
  • Created by an act of Congress, the Neighborhood Reinvestment Corporation is the umbrella organization of the Neighborhood Housing Services located in 137 cities. The network includes the apartment improvement program and the Mutual Housing Association.
  • The Enterprise Foundation and the Local Initiatives Support Corporation are two nationally orientated groups that work with community-based organizations to reduce the cost of rehabilitating and building low-cost housing, through assistance in designing, funding and operating housing.
  • The BRIDGE Housing Corporation, a nonprofit organization in San Francisco, aims "to provide housing in volume, not just in token numbers." The majority of the below-market units produced with BRIDGE funding and technical help are mixed in with market-rate housing.
  • Headquartered in Sacramento, Calif., and operating in 10 Western states, the Rural Community Assistance Corporation has helped local communities develop 20,000 units of housing, including more than 5,000 units constructed using self-help techniques.

These new partnerships are seen by some as the most significant and potentially far-reaching housing innovation of the decade. "It is clear to us that the scope and depth of the initiatives represent more than a passing phenomenon. We believe that larger, independent roles in housing and community development at state and local levels are here to stay," concluded Mary K. Nenno and George S. Colyer in the second volume of New Money and New Methods: A Catalog of State and Local Initiatives in Housing and Community Development, published by the National Association of Housing and Redevelopment Officials.

While states and localities are providing more public funds for housing from their general coffers, there is also an aggressive search for new revenue sources, including new real estate taxes, fees on new developments, the use of excess monies from finance agencies and other bond reserves and community funds.

Alaska, Louisiana and Memphis, for instance, pioneered the use of taxable housing bonds as a financing technique. Atlantic City has imposed a 2 percent tax on gross revenues; Montgomery County, Md., has imposed a 4 percent tax on the initial sale of rental buildings being converted into condominiums. Chicago has placed a one cent tax on cigarettes to raise money to provide housing for the homeless.

Since funding is scarce, renovation of older buildings is favored over new construction; renovating what is already built can prove substantially less costly--up to one-third less--than building anew. Every possible resource in cities and in rural areas needs to be tapped--buildings and vacant lots owned by a city through default, vacant lots owned by private developers who are willing to part with them at a low price or buildings that no longer serve their original functions and are vacant.

Important to increasing the supply of low-cost housing is the "shadow market," a term coined by William C. Baer, an urban and regional planning professor at the University of Southern California. Baer`s premise is that a community can significantly expand its housing supply by renovating into residential units buildings that were used formerly for nonresidential purposes (industrial lofts, schools, churches) and former group quarters (sorority houses, convents). Additional units can be created by subdividing or adding to existing dwellings. "To bring this `shadow market` alive, local governments need only to make modest changes to building codes and zoning regulations," Baer maintains.

Obviously, how such buildings would be renovated for low-cost housing would depend on budget, location and prospective users. Several design tenets, however, are universal in creating a quality environment. Joan Goody, of the Boston architecture firm Goody, Clancy & Associates, suggests, "A good place to live in is indeed a living place: it has and it remembers its past, it is responsive to the needs of its present occupants, and it suggests that there will be future changes to come. Unlike the identical, sterile, `faceless blocks` of the housing project (where the only changes are through defacement and graffiti), a good place to live in has variety and invites personalizations. It may have a subtle variety--of differently shaped windows or roofs, of color for trim or doors, of garden fences or plantings. Ideally these variations and changes will have occurred over a long period of time, with each generation making its additions and alterations, enriching the whole."

More and more the validity of current housing codes and standards is being questioned: Can we significantly decrease costs while maintaining quality? Or in other words, do building codes and standards reflect current housing needs, especially among people with low incomes. Kate Lane, of the Chicago-based nonprofit organization Bethel New Life, recounts, "When we renovated low-cost housing I had to fight for an exemption from placing a light bulb in a closet," an expense that would have markedly increased the project`s overall cost.

In New York State there are two codes for housing--one for one-and two-family housing and the other for multiple-family units. "You have to meet the same standards in a three-family house as you would in a 100-unit high rise. That does away with the economies of doing three- and four-family housing," says Kathleen Dorgan, director of the Capitol Hill Improvement Albany Center Corporation.

Space requirements also are being scrutinized. "We generally consider 1,000 square feet the minimal house size," says Annette Anderson, of the East Tennessee Community Design Center. "To reduce the cost of construction, however, we are looking at a minimum of 600 or 700 square feet. We`ll have to compensate with more shared space."

Are our standards for rehabilitation too high? The Enterprise Foundation emphasizes partial rehabilitation as the key to providing more low-cost units. "If it ain`t broke, don`t fix it" is the motto of the foundation`s Rehab Work Group. "Successful low-cost renovations mean fixing what is fixable, replacing what is broken, and adding only what is necessary to reduce costs for energy, maintenance, and operation," the group suggests in Cost Cuts Manual. Successful low-cost renovation means not blindly replacing everything in sight, but rather, analyzing each component of the building to find needed repairs for a continuing useful life."

Not only are low-income neighborhoods being created where none existed before, but low-income housing is being integrated into middle-class neighborhoods. Gone are the days of urban renewal when inner-city slums were bulldozed and replaced by huge, federally subsidized housing developments that became bastions of poverty, crime and squalor rather than neighborhoods of diversity and opportunity.

"It makes more sense to fit new housing in among an existing community and weave a common place than to isolate and segregate new construction from old, subsidized or not," writes Donlyn Lyndon, a professor of architecture at the University of California at Berkeley and a partner of the architecture firm Lyndon/Buchanan.

This resurgence of neighborhoods is sparking the preservation of low- and moderate-income enclaves, areas with historic significance that have not yet been gentrified and may never will be. Take the Ledbetter Heights historic district in Shreveport, which the McAdoo Hotel edges. Much of that historic district consists of small shotgun bungalows, many of which were nearly dilapidated beyond repair. State, federal and nonprofit dollars and leadership, however, have brought this neighborhood back to life for the people who have lived there for years.

Neighborhoods like Ledbetter Heights exist across the country in various states of disrepair. Their rejuvenation becomes most attractive when the developers can take advantage of the federal preservation tax credit and the low-income housing tax credit.

The new emphasis on neighborhoods has precipitated a re-examination of how zoning can either encourage the development of affordable housing in a community or work to exclude such housing. A landmark challenge to exclusionary zoning--widely known as Mount Laurel--came in 1983 when the New Jersey Supreme Court ruled that any municipality that did not meet its obligation to provide its fair share of regional low- and moderate-income housing needs would be required to adopt an inclusionary housing program. Inclusionary zoning is considered by some "to hold great promise of becoming the most significant means by which housing opportunities for lower-income households, in a racially and economically integrated environment, can and will be provided in the United States in the coming years," in the words of urban planner and author Alan Mallach.

Another technique to generate low-cost housing is linkage, a voluntary or involuntary program to generate housing from nonresidential development. In San Francisco, for example, developers of new office buildings have three options (1) construction of housing or participation in a joint venture to construct housing, at a fixed rate of new housing for every square foot of office development; (2) payment of a small fee for each square foot of new office space in lieu of not constructing housing; or (3) a combination of the two. This inclusionary zoning policy was adopted to assure adequate housing for low-income employees who would work in those newly constructed buildings.

In Seattle and Miami, developers can receive increased floor-to-area ratios (FAR) if they make a cash contribution to a housing fund or build low-cost housing. In Jersey City, N.J., Cambridge, Mass., Chicago and Washington, D.C., developers of large downtown commercial buildings can receive on a case-by-case basis generous density bonuses if they build housing or contribute to the housing fund.

As of early 1988 a total of 16 states and 12 cities had established housing trust funds for the development of shelters for the homeless or low-cost housing. Revenues come from a variety of sources: taxes on off-shore oil leases (California); real estate transfer taxes (Maine and Florida); a housing finance agency`s excess reserve funds (Kentucky and Maine); and impact fees on new market-rate housing (Cherry Hill, N.J.).

The federal low-income housing tax credit began Jan. 1, 1987; Congress is now considering legislation to continue the program beyond its Dec. 31, 1989, expiration date. Basically, the credits are claimed annually for a period of 10 years. Credits are available for new construction, building acquisition and rehabilitation. This credit can be used in conjunction with the historic rehabilitation credit, although all credits cannot be claimed from both programs.

Adopted in 1982 and revised extensively in 1986, the historic rehabilitation tax credit can amount to 20 percent of the cost of rehabilitating certified historic buildings or 10 percent of the cost of rehabilitating nonhistoric buildings constructed before 1936. Expenditures must exceed the greater of the "adjusted basis" of the building or $5,000. According to the Preservation Assistance Division of the National Park Service, 35,880 housing units have been created since 1982. Low- and moderate-income housing units created since 1982 have totalled 9,600. In FY `88, 47 percent of the projects qualifying for the tax credits have been residential. Although extremely significant, the combined efforts of the state and local, public and private sectors to provide lowcost housing "represents only a small fraction of the body of federal programs that this activity is trying to replace," warn Michael A. Stegman and J. David Holden in Nonfederal Housing Programs: How States and Localities Are Responding to Federal Cutbacks in Low-Income Housing, published by the Urban Land Institute. "The gap might narrow," they suggest, "as more places mount local housing efforts. But without a substantial federal housing production presence, urgent needs will continue to outstrip available resources by a wide margin."

The National Housing Institute, by comparison, reported in 1988 that to stem the tide of homelessness, 7.5 million new low-income housing units will be needed by the year 2000--at a cost of $300 billion. At the same time, through the homeowner`s mortgage deduction the federal government spends about four times as much--a total of $38.8 billion in fiscal year 1989--on middle- and upper-income housing than it spends on housing subsidies for low-income earners.

That warning has been heeded by many. A broad coalition of housing experts is working on the creation of a new national housing policy. Leading the way are Senators Alan Cranston (D.-Calif.) and Alfonse M. D`Amato (R.-N.Y.). Legislation framed by them revolves around the creation of a Housing Opportunity Program that would provide federal funds to local, state and nonprofit organizations to create low-cost housing. In turn these organizations would be required to raise matching funds from public and private sources, carry housing projects through completion and even oversee maintenance and operation of the properties.

The Cranston/D`Amato bill, which calls for expenditures of over $15 billion for both FY `90 and FY `91, is not likely to become law this year. Instead, Congress will likely pass funding for the continuation of existing HUD programs. In fact, the U.S. House of Representatives voted in July for $9.1 billion for assisted housing, a net increase of $514 million over the 1989 level.

Still on the Congressional agenda is extension of the low-income housing credit and the Community Housing Partnership Act. Some housing relief, however, will come from the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), signed by President Bush on Aug. 9.

Designed to salvage the savings and loan, FIRREA offers two affordable housing provisions. The first is the disposition of property formerly owned by savings and loans to be used for low-income housing; the second is a new affordable housing program funded by contributions from regional Federal Home Loan Banks. Each FHLB must make a contribution of 5 percent of its preceding year`s net income in the years 1990 to 1993, not to exceed $50 million. In 1994 and 1995, respectively, the figures will increase to 6 percent or $75 million and 10 percent or $100 million.

The immediate future is foreboding in this era of the federal budget deficit and costly scandals at the Department of Housing and Urban Development. The low-cost housing crisis will continue in the 1990s and likely will grow worse. Last year MIT`s Phillip Clay offered this chilling prediction: "By the year 2003 the gap between the total low-rent housing supply (subsidized and unsubsidized) and households needing such housing is projected to grow to 7.8 million units." Depending on average household size, this gap could represent some 18 million Americans--people who would ultimately have to move in with family and friends, live in substandard housing, pay a disproportionate share of their already modest incomes for housing or sink into homelessness. In simpler terms, the division between the "housing haves" and the "housing have nots" will continue to widen.

In 1949 Congress pledged to provide the opportunity for "a decent home and suitable living environment for every American family. " Now, the battle to provide the opportunity for decent, affordable housing to all Americans continues and needs the support of people in all walks of life. Particularly welcome is the involvement of professionals whose skills and talents can have direct bearing on the crisis. Architects, for instance, through the Search for Shelter program at the American Institute of Architects, are volunteering their time to help design shelters for the homeless and low-cost housing for the poor. Lawyers, through the American Bar Association, work to establish the right of every individual to decent housing.

Belief in that right cannot come simply through reading statistics. As Enterprise Foundation`s founder James Rouse says, "The people of this country, the leaders of our business corporations, the managers of our wealth, do not know how the millions and millions of people in this country live. They may have read some figures or seen pictures of derelict neighborhoods, but they have not walked those streets. They have not climbed the stairs in those apartments, seen people living in that miserable housing, paying outrageous rents, frightened, hopeless, feeling abandoned by the society of which they are a part."

When driving through a crumbling urban neighborhood you may well wonder under what conditions live the children you see playing in the rubble of vacant lots. Why are whole neighborhoods boarded up, while in other parts of town the homeless sleep in doorways? Why are thousands of runaway teenagers living in abandoned buildings--or squats--across the country? Why do we shuttle the weakest among us off to desolate, inhuman public emergency shelters--environments that more closely resemble prison camps than safe and warm havens? Others without a home are more lucky and find decent, warm shelter, if only temporarily. But that hospitality may run out before permanent housing is found. Without a doubt, hundreds, maybe thousands, of men, women and children in this country would be thrilled if offered a clean, dry room at the McAdoo, where food and decent human companionship are available.

More and more people are acknowledging that inequities exist and that the opportunity for all to have decent housing-- be it new or old--has a direct bearing on the greater well-being of this nation. Still, there is much left to be done. In the end, one wonders why so many others don`t also see the need to care.

Publication Date: Fall 1989

#ForumJournal #AffordableHousing

Author(s):Nora Richter Greer

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