Thursday, March 31, 2016

Righting the wrongs of our nation’s transportation system

by Kaitlyn Snyder, National Housing Conference

To celebrate the 50th anniversary of the Department of Transportation (DOT), Secretary Anthony Foxx presented at the Center for American Progress on Bridging the Divide: A Transportation Plan for the 21st Century on Wednesday, March 30. His speech outlined the current and historical decision making processes that were used to determine the locations of the transportation network. Sec. Foxx made an impassioned and at times, rather blunt, case for making our transportation system a way to connect people rather than divide them.

Sec. Foxx pointed out that many transportation decisions happened prior to the passage of the Civil Rights Act and the Voting Rights Act. Decision makers at the time thought of minority and low income communities as the community of least resistance; that thinking is reflected in how the transportation system was built in the early days and we see those values embedded in the infrastructure that is still used today.

Sec. Foxx went on to quote Thomas MacDonald and Robert Moses, two leading transportation and planning thinkers of their time. MacDonald said his goal was to get farmers out of the mud and advocated to displace people saying “destroying low income areas with highways would in effect serve a higher and more legitimate purpose converting them into a public asset.” Robert Moses said “plowing freeways through low income areas would make Baltimore a healthier city in the long run.”

I say all of this as background for the transportation system that we currently have. Anyone who has driven on a highway in or around a major city has seen this effect. Every time I drive to visit family in Pennsylvania I see the effects the highway has on the communities that surround it. The image below, taken from Google Maps, is the view of I-95 as you drive through Chester, Penn. I often feel as if I’m driving through the resident’s neighborhood and can imagine that it might have once been a thriving community with homes where the highway currently resides.

I-95 was built in the 1960’s and Chester was home to 66,000 people in the 1950’s. Today Chester is home to 34,000 people, of whom 75 percent are African-American.  Without getting into too much of the history, Chester is home to a huge, ongoing environmental justice fight. In the 1990’s a waste management company was established in town and rates of low-weight births, blood-lead levels, cancer, asthma and mortality increased dramatically. In 2008, Chester fought off a proposal for the world's largest tire incinerator and is currently fighting a trash incinerator for trash from New York City and Philadelphia.

Chester, Penn. is not a unique case. Sec. Foxx outlined similar stories in his hometown of Charlotte N.C.; I-95 in the Overtown neighborhood in Miami; the Staten Island Expressway; the Claiborne Expressway in the Treme Neighborhood of New Orleans; in St. Paul, Minn. a highway cuts through the historically black Rondo neighborhood; the Century Expressway in Los Angeles; I-5 in Seattle; farmers were forced to give up land to make way for I-35 in Iowa; and in West Baltimore the community of Harlem Park was destroyed before the planned highway was stopped - the community lives with what many call “a highway to nowhere.” And the inequities aren’t limited to highways—only 49 percent of low income neighborhoods have sidewalks, compared with almost 90 percent of high income neighborhoods.

According to Sec. Foxx, state and local governments have 98 percent of the decision making authority for how transportation funding is spent. He encouraged communities to use a meaningful community engagement process to develop a transportation system that is built by, for and with the communities served. One successful example of this is in Columbus, Ohio. In the 1960’s, the I-71 highway split the King Lincoln community from the central business district. This rendering shows the Long Street Bridge that now reconnects the two communities.

Throughout our nation's history, transportation has connected the country, but transportation infrastructure decisions have also worked to divide us. As we move forward into an era with a growing population and an aging infrastructure that needs to be rebuilt or replaced, it is incumbent upon us to learn from our past and not repeat the same mistakes. For many Americans, transportation is one of the largest monthly expenses, second only to housing costs. As we create affordable housing it’s critical for us to think of transportation not just as a link to opportunity but also as a chance to create new jobs in communities.

In closing, Sec. Foxx outlined new initiatives in DOT for a 21st century transportation plan. The department has made access to opportunity a priority for discretionary funding in programs like TIGER and Ladders of Opportunity. The administration’s budget request includes $20 billion to reconnect communities, expand transit, bicycle and pedestrian infrastructure and incentivize coordinated regional land use planning. They have also hired the federal government’s first ever Chief Opportunity Officer and further empowered the office of civil rights within DOT to shut down projects determined to have a “disparate impact” on disadvantaged groups.

I don’t expect the department’s new initiatives to right all of the wrongs of the past in one fell swoop. I am, however, encouraged to hear Secretary Foxx acknowledge the racism embedded in our nation’s decision-making for transportation systems. In Sec. Foxx’s words “we can’t change everything about the past, but we can certainly work as hard as we can today to repair our infrastructure to make it the connective tissues it ought to be.”

Tuesday, March 22, 2016

NHC Inclusive Communities Working Group member’s perspective

by Erica Leak, City of Austin - Neighborhood Housing and Community Development

Although Austin, Texas, may be considered affordable by East Coast standards, housing costs have increased dramatically in recent years, making the city less and less affordable for lower-income households. Current data indicates that there is a shortage of 48,000 units for households earning less than $25,000 per year, up from 37,000 five years ago. This deficit of housing that is affordable for low-income households impacts the entire community; without adequate access to affordable housing, many low-income households are forced to search for housing further from the city, resulting in greater transportation costs for those families and increased road congestion for all.

As a participant of the Inclusive Communities Working Group (ICWG), I’ve had the opportunity to learn about strategies employed in other communities to increase housing affordability and have evaluated them for their potential to address issues we’re experiencing in Austin. Thus far, the ICWG has identified the major housing challenges facing our communities, discussed inclusive housing policy, assessed different opportunity mapping approaches and compared land use regulations to increase affordable rental supply and strategies for getting them enacted. Each city has different challenges and regulatory environments, but sharing experiences has led to insights about new ways to approach issues in our own communities.

The City of Austin welcomed members of the ICWG to Austin on Thursday and Friday, March 3 and 4, 2016, for discussions about how to better communicate to the public about the need for affordable housing and the potential strategies to preserve and create it. The Austin session started with a tour of Capital Studios, the first affordable housing development built in downtown Austin in 45 years. 

The ICWG participants learned about the funding mechanisms used and challenges of developing in downtown Austin, including designing around a view corridor and having to include parking for a neighboring building. Capital Studios includes efficiency apartments for 135 low-income individuals, including downtown service workers and those who have experienced homelessness, to live in the heart of downtown. The development was funded with $11.7M in state low-income housing tax credits, leveraged by $4.7M in City of Austin funding, and another $5M from other sources. It includes over 30 units of Permanent Supportive Housing for individuals who have experienced chronic homelessness.

The topic of Building Acceptance of Inclusion through communications was perfect for the Austin meeting of the ICWG, as the City of Austin is about to begin a process to gather public input for the city’s first housing plan. The group provided ideas and insight about the most effective communication strategies for this topic. I’ll report back at a future meeting to let the group know how the outreach strategy worked!

Tuesday, March 1, 2016

Building from the ground up

by Chris Estes, National Housing Conference

While today’s Super Tuesday contests send presidential primary news into overdrive, I’m sure most everyone in the affordable housing community has been disappointed in the lack of discussion of housing. This is the fault of both the media and the campaigns themselves, of which only the Clinton campaign has produced a policy paper that addresses housing. I must give credit to Joseph Lawler at the Washington Examiner for the first column I have seen calling this out. Lawler interviewed a number of housing experts on Secretary Clinton’s housing plan and offers suggestions for what the other candidates should propose.

What does this state of affairs mean for the housing community? One thing is clear, and has been for some time: We must do a better job of framing the issue of housing affordability, its solutions and the benefits of those solutions if we want to get the attention, traction and ultimately the political support needed to turn the tide of America’s growing affordable housing shortage. This is not just an issue of how we as a community should communicate with presidential campaigns. It’s about building the support we need to get our work done every day.

NHC will address just this issue at our Solutions for Housing Communications 2016 Convening in New York City April 28-29. At this event you will have the opportunity to tour supportive housing developments to learn first-hand about their approval process and strategies to build community support. You will hear from urban governance and housing policy expert Dr. Joanna Lucio of Arizona State University and NHC’s own Amy Clark on the ideological roots of opposition to affordable housing. In addition to this and other powerful plenary sessions, you’ll have the opportunity to choose from workshops on how issues like design, property management and education relate to winning support for affordable housing.

Our belief is that building support well on the local level is central to creating the kind of state and national support need to get the program improvements and funding needed to adequately respond to scope of the challenges we see in communities across the country.

Government should buy low, not high, in affordable housing

What we're building 
by Ethan Handelman, National Housing Conference 

The old saw about investments is to buy low and sell high. But when it comes to affordable housing, government at all levels has an impressive track record of buying high, and then sometimes selling low. If, however, government could invest the resources to secure long-term affordable housing when markets cycle down, it could more efficiently provide affordable housing when markets cycle up. In other words, government can play the long game to win in affordable housing.

First, a definition: I use “buy” as shorthand for government investing resources to secure real estate for affordable housing. There are lots of means to do this, many of which do not involve government actually owning real estate but rather partnering with private sector capital sources and developers. Loans, grants, equity investments, land use restrictions and rent subsidy agreements are all ways to secure a property as affordable housing, either temporarily or permanently. Even purchase options or rights of first refusal can give government the ability to create affordable housing in the future without actually owning real estate. Buying affordability can therefore take many forms with different durations and effects: a rental housing voucher, a public housing property, a Low Income Housing Tax Credit equity investment, a community land trust.

When does government usually buy affordable housing? When housing quality, rents or home prices are at levels outrageous enough to capture public attention. A dramatic historical example is the Great Society programs in the 1960s that created much of the regulated affordable rental housing we have today in response to widespread unrest in cities. A more recent example at smaller scale is the city of Denver’s Revolving Affordable Housing Loan Fund (RAHLF, perhaps my favorite recent affordable housing acronym). It’s a laudable example of a locality putting up its own funds to finance affordable housing, and it is clearly driven by the rapidly rising rents in Denver.

Denver’s action is also an example of buying high. Rising rents are capturing public attention. Multifamily property prices are rising just as rents are rising, so government subsidy has to stretch further. There are certainly other examples of buying high:

  • Homeownership assistance. Down payment assistance loans or grants can help low-wealth buyers step into homeownership for the first time. These effective programs are most common, however, in places like Massachusetts, New York and California, where home prices are high and rising. The higher the home price, the more it costs to fill the gap between first-time homebuyer savings and the cost of a down payment. And if homeownership assistance does not capture some of the equity gain or secure affordability for the next buyer, government has not only bought high but also sold low.
  • Preventing conversion of affordable rentals to market-rate use. When a subsidized affordable housing property reaches the end of a long-term use restriction, public pressure and resident organizing often generate political will to preserve the property as affordable housing, which usually means either buying it from the current owner or paying the owner to maintain affordability. Stuyvesant Town-Peter Cooper Village is a recent $5.3 billion example (although it wasn’t the very top of the market). Preservation is a high priority, and in our current policy environment, it is cost-effective compared to new construction. But because political will to deploy resources occurs especially when properties are at risk, preservation is often forced to buy high. 

For most participants in the housing market, buying high is entirely understandable. A first-time homebuyer buys a house at a specific time because life demands it via children, maturity and a need for stability. A developer buys land at the market price using whatever financing is available, because doing deals is an ongoing necessity. Lenders lend to the maximum their underwriting will support in order to make loans before their competitors do. Market necessities force them all to have short time horizons.

But government can have a long time horizon. It can borrow inexpensively, even deficit-spend during down cycles, and won’t go out of business or get evicted (at least not literally). So government should use those advantages to buy low, during down cycles when real estate is cheap and most market participants lack the patience to anticipate the upswing. Government has many mechanisms to do so, many of which involve private capital sources and development, and all of which will be much cheaper for government during a down cycle:
  • Renovation of existing rental housing with use restrictions.
  • Gap financing through soft loans for construction of rental housing.
  • Land banks.
  • Community land trusts and shared equity homeownership.
  • Long-term, renewable use restrictions in exchange for capital investment.
  • Renewable rental assistance contracts.
  • Rights of first refusal or first offer for preservation of affordable housing. 

Government can also be far-sighted in its real estate choices during both up and down cycles. Instead of selling land quickly at low costs just to stimulate economic activity, land banks could offer long-term ground leases that preserve the option for public use far into the future. Government could limit unilateral termination rights for owners when creating new rental assistance contracts. Public housing authorities can tap into equity in their portfolios through financing rather than through sale transactions. Capital subsidies for new rental housing can plan larger reserves and periodic refinancing for future capital needs while requiring much longer use restrictions.

These strategies are hard to implement, notably because they require government to invest much more up front and then to pay attention over the long term to make sure the investments pay off (and don’t evaporate). Government may also have to be very patient, especially in places with persistent economic distress, which adds an undeniable political challenge. But wouldn’t it be better to try to solve those problems and make better use of the resources available than to continually buy high?

Getting to a buy-low approach to affordable housing may also require changing how we talk about the need for affordable housing and the solutions to providing it. If we frame lack of affordable housing as a crisis, it implies the solution needs to be quick and dramatic (and possibly that it will be risky to try). If instead we frame the lack of affordable housing as an ongoing structural problem, then it demands an ongoing, structural solution. With that framing, a buy-low approach becomes more conceivable.