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The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Archive for the category “affordable housing”

Homeownership Tax Deduction

I hate to ever agree with the Trump administration but here goes. They are in favor of limiting the homeownership tax deduction to $500,000 annually. This is a good start. This deduction mostly favors wealthier people. Furthermore research has shown it does not stimulate the purchase of housing but drives up the price. Another largely white upper middle class entitlement. Written by Paul Dribin

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Do We Have an Affordable Housing Crisis in St. Louis?

The answer to this question is how you structure the problem. The National Low Income Housing Coalition has done the most work of any organization on this issue on a national level. They pose the problem by taking the median rental rate in the community and factoring in the minimum wage income. Not surprisingly they concluded that virtually now where in the United States is housing affordable.

There are several problems with this approach. The minimum wage is not a good indication of a community's earning capacity. Many minimum wage workers are students, part time workers, and those new to the work force. Many live with parents or double or triple up. Also most minimum wage workers don't remain at that pay level for a long time, as they move up the ladder. The minimum wage was never intended to be a living wage, rather just a starter for low skilled workers. Many minimum wage workers also work 2 or more jobs.

A better gauge of housing affordability is the relationship between the median income and the median rent. This gives us kind of an average, not perfect, but much better. Let's look at some numbers as a point of comparison:

St. Louis Metro Area

Median Income- $52243 for a family of 4 in the City of St. Louis
Median Rent -2 bedroom- $1291
Therefore the monthly median income of $4354 can afford a monthly rent of $1306 at the 30% threshold. This represents 100.01% of the median rent.

One may conclude that on the whole rent is affordable in the St Louis area for the median household.

Boston
Median Income-$67846
Median rent-2 bedroom-$3166
Therefore the monthly income of $5654 can support a monthly rent of $1696 at the 30% threshold. This represents 54% of the median rent.

The Boston market on the whole is not affordable.

This approach seems to be useful in making comparisons among communities. It also does not relieve our community of our responsibility to provide affordable housing. After all, median income is a statistic. There are thousands of people in our metro area who cannot afford the median rent and do not have access to adequate rental housing.

Written by Paul Dribin

How Cities Can Promote Affordable Housing

How Housing Matters has an article about the above referenced subject. They point to an issue that I have frequently pointed out, zoning, land use, lack of density make affordable housing more difficult to do. Interestingly, the article shows that inclusionary zoning, a darling of the academic elite and the Urban Land Institute, has little effect even in those rare places where it is approved. Written by Paul Dribin

Copy of article from How Housing Matters:

How Can Cities Produce More Affordable Housing?

August 03, 2017

Though cities have recovered from the 2008 recession, housing market trends have created new burdens. Gentrification has taken the form of “new build” housing in recent years, and the demand for housing in formerly depressed neighborhoods has skyrocketed—as have rents. Meanwhile, wages for low- and moderate-income families are stagnant, and federal subsidies for affordable housing have declined. In their article, Lance Freeman and Jenny Schuetz describe housing (particularly rental) affordability in rising markets, review strategies and policies addressing assistance for poor households in inner cities, and provide suggestions for more effective and sustainable affordable housing policies. They present the idea that for any policy tackling housing affordability to be successful, it must take a holistic approach that bridges human development and housing. They urge supporting neighborhoods, schools, crime, and other factors that affect quality of life, in addition to housing, to effectively and sustainably produce affordable housing.

Key findings

The most widely used policies that address housing affordability, such as inclusionary zoning, have produced few affordable units and do not help much with overall housing affordability. The authors found that in the areas they studied, inclusionary zoning produced less than 0.1 percent of the affordable housing stock. A better understanding of why this is depends on recording better data on these programs.
Cities and counties should reduce regulatory burdens of development to reduce the cost of new housing.
Local governments should increase zoning density limits to allow for the production of small, low-cost units.
Local governments and nonprofits working on housing affordability need to attract and use private funding. This will help create an economically diverse housing stock, which is important for labor markets to function and for family and community well-being.

Homeless Prevention

An article in How Housing Matters makes an important point about homelessness in cities such as St. Louis. That article demonstrates the most successful approach to combating homelessness is a housing first model. This approach requires building affordable supportive housing for homeless people, housing them, and providing supportive services at the same time.

An interesting point about the St. Louis homeless situation. Biddle House run by St. Patrick’s Center serves anyone who wants it 3 meals a day, 7 days a week. When the Larry Rice shelter closed, people at Biddle prepared for more clients. They never came. We suspect Larry never had as many clients as he claimed. Written by Paul Dribin

Here is the copy of the article from How Housing Matters:

What Cities Can Do to Combat Homelessness

August 03, 2017

by Steven Brown

The most recent Annual Homeless Assessment Report to Congress points out the number of people experiencing homelessness has fallen every year since 2010, representing a 13.7 percent drop between 2010 and 2016. Homelessness fell even more dramatically among certain subpopulations over the same period. Chronic homelessness fell 27 percent, veterans homelessness was cut by nearly half and was eliminated in dozens of places across the country, and homelessness among families with children decreased 23 percent.

Though the number of people experiencing homelessness has declined nationally, many large cities have experienced increases in their homeless populations. Since 2010, homelessness increased slightly more than 1 percent. In many of these cities, the number of people in shelters has decreased while the number of people on the street has gone up dramatically. In Los Angeles, the number of people experiencing homelessness went up more than 33 percent in the past two years and increased more than 42 percent for people outside of shelter. In New York City, homelessness spiked 39 percent in the past year. Chicago, Denver, Seattle, and several other large cities saw similar increases.

Despite the trends, many cities—including Atlanta, Cleveland, and New Orleans—experienced significant declines in homelessness. What are these cities doing well? Houston is a prime example. After a peak in homelessness in 2011, Houston adopted a Housing First model for addressing homelessness. Officials and homelessness providers in the areas developed the Houston/Harris County Continuum of Care in 2012 and worked with local agencies to create The Way Home, an action plan with goals to address area homelessness. The goals of The Way Home are to

create a system to identify the chronically homeless and match them to appropriate affordable housing,
coordinate a service system to support long-term housing stability, and
create enough permanent housing to meet the demand.
Before The Way Home, area service providers and nonprofits were an uncoordinated “tangle of services,” but the city worked to coordinate local efforts, including adopting the Homeless Management Information System to match people to appropriate, stable housing within 30 days of system entry and assessment. The city redirected over $100 million in federal, state, and local funding, with help from local businesses, to build and maintain over 2,500 additional permanent supportive housing units with wraparound services. Since the introduction of The Way Home, homelessness in Houston, Harris, and Fort Bend counties has fallen 60 percent, and their Continuum of Care was recently recognized as one of 50 in the country that has effectively ended veterans homelessness.

The gains Houston has made toward ending homelessness through a Housing First approach and coordinated entry are laudable and impressive. Other cities have tried or are trying similar approaches, yet still struggle with a steady or growing homeless population.

One additional reason the gains may have been more effective in Houston is their more accessible housing market. According to US Department of Housing and Urban Development data, the fair market rent for a one-bedroom rental in Harris County stayed flat between 2011 ($767 a month) and 2016 ($773), and the most recent Census Bureau data for the county show an 8.9 percent vacancy in rental housing. Atlanta, Cleveland, and New Orleans have also used a Housing First approach and seen their homeless populations fall, and so have other cities with comparably lower rents and slower rental growth.

Compare this with Seattle and King County, which saw a 25 percent increase in fair market rent for one-bedroom rentals (2011: $977, 2016: $1,225) and has a rental vacancy rate of 3.4 percent. Decreasing housing affordability in an area can make it more difficult for people on the margins to stay in their homes and can prevent people in shelters or permanent supportive housing from jumping into private market housing.

But cities, including many coastal ones, with rising rents and rising populations experiencing homelessness can still fight the rising tide. Boston has experienced recent spikes in homelessness, but is in a state that has a right-to-shelter law. Even though the number of people and the length of stay in emergency shelters is increasing, the number of people “on the street” is among the lowest in the country, and the area is seeing declines in people returning to shelter. Though emergency shelter can have challenges (e.g., turnover, privacy, safety), shelters have the advantage of staff who can help coordinate services and transitions to more stable housing. Boston’s challenge, and the challenge of other cities in a similar position, is to build a better bridge between shelter and self-supported housing.

While homelessness is down in much of the country, many cities still struggle. Cities that have brought down their populations have done so through a Housing First approach, a tight coordination between public, nonprofit, and private stakeholders, and a clear path for permanent and stable housing. Houston’s Housing First, integrated Homeless Management Information System model, and close coordination between agencies have led to an end of veterans homelessness and a nearly 50 percent reduction in homelessness overall. Although rents haven’t risen there as quickly, the approach shows that getting people into permanent supportive housing may be the best solution. The Family Options Study showed that of transitional housing, rapid re-housing, and vouchers, vouchers proved the best option for helping homeless families achieve residential stability, and other studies have shown that rapid re-housing can work in certain contexts.

The best way for cities to help their homeless populations is to house them and support them with services to help them find stable employment, health care, and child care services. Though this may be challenging for cities with limited affordable units and rising rents, these are the steps that must be taken to support these most vulnerable of populations.

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Urban Development and Privilege

Much has been written recently about the concept of white privilege. I  find the term somewhat offensive because it makes people defensive. Nevertheless, the concept is true

There are a couple areas of middle class privilege that contribute negatively to the well being of communities.   The first is the mortgage interest deductions. This deduction primarily helps higher income people, and artificially drives up the price of housing. Working class people who do not itemize are hurt. This by the way is the biggest housing subsidy. A tax credit targeted to working class people would be more effective

A second set of privileges cover zoning and planning laws in our communities. These laws tend to zone out smaller and more affordable housing and Multifamily housing. I am not talking about housing homeless people but teachers social workers, nurses etc.    

The results of these policies are unnecessary segregation , a lack of mobility, and urban decline.  Written by paul Dribin

DeSales Community Development 

Kudos to this organization. This organization led by TomPickel has been around since the mid seventies. They have accomplished major housing and redevelopment work in the Fox spark and Tower Grove East neighborhoods of St Louis. They have rehabbed houses provided property management and health services.   Written by Paul Dribin. 

State tax credits

The post had a good article yesterday about the issues surrounding state tax credits.   Nothing new was really covered. The credits are too expensive but they are the only tool for doing affordable housing. The article correctly demonstrated that investors will not participate in programs with high levels of uncertainty.   It also shows that development in St. Louis is very difficult and requires government supports. 

Possible Effects of Tax Reform in Missouri on Affordable Housing and Community Development

Governor Greitens has tasked a committee with looking at Missouri’s tax structure and making recommendations for change. Of particular interest to the committee and the state tax credit incentives. Here is a quick summary of recommendations as they effect housing related tax credits:

1. Low Income Housing Tax Credits- Missouri has a state affordable housing tax credits that supplements the federal credits. The credits once allocated can be used for 10 years and can be used for acquisition and new construction, or acquisition and rehabilitation. The committee recommended 1) A restructuring of the credit as a soft loan. These loans could be repaid, extended, or forgiven. 2)A $50 million annual cap which would cut funding by over 50%. 3)Creation of a tax credit clearing house to buy up existing credits. 4)The funding would be subject to annual appropriations.

Comment. Obviously utilizing a lower cap would limit the number of deals that can be supported. In addition,because the annual appropriations process is so crazy in Missouri, there would be no predictability about funding. Investors would either choose not to participate or significantly increase their fees.

2. Historic Preservation Tax Credits-These credits provide incentives to developers to maintain and rehabilitate historic buildings and neighborhoods. The recommendations are: 1)Combining the Historic Preservation Credits with the Brownfield credits. 2)The combined program would have a $50 million cap. Presently the Cap for the two programs is $150 million. 3)The funding would be subject to annual appropriations.

Comment-Once again the annual appropriations process provides for a high level of uncertainty. Lowering the Cap would also limit the number of deals.

Final Comment- These programs are critical to redevelopment and housing, particularly in St Louis. They have provided huge amounts of economic development to cities and built large numbers of affordable housing units. The trouble is they are very expensive. The development community needs to come up with alternative methods for doing community development that does not break the bank.

Chesterfield Mobile Home Park

I attended a meeting today of some good citizens who are attempting to find a solution to save the residents of a mobile home park in Chesterfield who could be facing eviction.

The park has been located in Chesterfield since before that community was incorporated. There are presently about 130 families living there, who may own or rent their mobile home and all rent their spaces. They pay $350 a month in rent.

A developer has come forth who has apparently reached agreement with the park owner to sell the property for the construction of apartments. The tenants who are on month to month leases are naturally worried.

We are working to oppose the zoning change necessary for this transaction and come up with an alternative development proposal which would leave the existing low income residents in place.

Racial Homeownership Rate

The St. Louis Post Dispatch published an interesting article yesterday about the disparity in homeownership between African Americans and whites. The gap in St. Louis is about 29% with white people owning more homes. This gap increased as a result of the 2008 recession.

Nothing in this story is surprising to me. Homeownership rates are a sign of economic well being; unfortunately African Americans are not as solid economically as whites for the same reason there are other gaps. St. Louis saw a bigger disparity arise out of the recession. This is also not surprising because due to racism, segregation, and similar factors African Americans are forced to live a more marginal existence in St. Louis. More inner city neighborhoods, where blacks disproportionately buy are more likely to see a loss of value in a recession, and slower increases in good times.

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