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The St Louis Contrarian

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

Archive for the category “hud”

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

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Another Good Guy-Carl Lang

Today I am writing about a great guy and great real estate attorney, Carl Lang. I have known and worked with Carl for many years. He and his son David are very prominent in doing affordable housing, market rate housing, and Low Income Housing Tax Credit projects. He is extremely knowledgeable and has a quality I really like, he does not over lawyer. He is now Managing Partner at Rosenbloom Goldenhirsh. Written by Paul Dribin

Division of Spoils in St. Louis

Sunday’s Post Dispatch posed an interesting article. The issue at hand was how funding from the proposed tax increase should be funded in the city. I need to say a little more.

The city has a population of a little over 300,000 and contains 28 geographic wards. This is the same number of wards as when the city had a population of nearly 1,000,000 people. Resources ranging from federal dollars such as Community Development Block Grants are divided evenly among the 28 wards, and for the most part the aldermen regard these funds as their personal slush funds. This has never made any sense and leads to the increased splintering of the city. It is also probably an illegal used of federal funds, which HUD has never chosen to enforce.

Now it appears that north side aldermen are pushing for a bigger share of the new proposed tax revenue due to special need. They are totally correct. Alderman can point fingers all day but the poverty of the north side has little to do with the quality of political leadership in those areas. The article pointed to disagreement about a funding formula. I believe the answer is simple; apportion the funds according to poverty indicators which are easy to find. That would make for a more efficient and equitable distribution of the funds. Written by Paul Dribin

Segregation in Affordable Housing

The New York Times recently ran an article which was very thoroughly documented and described how Low Income Housing Tax Credit projects almost always were located in a racially segregated and economically depressed area. The city described was Houston but the facts could apply to almost any United States location. Projects located in depressed census tracts provide much worse outcomes for the residents than those that are not.(Although the sample size of projects located in higher income areas is very small). Here is a link to the article: https://www.nytimes.com/2017/07/02/us/federal-housing-assistance-urban-racial-divides.html?smprod=nytcore-iphone&smid=nytcore-iphone-share

Certainly in some situations building LIHTC projects in economically deprived areas might make sense if part of a major redevelopment project. Most often, the projects are located in those areas because of NIMBYISM or developer decision making.

I am not confident these situations can ever be changed. Higher income neighborhoods will almost never support the construction of low income project in their midst.

A solution to the problem would be something I frequently recommend; an income approach to poverty which provides everyone with a guaranteed minimum income which would be used to support housing as well as other critical programs. New housing would be constructed in response to the demand created by this source of income. FHA would beef up its’ mortgage development program providing a strong vehicle for the construction of new housing. Developers using this program would need to set aside 10% of their units for affordable tenants. Direct construction subsidies would still be available for special needs housing.

We need to overcome the inertia in housing policy caused by the greed of developers of the status quo.

St. Louis Housing Authority

Yesterday’s discussion about HOPE VI provides for a natural lead in to today’s discussion about the St. Louis Housing Authority. The authority controls thousands of conventional, section 8, and tax credit projects. Their work has been exceptional. They have been led for many years by Cheryl Lovell who quietly has created a powerhouse organization.

Back before Cheryl took over the housing authority was typically considered trouble and on HUD’s bad list. Negative stories about the authority were common in the media. The reforms started under Tom Costello and continued under Cheryl. They have completed revitalized their older projects, collect more rent, and have contracted out their property management. Written by Paul Dribin

Hope vi

Hope VI is a now discontinued public housing program that completely rehabilitated distressed public housing projects in this country.   The idea behind the program was to combine physical rehabilitation social services and create mixed income communities. I had the opportunity to work on the Darst Webbe program in the near south side.  That program has been successful in creating a mixed income community and has led to improvements in surrounding neighborhoods. 

Recent research has evaluated HOPE VI.  The program has not really transformed lives and it was noted that displaced public housing residents did not readily move back 

I believe the program has provided urban development benefits but has not significantly improved the lives of residents. The cost is quite high and demolition and new construction may have been cheaper. The jury is still out on mixed income housing. I have serious doubts that given a choice anyone would opt for this type of housing 

Used of CDBG Funds in St. Louis

The Community Development Block Grant is a program devised by HUD to provide flexible funds to community to meet broad based urban development needs. Cities of over 50,000 people receive the funds on a categorical basis based upon poverty etc. St. Louis is of course one of these cities receiving funds by formula. The use of the funds is to address community development, housing, economic development in a way that the local community plans. The city receives an allocation of millions of dollars a year. The amount has declined but is substantial.

The city has misused much of this funding. Instead of concentrating funding on the areas of greatest need, the funds are divided equally among the 28 wards. This of course waters down the effect and provides the aldermen a slush fund for pet projects, which may have nothing to do with broader priorities of the city. When I worked for the St.Louis Housing Authority we needed city wide targeting of block grant funds to get $28 million from HUD for the Darst-Webbe demolition and redevelopment. This commitment was tough to get. Funds have been used to over rehab houses in very poor locations, or to create non profits which accomplish little. HUD shares in the blame because they have lacked the courage to challenge the city on these policies. I intend to do some detailed reporting on this subject in the future.

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