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The St Louis Contrarian

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

Archive for the category “new housing”

Indirect Costs to Housing

When we talk about the lack of affordable housing we usually ponder about the lack of enough development programs, section 8 subsidy etc. These are all valid concerns. Another major problem is the artificial constraints we put on housing.

We are well aware of these constraints but usually don’t tie them into the affordability of housing. Some of these issues are zoning which does not allow for density, large minimum lot sizes, resistance to any sort of apartments, sidewalk requirements, density, and historic preservation.

A perfect storm of these barriers is the City of St. Louis. Who is not in favor of historic preservation but in St. Louis, cost knows no boundaries. The cost of developing a Low Income Housing Tax Credit unit in St. Louis is $250000. That is absurd. How many working class people are priced out of housing due to these requirements. Virtually every neighborhood in St Louis is considered historic.

Another example is Portland Oregon. About 20 years ago they issued a no growth boundary in an effort to curb sprawl. The result? The housing market became one of the least affordable in the country. Portland is now attempting all kinds of superhuman subsidy programs to stimulate housing. Ending the no growth barrier would do far more. Written by Paul Dribin

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St Louis Moves Ahead on Property Demolition

The Post contained a good but overly long article on demolition in St Louis. According to the article there are about 7000 properties in need of demolition. The city is more aggressively tackling the problem which is a major priority of Mayor Krewson.

I say congratulations. This is a step in the right direction. I have seen neighborhoods suffer for years due to the prescience of abandoned properties. The real problem again, is the political system in St. Louis in which the alderman must approve every tear down. Some have refused to approve any out of a mistaken notion that someone will return and rehab the property.

Written by Paul Dribin

More on Development Incentives

The Riverfront Times contained an excellent article today. It focused on a bill before the Missouri legislature which will improve the use of TIFs. It will require more transparency, shorter TIF periods, and allow the school districts more input and the possibility of opting out. The legislation is supported by both liberal and conservatives etc. The City of St. Louis is opposed to it because they want more “local control” over the process. Once again the City of St. Louis is on the wrong side of history. Written by Paul Dribin.

Pagedale. Missouri

Pagedale is a tiny mostly African American community in north St. Louis County. The community has a history of corruption and poor living conditions.

Beyond Housing has been active in Pagedale for some time and is making some positive contributions to the community including housing,economic development, and social services. This process of improvement is difficult and slow.

St. Louis Magazine recently published an article about the situation in Pagedale which highlights the corruption and forwards some criticisms of Beyond Housing. I consider the article to be counterproductive, rehashing old news, gossip, and negativity. Too bad. No good deed goes unpunished. Written by Paul Dribin

Community Development Subsidies in St. Louis

Community activists are outraged by TIFs , tax abatement, and other forms of development subsidies in St. Louis. There is justification for these beliefs. Another development subsidy which is more pervasive is more damaging. This takes place with the development of affordable housing where block grant funds are used to subsidize the difference between development costs and ultimate sale price of a house. Back when I worked on loan to the city I saw numerous examples of developments that cost $300,000 and sold for $100,000. Block grant funds were used to write down the development cost in the hope these properties would stimulate community development. They rarely did, but aldermen thought they would. Where is the accountability for this disaster of a policy. Worse these policies are still continuing today. Written by Paul Dribin

New Market Tax Credits

St. Louis was recently awarded a large new slug of New Market Tax Credits. These credits are intended to enhance development in underserved economic areas. This is good news. Attached is the article:

Microsoft plans to anchor a new office and lab building set to open in mid-2018 in the Cortex technology district.


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The U.S. Treasury Department announced Tuesday that the city of St. Louis’ lead economic development arm would receive a $35 million allocation of federal new markets tax credit authority.

The award is part of $3.5 billion in federal new markets tax credits authority allocated Tuesday to 73 organizations. The credits are designed to spur more investment in low-income and distressed areas by reducing the risk. Local organizations awarded the tax credits authority offer it to investors to attract them to projects in certain areas. Qualified investments are eligible for a 39 percent tax credit.

The St. Louis Development Corp., which aids developers and other economic development in the city, has received nine allocations of new markets tax credits totaling $418 million since 2004. It received $75 million in new market tax credit authority in late 2016, which combined the 2015 and 2016 allocations. In the 2014 round, it received $45 million.

“This is fantastic news for the City of St. Louis,” Otis Williams, SLDC’s executive director, said in a statement Tuesday. “New Markets Tax Credits have been a tremendous tool for us as we seek to redevelop and strengthen the City’s low-income neighborhoods.”

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Otis Williams, executive director of the St. Louis Development Corp., in a portrait on Monday, Sept. 9, 2013, in downtown St. Louis.  St. Louis Development Corp. was awarded $45 million in New Markets Tax Credits. Photo by Erik M. Lunsford elunsford@post-dispatch.com

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Another local entity winning an allocation this year was U.S. Bank’s community development corporate entity, USBCDE, which was awarded a $70 million allocation. The U.S. Bank Community Development Corp. is based in downtown St. Louis. USBCDE invests in projects around the country, not just St. Louis.

Demand should be high for the latest round of credits, said Matt Philpott, who heads the new markets tax credit program at USBCDE.

“I would expect of this new round of award … most of that will get used in 2018,” he said.

The credits have been used to fund multiple developments in St. Louis, including the restoration of the Central Library downtown, the headquarters for the Big Brothers Big Sisters of Eastern Missouri in Grand Center, the Cortex tech district’s new office building for Microsoft and the ongoing International Shoe building restoration on Washington Avenue.

The credits were in danger of being killed in the original U.S. House version of the federal tax overhaul. But the Senate’s tax cut bill retained the credits for the next two years at existing levels. Philpott said Sen. Roy Blunt, R-Mo., helped keep the credits alive in the tax legislation.

Effect of Changes to Tax Law on Affordable Housing in St. Louis

The new tax law certainly is controversial and I am certainly not qualified to offer a detailed analysis. One area that I am knowledgeable about are Low Income Housing Tax Credits (LIHTC). This is the main program for developing affordable housing in the United States.

The new tax law would have a detrimental effect on LIHTC which relies on selling tax credits to corporate entities and using the proceeds of those sales as equity for the construction and rehabilitation of affordable housing. Since the new law significantly lowers corporate taxes, it will also lower what corporations are willing to pay for tax credits, thereby making affordable housing more difficult to complete. Missouri suffers a double whammy with the elimination of the State of Missouri Affordable Housing Tax Credit by Governor Greitens and the MHDC board. This with the addition of potential cuts in the Missouri Historic Tax Credits will have dire effects on the City of St. Louis. Written by Paul Dribin

Community Reinvestment Act

The Community Reinvestment Act was a piece of legislation passed in the seventies which has had a very positive effect on urban development. This law required all regulated financial institutions to lend in non traditional areas and develop underwriting standards to allow this to happen. It has resulted in millions of minorities and minority communities receiving home loans. The program has also made money for banks and contrary to conservative ideology was not the cause of the housing collapse.

The Trump administration is trying to weaken the law. With everything else going on, this has not received much attention. We should be paying attention to this whole issue. Written by Paul Dribin

Housing and Schools

One of the biggest barriers thrown up against the construction of affordable housing, or housing in general, is that the increased number of children will negatively impact the schools. This is often a code for more racist beliefs. In any case, I am supplying an article from Shelterforce Weekly which quotes a study that disputes that notion. Like the author, I am skeptical that facts will change anyone’s mind.

BlogHousing

Adding Housing Doesn’t Overcrowd Schools

Miriam Axel-Lute

November 30, 2017

‘Monopoly’ by Rodrigo Tejeda, via flickr, CC BY-NC-ND 2.0

Only a few things in life are certain: Death, Republicans trying to cut taxes on the wealthy, and the fact that people opposing new housing development will bring up the possibility of overcrowding the local school system.

The fears trotted out in the face of proposed affordable housing developments rarely come to pass. One of our most popular articles describes how the claims made about four specific developments were evaluated after they were built and found to have either not happened, or happened to a much smaller extent than feared. “Many of the common fears about affordable housing are either overstated or simply wrong,” that article concluded, but it called for more systematic study.

The Metropolitan Area Planning Council has delivered with a study that examines the relationship of new housing development and school enrollment in 234 public school districts across Massachusetts. It found they are not correlated at all:

We find that the conventional wisdom that links housing production with inevitable enrollment growth no longer holds true. At the district level, we observe no meaningful correlation between housing production rates and enrollment growth over a six-year period. While it is true that schoolchildren occupying new housing units may cause a marginal change in enrollment, they are one small factor among many. In cities and towns with the most rapid housing production, enrollment barely budged; and most districts with the largest student increases saw very little housing unit change.

There are too many other factors, including changing demographics and bidding up of prices in desirable school systems, that are affecting enrollment numbers. Housing production just isn’t registering.

Is Evidence Enough?

This is good news for housing advocates. Who wouldn’t want an evidence-based rebuttal to NIMBY fears (or what they claim to fear when what they actually fear is not acceptable to admit in public)?

However, I have my own fear. The idea of “more housing units will equal more students” has such an intuitive logic to it (after all, families with children who will go to the public schools could move in), and confirmation bias is very strong. I therefore worry that this will be one of those cases where trying to win a point merely by presenting contradictory evidence might just cause people to dig in their heels. Of course, hopefully decision makers will be more open to evidence than those who are trying to influence the decision makers, but that’s not a guarantee.

It seems to me like this study probably shouldn’t be trotted out during particular permitting fights without being paired with the details of the situation of a particular school system and its capacity, and the particular housing market. For example, is more school enrollment even actually a bad thing? (Many suburbs are seeing marked declines in enrollment, says the MAPC study.)

This is probably also a really good time to review best practices for engaging in high-conflict conversations—leading with values statements, using language that brings people in rather than reinforcing their ideas, shifting the overall narrative.

Here’s hoping that used carefully, these fascinating findings can help smooth the way for more housing where it is needed.

St. Louis and Housing

I finished reading an article in the NYT today again about the overheated housing market in the San Francisco Bay Area with a focus on Berkley. It pointed out the resistance among single family homeowners to doing anything differently to make housing a little more affordable. I also believe that people in these markets are going to be underwater if the Republican tax bill passes and they are limited on mortgage interest deductions and cannot deduct state and local taxes.

In any case it points out to me again how so many quality neighborhoods in both St. Louis city and county contain quality housing at a good price for buyers. I would think a marketing program to young people living on the coasts may be in order. What a bargain. We also have great cultural amenities and a short commute. These are all pluses. Why aren’t we marketing them? Written by Paul Dribin

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