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The St Louis Contrarian

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

Archive for the tag “affordable housing”

One Way in Which St. Louis is Like California

California has just passed new legislation for creating more affordable housing. It is a drop in the bucket of what is needed but a good start. The reasons for the California housing crisis are many. An overheated economy and lack of supply help explain the problem. The lack of supply is predominantly due to restrictions on height and density, and extremely involved zoning laws restricting multifamily development.

St. Louis does not have an overheated economy but still suffers from unnecessary restrictions. I point to the historic preservation requirements in the City of St. Louis as a significant barrier to affordable housing. The suburbs have zoning laws which require low density and policies against the development of multifamily housing. Changes in zoning and land use will not alone create the conditions for affordable housing but it certainly would help. Written by Paul Dribin

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Vouchers and Housing Policy

Research clearly shows that poor people who move to a more affluent neighborhood do better in life. Unfortunately most affordable housing in St. Louis and elsewhere is constructed in lower income neighborhoods. HUD, under the Obama administration had tried to address this problem.

Up until now, Section 8 fair market rents were set for an entire metropolitan area. Therefore the rent structure in Wellston was the same as in Ladue. On an initial limited basis, HUD is changing the policy and determining fair market rent by zip code, therefore allowing higher rents in more affluent areas. Where tested, the concept has seemed to work.

To be sure, the policy has detractors. Housing authorities complain the policy is too bureaucratic. Housing practitioners are concerned that the policy if fully implemented would drain inner city neighborhoods of population and good tenants. These are both valid issues, but I believe the policy should be tried. The Trump administration unfortunately is eliminating the new rule that would implement it. Written by Paul Dribin

Air B&B and Affordable Housing

Housing activists in some communities have complained that Air B&B has caused a decline in affordable housing. Is this true for St. Louis? I doubt it. After all the Air B&B program takes mostly rooms from mostly houses that are otherwise inhabited. If full apartments are rented they were probably not in the affordable rental category. Written by Paul Dribin

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

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

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.

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.

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