the profitability of affordable housing, #2

This post has been a long time coming but here it is.

As I asserted in a previous companion to this post, affordable housing is a bit of a misnomer. The housing is affordable for the resident. However, it is obscenely profitable for the developer. Altruism does not get these units built. I am loathe to attribute this to greed but profitability certainly does enter into the equation.

Thus we arrive at the Parkside Village Development, on Colcord & 9th. A number of community activists worked tirelessly to force the previous owner, American Housing Foundation, to provide dignity & decent housing to its residents. This developer/complex management had fallen into financial difficulty and the ramifications of this fell upon residents. Vacant apartments were cannibalized to fix occupied apartments. Maintenance was spotty. The complex lacked basic services and security. Eventually, due in large part to public outcry, the City of Waco got control over this project.

The federal Department of Housing and Urban Development retained some influence on this site. In keeping with federal bureaucracy, communication on ideas and plans moves at a slow pace. However, as I understand it from public meetings and press accounts HUD gave the City of Waco four years to redevelop this site as of January 2011. This encompassed actual development so the planning timeline was probably closer to 3 years. Credit goes to the City leadership for fighting for control and HUD openness to mixed use development (i.e. retail). The City also fought for any new development to include demolition of the current structures. Kudos on these great points. This timetable for redevelopment began this Fall.

Everyone hoped for some private development to augment affordable housing. Mixed income neighborhoods are healthy, encourage additional private investment including retail and foster upward mobility among low-income residents. The downtown master plan even included some planning points for this property so that it would fit into the matrix of development spanning from downtown to Cameron Park.

Suddenly, a plan was publicly presented to the City Council at 3pm on Oct 18 to name a developer, D-Squared, who planned to build a development with 90% affordable housing and 10% market-rate. The ratio has recently changed to 80/20, better but not good enough. Included in this development will be Senior restricted dwellings and that number, originally at 50 seems to be moving up as well. I hastily wrote a letter on 10/18 that is below:

Dear Honorable Elected Officials of the City of Waco,
I write to express my dismay over the Parkside Village Redevelopment plan that the Pinnacle Group will present to you later this afternoon for your consideration this evening. While the plan does contain some laudable elements, including the of inclusion retail property and mixed use zoning as well as the replacement of the current physical structures, the development plan fails to remediate the problems the led the community and the City of Waco to this point in the first place.
Parkside Villages has historically served as a repository for low-income residents. This concentration of poverty contributed to both generational poverty and to a high crime rate within the community and larger neighborhood. This style of urban planning, very reminiscent of 60’s style segregated public housing, fails to promote advancement for residents and hampered the revitalization of the greater community. Furthermore, the social service and public safety costs outweighed any short-term financial benefits the City may have received. At this juncture, when there is an opportunity to reject the failed the development models of the past and to promote diverse, healthy mixed-income neighborhoods, why would the City return to prior mistakes?
To this point, your body has fought for a brighter future and dignity for residents of Parkside. You argued for HUD to expand its criteria to include mixed income and mixed use development. You insisted that any redevelopment include new physical structures. You spoke positively about the Downtown Redevelopment Plan’s inclusion of this area in its intentions for this area. I urge you to hold fast to this stance in accord with your previous comments and those of the community, voiced repeatedly during public comment opportunities about the Parkside site.
As a resident of this community and pastor of one of its churches, I cannot support a plan that calls for 90% low or moderate income housing. This community needs mixed income housing, in keeping with the fabric of the surrounding neighborhood. I urge you to affirm the Pinnacle Group where they got the plan right but also to send them back to the drawing board until they present a plan that is truly mixed-income and will benefit this community and Waco at large.
Sincerely,
James H. Coston
Senior Pastor

Only several hours after this initial public presentation, Council voted for it. The plan is below.



Can we agree that this process lacked some transparency? Can we agree that it appeared as an urgent and forced decision? Can we agree that this was not on its surface good government? I understand that the developer came with a sob story about needing to apply for federal tax credits (I read "federal tax credits" as "their profitability") before a deadline expired. It's been my experience that this is the typical modus operandi for affordable housing developers; it's akin to a timeshare sale. There is not enough time for additional consideration as some contrived obstacles force a quick decision. Rather than feel squeezed to make a decision, perhaps the developer should engage in better planning.

Furthermore, if it's a great plan, it can not only withstand public scrutiny but also win over those passionate souls who desperately want something more for the community than a third iteration of a failed public housing model. If the City had four years to make a decision--and I hear that HUD wanted a 'shovel-ready project' sooner rather than later but they did give the City 48 months--then why hitch this wagon to one developer using a 80/20 ratio only 10 months into that timeline? The housing market will come back; private capital would build on that site when things turn around. Is ten months even enough time to survey the myriad options available? Additionally, why undercut the downtown master plan with this development?

One possible retort is that HUD was adamant that demolition of the site take place immediately. Apparently, HUD extended a deadline on demolition by 6 months but the City was still going to have to cover this cost. The D-Squared plan does take the City off the hook for this service as ultimately the developer will pay for demolition. However, if that is the impetus for the deal, D-Squared has leveraged a minimal investment to Wall Street proportions.

There are a lot of pieces to this that just don't make sense on their surface. Public service is often thankless and an exercise in putting out fires. While I start from a place of distrust of affordable housing producers and management companies, I start from a place of respect for our public officials. Perhaps there is a sound explanation for a quick decision that will discourage private development and continue the concentration and cycle of poverty in the Brook Avenue community.

Perhaps we can hear this sound explanation next Thursday, December 8, 6pm, at the Dewey Community Center, 925 N. 9th St. Please join me as we seek enlightenment.