Housing opens door to redevelopment

The 18th and Vine area of Kansas City, Mo., was once the thriving heart of the city’s black community. Over the years, however, the area fell into disrepair, and city officials began studying how best to bring it back. Their efforts led to the creation of the American Jazz Museum, the Hall of Fame for baseball’s Negro Leagues and the renovation of the GEM Theater, which currently occupy the center of the revitalized neighborhood. But Kansas City did not stop there. Reasoning that the city’s revitalization efforts would be in vain without re-creating the area as a livable community, officials began focusing on housing. As a result, 204 mixed-rate apartments will be spread through seven buildings to help complete the task.

Nationwide, housing initiatives play an increasing role in urban revitalization. “Housing is an anchor for economic development,” says Chandra Western, executive director for the National Community Development Association (NCDA), Washington, D.C. “For any new revitalization strategy, housing is as important as financing and job creation.” According to “Comprehensive Neighborhood Development,” a publication of the National Association of Housing and Redevelopment Officials, Washington, D.C., attention to housing is an essential part of a revitalization program that addresses a distressed community as a whole. While some redevelopment programs focus on individual systems, such as jobs or education or crime, a more inclusive program is recommended by organizations such as NCDA and the Department of Housing and Urban Development, Washington, D.C.

Revitalization combinations

The combinations of housing and other redevelopment components can take many forms, depending on local needs. New York’s Storeworks program, a partnership between the city and Neighborhood Housing Services, a local nonprofit organization, renovates vacant, city-owned buildings with downstairs storefronts and between one and four upstairs residential units. “The streets [in the program] are economically viable but have one derelict building bringing them down,” says Harriet Frank, director of the Homeownership Rehabilitation Program for New York’s Department of Housing, Preservation and Development. The properties are sold at market rate to qualified applicants, with the city subsidizing the difference between total development costs and the market price. For example, a property that is worth $250,000 may cost $290,000 once the cost of gut renovations, transfer fees and environmental costs are added in; the city pays the difference. Residential space is ready for move-in at the time of purchase; commercial space is electrically wired and ready for development.

The key to the program’s success is a Federal Housing Authority loan that allows participants to pay as little as 3 to 5 percent of the purchase price as a down payment, Frank says. (The standard down payment for commercial property would have priced out many potential buyers.) According to Joan Tally, project manager for Neighborhood Housing Services, approximately half of the property owners live in the residential portion of their buildings. Thirty-four properties were sold in the initial project cycle, which ended in 1998; more than 800 people have applied for the 48 properties now available.

Other communities, such as San Francisco, focus on a combination of housing and human services to revitalize distressed communities. “Housing is a prerequisite to neighborhood stabilization, but it is not alone sufficient to stabilize an area,” says Pamela David, director of the San Francisco Mayor’s Office of Community Development. The city combines support services, funded by both public and private sources and provided by local nonprofit organizations, to help meet the needs of its economically stressed communities.

Ongoing projects in San Francisco’s Visitation Valley neighborhood illustrate the value of a diversified plan. A privately-owned housing community, with residents comprised largely of Section 8 certificate holders, had been taken over by HUD because of mismanagement. HUD temporarily relocated the residents, and the city transferred the property to nonprofit developers, who have imploded the two aging high-rises that made up the community.

Those buildings are being replaced with townhouse developments on three separately owned sites. Two of those properties will serve families; the other is a senior community. All three properties have child care facilities and community rooms. The result is that facilities are better equipped to meet the needs of the community they serve.

Affordable housing

Many federal housing grants, such as tax-exempt bonds, require that a specific percentage of the constructed units be designated for affordable housing. (The definition of “affordable” varies, but Sanjay Jeer, senior research associate for the American Planning Association, Washington, D.C., says that researchers generally regard a family as part of the “affordable” category if its gross income is less than 70 percent of the region’s median family income. However, agencies may differ dramatically on their definitions of affordable, depending on a region’s economic cycle or the type of relief being offered.)

Urban revitalization programs are not typically driven by affordable housing initiatives, according to John Murphy, executive director of the National Association for County, Community and Economic Development, Washington, D.C. However, in New Jersey, the idea seems to work.

Over the last nine years, the state’s capital, Trenton, has worked to change its urban landscape with the help of affordable housing and economic development initiatives. According to Rhonda Coe, director of the Division of Housing Production for Trenton, housing has been a focus of revitalization efforts because of overcrowding and Mayor Douglas Palmer’s commitment to the issue.

The ongoing Canal Banks project, located a few miles from downtown, demonstrates how housing can promote economic development. There, the community’s population earns less than 50 percent of the county median income.

In 1998, the city and local nonprofits began building or renovating 200 units in a Homeownership Zone within the Canal Banks neighborhood. The project is supported with a “hodge podge of civic, city and state funding,” Coe says.

House prices will begin at affordable rates and, as the neighborhood rebounds, the prices will be raised to market value. (A percentage of the properties are being offered at the market rate from the beginning to encourage the creation of a mixed-rate community.) The city hopes that, as Canal Banks’ housing stock improves, so will the economic climate, Coe says. The local Head Start school-readiness program is planning to move its headquarters into the neighborhood; additionally, Trenton is conducting a study to determine the best use of the community’s retail/ commercial strip.

In other Trenton communities, economic development is preceding rather than following housing initiatives. However, both components eventually are present in the revitalized neighborhoods.

Like Trenton, many cities are using mixed-rate — rather than only affordable — housing to stabilize blighted neighborhoods. That is because local governments have learned painful lessons about how dedicating large areas to nondescript affordable housing can stigmatize neighborhoods.

In Kansas City revitalization projects, such as the one in the Jazz District, include both market rate and affordable housing components. The city’s nearby Beacon Hill initiative will create 150 homes and 70 townhouses ranging in price from $90,000 to $200,000 in one of the city’s more economically stressed communities. The project is funded by a $10 million Section 108 Loan Guarantee, a $1.25 million Brownfields Economic Development Initiative Grant , Fannie Mae and area banks.

As cities create mixed-rate communities that bring more affluent residents into the neighborhoods, there likely will be a population shift as some low-income residents find themselves less able to afford rents and necessities. That movement over time is a natural progression, according to Jeer; the challenge for cities, he says, is to maintain a stable proportion of affordable housing in comparison to the overall population.

Ensuring commitment

In the last 10 years, cities have expanded their revitalization efforts to encompass the entire community, which includes housing and all the services that must accompany it. Western notes that cities must plan carefully when considering any plan with a housing component, adding that they must weigh the likely drain on city services such as transportation and police protection.

The support of residents, private investment and all public officials is also essential to the process since, without across-the-board support, the project may not achieve the momentum necessary for success.

Housing projects will continue to be a piece of the urban revitalization puzzle for the foreseeable future. And, while the use of housing will vary by city, combining it with other revitalization strategies seems likely to produce the most bang for the redevelopment buck.