The affordable housing game

The paper reported another real estate sale fee increase (you pay a hefty fee when you sell property based on sale price) to build "affordable housing" in Columbus, Ohio. And if you check the business news for your town, you'll probably see the same thing, different amount, different catchy name or acronym.

I've tracked this ploy for 40 years, under various names at my blog. Even 20 years ago, based on the transfers that went into this, there should have been no unaffordable housing for the workers our booming economy is drawing to central Ohio. Why? Because if you're smart and invest wisely, you move up and sell that house to another family. We bought our first home, a duplex in a shabby neighborhood, for $14,000 in 1962, the renter (now a FB friend, a liberal) paid our mortgage, and 2 years later we "moved up" to a nicer area and our renters paid both mortgages plus the car payment, and we paid back my father from whom we borrowed the down payment.

Many do benefit from "affordable housing" government (local, state, federal) programs. Middle and upper middle class. Developers, builders, sub-contractors, bureaucrats, government employees, banks, non-profits who get the grants, churches, salesmen, and even groups like ACORN who provide the workshops on how to use the money. The article names specific programs and funds. So what happened to "North of Broad," "Crossing at Joyce", "Home Again," "Restore Columbus," and CHIP, to name just a few that a decade ago were the darlings of the housing saviors?

https://www.columbusunderground.com/fee-increase-will-go-to…

https://collectingmythoughts.blogspot.com/2008/11/why-george-bush-isnt-fiscal.html

https://collectingmythoughts.blogspot.com/2018/08/the-need-for-affordable-housing-in.html

There were 160 housing programs in the federal government in 2012. That figure probably hasn't shrunk. I suspect they may have been at the bottom of the 2007-08 housing bubble that burst.

One percenters are living in public housing

I don’t know why this story is making the news (saw it on Fox) 10 months after it was published, but many very wealthy people are living in public housing at a much reduced rate—paid for by local and federal taxes. Some living in LA and NYC have incomes as high as $500,000.

“Of these 25,226 families [in public housing], 17,761 had earned more than the qualifying amount for more than 1 year. HUD regulations require families to meet eligibility income limits only when they are admitted to the public housing program." 

Well, gosh, in 1990, we earned more than we did in 1960, too. In fact, we’d paid off the mortgage on two homes. I wonder why this was never taken into consideration?

https://www.hudoig.gov/sites/default/files/documents/2015-PH-0002.pdf

"Case 1 – New York City Housing Authority, New York, NY – The Authority admitted the family to the program in November 1988, and it had been overincome since at least 2009. As of November 2013, the four-person household’s annual income was $497,911, while the low-income threshold was $67,100. Three members of the household earned income. The member with the highest income earned $275,757.In addition, the head of the household owned real estate that produced $790,534 in rental income between 2009 and 2013. As of July 2014, the family paid an income-based ceiling rent of $1,574 monthly for its public housing unit. According to the Authority, it did not evict this family from its 3-bedroom unit because its policy does not require it to terminate the tenancy or evict families solely because they are overincome. The Authority believes that allowing overincome families to reside in public housing is beneficial because it shows that participation in the public housing program can help families achieve a more stable life and the average rent paid by overincome families is greater than that paid by other low income families."

Could this be the new Pruitt Igoe?

In the area Hatert, at the edge of the city of Nijmegen, Netherlands, the housing corporations Portaal and Talis organize a great renewal operation. Most of the current housing does not comply with contemporary standards or needs a substantial make over.

72 apartments and a healthcare center. The irregularly shaped balconies project from each corner of the 13-storey-high tower, which was recently completed by Rotterdam studio 24H architecture. “We had a flower in mind,” says Boris Zeisser of 24H. “The balconies were designed to look like white petals and an overall organic shape was intended to evoke the image of a white rose.”

So it was with the public housing/renewal projects of the 1940s and 1950s in the United States. One of the most famous, Pruitt-Igoe of St. Louis came down in the 1970s. They had become cesspools and slum housing, festering towers of crime. Ironically, Pruitt Igoe was designed my Minoro Yamasaki, designer of the World Trade Center. Now a new film on The Pruitt-Igoe Myth "argues that the dysfunctions that prompted the Pruitt-Igoe demolition were not inevitable—that crime, violence, and vandalism were products of a negligent maintenance regime, poor financing, and poor design, as well as what New School urban studies professor Joseph Heathcott, an interviewee, characterizes as the use of public housing as a means of “planned segregation.” Freidrichs’s film is a well-crafted mix of retrospective interviews of residents and archival footage from local news sources." Howard Hosack of City Journal says the documentary is a victim of myths of its own. The fact is, the government is no better landlord than it is a step father, and the public housing actually hurt the people it intended to help. Because of preference given to single parents, fathers voluntarily left their families so they would qualify for the new housing, thus in the grand government tradition, making matters worse. ". . . blacks were robbed of the opportunity to advance through their own efforts, to build assets, and to forge communities. They—and Americans generally—continue to pay a steep price for ill-conceived projects such as Pruitt-Igoe."

The Pruitt-Igoe Myth: an Urban History – Film Trailer from the Pruitt-Igoe Myth on Vimeo.

Taking of Private Property for Public Use

I'm watching a video on c-span about the abuses of eminent domain to seize federal public housing to reduce black population. Most of us probably feel eminent domain in the taking of private property can certainly be unfair, particularly as it destroys homes and neighborhoods in the name of public good. But this is different--it's about taking federal public housing.

Perhaps you recall, if you're from Illinois, all the neighborhoods that were destroyed in the 40s and 50s because they were "slums" and required "urban renewal." Cabrini-Green is famous. Huge, impersonal, Soviet style architecture blobs were erected. Families and neighbors were scattered. Then 40-50 years later, those buildings came down, the families and neighbors were again scattered, and the yuppies moved back into prime real estate in Chicago. The friends of the Chicago Housing Authority probably did quite well--and may even be serving in Washington DC these days.

As public housing developments go, Cabrini-Green was never the largest, toughest or most troubled in Chicago. It was, however, the closest to the city’s rich and influential neighborhoods and perhaps the most widely known housing development in the country. It was made famous by the 1970s CBS television sitcom “Good Times,” which was set in Cabrini, and it also became known for its gang wars and headline-grabbing crimes — prompting Mayor Jane M. Byrne to move into the development in 1981 with her husband and a large contingent of police officers.

Taking of Private Property for Public Use - C-SPAN Video Library

Notice how young and articulate the first speaker, Ilya Somin, is. He's a Russian immigrant who came to the U.S. at about age 9--he still remembers life in the Soviet Union. Wish our home grown children did this well--and could preserve and protect as he has the ideas of the importance of private property and free markets or even the rights of people who must live in public housing. It would be a good project for a young person to track some of the wealth created for unions and building trades of condemning, building and then condemning again and rebuilding again in the same neighborhoods. And don't forget the freebies and tax rebates that the city government hands out.

New roots in Vermont

The architectural article in today's WSJ is about a 3 generation Korean-American family (via Communist North Korea over 60 years ago) with a retreat reflecting Korean culture and Vermont practicality. They own quite a chunk of land and built the family compound for about $300 sq. ft. With 48' of glass in the 12' wide dining room, the children can play in the middle of winter without shoes as the room can heat up from the sun to 87 degrees. Our little manufactured porch, 6' wide, at Lakeside does that too--in the winter sun we can almost heat the entire house built in the early 1940s.

I grew up in northern Illinois and even in the 1940s and 1950s I saw many out-buildings of similar concept on farms. They were probably designed by a clever farm wife who helped support the family and send the kids to college with her butter and egg business. These buildings had steep pitches to drop the winter snow and clerestory windows for warmth and light, the nests for the chickens were framed high enough for manure droppings to fall to the floor (also helps with heat and composting), with easy access waist high to reach under biddy for her precious eggs.

Outsiders who come in to rural areas or the inner city or to vacation/leisure towns and set about to recreate a feeling, or to preserve the past, or to establish a name for design, need to realize that eventually, the locals will not be able to afford to live there. I've seen that myself at Lakeside, where my husband has beautified the town with about 35 projects, being the architect for a renovation, a total remodeling or completely new designs on empty lots. When an area is "improved" the property values around it go up, and then the taxes go up. The early sellers do quite well; those who wait or who want to stay there because of location (ice fishing, boating) or family (generations of quarry workers from east Europe) may be out of luck. We have home owners from across the nation coming there for a few weeks in the summer to stay in fabulous cottages--that would have never happened before the 1970s gasoline crisis when leisure spots closer to home began to look more desirable to Ohioans, and the idea spread. Water mains and gas lines were laid and roads improved, and real estate development boomed. I've seen many homes in Lakeside, Marblehead and Catawba leave a family after 3 or 4 generations because the heirs cannot afford to own it, so it is sold to wealthier families. And I've seen owners sell because although they haven't "preserved" or "renovated," the neighbors have and they can't afford the taxes and insurance on a home they only use a few weeks of the year.

Most noticeable is what happens to the urban poor, what happens when a city neighborhood is "improved" or as we say these days "gentrified?" When I drive through some of the wonderful neighborhoods of user friendly townhouses in downtown Chicago full of white and light brown yuppies, close to the parks, the lake, museums and shopping, I do wonder what happened to all those poor and black welfare families of razed Cabrini Green. Did they go on to be middle or upper class citizens, no longer dependent on the government for housing?

When we moved to Columbus in the 1960s, one of the first architectural tours we took was German Village, which had been a run-down slum, and was experiencing a new birth. It was so exciting to see--I still have the fading color photos we took. Tiny brick houses and duplexes that still looked quite traditional on the outside and were already being subjected to some fairly rigid codes, were light, airy and contemporary on the inside--never really reflecting the humble origins of the German working class that built them in the 19th century. That was 42 years ago, so I'm sure those kitchens I lusted for have been done over again, once or twice, and now maybe are being subjected to all sorts of green remodeling to conserve energy, fight radon or remove toxic materials installed just 20 or 30 years ago. So where did the poor go when the gay decorators and lawyer-doctor trendy couples moved in? Well, they moved further out, maybe rented or got a foreclosed house with help from the government and started that neighborhood on a downward slide with trucks up on blocks and broken windows covered with plywood.

Some may have ended up on the Hilltop, where in the past 10-20 years non-profit housing groups with government grants have been trying to "improve" the housing, fairly solid early 20th century 4-squares cut up into 4-plexes. If they succeed, they will push the poor further away from jobs and city services, which are being cut back anyway, strangled by new environmental codes and regulations and the housing meltdown created by our government's belief that everyone needed a piece of the real estate pie.

I don't have a solution; but every improvement, whether private or government, has consequences. The green ones more than most.

The purpose of a house

By poking around in the Plum Book for 2004, I think I've found the root of the housing problem. The government. The Plum Book explains the 7,000 Federal civil service positions, so as soon as the next one is published, Democrats will be all over it like flies on honey to see what's up for grabs. So anyway, I was browsing the Assistant Secretary for Administration of HUD, and came across the Center for Faith Based Initiatives and its Director, Ryan Streeter. Found this dandy little article by him about a viable return on housing investments (by the government) that he'd done for ROMA, Results-Oriented Management and Accountability (ROMA), U. S. Department of Health and Human Services in August 2001. He says there are two purposes for housing programs, but that they came about with no overarching plan (surprise!):

(1) There is the conventional view that says housing programs are a good in themselves, and
(2) There is the (more recent) perspective that says housing programs should promote the economic self-sufficiency of the people they serve.

Most federal housing is #1--designed to be shelter, with little plan or thought about the client's long term need. Block grants for shelter or for rehab or construction. But in the last 20 years (can we all say CRA?) HUD began to think more about self-sufficiency combining supportive services with housing services to get people off welfare (can we all say Republicans?). "These have become much more common in recent years. Approximately 1,200 local housing authorities sponsor a Family Self-Sufficiency program."

Of course, Mr. Streeter, continues, #2 is waaaaay more complex (and expensive) than #1. What he says the client gets is very vague--something about not living in an unstable environment and possibly increasing wealth if he becomes a homeowner. The other parties to this transaction are definitely not poor--they are developers, investors, contractors, the real estate market, surrounding homeowners and finally, we taxpayers. In other words, the government housing programs are a lot like the food assistance programs--they do a lot more for the producers than they do for the poor.

Ask yourselves how this has worked out in your own life. Unless you purchased investment/rental property, or were a home flipper in the last housing boom, owning a home didn't do diddly squat for your wealth. You think it did because of the home sale prices, but because of inflation and everything you poured into the house that you wouldn't if you had been a tenent, you are lucky to break even let alone accumulate wealth. What owning a home did for my family was provide shelter, a good school district for the kids, nice neighbors, a life style that suit my tastes and education, and a lot of job opportunities for other people in the housing field--real estate agents, plumbers, electricians, animal and pest control, house painters, pavers, lawn services, tree trimmers, and window salesmen.

We live in a lovely condo complex now with beautiful vistas, trees, ravine and creek, because in 1962 we purchased a dump--a 1912 duplex in a mixed zoning neighborhood in Champaign, Illinois. The student renters paid the mortgage, allowing us to eventually move out, rent both units and get a nicer place, plus have enough left to make a car payment. All other wealth we have accumulated in 48 years has come from salaries, savings, inheritance, and investments (one really strange one where we bought a building lot on a lake in Indiana for $10,000 and sold it the next year for $25,000 not putting a penny into it, except the guy who mowed the weeds, and never spending one night there.) We paid $28,500 for our Abington Rd. home in 1968, sold it in 2002 for $325,000 and paid $275,000 for this one. But we lived on Abington 34 years, put about $170,000 into various additions and remodeling, to say nothing of the general maintenance and decorating (taking out trees, putting up fences, taking down fences, putting in drive-way, replacing garage doors, fixing gas line leaks, rewiring the mess the previous owners had made, building closets everywhere (no basement or attic), treating carpenter ants, treating termites, mopping up after flooded toilets or washing machines, replacing things in the 90s that we'd replaced in the 60s, etc. We paid fees to sell it, and then had to put money into the condo to redecorate brown walls and red ceilings, bring it up to code with insulation, and got hit with a $7,000 roof assessment the first year. Just last week we had someone here to replace some rotting wood on the deck.

No, whether you do it for yourselves, for your children, for your parents, or the government does it for a low income mom with children from several boyfriends, you don't change lives through housing subsidies or grants. Take a tour through any prison, hospital, school or nursing home, and you'll see that it is not the building that changes lives or educates or makes people well. It's the same with us.

Now, will someone tell the government. Someone might need help with safe, comfortable shelter, but they probably don't need the nanny state trying to babysit and redirect their lives.

Unintended consequences

My favorite breakfast is a sliced Honey Crisp apple (preferably huge and from Minnesota, but I'll take Michigan or NY if nothing else is available) and half a cup of whole walnuts. The problem is I had a frenulectomy in 1977 to close the gap between my front teeth. Let me tell you, when you've had surgery in your mouth you'll know it forever. I can't actually bite into a whole apple--it has to be sliced. After that surgery, all my teeth started to shift. You wouldn't think a tiny piece of flesh removal could do that much, but it did. Probably because I still have all my permanent teeth, even four wisdom teeth, as well as most of my childhood fillings. Even brushing my teeth and flossing can't remove the residue from this sticky breakfast, so I often don't eat until I get back from the coffee shop where I might talk or smile. The tiny shift of my front teeth has affected the enamel on my bottom teeth wearing it thin--so on it goes, 30 years later.

Every time we do something to improve something else, or to discourage something, or to destroy something, there are unintended consequences waiting. For instance, polio was virtually unknown when my grandmothers were children. Improved sanitation of the 20th century actually created the epidemics that began around the time of WWI. Middle class people were much more likely to get polio than the poor, and there was a time when they thought African Americans were immune! But in fact, in earlier times, everyone had had some exposure as children, got sick, and then recovered but had continued immunity. After the public water supplies were cleaned up, no one was able to withstand the exposure, which occasionally still lurked in water.

Let's jump a head to a bigger problem. Slum housing. At least, that's what it used to be called. In the earlier centuries in America, poor people built or rented their homes, and moved up or down as their income and circumstances dictated. The freedom to own land was a huge appeal to the immigrants who came here in the 18th and 19th centuries. My maternal grandparents had rented in Wichita when they were first married in 1901, then returned to Illinois in 1908 and lived out their lives on a farm inherited from grandma's father. My paternal grandparents were tenant farmers in the next county in the 1920s, had a large family (nine children) and a disability (my grandmother was blind). My grandmother's parents and other relatives were very good about helping, but there wasn't a government plan to assist them like there would be today for disabled poor people. There was charity, of course--my dad got a grant to go to college from the Polo Women's Club. So first their own children helped with the farm labor doing age appropriate tasks, and eventually, their adult children pooled their money and purchased a small home for them in town during WWII. Later, my grandfather who went to work in a plant when all the younger men had gone off to war (he really wasn't suited for farming), was able to save money, buy another home, and then another home, renting one. That's how housing worked in the early to mid-20th century.

Both Presidents Hoover and Roosevelt extended what started as a panic, then became a recession and then a depression by inserting government programs into problems instead of letting them heal themselves. My maternal grandparents had already begun sinking because of the easy credit for agricultural land and products in the 1920s. Like today, it was an over extension of credit that brought the economy down, but my other grandparents, tenants who had nothing anyway, really weren't affected. The New Deal of the 1930s built on Hoover's (a liberal Republican) mistakes and extended the Depression another 8 years. But worse still are the long term, unintended consequences of those programs.

The New Deal began the federal government's interference in the housing market which extends right up to the balance today in our 401-k and 403-b. It went way beyond zoning and health and safety, long a concern of government. The reason for the housing shortage after WWII, for the existence of all those Lustron homes in Mt. Morris, was rent control, and the government giving a corporation money to develop a house to meet the need and use factories developed during the war. Cheap housing just disappeared from the market, so rent and home prices soared. The government created that shortage. We didn't have fewer buildings in 1946 than 1941, just more rules. So who benefited from that? Certainly not the poor. Then when the poor had no access to even bad housing, the government stepped in again and built public housing, which quickly became a cesspool of crime, rigid segregation by race and very inhospitable living conditions. When public housing failed (remember the demolition of Cabrini Green in Chicago?), the government came up with new plans to "solve" the housing crisis--housing vouchers, community development agencies and non-profits, tax breaks or subsidies, condemning large tracks and rebuilding with tax incentives which created gentrification and scattered the poor yet again!

You think Katrina destroyed housing and hurt the poor? Nothing like what the residue of our federal government's housing experiments over the years have done! At every step, private enterprise has either been discouraged through regulation, or allowed to run wild through lobbying efforts and kick-backs to government officials who hold the keys to housing very tightly. Fast forward to the latest failure of our government to help the poor and low income with housing: the creation of the Community Redevelopment Act under Jimmy Carter, and it's expansion during the Clinton era to the point where banks were held hostage by "non-profits" with massive amounts of government funding receiving huge fees for each low income family they stuffed, unprepared, into a mortgage that didn't fit.

None of this was intended. There were enough good intentions to wall paper Washington DC. But there are consequences when you try to change people's behavior through government programming or reprogramming. Don't be fooled by politicians who weep and mourn over our "selfishness" when we have spent trillions on these government created crises and have only kept the poor down longer than they would have been if we'd done nothing and only stood by and wrung our hands.