No Poor People Please: More Abuse of the Word "Affordability"

More news about Portland's ownership-obsessed affordable-housing scene in the latest Portland Tribune, wherein a half a mil charity donation to HOST Development Inc. is touted as the latest good news in our city's ongoing critical loss of affordable housing. This comes from legendary Oregonian the late, great Fred Meyer's philanthropic trust. (Isn't it a drag that his stores are run by crooks now? I bet Fred's looking down from Heaven and wondering why an eighty-nine cent spatula has to have a big fat rubber handle, the word "Kitchenaid" and a $4.99 price tag on it. Oh well.)

“By partnering with HOST, we’re keeping Portland at the forefront of the fight against losing affordable housing,” the trust’s chief executive officer, Doug Stamm, said.
HOST builds and sells energy-efficient homes to first-time homeowners. It currently is selling homes in three developments for $190,000 to $250,000, depending on the home’s size.
http://www.portlandtrib...158100

"The fight against losing affordable housing" sounds nice. As is often the case, the fight is in fact for raising the home-ownership statistics, though. Then again, compared with typical prices, $190K for a place in, say, St. Johns doesn't sound too bad, does it? Or can you find places for around $200,000 anyway, if you aren't that picky about area? Is HOST really doing any good? Let's see what they have to say for themselves:

Our partners and supporters have made it possible for HOST to continue to provide affordable housing opportunities for individuals and families earning between 80% and 100% of Median Family Income.
http://www.hostdevelopment.com/about_HOST/partners.htm

And some more detail from a 2004 profile in Builders News:

HOST began with rehabs of abandoned homes before moving into new home construction. "We raise the money ourselves, and do it without government help," he says. Nonetheless, getting a few bankers on the board of directors helped the developer secure funds as project sizes grew.
HOST aims to serve those at 75%-100% of area median income (Habitat for Humanity, by contrast, aims at less than 30% of median income, and must heavily subsidize the costs.)
http://www.buildernewsmag.com/viewnews.pl?id=37

oh, jeez. Again with the 80-100% of MFI. To use the term "affordable housing" when it refers to housing that someone making less than forty or fifty thousand dollars a year* can't afford is patently dishonest, in my opinion. It really should be called something else. Apparently Northwest Pilot Project agrees with me, if I'm reading this snippet from the Portland Daily Journal of Commerce correctly:

The nonprofit Northwest Pilot Project estimates there are only 3,000 units of affordable housing in the city. PDC says the number is closer to 10,000.

That's a pretty big disagreement. PDC obviously has a generous definition of affordability. (Generous to developers asking breaks for "providing" it, at least). This DJC article is an interview with HOST's chairman of the board, Ted Gilbert (of commercial investment firm Gilbert Bros.) He also enjoys muddying the waters of what affordability means:

DJC: Median family income aside, what does affordable housing really mean?

Ted Gilbert: It’s a large spectrum. Affordable housing ranges all the way from homeless to very low-income rental and special-needs populations to work-force housing on a rental basis to affordable homeownership and trying to reverse the family flight that’s going on in this community right now.
(DJC story archived on)  http://forum.skyscraperpage.com/archive/index.php/t-134705.html

And yet "affordable housing," which always sounds wonderful in a press-release, headline, or Pearl District boast, rarely means anything but exactly what HOST is wasting poor Fred's charity money on: home-ownership help for people who already have enough money to buy a home. Here are some examples. I bet you've never seen anything like this before! Call your loan officer! Click the pic! Click it!! You're gonna be a homeowner!!

Crystal Springs Eleven - NEW PRICES!
SE 80th Place and
SE Crystal Springs Blvd
$216,000 - $219,00

Not into that neighborhood? How about

Raymond Park Place Homes
SE 118th and SE Schiller
Home prices range from $240,000 - $250,000

Or maybe

HOST Homes at New Columbia
One home left !
3 BR homes
From $220,000
http://www.hostdevelopment.com/available_homes/index.htm

(Now, where's that "$190K" place again? In the future? Or just in your mouth?)

I suppose people might say I'm nuts, that that's a good deal any way you look at it, given the price run-up of the last several years. But I fail to understand what net-gain, society-wise, HOST is creating if they're buying up already cheap houses, rehabbing them, and just selling them for a little "less-more" than a wholly for-profit enterprise might do. Is it simply that for-profit development ignores all but the high-end, and public-private arrangements such as this are the only way re- or new development happens that doesn't target upper-middle class incomes and above? Either way, it seems likely that they are in fact helping take cheap ("abandoned" yet perfectly rehab-able - right) houses out of the mix, even as they are claiming to be helping affordability. Regarding existing housing, Gilbert has this to say:

We’ve bought 525 units to date. It’s not a ton, I grant you. But the model works. We buy an existing unit. My guess is, of the 525 units, our average price per unit of purchase is under $30,000 a unit.

As for building new,

You have to compete with the private sector to buy land, you have to finance it, get an architect, the cost per unit goes up, and most of the new affordable housing that gets built is for around 60 percent median family income. Why? Because that’s the lowest you can go for the amount you paid to build the housing.
http://forum.skyscraperpage.com/archive/index.php/t-134705.html

The MFI thing is driving me insane. Going from "very low-income rental" to "60% MFI" to "80-100% MFI" all within the context of "we're doing something about affordable housing" is in my view completely nuts. I think that aside from Northwest Pilot Project, there's very little honest evaluation of the situation, and a lot of public-private "partnering" that not only is benefiting commercial developers but might even be, in a case like this, sucking up philanthropy that could be better applied otherwise.

But there really is another problem, and that is that "nobody" (meaning, the usual vocal minority of existing homewners and business-owners that constitute the voice of any Neighborhood Association) actually will stand for anything that smells like a bunch of poor people are going to be brought in who will drive down property values.

Few undertakings manifest both the promise and perils of affordable housing better than Charleston Place, a 99-home infill project finishing up this spring in the St. John's neighborhood of North Portland
***
The neighborhood's association was initially enthusiastic, recognizing that an influx of homeowners and children would shore up struggling area, with its high percentage of Section 8 units, a school decimated by dropouts, and poor city services.
But the term "affordable" soon raised alarm bells. "People heard the word and thought of government subsidies, unemployed or poor, even derelicts," says Nolte. "We said ‘no, this is for people with jobs. They have to qualify for a mortgage, they have to be employed.'"
http://www.buildernewsmag.com/viewnews.pl?id=37

So in this sense an enterprise like HOST seems to be doing all they can. Claiming that it's making a difference in this city's affordability, though, isn't helping. HOST is typical of a program benefiting no one except people for whom owning a home is already entirely within the realm of possibility, along of course with those whose business it is to make and sell them.

Today's Tribune story:
http://www.portlandtribune.com/news/story.php?story_id=120785933075158100
HOST's available homes page:
http://www.hostdevelopment.com/available_homes/index.htm
Daily Journal of Commerce Ted Gilbert interview, archived at:
http://forum.skyscraperpage.com/archive/index.php/t-134705.html
former HOST director Howard Nolte interviewed:
http://www.buildernewsmag.com/viewnews.pl?id=37

*Extra Credit:
PDC's nobody-matters-who-earns-less-than-this page:

# in
household            @80%    @100%
    2                    43,450     54,000
    3                    48,900     60,750
    4                    54,300     67,500

From the first of the pdf's linked on:
http://www.pdc.us/housing_services/inside_housing_services/asset_management/default.asp

Comments

[squeezed]

Fuck this makes me mad.

Reminds me of the O article with the quote from the trustafarian living in affordable housing who drove a landrover.

[naysayer]

Perhaps I'm being dramatic, but I think we're on the cusp of some worldwide changes in the redistribution of wealth.

I also don't think the transition will be pretty.

[Fred Stewart]

Do not worry about home ownership. The percentage of people that own their own home will no doubt decrease over the next couple of years. There are not as many opportunities for people to obtain financing as there once was. There will be a greater focus on rental properties and I hope some effort to work out fair manner to stabilize the rental market.

HOST is one of the reasons Inner Northeast Portland is the way it is today. The work they did in the early 90's helped qualify King Neighborhood as a worth while area to live in. This was back when King Neighborhood had as many as 100 vacant homes and some 5 vacant lots. By coming in and developing opportunities one home and one street at a time. King Neighborhood grew.

I am very proud of them and happy they are still contributing.

[PG]

Fred - Had rent stabilization efforts of some kind gotten underway in the early 90s we'd be on a lot better footing. But that was fifteen long years ago. By now the idea that we must ever further privilege ownership over renting has rooted itself in many levels of local policy. And even if a neighborhood looks better than it did back then, we still have to be clear about those dislocated during that process.

Many would point to such organizations as HOST (or the Land Trust) as providers of a net gain. But what we see as well (in the words of a presenter at the documentary referred to in the previous post), is this:

"the process of gentrification — how the simple act of investing in a community creates opportunities for people with resources and leaves people without resources at a disadvantage."

I will again assert that it is wrong to define something as affordable when it is clearly only accessible to a certain strata of society - people who are organized, stabilized, and secure in their ongoing potential to earn and pay at a level well above many others. The word gives Portland yet another reason to feel complacent that we are socially progressive somehow, when in fact diversity, inclusiveness, commonality and fairness are all, because of gentrification, in observable decline.

Thanks for commenting.

[Housing policy geek]

"PDC's nobody-matters-who-earns-less-than-this page"

I would suggest you do your research. Of the housing dollars PDC spent in the last year, 90% went to households earning 60% median income or below (44% with incomes of 30% MFI).

Now, I agree with you that $250,000 is hardly affordable homeownership, but it has as much to do with the market. If you can't find a house with more than 2 bedrooms for close to $250,000 in a neighborhood then $250,000 might be viewed as affordable.

[PG]

"Of the housing dollars PDC spent in the last year, 90% went to households earning 60% median income or below"

While we're on the subject of research, got a link for this?

[Psymonetta Isnoful]

http://www.pdc.us/pdf/housing_services/production-report/housing-production-report-fiscal-year-2006-2007.pdf

[PG]

Yes, I've read that one. While the figure "90%" is nowhere in it, presumably you're talking about this summary, page 4:

"Ninety three percent of the units/buyers that received direct financial assistance in FY06/07 were below 60% median family income (MFI) – both rental and homeowner housing."

The table on page 34 has unit breakdowns, and summarizes

"the six years of reporting by income (MFI level) for units receiving PDC financing (incentive only units are excluded). Of the total units, 78% were at or below 60% MFI and 83% of the dollars supported units at this MFI level. 26% of the units/homeowners were at 30% MFI or below."

But saying 90% is close, we can still ask, 90% of what exactly? The pie chart on page 6 indicates to me we're talking about only a third of the total unit count.

In any case, I think page 7's numbers, breaking down the 2011 target, show much too much intended action on behalf of ownership and market rate:

• 1,500 rental rehab preservation units
• 6,400 new low-income rental units
• 4,500 new market rate rental units
• 3,000 new homeownership units
• 1,600 homes repaired
• 3,000 first-time homebuyers

[Housing policy geek]

"In any case, I think page 7's numbers, breaking down the 2011 target, show much too much intended action on behalf of ownership and market rate."

I agree.

[Psymonetta Isnoful]

I think you have to keep in mind that the cost applied to each type of unit varies wildly, and can even vary by location and project.

That said, a reasonable rule of thumb is that the amount of subsidy required is proportional to the income level as compared to the housing unit cost in the area you are trying to build in. So, the subsidy required to build one unit reserved for below 60% MFI in a high market area is higher.

The subsidy for rental units is higher per unit in general over the cost of facilitating home ownership and especially home repairs.

In general, it cost more to produce and subsidize rentals. You can't compare based on straight unit production. 1,600 homes repaired is a low-cost, high benefit project compared to building permanently affordable rental units. So, it is reasonable to accept that 93% of the funding could be spent on 83% of the unit production.

The pie chart on page 6 is showing the amount spent on direct incentive programs vs. the amount of gap financing supplied by the PDC. That applies to all unit production/rehab buy downs and abatements regardless. So, I'm not sure how you're getting only 1/3 of those allocations are going to 60% or below.

Ownership programs include things like supporting the Portland Housing Center, helping low/no income seniors complete home repairs, Habitat for Humanity and the PCLT, not just new build programs like HOST. I'm not sure how anyone could take issue with any of these programs so far as their mission is concerned.

The other aspect to take into account is that this is Community Development...not just Renter Development. It has to be integrated, and address all of the issues of all of the residents, rather than just picking the fashionable silo to go after.

[Fred Stewart]

In the 90's the rental market was not known for growing income. Most investors that bought properties for rentals understood they would be upside down for awhile before they realized any monthly profits. Profit was in the increase in value of the property. In the early 90's, 10% cash on cash return on investment was considered a buy. By the end of the 90's I rarely saw anyone realize a return anywhere close to that unless you added the appreciation of the property into the calculation.

Today, we have a market where rent stabilization makes sense. However we are treading on thin ice here. We can not hinder growth in the rental markets to the point where an investor cannot see growth that could outpace inflation. We do not want to motivate someone to be a slum lord. God knows we had enough of them in the 1980's. We have to develop a balance that is fair to both the tenant and the landlord. The goal is to keep Portland mixed when it comes to the residents of its neighborhoods. Mixed in all demographics of the human experience.

I would like to see a cap on how much rent could be increased on a yearly basis if a tenant is living in the property. Once the tenant moves, I feel the landlord deserves the right to secure a new tenant at whatever the market will bear. What we have to prevent is people being pushed out of communities for the simple opportunity of profit.

[PG]

"I would like to see a cap on how much rent could be increased on a yearly basis if a tenant is living in the property"
Too right! Rents can be stabilized without hurting landlords' capacity for profit other than through selling their building. Incentivize tenant continuity, and the stability and diversity of our neighborhoods will benefit greatly as a result. This is why I see public resources targeting ownership as steps in the wrong direction.

This city needs to look at rent stabilization with an open mind and not just parroting the anecdotal horror stories that are perpetuated about rent control in SF, NY, etc. The research is out there.

[Psymonetta Isnoful]

At both of the complexes where I lived, in Portland, in the last 8 years rent increases were capped at 10% and I never saw my rent go up more than 5%. It was facilitated by the lease agreement and they had leases that were only 6 month.

Part of it is reading and understanding your rental agreement and factoring that into your rental choice. The other aspect is knowing how to negotiate a lease. Even when they converted half of the complex I was living in into condos, I was able to negotiate 3 free months of rent out of my new lease when they asked me to move.

[PG]

Are you going to stalk my blog and try to keep "correcting" me with your little classist agenda forever? Because you just make it clearer and clearer what side you're on.

[Psymonetta Isnoful]

Gosh, when I had those rental agreements, my household income was right around 43% of the area MFI.

I'm not quite sure how trusting the ability of humanity to learn how to represent their own interests in classist. Perhaps, your reality tunnel is a little narrow?

[PG]

The insistence that private capabilities are the solution to public shortcomings is Reagan/Thatcher all the way. You aren't in fact "trusting the ability of humanity," you're trusting the ability of certain individuals. This simply observes that some (for example, yourself) will be able to prevail, while ignoring the infinite variety of reasons why others will not. This describes a society as no more than the aggregated power of private individuals' capabilities and desires, regulated as little as possible by any larger concept such as the common good.

This of course describes the present system in general (of which the Portland housing situation is an example in particular), a system that by any measurement is exaggerating an increasingly huge gap between classes.

Because of this, to assert the present system's adequacy in assuring affordable life to everyone is classist. Your claim that everyone should simply educate themselves in the ways of finances and real estate enough to escape the crushing effects of housing inaffordability is in fact aligned with fundamental ethos of the modern conservative movement in which the social contract doesn't exist and in which the individual is simply on his own to succeed or fail.

To think that we can fulfill our obligations as a society by offering classes or something to the poor is hardly progressive - it is dismissive.

[Psymonetta Isnoful]

Actually, the social contract is to provide the educational opportunities, and conduct significant outreach to ensure that all people have the ability to take advantage of those opportunities and are aware of them. When, after addressing the lack of education, there are still barriers, then additional measures can be taken to support people who are unable to meet their needs.

To simply go out and "do for" people no matter what their ability or circumstance, and insist that it is the responsibility of government and agencies to force people into silos is the attitude of someone who is classist, or who is profiting from "doing for" others.,. AKA a poverty pimp.

[Psymonetta Isnoful]

I should add, that in no way shape or form have I suggested that private capabilities are the solution to public shortcomings. That is a base mis characterization of my position, which suggest that you can't grasp the idea that someone may want the same outcome, but has a significantly different approach to the process of achieving that outcome. When you do that, you alienate potential allies, and essentially back yourself into an indefensible corner.

In no way to I accept either the neo or the classical conservative position that the individual is prime. In fact, it's quite the opposite. I support the ability of small social groupings to first bolster the capabilities of all members of their group, and then join with larger society, as a stronger more able unit to address the large scale issues through a more consensus based process.

However, it is difficult to reach consensus on a large scale if one is devoting the bulk of their time to addressing base social gaps in education. (which includes the ability to handle questions of basic finance like bugeting and dealing with leases/contracts).

It is especially annoying when the people who know better, and who claim to represent these people "ride in on their white horses" and then use aggregated mis education and disinformation to promote their own personal agendas.

[PG]

I see "rental choices" or "knowing how to negotiate a lease" or "represent their own interests" as all signifying individual, private capabilities; it seems to me you're saying it's acceptable that a person's success depends on these capabilities or their ability to obtain them.

My agenda (such as at is) is to benefit, for the common good, people who are worse off than me and always will be. The belief behind this is simply that the people "making it" are far more likely to be doing all right. My criticisms of public resources targeting homeownership rather than renting is something I stand behind on this basis. That the cost/benefit can be parsed as PDC does, and as you support above, is in my view immaterial to what is morally right and what it in better service of what should be the priority goal of an inclusive rather than exclusive city. Urban Renewal, for whatever its achievements, can't be viewed as trying nearly hard enough to keep that as a priority because it's too focused on adding wealth to existing ownership. People such as yourself, assuming that is really you on the blog you link, benefit from UR personally - many do, and they should simply admit that this is the case, rather than stridently and from every angle at hand making the kind of assertions I characterize as indistinct from the modern conservatives' You're-On-Your-Own, privatize everything, drown the government template. But I admit, we're all internalizing that template more and more. We experience so much supply-side econ in everyday life we rarely imagine any more that there was any other way. We don't really expect that anyone should get help for anything any more. We see the experienced sales force at Home Depot, retired workmen all, laid off and replaced with low-wage temps, and we continue to shop there, wandering around on our own until we randomly hit the display where the indescribable fastener we want is hidden. Because all American life is the same way.

I suggest we resist it as much as possible. As regards the purview of this blog, I specifically suggest that if we don't want Portland to become like San Francisco, i.e. off-limits to all but the well-off, basically everything we're doing as a society that relies on leveraging private enterprise is taking us two steps back for every step forward. At least.

[Psymonetta Isnoful]

When I look at any one person, I see a collection of relationships, not an individual. I think that's what you're missing. Every person should first have a natural support network, and that network is what should be supported.

Secondly, Urban Renewal is an investment strategy. It doesn't target the enrichment of individual homeowners, as pure theory, because property tax increases are capped at 3%. The tax increment is generated by new construction. The new monies brought on to the tax roles can then be used to fund future services.

Building non-taxable new housing does not help the investment along, and bleeds potential future revenue from essential services and the ability to invest in future programs of social consequence. However, the PDC has adopted policies that attempt to balance this reality with the need to produce affordable and workforce housing because they recognize that it is important to try to prevent dislocation early on.

Each neighborhood has it's own unique starting point, and own unique trajectory. In Lents, it is practical to spend a great deal of time investing in existing housing, subsidizing homeownership for lower incomes, and developing assets of the working poor through land trusts and other tax incentive programs. But, some of the first new developments in Lents were new affordable housing stock, and now that land has been assembled, more is planned in balance with projects that will achieve the goals of Urban Renewal, which is increment generation.

Of course, a entity that is subject to property tax must own a property in order to generate increment... unless you're proposing that HAP and other non-profits start paying property tax on all of their developments. That won't help rents stabilize.

So, if your definition of "trying nearly hard enough" is to take every bit of funding and dump it into public housing production, that is very short sighted since that approach expends funding without generating any new revenue and eliminates the potential for additional future funding for all housing programs and public services.

Rental housing isn't like magic beans.

[Psymonetta Isnoful]

Also, I thought you might enjoy this.

http://www.nhc.org/pdf/chp_landscape2007_facts_portlandor.pdf