Category Archives: Housing

Helping the Poor by… Replacing Lower-Income Housing Units with Mixed-Income Development?

The Highland Grove mixed-income community. Photo credit: Richmond Free-Press

The premise behind public housing is that “market failure” fails to supply enough decent and affordable housing for poor people. Government must intervene in the housing marketplace not only with subsidies but as a real estate developer to fill the gap. What government succeeded in creating all too often — from Chicago’s infamous Pruitt Igoe towers to Richmond’s public housing courts — is concentrated poverty, crime and social dysfunction. Learning from past disasters, the public housing sector now sees the solution as diluting poverty by bundling low-income housing with middle-class housing under the rubric of “mixed-income” development.

Ironically, the consequence of implementing this philosophy in Richmond is less low-income housing and more middle-income housing.

The Richmond Redevelopment and Housing Authority has decided not to replace 22 of the 60 public housing units in Dove Court that were bulldozed in 2008 in order to make way for a a mixed-income community called Highland Grove. Reports the Richmond Free-Press: Continue reading

Bacon Bits: A Little Bit of This, a Little Bit of That

Safe hospitals. I’ve long maintained that the best thing you can do for your health is stay out of hospitals — 160,000 deaths occur annually across the country from avoidable medical errors monitored by the Leapfrog Hospital Safety Grade. Fortunately, Virginia hospitals are safer than most. The Old Dominion has the second highest percentage — 53% — of hospitals in the country of hospitals meriting Leapfrog’s A rating. In Maryland only 25% of hospital scored an A, and in Washington, D.C., there are no A-rated hospitals, reports the Richmond Times-Dispatch.

Expanding hospital. Speaking of  hospitals, Carilion Roanoke Memorial Hospital has just announced a $300 million expansion that includes a new tower to care for emergency and heart patients, a new behavioral health hospital across the street, a parking garage and a pedestrian skyway to connect it all. The expansion is part of Carilion’s plan to invest $1 billion over the next seven years, according to the Roanoke Times. Roanoke Memorial scored a B in Leapfrog’s ranking, incidentally. Roanokers might legitimately inquire if some of that $300 million could be better spent on preventing avoidable medical errors.

Bye, bye, Jeff, baby. The Commonwealth Transportation Board unanimously voted yesterday to allow Arlington County to change the name of Route 1 from Jefferson Davis Highway to Richmond Highway, reports the Washington Post. The United Daughters of the Confederacy had spearheaded the naming of the highway after the president of the Confederate States of America, as a “direct and antagonistic response” to the establishment of Lincoln Highway across the northern states, said Arlington Board Chair Christian Dorsey. Continue reading

Giving Slumlords a Bad Name

Winter Whittaker. Photo credit: Virginia Mercury

I tend to be sympathetic to renters and landlords in their disputes with problem tenants, many of whom can be irresponsible and exasperating. Some renters are deadbeats. But then I run across a shocking case like the one documented by renter Winter Whittaker and published on the Virginia Mercury.

Whittaker, a Richmond resident, called her landlord, Dean Parsons, to ask him to fix a leaky roof. We don’t know the history behind the phone call, which may or may not leave out critical context. Clearly, Parsons, who claims to oversee a portfolio of 375 apartments and rental units, was agitated about something. Whatever the possible extenuating circumstances, it’s hard to imagine any excuse for the racist and profanity-laced tirade he unleashed.

Responding to Whittaker’s threat of a lawsuit, he said, “I don’t give a shit about you. … I don’t give a good goddamn. You’re just another dumb ass n—— I got to go to court with and I go to court every damn day with them. It ain’t no big damn deal to me.”

You don’t have to just take her word for it. The Virginia Mercury provides the recording. Continue reading

JBG Smith Raises $75 Million for Amazon-Related Affordable Housing

Al Jackson, JBG executive vice president of social impact investing

JBG Smith, the dominant developer in the National Landing area where Amazon will build its HQ2 offices, has raised $78 million in an affordable housing initiative. The company hopes to raise between $100 million and $150 million in all. The funds would be used to develop “workforce” housing, targeting households with incomes too high to qualify for government housing assistance but too small to afford the rent on average two-bedroom apartments, reports the Washington Business Journal.

The JBG Smith initiative does not directly address the concerns of community activists who worry that an influx of highly paid Amazon employees will drive up housing prices in the Arlington-Alexandria area, leading to gentrification and displacement of lower-income families. But the addition of “a few thousand” units of housing would absorb a significant percentage of households expected to be drawn to the area. Amazon has said it will hire 25,000 employees over several years. The project likely will attract thousands of employees from other companies and organizations in the Amazon innovation ecosystem as well as people performing retail, construction, and service jobs.

The big question is where that housing will be built. The article quotes Al Jackson, executive vice president for social impact investing at JBG, only as saying that the company will target neighborhoods that could experience “significant gentrification” over the next decade.

Bacon’s bottom line: Continue reading

Fresh Thinking from Richmond’s New Public Housing Chief

RDHA chief Damon Duncan. Photo credit: Style Weekly

The Richmond Redevelopment and Housing Authority has a new chief executive, Damon Duncan, who led a housing authority in the Chicago suburbs before taking on his new role in March. He has a tough job. The public housing stock has been deteriorating — units have outlived their useful life by 10 to 15 years at least, he says. And Richmond housing projects are beset by crime, much of it committed by outsiders. Between the maintenance backlogs and the high crime rates, public housing in Richmond is a scandal.

In a Style Weekly profile, Duncan comes across as energetic and willing to challenge the status quo. What impresses me most is that he’s talking about making changes that will surely ruffle feathers in the poverty-industrial complex. To receive subsidized housing, he says, residents will have to work or enroll in education or training programs. Writes Style: Continue reading

Bacon Bits: Boomtowns, Amazon, and Rent-a-Tribe

Pockets of prosperity. America’s big metropolitan regions may be sucking up most of the growth and prosperity of the current business cycle, but they’re not sucking up all of it. In crunching data measuring economic prosperity, population growth and rising incomes, GOBankingRates found numerous “cities” (not metros) that qualify as “boomtowns.” One region stood out as especially vigorous: the South. And Virginia nabbed two spots in the top 10, reports CNBC.

Charlottesville ranked 6th among cities in the South with 2012 -to-2017 income growth of 17.9%, population growth of 11.9%, and GDP growth of 22.4%.

Richmond ranked 9th in the South with income growth of 15% over the same period, population growth of 7.6%, and GDP growth of 22.4%.

Can Amazon avoid a housing crunch? Amazon officials have told the Washington Post that the company will learn from its experience in Seattle how to avoid creating a housing crunch when its HQ2 expansion brings 25,000 jobs to a Washington region that already has full employment and high housing prices. Amazon contributed $80 million to public and private efforts to support affordable housing and prevent homelessness in Seattle, said Jay Carney, a senior vice president. But he added that it is primarily the government’s responsibility to ensure an adequate supply of affordable housing. Continue reading

More Money for Fairfax Affordable Housing — to What End?

Want more affordable housing in Fairfax County? Allow developers to build more of this.

The Fairfax Board of Supervisors is adding $5 million to its affordable housing budget next year, raising the total expenditure to $15 million. The Washington Post report of the budget action provides few details other than the fact that the money will fund an extra affordable-housing staff position and two positions for a new Office of Environmental and Energy Coordination.

The sum is a drop in the bucket for Virginia’s largest locality. Unless Fairfax is serious about increasing the supply of housing across the county — not just in Tysons, where residential growth will be choked by traffic congestion issues — the board action represents nothing more than virtue signalling. It’s a way of saying, “We care,” without really doing anything.

According to Zillow, the median home value listed in Fairfax County today is $619,000. An extra $5 million could subsidize the cost of 100 middling-cost houses — maybe 200 lower-priced houses — a year in a locality of 1.15 million people. Continue reading

It’s the Money, Stupid

A fascinating article in Sunday’s New York Times deals with one of the subjects that is a frequent topic on this blog—housing patterns. Using demographic data from the Census Bureau and home lending data published as part of the federal Home Mortgage Disclosure Act, the reporters “identified every census tract in the country that has grown notably more racially diverse since 2000.”

They found a consistent nationwide trend of increased diversity. Affluent whites are moving into central city areas that have been populated by blacks for many generations and middle-class non-whites are moving into suburbs long the domain of white families. The authors posit that the movement of whites into the central cities is a result of several factors. The major factor they cite is historical disinvestment by society in those areas, which has made them ripe for reinvestment. Another factor is old housing stock that was approaching the end of its life.

This increased diversity is altering the nature of the communities affected. The primary finding highlighted in the story is that the non-whites moving into the suburbs blend into, or integrate, their new communities relatively seamlessly. However, that is not true for whites moving into the central cities. The reason is not racial tension, but economics. While the non-whites moving into the suburbs have incomes similar to the families already living there, the average incomes of the whites moving into the central city neighborhoods are significantly higher than those who have lived there for many years. It turns out people feel more comfortable associating with those on their same income level. (This is not really a surprise.) Continue reading

Migration Chains and Trickle-Down Housing

Call it trickle-down housing. When developers build luxury housing for the wealthy because more expensive housing provides bigger profit margins, do the poor go homeless? No. When an affluent household moves into a luxurious new penthouse apartment, it creates a vacancy in its previous residence…. which a less well-to-do family moves into, creating yet another new vacancy. The idea, if not the label, has been around at least since the time of 1960s-era urbanist Edward Banfield, author of the sociology classic “Unheavenly City.”

The trickle-down description of housing markets always made sense to me because I saw up close how it operated. When my father was serving in the U.S. Navy in the early 1960s, he was stationed in Newport, R.I., the summering place of the Vanderbilts and other captains of finance and industry in the late-19th century. We lived next door to a former mansion that had been chopped up into multiple rental apartments. Some rich family had built the manse in the 1800s. After decades passed, it was no longer suitable enough or fashionable enough for rich people. The building was re-purposed as rental housing.

The reason people are going homeless is that not enough new housing, luxury or otherwise, is being built — not because luxury housing is too expensive for most people to afford. Continue reading

More Unaffordable Affordable Housing

The Lawson Companies., a Virginia Beach multifamily development company, is planning to construct a $19.25 million, low-income housing project in South Richmond, reports Richmond BizSense. The apartment complex will have 96 units, for an average cost of $200,000 each. Rent for two-bedroom apartments will average around $1,000 a month, while three-bedroom units will go for $1,100.

“We see this project drawing a lot of families,” said Freddie Fletcher, a Lawson development associate. “It’s a good market over there for families looking for an affordable, Class A apartment.”

The Virginia Housing Development Authority (VHDA) is providing financing for the development. The article does not say whether or not the $1,000-a-month rent will be subsidized from vouchers or other public funds.

The project appears to be similar to many other lower-income housing projects in Virginia. Lawson Corp. has $290 million in ongoing development across Hampton Roads and Northern Virginia, and is looking to do more deals in the Richmond region. Continue reading

Virginia’s Unaffordable Approach to Affordable Housing

The Creighton Court public housing project in Richmond.

If the public policy debate over affordable dwellings is as impoverished as that described in The Virginia Mercury this morning, poor Virginians are doomed to lives of housing misery. Here’s how reporter Ned Oliver sums up the controversy: “Is affordable housing something for the state to tackle, or should it be left to cities and counties to address with local money?”

Embedded in this formulation are two assumptions: (1) The paucity of affordable housing might be remedied by more grants and low-interest loans; and (2) it is the responsibility of government, either state or local, to find the money for those grants and loans. In other words, the solution to the affordability crisis is more government, not less. Yet in the same article, Oliver notes that it costs $200,000 per unit to build new apartment complexes! Continue reading

Affordable Housing: Thinking Outside the Container

Sheila Gunst shows off the kitchen in a modified, 320-square-foot shipping container.

Sheila Gunst estimates that there are 33 million cargo containers around the world, half of which are empty. Many of the empties languish in United States because China ships $400 billion more in trade goods to the U.S. every year than the U.S. ships back. After making multiple trans-oceanic trips, used containers stack up in port cities like Norfolk by the thousands.

And therein lies a business opportunity. The shipping lines can recycle them as scrap metal… or sell them to someone like Sheila, an interior designer living in the Richmond area, who dreams about refashioning them into inexpensive dwellings. Continue reading

Mugged by Reality: Sedgwick Gardens Edition

Lawrence Hilliard moved to Sedgwick Gardens to escape the ghetto. Then the ghetto came to him. Photo credit: Washington Post

A conservative, as the saying goes, is a liberal who has been mugged by reality. Well, it appears that a large number of liberals in the affluent Cleveland Park neighborhood of Washington, D.C., have been mugged by reality. Whether they become conservatives remains to be seen.

In a social experiment that could have implications here in Virginia where the idea of mixed-income housing is all the rage, the D.C. Housing Authority increased in 2016 the maximum value of vouchers to 175% of fair market rent as set by the Department of Housing and Urban Development. That meant, according to the Washington Post, that vouchers could be used for one-bedroom apartments renting at up to $2,648 per month.

At Sedgwick Gardens, a historic Art Deco apartment complex overlooking Rock Creek Park, one-bedroom apartments rented for about $2,200 per month in 2017. The apartment complex, located in D.C.’s predominantly white Cleveland Park neighborhood, is, as the WaPo puts it, “a bastion of urbane liberalism where only one in 20 voters cast a ballot for President Trump in the 2016 election.” The reaction of many Sedgwick Gardens inhabitants to the influx of tenants directly off the streets, however, was less than warm, tolerant and embracing. Continue reading

Another Fig Leaf Solution for Affordable Housing

Virginia lawmakers are adding $4 million this year to the Commonwealth’s affordable housing trust fund. While acknowledging that the sum is a “drop in the bucket” when it comes to affordable housing costs — the money would bring the revolving low-interest loan fund up to $9.5 million — the Washington Post cites housing officials as saying that the money “is a sign that the state is paying attention to a growing need.”

I would characterize the $4 million expenditure differently. The political function is to allow the Northam administration and lawmakers generally look like they’re doing something while. in actuality, they are studiously ignoring the underlying problem. The erosion of affordable housing is mostly a supply-side problem, not a financing problem. Continue reading

Bacon Bits: Economic Research Edition

I periodically check the research papers coming out of the National Bureau of Economic Research (NBER) because they often address issues of interest to Bacon’s Rebellion. The research is far more rigorous from a methodological perspective than the work product of special-interest and advocacy groups, hence more worthy of serious consideration — even when it leads to public-policy implications I don’t like! Here are some quick hits from recent studies:

“The Effects of Rent Control Expansion on Tenants, Landords, and Inequality: Evidence from San Francisco”
“We find rent control increased renters’ probabilities of staying at their addresses by nearly 20%. Landlords treated by rent control reduced rental housing supply by 15%, causing a 5.1% city-wide rent increase.”

Implications: Rent control benefits existing renters but punishes newcomers entering the rental marketplace. Can you say “increasing homelessness?” As zoning codes and other restrictive policies aggravate the supply/demand imbalance here in Virginia, will our politicians avoid the temptation to impose rent controls? Continue reading