Category Archives: Housing

Motels as Housing of Last Resort

Flagship Inn, Petersburg

Two Sundays ago the Richmond Times-Dispatch ran a disturbing special report on poverty and housing insecurity along the Jefferson Davis Highway in Chesterfield County. Hundreds of people live in shabby motels, paying $200 or more per week to live in conditions almost as deplorable as Richmond’s public housing projects. These hotels, the housing equivalent of pawn shops and payday lenders, serve the poor and the desperate who have nowhere else to turn. It is depressing to think that people live this way.

People pay huge sums — $200 per week translates into more than $800 per month, enough to rent a nice, two-room apartment in a decent neighborhood — to dwell amidst deplorable conditions. Many hotel rooms have roaches, bedbugs and other insect infestations. The article cites leaking sewage, mold, mice droppings, and inoperable door locks. Conditions sound similar to those of the public housing projects — without the same level of crime.

The plight of some of the residents is truly pitiable. Latisha Ragland, a single mother with three children, lives in the Flagship Inn in Petersburg. The 39-year-old had most of her right leg amputated because of complications from diabetes and high blood pressure. She receives dialysis three times a week, and is waiting for a kidney transplant. She receives $735 a month in disabilities benefits but spends $220 a week for rent. Any unexpected expense is devastating. Stressful insecurity adds to the misery of her circumstances.

It seems absurd that someone must pay the equivalent of nearly $950 per month in rent (4.3 weeks per month x $220) for a literally lousy hotel room. The article prompts the question of why tenants have to pay so much. Are people like Ragland being exploited by greedy motel landlords?

That’s hard to say because landlords would not talk to the reporters. The lawyer for one responded, “There’s plenty of other hotels. Obviously, it’s not that bad or she would leave.” That’s not much of an answer.

But there are hints in the special report as to why the rents are so high. People who live in hotel rooms come only when they can’t find housing anywhere else. Other than living in a tent in the woods, this is truly housing of last resort. Who are these people? For the most part, they live hand-to-mouth and have terrible credit. Who would pay $950 per month if they could qualify to rent their own apartment?

Evidently, some tenants fail to pay their rent. Consider the predicament of the landlord. Anyone who stays at a motel for longer than 90 days has rights under the Landlord-Tentant Act. Landlords can evict clients for non-payment only after giving them a reprieve to allow them to come up with the money, and only after a court proceeding. Sometimes unpaid rent can accumulate to substantial sums.

The T-D cites the situation of Trimaine Reed, living at the America’s Best Value Inn, who took the motel to court after living with cockroaches for three years. In return, the motel tried to remove her for failing to pay $4,016 in rent. The judge ruled against her, she claimed, because she had forgotten the paperwork laying out her defense.

The larger point is not whether Reed was fairly or unfairly evicted. The point is that motel owners are dealing with clients with terrible credit quality who frequently fail to pay their rent. Motel owners either eat the lost rent or attorneys to collect it in court. In either case, they bear a substantial cost which must be compensated for by charging what seems to be unconscionably high rents. The situation is directly analogous to payday lenders who charge what seem to be unconscionably high interest rates to clients with a high propensity for default.

What is to be done? How does society at large deal with the heart-breaking stories of people who live in these motels? Cracking down on the motels does not seem to be a viable option. Driving the motels out of business will leave the tenants with no place to live. Some say Chesterfield County should encourage more affordable housing by requiring developers to add affordable-housing units as a condition of development. That’s fine if you’re OK with wealth transfers from the middle-class to a lucky few who qualify for those apartments; regardless, the lucky few won’t come from the ranks of the motel people because landlords would accept only lower-income tenants with the very best credit. Another option mentioned by the T-D is to create rental subsidy program funded in part by the county. That’s fine if you’re OK with tapping middle-class taxpayers.

None of the traditional remedies look good. But let me throw out an idea. There does seem to be an opportunity to create a charity-based enterprise. Because of their poor credit, motel tenants are paying outrageous sums for terrible living conditions. Address the credit issue, and a charitable entity can get the motel people into better housing at lower rents. Perhaps a charitable enterprise could bundle a couple hundred of these people, in effect pooling the risk and functioning as a co-signor so tenants can qualify for better housing under more favorable terms. Inevitably, some clients would default and the charitable entity would have to eat some bad debt, so it would be necessary to inject some charitable capital or public housing funds to maintain solvency. But in theory, tenants will be at lower risk of falling behind on their rent because they will be paying a significantly smaller percentage of their income. It’s an idea worth noodling.

Public Housing Vs. Private Housing, Round Two

A couple of weeks ago, I published a post, “Your Taxpayer Dollars at Work: Stuffing Poor People into Hideous Housing,” trying to put the $150 million maintenance backlog at the Richmond Redevelopment Housing Authority into context. I noted that the RRHA’s $65 million budget, spread over 4,000 public housing units, amounts to $16,250 per unit per year, which would buy luxury digs in the private rental market. That seemed like an outrageous amount of money, I wrote. However, I made it clear to readers that I needed to vet my “back-of-the-envelope calculation” before drawing any authoritative conclusions.

It’s a good thing I added that disclaimer because, in fact, I did omit relevant information. Hang with me because this gets a bit involved. The Richmond Times-Dispatch ran an unsigned editorial citing my numbers, unfortunately without noting my caveats. RRHA CEO T.K. Somanath took justifiable umbrage at my suggestion that for the money it spent, the authority could put housing project residents into a posh apartment in Richmond’s Manchester neighborhood. In point of fact, he said, the RRHA spends only $30 million maintaining its public housing project. The rest of the budget is dedicated to real estate and community development projects.

Somanath chastised the T-D for “parroting the grossly inaccurate musings of libertarian blogger Jim Bacon,” although he did acknowledge that my piece had contained the aforementioned caveats. The T-D reprinted Somanath’s letter and responded, as appropriate, that he was “quite right. We’re grateful for the additional context, and we should have included it in the original piece.”

But Somanath doesn’t get off the hook so easily. Let’s take a closer at the numbers.

The figures at right come from the RHHA’s 2014 annual report. (The numbers in the 2015 annual report are not as detailed, and the 2016 annual report has not been published yet.) The heading atop the column refers to the “Total Low-Rent Housing Fund Group,” which, if I am not mistaken, refers to public housing.

Thus, we can see that the RRHA spent $31.2 million in 2014 on Richmond’s public housing projects. Of that amount, “operation and project cost” amounted to $28.4 million. Averaged over the 4,000 housing units, it cost about $7,100 a year per unit to operate and maintain Richmond’s public housing. Please note: That’s just to operate and maintain the properties.

To make an apples-to-apples comparison between the cost of public housing and the cost of private-sector housing, we would have to include the capital cost of purchasing land and making improvements equivalent to the public housing units.

We can get a sense of the capital cost by looking at the City of Richmond assessments. I looked up the assessments for Mosby Court, South Mosby, North Mosby, Whitcomb Court, and Creighton Court, accounting for 1,501 apartments all told. (If I had all day, I’d dig up assessments for the other public housing units, but this is a blog — I don’t have all day.) The land and improvements for those properties totaled $47.4 million, averaging $31,600 per unit. If assessments are similar for the other public housing projects, that extrapolates to a value of about $126 million for the entire portfolio of public housing projects.

Now, let’s say the RRHA tried to replicate its public housing portfolio from scratch, selling $126 million in 30-year municipal bonds paying a 3% yield to purchase the land and build the apartments. That would amount to an average financing cost of $1,525 per unit per year. Add that cost to RHHA’s “operations and project cost, and you get a total annual cost of $8,625 per year, or $718 per month per unit.

What can you rent in the private housing market for $718 or less per month? Well, you can rent a two-bedroom, one-bath, 800-square-foot apartment at Nottingham Green for $645. You can rent a two-bedroom, one bath, 795-square-foot apartment at Village South Townhomes for $629. You can rent two-bedroom, two-bathroom apartments at The James on W. Bacon Street (cool, huh?) for $709. The James includes a pool, fitness center, water, heat, cable and air conditioning!

You pick:

Mosby Court

or…

The James

I’m sure these comparisons could be refined. I made three requests, one by email and two by telephone, to interview Somanath and make sure I was using the RHHA numbers correctly. He never responded. If he doesn’t like these numbers, I gave him every chance to shape this article. If he changes his mind, I would welcome his input after the fact.

The disparity between public housing and private housing may not be as great as I conjectured in my original article, but it is still significant. And, to return to the point of my previous post, the original justification for public housing in the 1930s was that government needed to address the “market failure” of private builders. If the private sector couldn’t provide affordable housing for the poor and working class, government needed to step in. From the evidence provided here, it still appears that the private sector can provide superior housing in the Richmond region at a lower rental price.

My point is not to condemn the RHHA. I’m sure RHHA employees are doing the best job within the constraints they are working under. The point is that public housing projects are a failed model for sheltering low-income Americans. The logical solution is to get government out of the business of owning and operating low-income housing. Tear down the projects, let the private sector re-develop the land, and empower the poor through vouchers to seek their own accommodations.

Your Taxpayer Dollars at Work: Stuffing Poor People into Hideous Housing

Mosby Court, one of Richmond’s infamous public housing projects. Photo credit: Richmond Times-Dispatch.

The Richmond Redevelopment and Housing Authority, which provides public housing to about 10,000 Richmond residents, faces a $150 million backlog in repairs for its 4,000 housing units, reports the Richmond Times-Dispatch. “At some point you’re going to have very serious health and safety problems,” agency CEO T.K. Somanath told the authority’s board last week.

The authority is considering converting its six public housing projects from traditional federally funded public housing into the Section 8 housing choice voucher program, which would net the agency $7.5 million a year to apply toward property maintenance and large-scale redevelopment.

The authority has about $750 per unit annually for repairs and upkeep, reports the Times-Dispatch. A May 2016 physical needs assessment found the agency needed nearly $19,000 per unit to make all necessary fixes.

One obvious question is, why did the RRHA short-change maintenance so severely over the years? Were administrative costs bloated? Were other costs out of control? Did the department of Housing and Urban Development (HUD) cut financial support? Could RRHA have charged tenants more rent? The reasons are not clear, either from the T-D‘s reporting or from RDHA documents.

But there’s an even more fundamental question. The entire justification of having the government build and administer public housing is that government can do the job more inexpensively than the private sector. But can it?

RRHA’s budget is about $65 million a year, and it operates 4,000 housing units per year — housing units built decades ago, the original cost of which is almost fully amortized. That averages out to $16,250 per unit per year — $1,350 per month.

Think about that: You can rent new, two-bedroom apartments between 900 and 1,000 square feet in the Manchester neighborhood south of the James River for between $1,100 and $1,300 a month. They come equipped with hardwood floors, microwaves, washer-dryers, and some look like the photo at right:

Here’s the really amazing thing: The private-sector rental units are not fully amortized. Landlords have to pay the financing costs! Yet somehow they can provide quality apartments for less than it costs RRHA just to operate and maintain its disastrous public housing projects.

I’m sure I’m leaving stuff out — the RRHA pays utilities, and I expect that Manchester landlords do not — and I’m sure a fair comparison wouldn’t be as devastatingly bad as the numbers I have presented. This is a back-of-the-envelope calculation, and I would need to vet the figures with RRHA officials before drawing authoritative conclusions. But I suspect that no tweaking of the numbers would change the fact that public housing is a catastrophically failed financial model — and that doesn’t even include the social cost of packing poor people together in isolated, crime-ridden communities.

Surely it would be far better, as the RRHA requests, to convert all public housing to Section 8 vouchers. Going one step further, it likewise would be better to empty the projects, tear them down, let the private sector redevelop them, and get government out of the rental housing business altogether.

Update: Somaneth informs me that only $30 million of the RRHA’s $65 million budget goes to managing public housing. The rest goes to real-estate and community development programs. Thirty million dollars translate into an average expenditure of $625 per unit, which paints a very different picture than the one I describe above. I will have more to say about this in a future post.

Sustaining the Biggest Public Nuisance in Richmond

Mosby Court, public housing project in Richmond

Republished from Cranky’s Blog.

Not satisfied at maintaining the largest public nuisance in Richmond – the one that just led to the shooting death of a State Policeman – the Richmond Redevelopment and Housing Authority (RHHA) now proposes to do nothing realistic about it:

  • Fencing and gates. RRHA says this remedy is “largely . . . impractical.” I guess killing policemen is more “practical.”
  • Parking stickers and IDs. Not a bad idea, but worthless until they have the off-duty cops in place to catch the trespassers.
  • Empowerment programs. So, the problem largely is male visitors and they are going to “empower” the tenant girlfriends who are harboring those males? Please! The remedy is to evict those girlfriends.
  • Summer programs for the kids. Good thing to do but unrelated to the visiting male problem.

This is not rocket science, folks:

  • The feds tell us “(1) that effective property management can have a major impact on the health of a community, and (2) that accessible, legitimate techniques can be used to stop the spread of drug activity on rental property.”
  • Indeed, as to drugs (and certainly as to other crime), nuisance abatement is the sole tactic that has been shown scientifically to reduce crime in residential places. The DOJ monograph says: “With the evidence available we are relatively certain that holding private landlords accountable for drug dealing on their property by threatening abatement reduces drug related crimes.” Whether as to drug activity or other disorder, the landlord is the only entity that can make the physical changes to the property, evict the troublesome tenants, hire the security, control the access, and enforce the lease terms necessary to make the property safe.

Yet, RRHA, aside from the fences they have rejected, is not talking about what we know can help here:

  • Lights;
  • Cameras;
  • Access control;
  • Off-duty cops on patrol;
  • Rigorous trespass enforcement; and
  • Rigorous lease enforcement (i.e., eviction of the girlfriend who harbors the disorder)

As to that last point, the HUD lease [at Para. 25] contains the necessary provisions. These include eviction for, inter alia:

  • Drug related criminal activity engaged in  on or near the premises by any tenant, household member, or guest; and
  • Criminal activity by a tenant, any member of the tenant’s household, a guest or another person under the tenant’s control that threatens the health, safety or right to peaceful enjoyment of the premises by other residents or by persons residing in the immediate vicinity.

Yet, when I spoke with them about this (in the distant past), they said

  • Legal Aid makes it difficult to do anything;
  • The judges are reluctant to enforce the lease;
  • It would be “onerous” to ask RRHA staff to follow up on all offense reports and calls for service; and
  • Given the quality of the people who live in subsidized housing, RRHA can’t be expected to do much better.

To judge from their response to the current murder rate, and the shooting of the policeman by a trespasser who was living at RRHA, their indifferent attitude and the soft bigotry of their low expectations have not improved.

It is clear that RRHA is not serious about controlling its property. City Council is quiescent. The Commonwealth’s Attorney is not prosecuting the RRHA Board for maintaining the nuisance. Your tax dollars at “work.”

The Scourge of Rootless, Predatory Males

Travis A. Ball

Last week 27-year-old Travis A. Ball allegedly shot and killed Virginia State Police Special Agent Michael T. Walter in an apparently unprovoked attack in the Mosby Court public housing project. The murder was the seventh homicide and one of about 20 shootings to take place in the troubled housing project so far this year.

The Richmond Times-Dispatch has done commendable work fleshing out the circumstances of the murder and the background of the alleged killer, but a bigger story remains to be told. The crime gives us a window into the pathology of 21st-century American poverty. Through the story of Travis Ball we can gain insight not only into the social breakdown of inner-city African-Americans in public housing but the spreading social dysfunction among the poor of all races and ethnic groups.

The tip-off appears in Robert Zullo’s article in the T-D today: In his arrest warrant, Ball had listed as his address a home on the 1900 block of Redd Street in Mosby Court. But he had been banned from the property in 2016, and his name was registered on a 4,000-person list of people ineligible to live there. Shortly after that ban, according to a second T-D article, an emergency protective order was issued for the mother of one of Ball’s children. Court records show that Ball had engaged in several acts of domestic violence. The T-D articles indicate that he had two children with one woman, and hint that he may have fathered a child with a different woman.

Think about this: Mosby Court maintains a list of some 4,000 individuals who are banned from living in housing project of only 458 units. That is an astonishing number. The T-D reporting does not give us a profile of these people, but I would be willing to wager that the list is comprised overwhelmingly of men, like Ball, and that the vast majority have been blackballed for violent behavior on the project premises.

The problem is that the Richmond Redevelopment and Housing Authority (RHHA) has no effective means of enforcing the list.

“The manpower that’s required, it’s hard to knock on doors on a daily basis,” said RRHA CEO T.K. Somanath. “Neighbors sometimes let us know, and we have our property management [and] maintenance folks inspecting these properties periodically. There are ways to find out if people are not abiding by the lease [which] causes these violations, and we take action.”

The housing authority disbanded its own seven-member police force in 2014 due to budget pressures and the conviction that residents would be better served if the agency deployed its resources consistent with its core mission of providing housing services. It is not clear from the article whether or not the RHHA police were used to enforce the banishment list. Whatever the case, there is no effective enforcement mechanism now.

I am entering the realm of conjecture here, and I advance the following observations not as fact but as operating hypotheses to be confirmed or rejected through follow-up reporting. The RHHA, according to its website, manages and maintains 12 housing developments for low-income families, seven developments for the low-income elderly and the disabled. The low-income housing, I suspect, are dominated by households of single mothers with one or more children. The number of households with married spouses and children approaches zero.

I conjecture the existence of a large floating population of under-employed, unmarried men in low-income communities — be they like Mosby Court or a rural trailer park — who lead a largely parasitical existence. They attach themselves to women as sexual partners, moving into their apartments, eating their food, and contributing only sporadically to the maintenance of the household. These relationships are typically unstable, fraught with domestic violence and child abuse. Men move from woman to woman, impregnating them with no concern for the welfare of the children. Sometimes they establish meaningful relationships with their biological children; often they do not. Nonpayment of child support is endemic. Often, women don’t even know for certain who the fathers are.

I further conjecture that the existence of this population of unattached males explains another widespread and unexplained phenomenon: that of childhood hunger. Low-income families have no trouble obtaining food stamps. Why are children going hungry? Why must school districts maintain breakfast and lunch programs? Why do charities provide children with backpacks of food to take home during weekends? Is it possible that many household food budgets are being stretched by the necessity to feed an adult male whose presence is entirely “off the books”?

The prevalence of unattached, freeloading and often violent males, I submit, is one of the great unacknowledged scourges of poverty in the United States today. Though poor themselves, many of these males are predators and they add immeasurably to the horror of poverty. They prey among the weak in their midst, inflicting routine domestic violence that never makes it into the newspapers (unless a murder occurs). They commandeer the limited resources of the women they live with, often resulting in the abuse and neglect of the women’s children — especially if the children are not their own.

It is not politically correct to portray 21-century American poverty in this way. Progressives are committed to the idea that the pathologies of poverty are the result of endemic injustices such as racism, income inequality, poor schools, and insufficient economic opportunity. Read the academic literature and the politicians’ press releases and you see nothing about the growing population of rootless, predatory males. Unless we acknowledge the realities of poverty, how can we ever hope to combat it?

Let me be 100% clear. Although I am extrapolating from an inner-city housing project, this problem is not unique to African-Americans. Rootless males are prevalent among poor whites, Hispanics and American Indians. (See my post about Jesse Lee Herald, a 27-year-old white man in Shenandoah County who had fathered seven children by six different women.)

This is one of the great untold stories of the United States today. But because of our politically blinkered thinking, we cannot see it.

Bristol Home Builder Proposes Solar Subdivision

Developer Aaron Lilly is seeking Bristol planning commission approval to construct 30 upscale townhouses using solar power to offset electric bills. He envisions the project as the first solar-powered subdivision east of the Mississippi, reports the Bristol Herald-Courier.

The project would be built on 12.5 hillside acres near an Interstate 81 exit. The townhomes would have 1,600 square feet of living space plus a 400-square-foot garage. Units can be configured with “smart home” technology for monitoring and control that, among other benefits, can provide medical information to a caregiver. Lilly sees the houses as “age in place” residences. He intends to price the properties in the $200,000 to $250,000 range. Said Lilly:

After seeing solar was at least possible, we’ve been working on this for over a year. It is more affordable than ever before and the price of electricity goes up every year. … There would be two meters on the house – one telling how much power we consume from [Bristol Virginia Utilities] and the other how much power is produced and the person would pay the difference.

If power keeps going up and solar keeps coming down, we’re there. If we’re not there yet, we’re close enough. This is our goal and we’re working feverishly to make sure it happens. … The first ones are an experiment. We don’t know how much power we can make.

Planning commissioners were supportive of the proposal and granted preliminary approval.

Bacon’s bottom line: It’s hard to imagine that this is the first time a developer east of the Mississippi has proposed building new townhouses with solar panels on the roof. But I haven’t heard of anyone doing it in Virginia, so, who knows. If Lilly says it’s true, maybe it is. If so, good for him.

Economically, it may make more sense for home builders to install solar during the construction phase — Lilly will build nine connected units in Phase 1 — than for individual homeowners to outsource the project to solar installers one project at a time. Also, Lilly can pocket the solar credits, which might be worth more to him than to individual homeowners. Another selling point is that homeowners can amortize the construction cost over the life of a 30-year mortgage.

Home builders are always looking for a competitive edge. I’m surprised that we haven’t seen more of this kind of activity.

Slum Maintenance at Essex Village

Crime scene at Essex Village.

Crime scene at Essex Village. (Photo credit: WTVR)

Who needs tenement slums when we’ve got public housing projects? The supposed “market failure” of the private sector to provide the poor and working class with decent shelter provided the justification for the federal government to get into housing business in the 1930s. We all know the result. Uncle Sam turned out to be the worst slumlord of all. In desperation, the government tried outsourcing to the private sector. How’s that working out?

I’ve highlighted the disastrous Kippax Place in Hopewell in previous posts. Now, courtesy of the Richmond Times-Dispatch, we learn that Essex Village in Henrico County has similar problems. Here’s how Debbie Truong leads off the story:

Inside one apartment building in Henrico County’s largest federally subsidized housing complex, the bathroom ceiling leaked, the stove thermostat was faulty and the windows wouldn’t stay open.

Across Essex Village, stairs were in disrepair, and there were mice and leaking water heaters. In November, raw sewage bubbled to the surface of manhole covers and, in December, drains backed up in four ground-level apartments.

Since April 14, 140 cases of building code violations were either reported or discovered by the county as part of an enhanced effort to turn around what officials say has languished into the county’s most poorly maintained housing complex.

Henrico County officials have vowed to get the housing complex back up to an acceptable standard. It will continue to pursue inspections aggressively and it will pilot a “family stabilization” project that will bring health, financial literacy, social services and other resources to the 1,600-resident complex, reports Truong.

Gregory Perlman

GHC Housing Partners, which owns the 496-unit complex, said it has addressed the building code violations, which were “fairly minor” in any case. Also, CEO Gregory Perlman noted that Henrico had failed to support a proposal last year seeking federal tax credits that would have helped pay for renovations.

Who is this Perlman person? In 2012 he claimed to have invented a “new approach to affordable housing.” This comes from a GHC press release:

“We focus on our residents and provide them with the opportunity to better their lives through self-improvement programs as well as support from the non-profit Perlman Foundation.”

… GHC Housing Partners specializes in acquiring and managing primarily Section 8 housing and providing social services and amenities that go far beyond HUD requirements. Vegetable gardens, dog parks, job counseling, college scholarships and summer camps are only part of this transformation of affordable housing. GHC Housing Partners is focused on initiatives and programs that improve lives and provide bootstrap opportunities for residents to achieve a higher standard of living.

Wrapping public services around public housing is the hot concept in the non-profit world. But how has the idea fared in the real world? The building code violations speak for themselves. The T-D also quotes a Rev. Joe Ellison who previously ran a day care at Essex and served as a pastor in the community. He left in 2005 “crestfallen over the living conditions.”

He said he approached management at Essex two  years ago, hoping to establish a program that involved mentoring and job creation. After a lukewarm response, he instead turned his sights to Fairfield Court in Richmond.

GHC warrants a closer look, far closer than I can provide in this quick blog post. The company is part of a housing-industrial complex that has grown up around public housing and, some have told me, exists as much to provide a comfortable living for a vast ecosystem of for-profits, non-profits, consultants and government administrators as for the poor themselves.

On its website, the Sherman Oaks, Calif.-based GHV claims to be the ” industry’s leading affordable housing owner and developer.” Since 1993, the company has acquired 20,000 housing units across 24 states in $1.25 billion worth of projects.

I infer that the company is for-profit, as the website makes no mention of a non-profit status. The parent company, GHC Housing Partners, is affiliated with GHC Investment Holdings, which acquires, owns and manages affordable housing; GHC Development, which develops properties using tax-exempt bonds and low-income housing tax credits; PK Management, a property management arm whose mission includes providing “quality service to its residents;” and a charitable arm, the All Ways Up Foundation.

In 2014, according to its IRS 990 form, the All Ways Up Foundation provided $128,777 in grants to organizations and $123,935 to individuals — sums that work out to an average of $12 per housing unit across the GHC system — and hosted an educational summit.

PK Management, which manages 18,000 units, purports to employ 41 social service coordinators to oversee resident welfare, focusing on delivering expanded services to its residents. It also offers “educational and professional opportunities designed to break the cycle of generational poverty.” (It’s not clear from the website if PK Management serves Essex Village, nor who pays for these services.)

The federal government turned to outsourcing after it became clear that it was doing a terrible job of running public housing projects itself. Perhaps it is time to ask if the non-profits and for-profits are doing any better. Anecdotal evidence is piling up that they are not, although Essex and Kippax may not be representative of performance at other housing projects. My suspicion is that private players master the latest buzz words and throw out a lot of flash-and-dazzle to impress the bureaucrats and win big contracts but that there’s not much follow through.

Perhaps the Times-Dispatch could do a little digging. What is the precise nature of GHC’s relationship with Essex Village? Does it own the property outright? Does it have a contract with the federal government? Does it provide wrap-around social services? Does the All Ways Up Foundation provide any grants? How much revenue does the project generate, and what is the cost structure? Most pertinently, how much money does GHC devote to maintenance and upkeep? Surely, this information would be available through the Freedom of Information Act.

Related questions: Who in the federal government, if anyone, is responsible for looking over GHC’s shoulder to make sure it is maintaining basic standards — and why has Henrico been forced to step in?

Twilight of an Era in Alexandria

Eric Terran, a 39-year-old architect, is doing something that almost no one in the City of Alexandria is doing anymore: building a detached, single-family residence. Last year he purchased a lot zoned for single-family residential for $230,000, and now he’s erecting a 3,300-square-foot house on it, reports Michael Neibauer with the Washington Business Journal.

Construction of detached, single-family dwellings has almost come to an end in Alexandria, where the inventory of lots is fast disappearing. As Neibauer notes:

Alexandria ended fiscal  2016 with 9,131 single-family detached homes, the exact number it counted at the close of fiscal 2015. In fact, only 12 new homes — not including tear-downs, which do not add to the city’s inventory — have been built since 2010. Save for infill and tear downs, Alexandria is largely built out.

I have no doubt that Neibauer has done his reporting and knows what he’s talking about, but his numbers don’t quite jive with Alexandria’s building permit data, seen above, which I took from the Homefacts.com website. According to that data set, permits issued for single-family housing since 2010 numbered in the hundreds. Admittedly, the overwhelming majority of permits was for 5+ unit, multi-family dwellings, which is broadly consistent with what Neibauer is saying.

Rather than get hung up on explaining the statistical discrepancy, however, I want to focus on the larger truth, which is the transformation of development patterns in Alexandria. The overwhelming preponderance of new housing construction in the city consists of multi-family housing — apartments and condominiums. Indeed, 2013 and 2014 showed new housing construction running at a torrid pace — faster than at any time since 2001.

I’m not intimately familiar with Alexandria, but I did visit downtown several months ago and observed a lot of recent mixed-use development. My superficial impression is that Alexandria is allowing developers to build a lot of the right stuff. The new development is preserving the walkability that made Old Town Alexandria and environs such a special place.

In 2010, the city achieved an all-time population high of 140,000, and has added population since then. As the city continues to grow, new houses like Eric Terran’s will become an endangered species. Newcomers will be living in apartments and condos.

Update: Michael Neibauer contacted me to explain the discrepancy I alluded to. Eric Terran is building a detached single-family dwelling. Although there are many “single-family dwellings” being built in Alexandria, they are row houses — not detached single-family dwellings.

Reinventing another Failed Public Housing Project

Kippax Place represents another in a long line of initiatives to reimagine public housing.

Kippax Place — “reimagining public housing.” Image from the website of the Virginia Community Development Corporation.

Kippax Place, a seven-story building in downtown Hopewell, is a product of 1970s-era public policy housing. Like so many public housing projects, it became almost unlivable. In an effort to restore the facility to habitable standards, the Hopewell Redevelopment and Housing Authority has contracted with the Community Housing Corporation to give the home for more than 100 elderly and disabled residents a $13 million, top-to-bottom overhaul.

As described by the Richmond Times-Dispatch today, the apartment building had deteriorated to an atrocious state of disrepair: broken water pipes, mold, rodents, bed bugs, leaking ceilings and windows, intermittently operating elevators, an antiquated HVAC system, and a dysfunctional trash chute that had filled up to the top. When both elevators broke down, residents would get trapped in their rooms for days at a time.

How had the situation gotten so bad? One problem is that the business model was fundamentally unsound. In  2015 article the Hopewell News quoted Steven Benham with the Hopewell housing authority:

“Kippax … was losing about $90,000 a year when you look at the revenue that we get from that building and the overall expenses that it takes to run that building. We’re losing about $90,000 a year.”

To help stop the financial bleeding, Benham said HRHA has tried to reduce services at the building, closely monitor the utilities, and reduce staff. He said the cost has been brought down quite a bit but it has not been enough.

Notice the phrase, “Reduce services at the building.” That’s another way of saying, “Reduce maintenance.” Not that Benham had any choice. The housing authority has to live within an inadequate budget.

The situation is Hopewell is little different from the situation anywhere else in the country. The TD provides some perspective:

[Kippax residents] are on the receiving end of historic indifference toward maintaining the nation’s public housing stock — a problem so dire that experts say 10,000 units go offline annually because they have become uninhabitable.

There’s a documented $26 billion backlog of capital needs for such things as bad boilers and faulty pipes across the nation’s 1.2 million public housing units. … The actual need is likely twice as high.

Affordable housing advocates warn some complexes have deteriorated to the Depression-level conditions that first prompted the federal government to become involved in housing issues in the 1930s.

Bacon’s bottom line: The original justification for public housing was that there was a “market failure” in housing that justified government stepping in and creating a supply of “affordable” units.  Politically progressive reformers argued that government could provide decent housing at a lower cost than could the market.

Eighty years of experience have demonstrated with startling clarity that the “public failure” is just as bad, if not greater than, the “market failure.” Even when supplemented by federal subsidies, the pitiful income streams generated by low-income residents are inadequate to sustain the public housing projects. Invariably, the path of least resistance is to defer maintenance. Over time, the public facilities deteriorate to a level that would be intolerable if they were operated by private-sector slumlords. Not only does government build and maintain slum-style housing, public projects concentrate poverty, often making them projects cesspools of crime and violence. (As a home for the elderly and disabled, Kippax does not appear to have a significant crime problem.)

The housing-industrial complex — an ecosystem of federal and local agencies and authorities, financiers, contractors, and consultants — has been impossible to dislodge. Like any other special-interest group, it is politically powerful. Over the years, the industry has tried to reinvent itself based upon trendy new concepts and theories, all leading so far to disappointing results. The idea at Kippax is to convert the property to private ownership and management in partnership with Christiansburg-based Community Housing Corporation, with rental assistance to keep rents affordable.

The infusion of capital and major renovations will improve the quality of the housing stock in the short run. Residents will appreciate having someone repair their apartments, seal the building against the elements, fix the elevator and put the trash chute back into working order. Also, a modernized HVAC system should generate savings through lower electricity costs. The question in my mind is whether the facility is financially sustainable over the long run. If not, it matters not whether the landlord is the public housing authority or a non-profit enterprise. If not, Kippax will enter into another downward spiral of deferred maintenance and disrepair.

Suburbs Not So Simple

Virginia suburbs have diverse patterns of development.

Virginia suburbs broken down by percentage of population in each suburban type.

A difficulty in analyzing the economic dynamics of the “suburbs” is that land use and development is far from uniform. Recognizing that the term encompasses a wide range of human settlement patterns, the authors of “Housing in the Evolving American Suburb” broke down suburbs into five major types.

Established high-end. These have high home values and established development patterns. They tend to be built at higher densities and located closer to the metropolitan core. Residents resist new growth.

Stable middle-income. These neighborhoods tend to be older and located closer to the urban core. They exhibit a wide range of home values.

Economically challenged. These locations have lower home values and have seen little to no population growth in recent years. They may have aging infrastructure or under-performing services.

Greenfield lifestyle. These are newer, developed within the past ten to 15 years, and closer to the suburban fringe, where the bulk of new community development is occurring. They tend to have some land still available for new development.

Greenfield value. These, too, are located at or close to the suburban fringe, attracting value-oriented home buyers. Developing over the past ten to 15 years, they often reflect a “drive until you qualify” pattern.

The distribution of population between suburban types is similar in Richmond and Hampton Roads, as seen in the table above. But the sprawling, faster-growing Washington region is distinguished by a significantly higher “greenfield value” population. The drive-until-you-qualify phenomenon is in strong in Washington’s Northern Virginia suburbs, impelled by development restrictions and high housing prices in the core jurisdictions.

Bacon’s bottom line: I suppose this taxonomy is marginally interesting, but I don’t see how it guides either homeowners or county governance. The same study examines home buyer preferences (see previous post). How do these suburban types match against those preferences? The study doesn’t say. How does the trajectory of housing values match against those preferences? It doesn’t say. How should county officials alter their comprehensive plans to better align housing/community types with market demand? Again, not much to say.