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.

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19 responses to “Reinventing another Failed Public Housing Project

  1. No kidding, I actually thought the topic of subsidized housing was something that Trump could take on – that’s where his father’s family business started, after all. (I worked for NYC Dept. of City Planning, several hundred years ago when Andrew Cuomo was big in affordable housing — that’s how he got his HUD app’t.)

    What is the business model here – once it’s built, are the rents the only revenue? ” Is the facility financially sustainable over the long run” – what is the alternative for these people?

    “Asset management” for any facility, public or private, is supposed to optimize investment in O&M. My late husband ran giant gov’t facilities, and he said one should save a certain percentage for maintenance.

    In the 1930’s, we had scarce building codes, plenty of housing didn’t have indoor plumbing, and people were allowed to live in shacks. That is no longer allowed, and I’m not sure “we” thought thru what that meant to affordable housing. With nuclear family household sizes shrinking, and the move towards what Gov. Warner calls the “gig economy”, the free market is unlikely to keep people housed safely and with dignity.

    Some regulations I’d like to see overturned is the move in zoning against boarding houses and accessory units (garage apts. and the like) could help. And there are some progressive moves towards providing apartments to single men *without* the puritan restrictions in place now. Also, “tiny house” villages.

    Surely we can do better than the stable in which Christ was born lo these many years ago….

    • You are absolutely right that zoning codes are a big part of the problem. I’m not saying that reforming zoning codes — allowing more smaller units — would make housing affordable for everyone, but it could create more affordable units than we have now, and those units would be less concentrated than public housing. As the tiny housing movement shows, a lot of creativity and innovation could be unleashed.

  2. re: ” Surely we can do better than the stable in which Christ was born lo these many years ago…”

    Indeed.

    Here’s the question. What happens to people who don’t get a good education, then run afoul of our criminal justice system, then become permanently unemployable -when they get old and have no means of support to pay for their food and shelter?

    Jim like to pick at the scab of specific “failures” – then extrapolate them out to a concept failure – then asks in a round-a-bout way – ” why should we subsidize these folks in the first place since govt fails at the task compared to the free market?”
    or some generally-related theme.

    Seldom do you ever here him say – “Here’s what we the govt should be doing instead”. Nope… it’s a failure of govt of the basic “progressive” approach to providing housing… it’s all a failure and why do we have to take care of these malingering miscreants in the first place.?

    And yes.. perhaps we’re going to hear “some” answer from the newly-minted HUD Secretary, eh?

    Hey.. maybe this is the perfect opportunity for Jim B to provide some advice of what we ought to be doing instead to the new HUD guy, eh?

  3. re: ” As the tiny housing movement shows, a lot of creativity and innovation could be unleashed.”

    totally bogus concept … they really almost NEVER deal with the issue of infrastructure… no matter how “tiny” a house is – it’s needs a water/sewer connection – more important than that – it needs a water/sewer connection that was PLANNED initially when the zoning density was decided – because you just cannot put any size pipe in – and then hook up unlimited housing units to it.

    So the question is – why size pipe would you choose to put in for any parcel of land to start with – you obviously cannot put in unlimited size pipes everywhere.. you have to commit to WHERE you will support density – and that, in turn, drives the zoning density… it’s not some evil plot to prevent density.

    Beyond all of this – many housing authorities are, in fact, voucher, subsidized private sector that gets a subsidy to lower the price below the market. how they do that is always a tradeoff between how much profit versus how much money for maintenance and when the maintenance overwhelms the profit –
    then they cut corners , then walk away. The govt does not own the building … the govt just ends up with the occupants being tossed out and needing help for new housing.

    it’s not the simplistic proposition that folks might be led to believe.

    here’s some facts that show that quite a bit of it is, in fact, private sector:

    https://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/programs

  4. “The question in my mind is whether the facility is financially sustainable over the long run.”

    Indeed. There seem to be two models for public housing at work here: 1. start with a terrific new building for poor families/individuals, maintain it using the rents they can afford, “reduce services” and watch the building and living conditions deteriorate “to depression-era levels,” spend millions on an elaborate rehabilitation, repeat cycle . . . ; or 2. start with a terrific new building for poor families/individuals, charge market rents but subsidize those for qualified residents, use market-based income to maintain the building properly, continue indefinitely.

    Obviously Model 2 is the only one with a chance of achieving its housing goal. That’s what Christiansburg has chosen. But Model 2 has challenges too — primarily, what government-appointed management will run any property efficiently and hold to good standards while insisting (over the resistance of bureaucrats and elected officials opposed to raising subsidies) on raising those rents commensurate with the market?

    The only way forward, it seems, is to let market forces and the profit motive run these housing complexes, subject to a requirement that they accept a small percentage of needy residents — a percentage not high enough to disrupt the desirability of the the building for wealthier applicants.

    It’s no surprise, then, that local jurisdictions in NoVa are seeking these days not to concentrate the needy population in public housing but disperse them widely throughout the rental community with subsidies.

    But is it working? What percentage of needy is low enough that it doesn’t harm rentals to those paying full price? Are there enough subsidized units available on this basis to satisfy the need? Is the cost of those subsidies sustainable politically? What is done concurrently, a la “Homestretch” in Falls Church, to bring these needy residents out of dependence to a life without housing subsidies? If we can’t give good answers to those questions, maybe “public failure” housing is the best alternative there is to letting these folks sleep on the streets.

    • Fairfax County requires 12% workforce/affordable housing on virtually every MFU rezoning and 20% workforce housing in Tysons. The lower-priced affordable housing simply is not affordable for the developers to build in Tysons.

      A few years ago, Fairfax County tried to adopt a plan for Residential Studios Units virtually everywhere in the County. It failed miserably because of opposition to MFUs in low-density residential zones. The County’s poor performance in enforcing the Occupancy Code stroked the opposition as well. Few trusted the County to enforce RSU zoning rules.

      Having learned a lesson, the County is now looking to find ways to expand affordable housing in certain appropriate commercial and light industrial zones, as well as high-density residential, when such units are near public transit and other services. A special committee is nearly completing its recommendations, which include better code enforcement, to the County. Better enforcement increases residents’ trust, which would permit more affordable housing, which would decrease overcrowding.

  5. I think in whacking on the concept of “public housing”, we’re beating a depression era dead horse.

    to wit – this is the Modern Program [excepts]:

    ” Section 8 of the Housing Act of 1937 …authorizes the payment of rental housing assistance to private landlords on behalf of approximately 4.8 million low-income households.. The largest part of the section is the Housing Choice Voucher program which pays a large portion of the rents and utilities of about 2.1 million households.

    The Housing Choice Voucher Program provides “tenant-based” rental assistance, so a tenant can move from one unit of at least minimum housing quality to another. It also allows very low-income families to choose and lease or purchase safe, decent, and affordable privately-owned rental housing.

    Section 8 also authorizes a variety of “project-based” rental assistance programs, under which the owner reserves some or all of the units in a building for low-income tenants, in return for a federal government guarantee to make up the difference between the tenant’s contribution and the rent in the owner’s contract with the government.”

    https://en.wikipedia.org/wiki/Section_8_(housing)

    so HUD has moved away from it’s original model which was more like government warehousing of people.

    And the problem with local housing authorities like the one in Hopewell – is how much they spend on “overhead” – i.e. administrative staff… some of them have unfortunately become a “jobs” program for more staff than they ought to be able to expend funds on…

    but “private sector” does not necessarily mean good operations either – just look at the for-profit colleges slurping up vouchers for worthless degrees…

    So with ANY program where the govt is distributing money for a purpose – there are always ways paths to actual or virtual fraud. And yes.. that happens with other govt programs… the DOD when it buys stuff from the private sector…

    I just don’t think it is useful to point to govt entitlement programs as ones unique to abuse and to then cite that as a reason to not do the entitlements. Geeze, everytime I turn around some “watchdog” group is accusing Medicare or MedicAid or the Dept of Homeland Security of the DOD of “wasting” billions of dollars!

    but for housing at the end of the day -what are you going to do with the elderly, the handicapped, and kids with poor moms in terms of housing – not fund it at all? Because if your answer is to fund it but don’t allow bad management, fraud and waste – then that’s a threshold criteria to not fund any program at all.

    I think what HUD is doing now – giving a voucher – and letting the recipient find their own “affordable” housing – with a HUD insuring it meets minimum standards is on the right track – as opposed to big centralized buildings …holding 100% low income tenants – even if it’s privately-owned unless there are strict standards for maintenance and operations – because we know that privately-owned, publicly-funded has it’s own problems also.

  6. Larry G: Replace housing bureaucracies with housing vouchers.

  7. I thought you supported the concept of vouchers! no?

    what would you do instead? no funding for housing?

    you’re good at what you don’t like – like a lot of Conservatives these days – but you sorta fall short on practical solutions and seem to prefer the ideological ones.. even then you seem to still support middle class goodies but not low income goodies..

    😉

  8. In 2014, the most recent year for which complete data are available, households with incomes of $200,000 or more received an average housing benefit of $6,406 — more than four times the average benefit of $1,450 received by households with incomes below $20,000.

    ?itok=PD1J40hV

    ?itok=ggATeaVl

    • Outrageously unfair. Mortgage interest deduction needs to be pared back. No more than $10,000 a year in interest, something like that. Maybe lower. The idea should be to help people get started on the home ownership track, not to subsidize housing across the board.

  9. Good GAWD! we AGREE on vouchers AND mortgages!

    One mortgage deduction, for one owner-occupied house capped at median price. No vacation homes, no RVs, no second homes…
    and … no subsidized flood insurance either except for primary home.

    ?itok=zJnXVQ2V

  10. And to think that Jim was doing so well with his previous blog.

    As one who once lived within a few blocks of Cabrini Green in Chicago, I am not so sure that huge public housing projects were part of some liberal experiment.

    The fact is that previous housing might have been far worse and something had to be done.

    Take Virginia. In the 1950s in Norfolk, city leaders (hardly liberal engineers) wanted to bring urban renewal to downtown area slums. They did. The poor were relocated across the river in public housing leftover by temporary wartime shipyard workers.

    In Richmond, some of the public housing came when the white and conservative leadership wanted to plant an expressway through some of the most cultural rich African-American neighborhoods. It wasn’t part of an “experiment” but a way to link north and south by four lane roads and give white local residents a way to uproot and move to the ‘burbs.

    • Indeed – Peter nailed it:

      ” In the nineteenth and early twentieth centuries, government involvement in housing for the poor was chiefly in the introduction of buildings standards. New York City’s First Houses, dedicated in 1935, were the nation’s first public housing project. Most housing communities were developed from the 1930s onward and initial public housing was largely slum clearance, with the requirement insisted upon by private builders that for every unit of public housing constructed, a unit of private housing would be demolished.”

      ” NYCHA was created in 1934.[1] At the end of 1935, NYCHA dedicated its first development, called First Houses, located on the Lower East Side of Manhattan. The Authority boomed in partnership with Robert Moses after World War II as a part of Moses’ plan to clear old tenements and remake New York as a modern city. Moses indicated later in life that he was disappointed at how the public housing system fell into decline and disrepair. Originally intended for working families, the projects increasingly became occupied by low-income families, many of whom had no working adult.” (excepts from wiki articles)

  11. Jim, thank you for providing a platform for honest discussion of some of these tough issues – with an invaluable Virginia focus!

  12. Homeownership is great, but our public policies and economic frameworks need to understand – not everyone is going to be a homeowner. For a range of reasons [see: the a/r family formation variability + gig economy + building codes and not allowing people to live in shacks any more, among others], people are going to need and want a variety of housing types.

    If we set homeownership as our ‘norm’, and incent all the systems around it, and make other paths equivalent to failure – then those people are going to be defined as failures. And that doesn’t reflect reality.

  13. well the tax policy incentivizes home ownership and penalizes renting…

    what would happen if renters could claim rent as a deduction or get a tax credit toward their rent – which would be consistent with the tax breaks we give for home ownership except in that case you get to write off your interest, your taxes AND your capital gains when you sell it – which is how people “bootstrap” their wealth via owning a home – and that home – ends up being what their kids inherit – and that too is not taxed.

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