Affordable Housing Institute : US

By: David A. Smith

 

[Continued from yesterday's Part 1.]

 

Does Does it matter where they live if they all go to the same school?

 

In yesterday’s post laying out a typology of where urban Indians live – a companion to my previous two-part snapshot of India’s housing situation – we started from the bottom up, looking initially at the purely private, purely informal solutions that people create out of necessity.  The photos demonstrate that given enough incumbency, people acquire an implied political legitimacy, and the municipality takes small steps to rationalizing the public-space aspects of the urban infrastructure. 

 

[Unless otherwise noted, all photos in this multi-part post were taken by David Smith on visits to India.]

 

4. Slum-relocation community

 

As slums are a place where private investment outpaces public infrastructure, with continuous urbanization there usually comes a moment when the informal settlements have overrun the available transportation or utility infrastructure, and a portion of the slum must be demolished to create space, such as for a railroad right-of-way.

 

Alleyway through a slum: that’s a train going by

 

Commuter train, Mumbai – the municipality required ten meters right-of-way either side of the tracks

 

Under Indian law applicable to Mumbai, the slumdwellers had a right of access to housing, meaning that to relocate them required their consent, and to obtain it, the government promised to build them new affordable high-rise co-operative flats (which we’ll see later in this post).  But that would take time, and in the meantime, the right-of-way had to be cleared, so the municipality built relocation flats – transitional housing:

 

Relocation flats, Mumbai

 

Naturally, people living in transitional housing have little motivation to beautify their public space:

 

Relocation flats, Mumbai, the trash does tend to pile up

 

Yet they keep clean their interior space:

 

Flats arranged around a courtyard, and it is fairly clean

 

When in their relocation settlement, they conduct business.

 

Pipe scavenging and recycling business

 

5. Affordable co-op

 

Because housing – its location, quality, production, and affordability – will be a driver of Indian global urban competitiveness, at some point a government – usually a municipal government – decides as a kind of civic economic self-defense that it must create affordable housing. 

 

Mankhurd co-operatives, funded through World Bank Loan repaid by railway surtax (see below)

 

As cities densify, there is only one direction to go – up. 

 

Oshiwira 1, affordable co-operative built by SPARC, Mumbai

 

The city becomes vertical, and to become vertical, that requires structural framing, which implies formality. 

 

The scaffolding may be casual but the building is reinforced concrete

 

Similarly, cities mean traffic jams, and bad cities have worse traffic jams, so the municipal competitiveness – to say nothing of quality of life – requires the addition of public transportation, and depending on location, that often means railways.

 

In Mumbai, for instance, people relocated away from municipal infrastructure (previous grouping) benefitted from affordable new-construction high-rise co-operatives whose principal loans were repaid through a surtax on railway tickets – thus drawing a direct financial link between the improvement of middle-class infrastructure (in this case, the railroad right-of-way) and increased affordability for the poor.

 

Once the government is involved, formality also implies certain basic amenities.  Even though the flats are tiny, they have all the necessities, such as a flush toilet:

 

Toilet, which will be two footprints in the floor

 

The toilet lacks fixtures – for the time being, it is merely a ceramic hole into which people make their deposits – but the configuration allows for a later retrofit of an individual seat toilet.  The apartments are extremely small, averaging 25 square meters (about 270 square feet), which compels design-size limitations such as showers rather than tubs:

 

Bathroom: designed for just a handheld shower

 

Concrete, though strong, is brittle, and extremely difficult to retrofit.  (Ever try drilling into concrete?) 

 

Wiring running outside the structural concrete, Oshiwira 1

 

[We see a similar phenomenon in pre-WW1 English homes and apartments, where the plumbing and electrical run outside the structure because there is no room inside the building – and its narrow walls – to accommodate hiding the piping.]

 

Because increasing lower-income Indian affluence changes people’s housing consumption expectations, the embryo apartment that is an acceptable size today may be functionally obsolescent in a decade, and if so the retrofitting will be a challenge.  Even though I am delighted to see these high-rise flats going up, I worry just a little about their eventual economic or physical obsolescence. 

 

6. Affordable high-rise market flat

 

With such an enormous shortage of housing – of all configurations, particularly the affordable ones – it’s no wonder that major Indian conglomerates are rapidly entering the field of new housing production, such as with the Tata nano-house.  Sometimes it seems as if the entire nation is one gigantic construction site:

 

Affordable high-rise in construction, Ahmedabad, January 2010

 

Built, building, and planned to be built: Ahmedabad

 

)

Affordable new-construction high-rise flats, south Ahmedabad

 

Affordable new-construction high-rise flats, south Ahmedabad

 

Remarkably, much of the construction is being done by women:

 

Women are a large portion of the construction workforce

 

The goal is a fully formal, mortgageable house in the price range of Rs 150,000 to Rs 300,000 [Roughly $3,500 to $7,500 US – Ed.], an income band for which there is already a huge demand, one showing no signs of abating.

 

)

Recently built affordable market flats, Ahmedabad

 

The developments are well designed and highly dense:

 

Site plan and floor plate, Ahmedabad affordable high-rise

 

Though small, the apartments are fully formal:

 

On the inside, it’s fully formal

 

They have a modest but serviceable toilet:

 

Two footprints today, a ceramic bowl tomorrow?

 

In addition to the utilities – water, electrical, and heat if required (often it is not) – there is a fully practical if tiny kitchen:

 

Everything including the kitchen sink

 

Indeed, so rapidly is India urbanizing, and so inexpensive is large-scale small-apartment construction, that just above the government’s level, the marketplace is exploding with new housing:

 

[Concluded tomorrow in Part 3.]

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By: David A. Smith

 

Where do urban Indians live?  In almost every configuration and tenure imaginable, from living in ramshackle sticks-and-tents to Texas-style-subdivisions, with everything in between.

 

Tents in the foreground, gated subdivision in the background: Ahmedabad

 

A little while back, returning from my three-week trip to northern India, I posted a two-part snapshot of India’s housing situation, focusing on the confluence of events across political, economic, and urbanization dimensions.  This mainly visual post will slice through the onion by income and tenure configuration levels, giving a typology of the different forms of housing now present in Indian cities.

 

At the South Asian Housing Finance Forum, Delhi, January, 2010

 

[Unless otherwise noted, all photos in this multi-part post were taken by David Smith on visits to India.]

 

In a country of a billion-plus people, undergoing what is probably the highest rate of urbanization (measured in total population moving to cities), we can certainly expect to discover every imaginable type of urban residential accommodation – and that the nation is in fact greatly short of quality affordable housing.  Indeed, the Government of India officially estimates a ‘quantitative deficit’ of more than 25,000,000 homes. 

 

Further, because housing demand is elastic, as India becomes richer and as more new homes are created, people will consume more housing, household size will shrink, and households will increase much faster than the population does.  The result is that over the next 10-15 years India will have the ability to absorb the all-but-unthinkable number of more than 100,000,000 new homes, mostly in urban and urbanizing areas. 

 

Where does he live?  Where does his family live?

 

The India we see today is a nation in transition – exploding through the carapace of nineteenth-century soot, filth, pollution, and bustle into a twenty-first century powerhouse. 

 

If slums are a phase through which rapidly urbanizing cities pass – as I think they are – then we have to expect and calibrate India’s urbanization from the bottom of the pyramid on upward, starting with housing built entirely by poor people, for poor people, in the face of government indifference or hostility:

 

1. On the streets: pavement dwelling

 

We start with those who have come to the city despite having nothing whatsoever, and who live on the streets.  In Mumbai and in Delhi, one can find small or larger families some of whom live on the streets.

 

Family gathered on a Mumbai sidewalk

 

In America and the European cities, one can find the homeless, but in these developed nations, being homeless is always accompanied by a mental or behavioral problem; in India, it can be a condition of simple urban poverty. 

 

I’ve taken only a few photographs of Indian pavement families, because there is something so intrusive about using a long lens to peer into a household’s workings, even if the family has chosen to live their lives in public.  Still, there is also something homelike and practical, such as cooking:

 

Pavement family rice pot

 

Living on the street necessarily means evacuating on the street:

 

Man urinating discreetly into the gutter, Bikaner, Rajasthan

 

Men and boys urinating in public are so commonplace that a convention has evolved: if you turn your back to the street and hold yourself still, it is somehow understood that people should look away.    But male urination is the least of the sanitation challenges, for it can be done relatively discreetly and relatively hygienically.  More challenging is the effort to protect women and the related campaign to eliminate open defecation, which is not just a matter of esthetics but also of health – both for the evacuator and for the water supply, a risk that has been known since the dawn of history.

 

2. Impermanent slum (’landing paid for urban immigrants?’)

 

Pavement dwelling is the lowest economic form of urban existence because it is the least safe, the least private.  One notch up is the ramshackle urban slum, made entirely of found materials, and invariably located on publicly owned low-value land – usually next to the river, the stream, the paper mill, the cement factory, or the dump – where people can settle and create their own intra-community, a world of their own inside the world of the city.

 

I profile one such in A day in the life of a slum [Post to come – Ed.]:

 

Ahmedabad and the Sabarmati River

 

Throughout history, people have been lured to cities by the promise of higher money income, a promise that is usually true, and they imagine that when they move to the city, they will be able to keep the animals they have raised in the countryside.  That was true of the Irish who came to Boston during the Potato Famine, and it seems evidently true of the Gujaratis coming to Ahmedabad whom I photographed outside my hotel room window:

 

Keeping goats, most likely for milk

 

Critical to these households is that by moving to the city, they can earn money, give their children a better education, and expand their horizons, if not for themselves then for the next generation.

 

Slums adjacent to Mumbai Airport

 

3. Permanent slum (’informal settlement’)

 

Slum community built on the infill outside a truck distribution warehouse

 

Slums improve, though; given time, people gain a perception of security of tenure, and as they come to expect that they will be there longer, they bring more durable found materials into buildings and rebuilding their informal settlement.

 

Informal settlement, Mumbai

 

The house is made into a home, with a waterproof roof, laundry drying on the line, and herbs being cultivated in plants:

 

Note the plants being grown in pots

 

Characteristic of these slums is that they are, in general, ground-floor:

 

Self-built settlement, Oshiwira neighborhood, Mumbai

 

Buffalo yard in the Oshiwira informal settlement

 

People keep animals immediately outside the family home.

 

After a while, the slum becomes sufficiently permanent that people invest in structural materials to add a second story:

 

Work on the ground, live a flight up: Mumbai

 

Often a residence over a business:

 

New urbanism, home-grown: Dharavi, Mumbai

 

Given time, these neighborhoods become physically formalized:

 

Would you call that a slum?  After having seen the previous photos?

 

Sometimes the municipality also recognizes the legitimacy of a long-standing urban settlement, by adding public infrastructure like paving:

 

Jadibanagar, Ahmedabad: note paving and water tank (blue)

 

Jadiabanagr, Ahmedabad

 

Have you noticed what’s happened in this sequence of photographs?  All within the realm of purely informal housing – self-built, self-organized, self-perpetuated – we have the first faint stirrings of a civic response.  It starts with tolerance – visual aversion of their presence – and then rises to the gradual formalization of public space, for community hygiene or out of charity, it moots not.

 

What happens when the community decides it has a duty to these urbanites, whether or not it wished for them to arrive?

 

Ahmedabad: community center in informal settlement

 

[Continued tomorrow in Part 2.]

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[Continued from yesterday's Part 1.]

 

By: David A. Smith

 

In yesterday’s post featuring a well-titled New York Times story, we focused mainly on the upside of premarital homebuying – how it tends to precipitate the decision to marry. 

 

Honey … I guess we’ve got to get married

 

Since it does, policy makers like to incentive the buying of first homes:

 

Pete Flint, the chief executive of Trulia, a real estate search engine, points out that people who have never bought a home make up a demographic tending toward the young and unmarried.

Enabling people to marry sooner ties to population growth, which ties to desirable national demographics.

 

And then there’s the federal tax credit for first-time home buyers [spotted as a worthwhile initiative by AHI in 2003 – Ed.], to expire on April 30, 2010, which will provide several thousand dollars in income tax relief.

 

With this tax credit, we multi-ethnic models were able to pretend we’re a family!

 

[Unless the recession turns around quickly, expect to see Congress extend the tax credit yet again – Ed.]

 

It offers federal income tax relief equal to 10% of the purchase price of a home — capped at $8,000 — for couples earning less than $150,000 and individuals earning less than $75,000.

 

As we saw in Great laws from little blog posts grow, the first-time home buyer credit really works – and now is an excellent time to be providing a stimulus to encourage young couples to move into home buying.

 

That deadline is lighting a fire under some couples in the serious, or almost-serious, stages of a relationship.

 

As we saw yesterday, the relationships’ degree of seriousness corresponds directly to whether the parties are willing to co-invest in a long-lived, illiquid asset of much more value to them jointly than individually.  Come to think of it, isn’t that a fair economic definition of marriage itself?  A long-lived asset.  Illiquid (hard to get out of).  Of minimal value separately. 

 

They worry that if they don’t act now, they may squander the best property-buying opportunity they will have for a while.

 

Or your mother won’t fund your down payment.

 

I’ve posted before on the many reasons why single-family homes are resistant to massive price drops; one reason is buyer anxiety about the availability of long-term secure tenure with investment potential.

 

There are also signs (or at least a feeling in the air) that the housing market could be picking up (including word that this [2009 – Ed.] may be a good year for Wall Street bonuses).

 

As we know, it was.

 

Mr. Flint said that trulia.com had received numerous e-mail messages from unmarried couples asking about the logistics — and wisdom — of buying a home together.

 

 

Many of the queries are about the first-time home buyer tax credit and how or whether it can be divided between people whose marital status doesn’t allow them to jointly file a tax return.

 

(The answer from the Internal Revenue Service: only one of the two people can claim the tax break if they are unmarried at the time of the sale. It cannot be divided, even if the couple marry later in the year.)

 

Things get dicey when you try to undo it

 

Marriage creates a legal institution – the marital couple.  It is an economic joining. 

 

Trulia posts such questions on a message board called Trulia Voices, and real estate professionals often chime in with answers. One of the notes on the board contained the following cautionary tale from a couple who split up, rather than marry, six months after buying a new house.

 

That’s why you should cohabit before you coinvest – you can dissolve the relationship a whole lot more easily than you can dissolve the economic partnership of co-owning a house.

 

One person in the pair had provided a 10% cash down payment on the home; the other borrowed 10%; and they both signed a mortgage for the remaining 80%. Once they decided to break up, their only recourse seemed to be to try and sell the house.

 

“Yet,” the e-mail post says, “only being six months into the house it would be difficult to break even (right?). He is in no financial position to take on the home himself and I would be strapped if I did.”

 

Ergo, don’t buy unless you’re sure.  In my case, I closed on a condo, got married days later, and then went on honeymoon.  We lived together only after we got married.

 

Real estate lawyers say that there are more complications for unmarried property owners who part ways than there are for married property owners who divorce — and a less clear process for resolving them.

 

Marriage’s economic fusion can be replicated with domestic partnerships; what cannot as yet be replicated are the favorable tax and health-care treatments accorded the legally married.

 

Is that a rhetorical question, or what?

 

“By default, our laws are suited for married couples acquiring assets,” says Luigi Rosabianca, a real estate lawyer in Manhattan.

 

Because if you’re not married, you’re unlikely to be sharing assets, and the assets you’ll be sharing are chattel – portable – hence subject to a ready division.

 

Under New York State law, he explains, a husband and wife are considered “tenants by the entirety” when they buy property.  

 

State laws vary, but in general, they are construed for the benefit of surviving spouses – an important default benefit not generally extended to civic domestic partnerships.

 

That ensures, among other things, that the property will automatically transfer to the surviving spouse if one person dies.

 

Marriage, in short, is a bond accorded a higher status than a simple partnership.  That principle is believable and logical (and a refutation of the claim that civic domestic partnerships can give all the same benefits).

 

“If you are not married, you have to fill in the blanks,” Mr. Rosabianca said. Toward that end, he recommends that unmarried couples consider signing what amounts to a pre-prenuptial — legal agreements specifying the unknowns, including “who contributes what percentage of the expenses, mortgage, taxes, common charges, utilities.”   He added, “You also have to account for capital gains — what percentage goes to whom.”

 

All of these are simply negotiating contingencies against the exit.  If, when being married, you pledge and mean the ’til death do us part, then none of them matter.  But if you’re buying property and are not married, then the question is – Well, why not?  You must be contemplating the possibility of sepaqrating.

 

And there can be other issues. “Say this house is close to your mother,” Mr. Rosabianca said. It may be wise to sign an agreement saying, “If we break up, you have to buy me out, because I don’t want to live near your mother.”

 

Uh … even if we don’t break up? 

 

This would be less of a problem if I had no one in common with you

 

Couldn’t that be a problem for a married couple going through a divorce as well?

 

“With a married couple that would probably be handled with the divorce,” he said. With an unmarried couple “it’s almost more prudent to be proactive in addressing these concerns.”

 

No, I get the villa, you take the mansion

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By: David A. Smith

 

So good is the New York Times’s headline for this story – adapted from Christopher Marlowe – that I cannot improve upon it:

 

Come live with me and be my Love

And we will all the pleasures prove

– Christopher Marlowe

 

Shakespeare’s contemporary and competitor

 

So intertwined with our notions of family are our feelings about housing that we use tenure terms as shorthand for relationship status – we speak of living together, moving in together, or setting up house.  The shorthand works for reasons both superficial – living together implies sleeping together, and we know what that means – and economically profound, because finances are as messy to commingle as fluids, and just as hard to separate.

 

Thought-provoking but counterfactual

 

Chuck Haberstroh and Jacque Horelik went to high school together in Westport, Conn., but they did not know each other then. They met by chance during college, when she visited a mutual friend at Lehigh University, where he was a student. A few years later they crossed paths back home in Westport and went on a date to a cool pub and restaurant. Things were a bit on and off for a while, but then they began to get serious.

 

Because housing cost is size-dependent, and housing demand is elastic, the appeal of moving in with someone for whom one feels intimate is partly the ability to move out on those where toothbrush-mingling is less acceptable.

 

He lived in a house in nearby Norwalk with a bunch of male buddies; she moved to the place next door with her sister and a couple of friends.

 

Cohabitation changes the relationship because what once was an event – we are getting together – becomes the absence of an event.  Making coexistence less eventful has an up-or-out effect: it deepens some relationships and destroys the magic of others.

 

She started spending all of her time at his place, so she ditched her room and moved in with him.

 

Cohabitation has relationship significance.

 

Whose is whose?

 

Commingling capital has more relationship significance.

 

A few months later, they signed a lease on a small apartment of their own.

 

As we all know, among the great advantages of rental is its ease of entry and exit.   Establishment costs are low – sign a lease and pay a security deposit – and capital at risk is likewise low. 

 

Commingling your future has the most significance of all.

 

He was in his late 20s, she was two years younger. They had been together for two years. They made each other laugh, they liked each other’s friends, they loved each other’s company. And so they knew — as everyone seemed to be telling them — that it was time.

 

To buy real estate.

 

Chuck Haberstroh, 30, and Jacque Horelik, 28, haven’t set the date, but they have bought a home. “We may never see such a buyer-friendly environment again,” Ms. Horelik said.

 

We all know that making the decision to marry is fraught with symbolism and emotional complexity, to the point where the parties themselves may doubt their intentions and commitment.  Buying the house, while seemingly simpler, is actually clarifying – if you can imagine jointly investing your independence into an illiquid financial asset, whose payoff will be only many years in the future, then maybe your wallet is telling you something your brain is reluctant to acknowledge.

 

And for Mr. Haberstroh and Ms. Horelik, both the real estate and the relationship have now fallen into place, to the delight of Ms. Horelik’s family, who are of the wedding-before-house school.

 

The first night they slept in their new home, they got engaged.

 

I suspect similar real-estate-clarifies moments occur frequently in relationship development – it certainly did in my case.  I’d been living in a big dusty rent-controlled apartment – let me be clear, I was not in favor of rent control, but in the People’s Republic of Cambridge it was illegal to pay more than the Rent Control Board approved rent – and Nancy thought it time I should be investing into an owned home or condo.  Since I didn’t care, she undertook to look for places, and as she toured them, she realized after a while that she was rejecting candidates not because they’d be bad for me, but because they were unacceptable to her.  “Once I realized that,” she told me, “it meant I couldn’t envision a future without you.”

 

Two distinct forms of desire — the carnal type and the kind that involves granite countertops — have been known to intermingle, but perhaps never more so than now.

 

How buffed are your countertops?

 

Aside from the financial consequences, there are also procreative ones.  Move out of your parents’ house, move in with your girlfriend or boyfriend, and more bedrooms mean more babies.

 

New York and its environs have always been places where real estate can drive relationships, for better or for worse (think of the marriages that have lingered for far too long because neither spouse can afford to move out of the Classic 6).

 

I previously explored that in staying together for the sake of the bills:

 

Because housing demand is elastic, there’s a direct correlation between housing consumption and family size.  It works going upward (more bedrooms means more babies) and the same dynamic works unhappily in reverse – people who no longer wish to live together nevertheless cannot afford to live apart:

 

Lisa Decker, a certified divorce financial analyst in Atlanta, said she was seeing couples who were determined to stay together even after divorce because they could not sell their home, a phenomenon rarely seen before outside Manhattan.

 

If you are what you live in, what you live in can become what you are. 

 

Marriage is always an economic decision, especially with most people seeing it as the gateway to parenthood:

 

But the peculiarities of the housing market today are leading more couples to ponder the question, “Should we buy?” before they settle the question, “Should we commit?”

 

They’re intertwined.

 

Whom mortgage obligations has joined together, let no one put asunder

 

Mr. Haberstroh, now 30 and a vice president of CastleKeep Investment Advisors in Westport, said the market dictated which question he and Ms. Horelik tackled first.

 

“When the market started to turn in the buyer’s favor,” he said, “we decided we had to take advantage of that.”

 

“My whole thing was with this market, get the house — the one you want and love — first,” Mr. Haberstroh said.

 

He may not like it, but I’ve got him by the bulge

 

Buying a house is as precipitating an event as pregnancy – it’s an instant where a continuously rising level of affection and desire is converted into a discontinuous and hard-to-reverse change in status:

 

That wasn’t entirely her whole thing. “I was itching to get engaged before we bought the house,” said Ms. Horelik, 28, a teacher who works with special education students. “Chuck definitely felt the pressure from me and both of our families.”

 

I’m surprised the would-be in-laws weren’t hinting about down-payment assistance. 

 

“There are just so many things you can lose out on” if you wait, said Elaine Matthews, 27, an actress and dancer who is in contract to buy a condominium in Greenpoint, Brooklyn, with her boyfriend of 16 months, Sean MacLaughlin. They hope to close on the property — a brand-new 1,200-square-foot ground-floor duplex with a backyard, a deck and a white picket fence — at the end of February or the beginning of March.

 

Elaine Matthews, 28, and Sean MacLaughlin, 31, plan to get engaged; meanwhile they are under contract to buy a condominium in Greenpoint, Brooklyn.

 

Ms. Matthews and Mr. MacLaughlin, a 31-year-old actor, met while performing with the touring company of “The Phantom of the Opera,” and have spent most of their relationship on the road, living in hotels.

 

“New York rents are very high and you never see that money again,” Ms. Matthews said. She went on to list the benefits of buying: “We got a great mortgage rate, 4.75,” she said. In addition, owners of units in new developments in New York City can take advantage of a program that phases in property taxes over a period of 10 years.

 

One of the many ways governments incentivize homeownership.

 

Mr. MacLaughlin said: “We were talking about getting married and I said, ‘Wait a minute, if we just put off the ring, we’ll get the apartment first.’ ”

 

A good illustration of the difference between symbolic and practical expenditures. 

 

At $522,000, the apartment costs a good deal more than most rings, but Ms. Matthews said the price was about $60,000 less than what a similar unit in a complex by the same developer went for two years ago.

 

But then, love is supposed to be about being impractical, isn’t it?  Practicality comes when the relationship ends …

 

Or half of the equity in a property?

 

[Continued tomorrow in Part 2.]

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By: David A. Smith

 

Would you rather spend $138 and get 360 brand-new objects, or spend $130 and get 269 used objects?

 

What is this, asks the reader, a trick question? 

 

Not to the New York City Housing Authority, but perhaps to those whose willingness to believe and trust has been incinerated by many years of unfulfilled hopes.  As reported in the New York Times [February 6, 2010 – Ed.]:

 

Philadelphia tore down 21. Chicago leveled 79. Baltimore took down 21 as well, and when 6 of them came down in one day in 1995, it threw a parade.

 

IMPLOSION–The implosion of a large housing project in Newark in 1996. Many cities have moved toward smaller-scale housing that does not carry the stigma of despair and poverty.

 

Since the 1990s, public housing high-rise buildings have come tumbling down by the dozens across the country as cities replace them with smaller suburban-style homes that do not carry the stigma of looming urban despair and poverty.

 

Not just in America.  London has torn down some of its council high-rises.  Paris should tear down its.  Even as increasing density means cities must go vertical, going vertical is the prerogative of the wealthy.  The poorer you are, the more important it is for you to live on or near the ground floor – despite theoretical architects like Le Corbusier, the only people who can live happily in a high-rise are middle-income or rich.  Very low income high-rises become the slums inside.

 

New York City has long been the great exception, and red-brick towers still dominate the skyline from the Lower East Side to East Harlem, from Mott Haven, in the Bronx, to Bushwick, Brooklyn.

 

Dents in the sign notwithstanding, a wonderful community?

 

New York is exceptional for many reasons:

 

• It has long had the nation’s most capable large public housing authority
• As the cradle of apartment and high-rise living, it’s got a granite backbone uniquely suited to high-rises.
• NYCHA has been searching the sofa cushions (to scrape up extra operating money) and selling the family silver (disposing of non-core assets) to stave off the evil day.

 

Yet, as we saw only a few weeks ago, rehab deferred is rehab denied, and New York City, under the capable direction of Michael Kelly, has finally reached the inevitable conclusion for this property:

 

But now, for the first time in its 75-year history, the New York City Housing Authority wants to knock down an entire high-rise complex, Prospect Plaza in Brooklyn — a move that has surprised and angered a number of former tenants and advocates for low-income housing.

 

 

In the past decade, the authority has chosen to renovate rather than tear down its aging housing stock, often at great expense. Its decision to demolish Prospect Plaza was not the result of a sweeping policy shift, but of the failure of a renovation project that became bogged down in years of administrative, financial and legal problems.

 

The failure of Prospect Park’s HOPE VI renovation – a failure over a decade in the making – is a classic story.  Visions of sugar plums brought to the party far too  many cooks, all angling for their own piece of the pie.  As profiled in a story I discovered from City Limits, July 1, 2001, the inevitability effect doomed the Prospect Plaza HOPE VI transaction:

 

 

Here are a few snippets from the tragedy:

 

A consortium of community groups and churches, which joined with project tenants to jointly administer the funds, are now [July 1, 2001 – Ed.] duking it out for control of the money.

 

While they fought over the financial ice cream cone, it melted away.  Here’s a representative snapshot from a story so dreary I cannot bear to quote it:

 

Early on, when Abdur-Rahman Farrakhan became chairman of the PPDC, the group quickly descended into a nasty war of words. Farrakhan accuses other nonprofits–in particular the Brooklyn Interborough Community Network (BICNet)–of manipulating Prospect Plaza’s tenants in the hopes of getting large contracts for job training and technical assistance. “Everybody is looking to position themselves as best they can to be able to take advantage of this,” he says. Farrakhan says that Shelton Jefferson, who heads BICNet, “wanted a guaranteed contract and went to the tenants to stir shit up.”

 

Jefferson says he’s astonished by Farrakhan’s charge. “I doubt if Mr. Farrakhan would say something like that,” he says. “I have become involved in this project only because I was asked. I was asked by NYCHA to be an adviser to the tenants.”

 

For several years, NYCHA and its preferred developer, a very capable organization khown as Michaels Development, pursued HOPE VI, but that too collapsed.  Meanwhile – rehab deferred is rehab denied – the buildings became progressively more empty, more decrepit, and more expensive to renovate.

 

Prospect Plaza today: derelict and fenced off

Don’t let the windows fool you – the ground floors are boarded up

 

Prospect Plaza — three 12- to 15-story towers in Brownsville — is plagued by neither despair nor poverty: It has been vacant since 2003, when the last tenants were moved out with the promise they could return to refurbished apartments.

 

So why are we keeping an outmoded shell?  Nostalgia?  Or political expectation?  Or something simpler – like distrust of the alternative?

 

Agency officials say they want to tear down the 35-year-old buildings and erect new apartments in their place. Officials initially planned to leave the towers standing and reconfigure the apartments, by eliminating some units to create bigger living rooms and bathrooms, but those plans were scrapped by the authority’s new leadership because demolition made better financial sense.

 

It often does.  Buildings become obsolete, the more so when they fail to receive periodic upgrading and repositioning.

 

Ilene Popkin, the agency’s assistant deputy general manager for development, said the three buildings had deteriorated from vandalism and exposure to the elements, and were out of context with the neighborhood.

 

She said it would cost $481,000 to renovate each of the 269 apartments. Demolishing the structures and building 361 new units would cost $381,700 per unit.

 

If you do that arithmetic, renovation will cost $130 million and deliver 269 existing apartments; new-build will cost $138 million and deliver 361 – 92 more apartments for only $8 million more.

 

Mo’ money, mo’ housing

 

Moreover, because they’re new-build, with no resident relocation challenges, the construction will go faster, with far fewer unknowns or temporal risk factors.

 

The new apartments — including public and private housing, not only for the poor but also for low- and moderate-income families — are likely to be built in low-rise buildings.

 

Prospect Plaza originally included four towers housing 1,200 people.  [Not units – Ed.]

 

One was torn down in 2005; the plan was to use that space for a new community center, shops and additional housing. But today, the building’s old footprint is just a fenced-off lot.

 

Many public housing properties suffer from excessive density, particularly if the apartments are designed for families.  Babies have the annoying habit of growing up into toddlers, then into children, then into adolescents, and all these increasingly animate and rambunctious small people

 

That building was the first high-rise the authority demolished. In 2007, the agency also knocked down a number of two-story buildings as part of the redevelopment of the Markham Gardens complex on Staten Island.

 

The authority has completed the first two phases of its Prospect Plaza redevelopment plan, involving not the actual housing project itself but 37 two-family houses and 150 rental units in four-story town-house-style buildings that were constructed on nearby lots formerly owned by the city.

 

It’s a start – improving the neighborhood surrounding the public housing property.

 

The new Prospect Plaza: not a project but a neighborhood

 

The ribbon-cutting – always a happy moment

 

Several former residents of Prospect Plaza and groups that represent public housing tenants said they did not support the demolition, in part, because it was unclear to them that the authority intended to replace the old units with the same number of new public housing units.

 

While I understand about residents’ fear of losing apartments, there is a vast difference between losing a judicial unit – an apartment that is contractually or legally obligated to be affordable, irrespective of whether it is inhabitable – versus losing an actual unit. 

 

Do we count the unit as here or lost?

 

Even as the three towers sit vacant on Prospect Place near Saratoga Avenue, they continue to be a costly expense for the cash-strapped authority, which has paid a security firm $25,000 a month since 2005 to keep watch over the buildings.

 

At $25,000 a month for five years, that’s $1.5 million – which could have meant five more brand-new apartments after the rebuilding.  A large fraction of our public housing stock has decayed beyond salvageability, and – as we saw in Atlanta – it takes an executive with some courage to say so.

 

Agency officials have not decided how many of the new apartments will be public housing, but they said that former residents and community leaders would help make that determination.

 

“We are committed to being shoulder to shoulder with you,” the agency’s new general manager, Michael Kelly, told former tenants and others at a community meeting last week [Late January – Ed.] a few blocks from the vacant buildings.

 

Michael Kelly, general manager of the New York City Housing Authority, tried to reassure former tenants at a public meeting.

 

As I’ve previously posted, Mike Kelly is one of the good guys.  I trust him.

 

The cost of demolishing the towers and building the new apartments is estimated at $138 million. Part of the financing will come from a $21.4 million federal grant the authority was awarded in 1999 to revitalize Prospect Plaza, of which about $17 million remains.

 

The other $4 million got spent in the ill-fated Michaels HOPE VI effort.

 

At the meeting, Mr. Kelly said it was too early to say where the rest of the financing would come from. Agency documents describe the project as “mixed finance,” meaning it will be paid for with public and private dollars, with some of the money coming from the sale of federal low-income housing tax credits.

 

Doctoral candidate Laura Tach likes income mixing

 

Meaning income mixing, meaning LIHTC residents and so on.

 

The demolition, which must be approved by the federal Department of Housing and Urban Development, is planned for this fall, with construction scheduled to start in 2012.

 

If one cannot finance the renovation, one has no choice but a teardown and rebuild.

 

Preference for the new public housing units will go to former residents, many of whom were relocated to other public housing in Brooklyn.

 

Milton Bolton, 50, a former resident and the president of the still-intact Prospect Plaza Tenants Association, held up a thick draft of a 1998 application for the federal grant and said, “It’s hard to have trust.”

 

Milton Bolton, the tenant association president of Prospect Plaza, at the vacant buildings where he used to live.

There comes a time when buildings have to go somewhere to die; when that happens, it is a kindness to get rid of them.

 

Ms. Popkin and Mr. Kelly acknowledged “bumps along the road” for the project in the past, but they stressed their desire to rebuild the neighborhood. “I understand that folks here are frustrated,” Ms. Popkin said. “There is a new management at Nycha. We have a commitment to these towers. This is a top priority to move forward.”

 

Initially I was skeptical of Mr. Bolton’s distrust, until I found these paragraphs from nine years ago:

 

Even residents who say they’d welcome higher-income neighbors are running out of patience. Milton Bolton, the president of the Prospect Plaza Tenant Association and once a big booster of the plan, is now [July, 2001 – Ed.] ambivalent. He’s distressed that the social service programs are not established yet–particularly the homeowner training workshops, since he someday hopes to buy a house. Bolton, a soft-spoken bear of a man, sits in a straight-backed chair and bounces his 2-year-old son [The boy is now 11 – Ed.] on his lap as his seven other children scoot in and out of the room. “We welcome the changes,” he says. “We welcome the impact if it’s done right. But no matter what we do, it still feels like we’re fighting a losing battle.”

 

Bolton, who has put in countless hours on the Prospect Plaza deal, believes that he will not be allowed to return to the project once the renovations are complete. He has been unemployed for a while and admits that there have been many times that he has fallen behind in his rent. He’s even been put on probation for the problem. “What they’re telling me is once I leave, I’m not coming back,” he says. “We just have to hope they bring at least some of the people back.”

 

I sometimes forget that those residents who have the most time to devote to public housing advocacy may be those who have the fewest economic resources.  I respect and admire Mr. Bolton’s patience and commitment in the face of uncertainty and disappointment.

 

Bolton keeps hoping

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