By Jim Roos
In 1971 Jim Roos created Neighborhood Enterprises, Inc. to manage lower cost rental housing. In 1990 he created Sanctuary In The Ordinary, a nonprofit corporation that own affordable rental housing and advocates for supportive public policies.
We need systemic change in strategy for adequate Housing and Community Development. The current process of gut rehab or new construction, fueled by tax credits, produces expensive units, at high subsidy, and often concentrates rental units in large complexes like Canfield Green in Ferguson.
In St. Louis the average cost per unit of gut rehab/new construction is about $185,000. Two years ago Neighborhood Enterprise, Inc. participated in rehabbing four, large, 3-bedroom, 2-bath units for owner occupants where the average cost was $330,000 and average subsidy was $240,000.
Not only are many of these projects expensive per unit, but the tax credits are inefficient. Every $1 of tax credit produces only 43 cents of housing according to an article in the St. Louis Post-Dispatch (3-3-14).
A better process would be:
Promote nonprofit corporations to repair, own, and manage lower cost rental housing. The apartments owned by nonprofit corporations should be affordable to people at 50 percent of are median income (AMI). For a family of four, maximum income would be about $33,550. Affordable means that the rent should not be more than 30 percent of family income. Maximum rent for 2-bedroom unit would be $839. Most 2-bedroom units would rent between $500 and $700. We should strive for a mixture of 75 percent market rate and 25 percent subsidized units.
We should focus on “selective rehab” as proposed by The Enterprise Foundation in its Cost Cuts Manual in 1987. When Neighborhood Enterprises utilizes selective rehab methods we produce “Sanctuary In The Ordinary”, that is, units that cost an average of $45,000 per unit, 1/4 of the cost for gut rehab, and we seldom displace people.
Government should provide 20 percent interest-free permanent financing and banks provide 70 percent for permanent affordable rental housing owned by nonprofits. There is currently little private or no public financing for ordinary rental housing. The government could also target housing choice vouchers to these permanently affordable units.
Having government provide funds for rental housing sounds crazy and is counter intuitive. Neighborhoods want home owners. However, if we stabilize rental housing, homeowners will stay or want to move into the neighborhood without subsidy. Just as important, when we focus on rental housing, fewer tenants will be displaced into distressed areas like Canfield Green in Ferguson.
Since 1970 I have lived and worked in the area just north of I-44 between Jefferson and Grand, now called the Gate District. After I-44 was finished in 1970, this area rapidly declined. Over 20 years more than half of the buildings were abandoned and demolished.
According to ST. Louis Post-Dispatch (10-29-02), between 1970 and 1990 four redevelopment plans were proposed for this area with little success. Only in the mid 90’s could new homes be built and sold to owner occupants. I closely observed in my neighborhood and in adjacent neighborhoods where Neighborhood Enterprises, Inc. managed property that after rental units were stabilized new home owners were again attracted—without subsidy.
Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.
