Displacement-Free Development

1. Displacement-Free Development Revitalization Strategies that Sustain and Benefit Long-Time Residents Robert Damewood, Esq. Regional Housing Legal Services Hill District Consensus Group Development Without Displacement Pittsburgh, PA - November 12, 2012

2. RHLS Regional Housing Legal Services is a nonprofit law firm with unique expertise in affordable, sustainable housing and its related components — community and economic development, utility matters and preservation of home ownership. RHLS provides innovative project and policy solutions that help create sustainable communities offering decent, safe and affordable housing for lower-income Pennsylvanians.

3. Development in the Hill District There are over 30 development projects in the greater Hill District that are currently under way or are expected to break ground in the near future

4. Demographic Trends in the Hill As development has come to the Hill, housing prices have begun to increase ... 2006-2010 1986-1990 Average Sales Price … and racial demographics have begun to change. % Black Population 2010 1990

5. The Challenges Facing the Hill Today All neighborhoods need investment to thrive, but the return of significant levels of investment to the Hill raises some serious questions: Will long-time residents be able to enjoy the benefits of a revitalized neighborhood? • Will some residents be forced to relocate in order to make way for new development? • Will all residents be able to afford increases in rents and property taxes? • Will residents have a chance to build wealth and improve living standards?

6. Historical Perspective - Redlining From 1934 to 1968, FHA used “redlining” to direct federal mortgage assistance to newly constructed White residential communities and away from older Black and mixed-race neighborhoods. Private mortgage lenders followed suit. • From 1934 to 1950, 3 out of 5 home purchases were financed by FHA • Until 1962 less than 2% of FHA loans went to non-White buyers • “White flight” was also subsidized by highway funding and new public infrastructure • Homeownership continues to be subsidized through the mortgage interest tax deduction and property tax deduction

7. Historical Perspective, Cont’d. During the post-war housing boom, housing policy for European-Americans was affordable homeownership in appreciating neighborhoods: • The flight of capital to newer White neighborhoods created a strong tax base, resulting in better funded schools and municipal services • Better access to education and jobs led to increases in household income • 72% of White households in Allegheny County own their homes • Median White household income in Allegheny County is $41,000 • Average White household wealth in US is $110,000

8. Historical Perspective, Cont’d. During the same period, housing policy for African-Americans was large-scale demolition, subsidized rental housing, and urban renewal: • The flight of capital from Black neighborhoods depressed property values and eroded the tax base • New highways and urban renewal separated Black neighborhoods from commercial centers • Only 39% of Black households in Allegheny County own their homes • Median Black household income in Allegheny County is $22,000 • Average Black household wealth in US is $5,000

9. Legacy of Redlining - Income Discriminatory housing and community development policy has left many Hill District residents with low incomes and insecure housing: • The median income in the Hill is only $18,000 • 1/2 of all rentersin the Hill pay more than 30% of their incomes on housing • 1/4 of all homeownerspay more than 30% of their incomes on housing • 41% of all housing in the Hill was built before 1939 • 21% of all properties in the Hill are tax delinquent Hill District Tax Delinquencies 2011 These conditions make many residents vulnerable to displacement as property values increase

10. Legacy of Redlining - Ownership Discriminatory housing and community development policy left much of the Hill District owned by others: • Only 32%of all homes in the Hill are owner-occupied – compared to 52% for the City as a whole • 40% of all homes in the Hill are subsidized rentals* – compared to 5% for the City as a whole • 30% of all parcels in the Hill are owned by government entities These conditions make residents more vulnerable to decisions made by others and less able to build wealth as property values increase

11. Types of Displacement Direct Displacement Indirect (Market) Displacement a.k.a. “gentrification” Increased housing costs/stagnant incomes Property values/property taxes and rents increase Resident incomes don’t keep up with increased costs Greater demand for property Homeowners may lose homes due to mortgage/tax foreclosure or stepped-up code enforcement Landlords may decide to “opt out” of rental subsidy programs • a.k.a. “relocation” • Eminent Domain • Government takes property, pays owner “fair market value” • Relocated residents are entitled to a “comparable replacement dwelling” • Tenant Relocation • Landlord (usually PHA or developer) evicts or relocates tenants for development • Subsidized tenants are usually entitled to a “safe and sanitary” replacement dwelling

12. Direct Displacement - Social Networks Involuntary relocation often destroys the social networks that low-income families depend upon for survival. Direct displacement has been linked to: • Onset of depression • Increase in mental illness, domestic violence, marital breakdown, accidents and disease • Homelessness • Poor academic performance Because of this, “temporary” relocation is rarely temporary. Nationally for the HOPE VI program, only 24% of relocated residents return to the redeveloped site.

13. Direct Displacement – Housing Choice Most subsidized tenants are relocated using housing choice vouchers. Since voucher rents are capped at the Section 8 “payment standard”, most voucher residents live in very low income areas. PNCIS – Section 8 Vouchers, 2009 PNCIS – Household Income, 2009 The social cost (human services, law enforcement, academic support, etc.) of uprooting low-income families from social networks and reconcentrating them in high- poverty areas has never been evaluated.

14. Market Displacement - The Hill As development comes to the Hill District, long-time residents are already being priced out: “In a great irony that future development risks repeating, Mrs. [Thelma] Lovette was priced out of her apartment in Crawford [Square], the housing development that she helped initiate as a board member of the Hill Community Development Corp.” Pittsburgh Post-Gazette, 4/19/12

15. Strategies to Prevent Direct Displacement Advantages: Less social cost, only need to pay for one move Barriers: Availability of large off-site parcels Build First: Build replacement housing first before relocating residents. Examples: Bedford Hill, Reed-Roberts/Dinwiddie On-Site Relocation: Consolidate occupancy on one part of a site while developing new housing on another part. Examples: Second East Hills, Millvue Acres Property Management Approach: Make capital improvements at unit turnover and work with residents to resolve negative behaviors. Example: North Side Properties Advantages: Less social cost, only need to pay for one move Barriers: Need high vacancies; new construction may be limited by utility configuration Advantages: Less social cost, very little if any relocation costs Barriers: Requires different funding mix than straight development deal

16. Strategies to Increase Incomes/Affordability Advantages: Potential win-win Barriers: Requires funding and planning to do it well First Source Hiring: Require funded developers to hire from the community. Example: Hill CBA Tenant Support: Work with tenants to improve functioning and access opportunities. Example: North Side Properties Inclusionary Housing/Business Development: Set aside for low-income residents/resident-owned businesses. Example: Boston Chinatown, San Jose Entrepreneurial Support: Help residents turn skills into business ventures. Example: Ujamaa Collective Advantages: Turns affordable rental housing into a community asset Barriers: Funding, slow process Advantages: Uses market potential; less public subsidy required Barriers: Works best in “strong” markets; no local implementation scheme in place Advantages: Residents control their own economic situations Barriers: Funding; can be a slow process

17. Strategies to Stabilize/Increase Ownership Advantages: Only way that some homeowners can afford repairs Barriers: Funding Home Repair Grants for code issues, appearance and energy efficiency. Example: Clairton Homeowner Support for tangled title issues and mortgage/tax delinquencies. Example: Clairton Lease-Purchase Housing: Give tenants an option to purchase new rental housing. Example: Clairton Community Equity Stake: Give tenants and community groups an equity stake in new developments along with the power to protect community interests. Examples: North Side Properties, Clairton Advantages: Prevents vacancy, blight and homelessness Barriers: Funding Advantages: Available funding (LIHTC) Barriers: LIHTC requires a 15-year rental period Advantages: Potential for greater public benefit than typical approach Barriers: Agency reluctance

18. Case Studies North Side Properties Clairton Southside Comprehensive equitable revitalization of a severely distressed neighborhood 2002: Sanders Task Force awarded funding to a developer for the Clairton Southside revitalization and required them to partner with the CEDCC CEDCC ensured that the revitalization created homeownership opportunities and benefitted existing residents Won state and regional recognition as a community development best practice 2008 Innovation Award from the Housing Alliance of PA 2011 Community Development Award from PCRG 324-unit scattered site Section 8 property on the North Side 1983: URA financed acquisition and rehab in a way that provided funding for a tenant buy-out 1998: Tenants formed NCFH to stop mass eviction of 300+ families 2008: URA financed NCFH purchase of a majority equity interest • NCFH now has right to approve all major decisions • Cash flow is being reinvested into the properties and tenant services • Properties transformed into a valuable community asset