Gentrification Assault, Oakland Housing Market Out of Control

DARWIN BONDGRAHAM - Martin and activists outside of Community Realty's offices in April after delivering a letter requesting a meeting with Marr.

DARWIN BONDGRAHAM – Mr. Martin and activists outside of Community Realty’s offices in April after delivering a letter requesting a meeting with Marr.

Vicksburg, Mississippi   It was hard to believe a friend’s claim that Oakland, California has now become one of the three most expensive cities in the country in no small part because the housing market has gone berserk. He said that Oakland now only followed New York City and San Francisco, and had bypassed Seattle, San Jose, and other famously, exorbitant cities. What happened here? Oakland used to be where people moved for affordable housing who couldn’t afford to live in San Francisco, famous for its port, industry, and blue collar grit, and Jack London. The city where Gertrude Stein famously stated, “there’s no there, there.”

But, now they are all coming there. Suddenly, it is also one of the most diverse cities in the country with the population almost evenly split between Latino, African-Americans, whites, and Asian-Americans, so much so that one controversy, when I recently visited, had to do with racial profiling of neighbors in the Nextdoor.com application that is used by one-third of this highly connected city, exposing the well-known, little discussed racism that stalks almost all of these sites with their constant alerts of anyone with a hoody and a tan.

Not without a fight though. Visiting the weekly paper, the East Bay Express, I picked up a recent issue featuring a cover story on one of Oakland’s biggest landlords, Michael Marr, who had specialized in vulture investing of foreclosed properties after the 2008 real estate crash, ending up with 333 houses and apartment buildings in the city with 1300 rental units under management. Now he’s in federal court though for what the FBI characterized as a conspiracy to “rig foreclosure auctions” along with eleven other East Bay real-estate investors who “made a pact not to compete with one another at foreclosure auctions.”

Marr is letting his lawyers handle that mess and meanwhile is trying to jack rents in some cases by more than $1000 per month. Rent controls in Oakland only cap increases for homes built before 1983, as the impact of such increase would cause massive displacement of many long term residents. It was good to see that standing in the way and organizing the tenants was the Alliance of Californians for Community Empowerment, known as ACCE, and formerly California ACORN. The tenants and the organization have demanded a rent freeze while the court case is pending, a sale of Marr’s ill-gotten properties to the Oakland Land Trust, and action on lingering issues with mold, bedbugs and other problems. ACCE is not only fighting these issues in Oakland either. Fighting a foreclosure with a late night rally at a vulture investor’s house in Los Angeles has found them defending their free speech and association rights in Los Angeles as well.

ACORN has recently won rent controls in Edinburgh and throughout Scotland with the Living Rent Campaign, and more landlord accountability in Toronto and Bristol, but there is little in any of our arsenals to prevent sweeping gentrification without a public and governmental commitment to diversity and affordability in a city. Oakland could become the battleground where we have a chance.

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Banks Creating Housing Squeeze Even More than Gentrification

atlantic yards before construction

Atlantic yards before construction

New Orleans   It seems like it has taken forever, but the first units of affordable housing as part of the victorious, but controversial, agreement negotiated between ACORN and Forest City Ratner to be built as part of the Atlantic Yards project, are finally coming to fruition, better late than never, thanks to the 2007-8 housing financing meltdown.

DNA Info reported:

Applications are now open for the first units of affordable housing at the Atlantic Yards Pacific Park complex. The modular tower built by Forest City Ratner Companies is the first building in the 22-acre Pacific Park development (formerly Atlantic Yards to join the city-run affordable housing lottery. The Dean Street property will contain half market-rate apartments and half affordable housing; the tower has 363 units in total.

Rents … will range from $559 per month for a studio at the lowest income requirement bracket ($20,675 to $25,400 per year for one person) to $3,012 per month for a two-bedroom at the highest income bracket (between $104,915 and $144,960 per year, depending on household size), the lottery requirements said.

As the country-and-western song goes, “that’s something to be proud of…,” but the larger issue continues to be in New York and most other cities in the US and around the world how unaffordable housing is. Ironically, as much as the delay at Atlantic Yards had to do with the meltdown in bank lending because of the housing bubble, banks are still at the heart of unaffordability.It’s not /just /gentrification, in fact, the gentrifiers are as much an effect caused by banks as they are a trigger for rising prices.

Stuart Melvin, ACORN’s head organizer in the United Kingdom, shared a piece from the New Economics Foundation with me several months ago.They noted that:

 

In advanced economies, banks’ main activity is now domestic mortgage lending. A recent study of credit in 17 countries found that the share of mortgage loans in banks’ total lending portfolios has roughly doubled over the course of the past century –from about 30% in 1900 to about 60% today.

 

This is how banks are making money everywhere, rather than through direct lending to consumers or businesses, partially because the land is a solid asset serving as collateral, meaning they can foreclose.  Where the land is scarce as it is in New York, London, San Francisco, and, well, lots of big cities, this makes each parcel more valuable and the next thing you know on the rollup, houses are costing nine times average  annual income throughout England and twenty times annual income in southeast England for example and that’s true for many other cities as well.

All of which squeezes housing developers even more, especially if they are not heavily subsidized by the government, when it comes to providing decent and affordable housing. The same level of bank profits cannot be gained compared to mortgages, so prices balloon, and the available customers who can handle the weight become smaller, and richer, until the whole bubble bursts again.

We countered this in New York through land trusts or mutual housing arrangements, but that is only partially successful. The scale of the issue is too large. Other countries and communities have tried land banks or public corporations.Unless we change our public policy around housing though this is a problem accelerating once again until it crashes against the wall, and in the meantime, low and moderate income families find themselves left with fewer and fewer affordable opportunities for decent housing.

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Affordable Housing Versus Any Housing at All

16th_m_post_card

http://www.sfbarf.org/pages/pictures.html

New Orleans    There’s starting to be an emerging pressure confronting housing activists and organizations, or so it seems: the fight between affordable housing versus any housing at all. The fight is particularly pronounced in the “executive” cities where most people can no longer afford to live, like New York, London, San Francisco, Vancouver, and the rest, but it also is being waged neighborhood to neighborhood under pressure of gentrification.

A recent article in The New York Times featured a self-proclaimed anarchistic, contrarian voice from San Francisco called BARF, the Bay Area Renters’ Federation. Yes, they thought the name was funny. These activists, what can you say? Essentially, they had adopted a position in the desperation of the situation in San Francisco that was essentially “anything goes,” as long as it means more housing, affordable, luxury, whatever. Longstanding tenant organizations in San Francisco called BARF, the “Tea Party” of housing groups in the city, which pretty much defines a “how low can you go” put down.

There may be worse though, and I stumbled on these notions reading a column in The Economist reporting some of the bright ideas that economists have. This is The Economist though so don’t be surprised that the argument starts from a position, similar to BARF, that development is good, and even alleges that everybody loves development, the problem is that no one wants it where they live, they want it somewhere else in the city.

Nonetheless, the ideas were, to say the least, novel. One was a straight “pay to play” proposition. Developers wanting to build in a particular area where they might counter community opposition would offer to pay neighbors in the area in cash money for the inconvenience and upset they had about the development. The exchange there was almost the equivalent of paying for “mental anguish” or some such. Taking it a logical next step though, neighbors willing to have their silence or support bought could also try to trade their position for whatever they believed the loss of value in their property might be.

In some ways this proposal isn’t so novel. Forever big developments in rural areas have bought out landowners wholesale to split communities. Developers reportedly buy out tenants in cities where they have protected leases in order to redevelop buildings in “executive” cities now, so what may seem on its face absurd, actually may be a more common practice than we realize. Many so-called neighborhood associations are so dominated by local real estate interests and individuals that it can be hard not to see them already as developer lapdogs. And, of course, when politics and money mix, this kind of business is also routine. The Mayor of New Orleans in a pique over a competing developers complaint that another developer won a bid to deal with a city building, is trying to get legislation through the state that would force any litigator in the future to have to put up a bond for the lost revenue, etc, etc, etc. You get the picture.

Another unique proposal offered was a sort of community “blackmail.” If a neighborhood fought a development in their area, essentially an ordinance or statute would require them to support a development elsewhere in the city of equivalent value and impact. The premise behind the proposition is, once again, that all development is good and beneficial, any opposition is narrow and selfish, so if you protest, you eventually pay the piper and have to saddle up to screw another community elsewhere in the city. Either way, the one thing that is certain is that the development gets built.

We might think some of these proposals are just ridiculous, but doing so is at some peril. Take a quick look at the political contributions in virtually any city for the municipal officeholders, and usually you will see the who’s who of all the local and many national developers lining up with cash, usually for candidates on both sides in the election so that they have markers down on all the candidates, as well as of course the eventual winner.

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Neighborhoods Matter a Lot in Determining the Future

Demolition of housing project in New Orleans

Demolition of housing project in New Orleans

New Orleans   A new study being prominently reported argues powerfully that the neighborhood where you live and are raised may have way more to say about determining your future than many families or policy makers or government officials may have been willing to admit. That’s scary for many considering the abandonment of much of urban policy and investment by the federal and other branches of government in recent, and likely coming years, unless there is a major, almost revolutionary shift. Implicit, but unstated, in the dry report melting economics and math together, is how important strong community organizations, like the ones build by ACORN in lower income neighborhoods, could have had the ability to dislodge the depressing path of the future.

Justin Wolfers, an economics professor at the University of Michigan, reported on this harder look at the numbers in The New York Times, reviewing a dissertation being completed by one of his students, Eric Chyn, that is finding that the impact of neighborhood, always understood to be powerful, is even more devastatingly so than earlier assumed. Previous studies have found that children relocated from more difficult environments at a young age outperformed their peers economically by a substantial amount. These studies looked at winners and losers of a lottery in a public housing project, comparing the winners, those who were given a housing voucher to move out, with the losers, who those who were trapped inside. Chyn found that the impact was understated, because everyone entering the lottery was motivated to win, so that the real difference was between those who wanted out, and those who were stuck there. He looked at a more random set of people moved in and out as public housing buildings were dismantled in Chicago and the figures jumped out like screaming demons in an everyday Halloween.

The lack of a serious national housing policy that allows families better odds of emerging in the future is ignored by the right with their pretense of personal responsibility and not pursued as a mission on the order of the search for the Holy Grail on the left. It’s not a two-handed problem, where on the one hand this, and the other hand that. Unless we dramatically improve living conditions – and – opportunity in low-and-moderate income neighborhoods and force economic and racial mobility in communities, health opportunities, educational offerings, and job prospects, then the only thing we seem to be doing is making careers for economics to calculate the level of our failure.

And, part of the equation has to be support, one way or another, of vibrant and aggressive community organizations, and developing the organizers who build them, so that the ways and means to carry on the fight and have people participate in the push will be in place, as well as the ability to hold government and institutions accountable for making the changes that can redirect dismal futures to ones with hope and promise.

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Making Inclusionary Zoning in the US, Canada, and United Kingdom Really Work

inclusionary-zoning-00166325Little Rock   In New York City recently there was some guarded optimism among affordable housing advocates when the City Council passed modifications requested by Mayor Bill De Blasio to improve the inclusionary zoning requirements. The new rules would hold developers responsible for providing 20 to 30% of all units as affordable housing to families at 40% to 80% of the median income in the city. Unfortunately not all developments will be under these rules, but only those where the developer is asking for a rezoning on height or density from the City. Earlier the city had modified the ordinance so that such developers could not copy the Mumbai scheme and create separate entrances, lobbies, and amenities or even separate abutting buildings which is allowed by the Bombay Municipal Corporation.

In Toronto inclusionary zoning is now a front burner issue because the province of Ontario is transferring the inclusionary zoning authority to the city by 2017. ACORN was able to get Councilor Mike Layton to move a motion through the council for the city’s research staff to develop options for how the city could most effective implement such zoning practices once the opportunity arrives. John Anderson, ACORN Canada’s head organizer in Toronto, is gearing the campaign to be ready and waiting with a “best practices” proposal.

In London the Mayor scoffed at any requirements that would restrain developers around separate entrances and in council after council, as social housing is being converted and new developments are being constructed, affordability is being defined as a percentage not of median income but of market rate. Given the explosion in rental prices in London, market rate has not been a slippery slope for tenants but a mountain climb, essentially pricing low-and-moderate income families out of the market of even so-called affordable units produced through inclusionary zoning.

ACORN in the United Kingdom is looking with great interest at inclusionary zoning as a potential national campaign that can be won locally given how critical the issue of affordable housing is in all of our cities. Head organizer Stuart Melvin noted that the escape hatch that developers have run battalions through in England is basically a cooking-the-books, funny-money scheme. As described in The Guardian:

“Under Section 106, also known as “planning gain”, developers are required to provide a certain proportion of affordable housing in developments of more than 10 homes, ranging from 35–50% depending on the local authority in question. Developers who claim their schemes are not commercially viable, when subject to these obligations, must submit a financial viability assessment explaining precisely why the figures don’t stack up. In simple terms, this assessment takes the total costs of a project – construction, professional fees and profit – and subtracts them from the total projected revenue from selling the homes, based on current property values. What’s left over is called the “residual land value” – the value of the site once the development has taken place, which must be high enough to represent a decent return to the landowner.

It is therefore in the developer’s interest to maximise its projected costs and minimise the projected sales values to make its plans appear less profitable. With figures that generate a residual value not much higher than the building’s current value, the developer can wave “evidence” before the council that the project simply “can’t wash its face” if it has to meet an onerous affordable housing target – while all the time safeguarding their own profit.”

In Bristol, ACORN noted that “we have 3 major developments, in our neighbourhoods, where it looks like the developer is going to get away with 0-7% [affordable units] (and the 7% only after a fight by local activists).”

Developers make their money by building castles in the sky and then using sleight of hand when the reality starts rising from the ground. They routinely play fast and loose around the finances to get the job done, because their incentive is to get out as soon as the paint dries. Too many politicians in too many places are relying on their contributions to pay their bills to win public office making them weak advocates for tenants. It’s hard to believe such a “partnership” will produce accountability on affordable housing without a fight.

This is a battle to the death to see if we can win enough affordable housing to be able to exercise our rights to the city or whether we will be forced out completely.

***

Please enjoy Jim James (with the Sachal Ensemble) Love’s in Need of Love

and William Bell’s The Three of Me.

Thanks to KABF.

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Citizens Desperate for Effective Public Policies to Save Affordable Housing

Screen Shot 2016-03-19 at 10.33.38 AMHalifax    The discussion of fights between tenants and landlords was a central part of the organizers’ agenda in the ACORN Canada head organizers’ meeting. In Ottawa it was another fight to save the 1300 unit, Herongate, a frequent target. In Toronto and Halifax landlord licensing is an ongoing fight and there were steps forward around inclusionary zoning, but ground zero for much of the struggle was the blazingly hot housing market in British Columbia cities of Vancouver and its satellites cities, where most of our members live, in Burnaby, Surrey, and New Westminster.

Average home prices in Vancouver are now considerably over $1 million. The Premier was in The Globe and Mail promising to end “shadow flipping,” which is a good example of how overheated the market is. Shadow flipping involves a real estate agent, who represents a seller, recommending and securing a “sales contract” from a new purchaser at a fixed price, and then continuing to try to get another buyer to pay more than the original contract and pocketing the difference from the higher price before the deal goes to closing. Shadow flipping is just a fancy term for felony robbery.

What’s the fix for low and moderate income families being pushed out of affordable housing? That was the question before the organizers.

Burnaby was about the worst case. The council has approved something called a “density bonus” for developers, which allows them to pay more, millions more to the city, to go up higher with more units. 20% of the so-called bonus goes to a fund for the creation of affordable housing, though little has been approved or built. 80% goes for civic improvements and amenities in Burnaby. The result is that the city council has a huge incentive to allow for total displacement and gentrification!

Vancouver supposedly has a program of one-for-one replacement for every rental unit lost. The RAP or Rental Assistance Program is supposed to require placement of the tenant before a rental unit can be converted or demolished in comparable housing within a range of 10% of the rent they were paying within a reasonable distance from their current residence. Sometimes this will stop the redevelopment, but in other cases this and other programs are subverted by developers who simply throw money at the lower income tenant which is too good to resist, inducing them to vacate voluntarily with some money in their pockets.

For all of the strategies and public policies discussed the best model that emerged in the discussion centered on the city council of New Westminster. There is no fancy bylaw or housing program, and there have been a lot of developers who have come, blueprints in hand with proposals, and admittedly some of them have been built, but for the most part they have not succumbed to the high-rise, density bonus allures for a simple reason: they just say, “No!” They vote down the proposals that too often simply eliminate the housing without hopes for residents finding replacements.

Protecting affordable housing and our neighborhoods in many cities in Canada may not come as much from fancy, well-crafted policy solutions, but from old fashion, hard-knuckled politics. Moving the developer patsies out of office, and putting home protectors in when the chance arises to pull the voting levers.

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