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March 3, 2010

Mixed bag

Solutions to Louisville’s dearth of affordable housing in short supply

Just as the U.S. Department of Commerce reported last week that home sales plummeted 11.2 percent in January to their lowest rate in nearly 50 years, a Louisville warehouse at the corner of 18th and Main streets continued to slowly disappear.

For the better part of a year, this once-massive, 19th-century brick structure has been the subject of piecemeal demolition, its bombed-out look fitting nicely with the surrounding Russell neighborhood: More Fallujah than Falls City. In fact, its only unique feature is that it’s still standing at all; most properties in Louisville’s West End don’t stick around for very long once they’ve been selected for demolition.

At a time when a growing number of Americans are unable to afford decent housing, the rate at which the city’s cache of existing structures are falling to the bulldozer far outpaces the construction of federally funded housing developments like the Liberty Green project at Liberty and Hancock streets. In fact, it turns out the net result of 20 years’ worth of federal housing programs has resulted in a contraction of units on the Louisville market, not an expansion.

According to Cathy Hinko, director of the Metropolitan Housing Coalition, this is no accident.

“In the old days, public housing was built solely with federal funds,” Hinko says. “Now, there’s no way you can build replacement housing without low-income housing tax credits, which means you have to get private investors. And private investors are very afraid of family public housing.”

In 1985, the city had about 5,000 low-income public housing units for families; those units were priced so that families earning only 80 percent of the city’s median income could afford them. Today, only 2,200 such units exist. The main catalyst behind this contraction has been the federally funded HOPE VI program, which the Clinton administration created in an effort to turn atrocious inner-city barracks-style public housing into vibrant mixed-income residencies.

The problem, according to Hinko, is the fact that private investors want to raise public housing standards beyond the means of those it is supposed to serve, effectively pricing out the very people who need it most.

“People forget that when the city tore down Cotter and Lang (public housing complexes), they only replaced 200 housing units out of 1,100 for a net loss of 900 housing units,” she says. “You’re starting to have a serious impact, losing 20 percent or more of your family public housing units. When they built Park DuValle, there were higher financial standards established in order for people to get in.”

Tim Barry, executive director of the Louisville Metro Housing Authority, disagrees, saying the standards for HOPE VI-funded projects haven’t changed “one iota,” and that the public units are largely priced at or below the market rate.

“The problem here is we’re in the hole,” Barry says. “We haven’t replaced everything we’ve razed yet. At our current pace, we’re probably 3-4 years away. We have made the commitment to replace it, and we’re the only housing authority outside of Seattle doing 1-to-1 replacement,” meaning that for each family displaced by demolition, the authority has guaranteed them a new unit waiting at the end of the tunnel.

There are more than 13,000 families on the 1-to-1 waiting list, forcing the authority to juggle its available resources against unyielding demand as construction continues at a sluggish pace. In the meantime, nearly 16,000 Section 8 rental units are keeping Louisville’s lowest income earners afloat, and many government-backed housing initiatives, such as the purchase of $1.25 trillion in bad mortgages and the provision of tax credits for first-time homebuyers, are set to expire this spring.

One initiative that will be preserved is the Neighborhood Stabilization Program, created by the Obama administration in the wake of the sub-prime mortgage meltdown in 2008. The program was designed to act as a kind of tourniquet to prevent those “hardest hit” communities from bleeding to death until the $787 billion stimulus infusion, passed the following year, could ultimately stem rising tides of homelessness and unemployment nationwide.

But it hasn’t worked out that way. As the stimulus itself was too small to cover the massive cost of Wall Street’s crimes, so too has the Neighborhood Stabilization Program’s success been hampered by a correlative lack of funding: Only $15 million has been funneled into Louisville for its stated purpose of “stabilizing communities that have suffered from foreclosures and abandonment.”

“In Jefferson County, you’re talking about foreclosures at a rate of 5,000 foreclosures a year,” says Mike Hynes, vice president of the nonprofit Housing Partnership Inc. “If you value $100,000 per home across $15 million, that equals $3,000 for every home. It’s a drop in the bucket.”

In lieu of paltry funding, the most cost-effective measure for the city has been to demolish older at-risk structures and build anew, which not only helps explain the rate of demolition occurring in the city’s West End, but also the ethos underlying America’s approach to mixed-income housing creation.

“As an agency, we tend to not go to the side of demolition as the solution,” says Hynes. “In a lot of neighborhoods in Louisville — in particular the old city — some of these houses have huge contributing elements to the neighborhood-at-large. I would hope that we can find something as a community that helps to deal with the issue but isn’t limited to demolition.”

According to data from a Temple University Center for Public Policy study, a derelict house just 350 feet away from occupied, equitable homes will eat up nearly $7,000 worth of equity. Couple this with the fact that areas with high concentrations of foreclosures tend to have higher concentrations of poverty, crime and minority segregation and you can understand why private investors aren’t jumping at the chance to create quality low-income housing all by themselves.

What the Neighborhood Stabilization Program can do, says Hynes, is surgically strike “tipping point” properties that threaten an entire neighborhood. “Let’s say there are three or four homes on a prominent corner. This could be a nice subdivision, where if you just stimulated those houses, you could help more people than who you just touch directly.” 

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