Monday, October 24, 2011

Building Home

Though not as tough as this one, the 1980 recession cut pretty hard and, like governments today, the City of Seattle was struggling to make do -- cutting, cutting, cutting.  Once, while preparing a recommendation to the City Council on Community Development Block Grant funding, we decided not to fund a small outfit called the Stevens Neighborhood Housing Improvement Program.  They had a tool bank for home repairs on Capitol Hill and while not a lot of money, we made the call to put the $5,000 previously assigned their program into public safety. 

You would have thought we had cut the Mounted Horse Patrol Program – which, in fact, we also tried to do that year – ouch!  And the Lake City Aid Car – double ouch!  The Council Committee heard the Mayor’s recommendations, then listened to the tool bank’s brigade of speakers talking about self-reliance, the need to keep our neighborhoods in good repair, how neighbor helping neighbor builds community and finally, reminding everyone in the room that the Mayor who we said wanted to do this had actually run on a neighborhood platform.   Yes, on a neighborhood platform!  The council members glanced at the Mayor’s team periodically, seeming to say:  “You are putting us – and your boss – through all of this for 5,000 bucks?”

Today, Capitol Hill Housing, the successor to the tool bank, owns 42 buildings, 1,102 apartments across the city and reports assets of over $50,000,000.  They are one example of an explosion of non-profit housing developers who surfaced in the decade of the eighties.   David Colwell, a wonderful guy who preached at the downtown Congregational Church, thundered in a sermon once that “one homeless person was one too many,” and Plymouth Housing grew from the actions of his congregants and now operate 12 buildings, serve a thousand formerly homeless or marginal homeless residents and have assets of $17 million. 

The Fremont Public Association merged its Housing Development Department with a group of low income housing advocates and created the Low Income Housing Institute in 1991.  Since, LIHI has created 3,800 housing units, 1600 of them in Seattle.  They and 26 other housing developers work in King County as do three housing authorities and a network of financial service providers, lawyers and bureaucrats.  

Taken all together, this non-profit network represents a flow of civic energy that inspires and serves today.  They are a priceless value to our community, but how did they get here?  How did Stevens the tool bank become Capitol Hill Housing the powerhouse?

Answering this question will require a short detour into the Great Depression to find an important part of the non-profit narrative.

Today’s real estate financial systems have roots in the housing catastrophe associated with the Great Depression.  Prior to the Depression, housing markets were significantly different.  According to economic historian Ken Snowden, only 41% of the country’s non-farm housing units in 1920 were owner occupied and only 40% of those properties were mortgaged.  Most loans covered just 50% of the home value and matured in 2-5 years, requiring constant refinancing.  But with the rise of the Building and Loan banks, terms got longer, some as long as 12 years and covered a higher percentage of the value.  Also, private mortgage insurance companies began to enter the market, further spreading risk.  In fact, securitazation of mortgages, bundling mortgages into bonds, was a feature of the twenties bubble.  The end of the twenties saw housing prices inflating and mortgage debt rising along with it, tripling over the decade. 


Decadal Change of Mortgage Debt and Housing Starts
in the US         Kenneth Snowden
After the bubble burst, by 1934, half the home mortgages in this country were delinquent.  After rising to nearly 50%, national home ownership plunged back to the level it had started at in the twenties.  As a comparison, 4.5% of mortgages in 2008 were “seriously delinquent,” defined as 90 days or more overdue.  In 2009, the actual foreclosure rate was 4.5% with 10% of mortgages at least 30 days behind.  As badly as people are hurting today, it’s hard to imagine that harder time.

The alphabet soup of legislation thrown at the housing crisis in the 30s provided the foundation for much of today’s housing finance system and extended the role of the federal government.  The effects of that new role are part of the DNA of neighborhood housing activism in the 1980s. 

Four years before the Federal Housing Administration legislation passed in 1934, the census revealed that 30% of houses in the US lacked at least one component of standard residential plumbing – hot water heating, a toilet, running water itself.  In designing the law, legislators saw it is a tool not just to provide a federal guarantee to mortgages, but also to upgrade the quality of housing stock generally. 


Museum of the City
The desire to have better housing stock and lower lending risk guided FHA's hesitance to make loans in communities where “different” people lived.  Lenders throughout the life of this country took note of where African Americans, Jews, Asians, Italians and others lived, but the FHA neighborhood rating practices institutionalized this discrimination.  FHA’s lending practices also created a bias to new, suburban housing during the tremendous boom that followed World War II – home ownership increased 11.5% to 55.6% during the forties.

While the 1949 Housing Act established the goal of every American living in a decent and suitable living environment, it also emphasized slum clearance -- read that existing low-income housing.  In fact, when President Truman signed the bill, his remarks started with slum clearance ahead of the more lofty “decent and suitable” goals. 

And throughout all this time, the great African American diaspora is taking place, with 6,000,000 people leaving the South for what writer Richard Wright called “the warmth of other suns.”  Born in Roxie, Mississippi, Wright left poverty, family health problems and the murder by whites of his uncle to go to Chicago in 1927 with his aunt.  Listen to the hope in his voice as Wright heads North: 


I was leaving the South
To fling myself into the unknown ...
I was taking a part of the South
To transplant in alien soil,
To see if it could grow differently,
If it could drink of new and cool rains,
Bend in strange winds,
Respond to the warmth of other suns
And, perhaps, to bloom.

The physical and financial decline of the cities and the social unrest in them during the sixties, along with institutionalized discrimination, provide the strings of DNA for today’s continued activism in housing.  Very specific to Seattle are three additional sources.  The great freeway battles of the sixties, prompted by the great contusion Interstate-5 made through close-in neighborhoods, were mostly won by the neighborhoods and created organization and energy.  (See R. H.  Thomson Meet, Mayor McGinn in the "Our Great City" folder) Also important was an excellent Seattle Housing Authority with a tradition of looking out for poor people since 1939.  We’ll tell SHA’s inspirational story in a future posting.  Third is the office tower, hotel and condo building boom in Seattle in the latter part of the seventies and through the decade of the eighties. 

Over those ten years office towers like the Columbia Center, 1201 Third Avenue, US Bank, Wells Fargo, 1111 Third Avenue and many others doubled the available office square footage in the downtown core.  At the same time, condo development was on a roll in the Denny Regrade, now branded as Belltown, and in the neighborhoods, where conversion of apartments to condos was displacing lower income people, especially seniors.

The sum of all that building, its sometime displacement of lower income people, its traffic, its larger, more imposing scale, the rising cost of housing and living in Seattle, the relentlessly changing landscape, conspired to make a lot of people quite uncomfortable.

Accordingly, neighborhood activists collected enough signatures to force a vote on a height restriction for downtown office towers.  The City Council overcame the objections of developers and required one-for-one replacement housing for people displaced by new office development.   A condominium conversion ordinance was passed to provide protection and compensation for displaced households.  For the first time, the city invested directly in low income housing, starting with a bond issue for seniors, low-income and new, large immigrant families.  New, large immigrant families!  Imagine that today!  Most were from southeast Asia.  It was all packaged together with money for a new Seattle Art Museum.  Bread and Roses.   Following up on the bond issue, the city started a seven year housing levy in 1981 that continues to this day.  At one time, Seattle spent as much locally generated tax money on affordable housing for the full spectrum of low income people as did the entire state of California. 

These and other local changes, particularly changes in how federal tax credits can be applied to low income housing, created opportunities for new and creative partnerships with the growing cadre of non-profit housing developers.  Into the mix comes the Downtown Seattle Association and creates the Seattle Housing Resources Group as a private sector response to the cost and availability of housing in and near the downtown -- housing that helps people work in retail, hotel and other jobs supporting the downtown economy. 

SHRG was frequently criticized as a fig leaf for the downtown developers, including me.  Some leaf.  It now works in 29 buildings in and around the downtown, serving 2,000 households. 

Non-profit developers also thrive here because of the remarkable consistency of financial support.  Even in a tough tax year like 2009, city voters passed its fourth seven year housing levy with 63% approval.  Since 1981, when those first property tax levies passed, the city has provided funds to its private non-profit partners and supported the creation of more than 10,000 apartments, rental support for another 4,000 people and 600 down payment loans to first time home buyers earning under 80% of median income.  These funds are leveraged three times over with federal grants and tax credits. 

This is not just about money.  It is more like throwing people at problems, people who are not intimidated by the complications of doing something for and by themselves. 


Cool paper on the federal response to the 30s housing crisis
Kenneth Snowden, Lessons From the 30s
Point of view of artists in Belltown in the Face of Condo Development

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