Overcoming the land problems in the United States -- Habitat for Humanity Int'l 1

Overcoming the land problems in the United States

By Karan Kennedy

“Land is a big problem for any affiliate in the United States!” exclaims Mary Ann Durso of Collier County HFH. In the resort area of Naples, Florida, it is especially difficult. “In the last year,” Durso explains, “land prices have doubled. The price for undeveloped land is now US$200,000 an acre.”

The high price of land pushes the median cost of a home in Collier County to US$504,000, while the median earned income is US$26,000. With an estimated need of 30,000 units, the options for working families are few. According to Durso, many live in trailers that are mildewed and have leaky roofs. Other families live in a rented room in someone’s house or they live in the place where they work. Families pay as much as 80 percent of their income for a place to rent.

The reality

Even though southern Florida — along with New York City and southern California — is a high-priced market, this alarming disparity between house costs and earned income is impacting many parts of the United States. According to the 2005 State of the Nation’s Housing report issued by the Joint Center for Housing Studies of Harvard University, “the number of metros where the median house price-to-income ratio is at least four has more than tripled from 10 to 33 in the past five years.” [1] The report goes on to state that from 2000 to 2003, “the number of middle-income households with severe housing cost burdens shot up by nearly one million.”[2] It follows that the challenge for low-income families is even greater.

Philip Wise of Dallas Area HFH (Texas) confirms that land prices have risen sharply in the last three or four years. The reasons are many, including urbanization, economic growth, and difficulties with regulations that control zoning and land usage. The land that is “easy” has already been built on, Wise explains. To find land that is close to services and places where people work takes creativity and determination.

Families with low or even moderate incomes are forced further and further out of city

centers where housing and land are more affordable. The Harvard report also indicates that more than a fifth of households live at least 30 miles out in six major metro centers in the United States.[3] A recent study by the Brookings Institution’s Urban Markets Initiative estimates that the average U.S. household spends 19 percent of its budget on transportation.[4]

At the same time, the Harvard report also notes that the federal government is “under fiscal pressure” to cut programs rather than expand them.[5] Donna Golden, HFHI director of U.S. Housing and Urban Development programs, confirms that there has been a steady decrease in funding available from the government’s Self-help Homeownership Opportunity Program (SHOP grants), down from 40 million when the program started 10 years ago to 20 million last year. In addition, HFHI access to this funding that is specifically for land and infrastructure has dropped from 60 percent to about 40 percent.

Cities around the country are dealing with the fact that those people who provide essential services cannot afford to live in their communities. The 2004 version of “Paycheck to Paycheck: Wages and the Cost of Housing in America” from the Center for Housing Policy indicates that police officers cannot qualify for the mortgage of a median-priced home in 20 of 25 metropolitan markets surveyed; firefighters cannot qualify in 20 of 25 metropolitan markets surveyed; and elementary school teachers cannot qualify in 21 of 25 metropolitan markets surveyed.[6]

Solutions

With the increasing pressure on the gap between earned income and the cost of housing, it is up to local governments and communities to find creative ways to address the problem. In the March/April 2006 feature article of Multifamily Trends, B. Kreisler describes several approaches that communities are taking,[7] including:

  • Construction of high-density housing
  • Employer-assisted housing
  • Defining the need as “workforce housing” rather than “affordable” to dispel negative perceptions of low-cost housing
  • Acknowledgment of the relationship between affordable housing and transportation
  • Employer-assisted housing tax credit programs
  • Conversion of nontraditional residential space, such as warehouses, schools and churches
  • Development of infill parcels or brownfields, abandoned industrial and commercial facilities where expansion or redevelopment is complicated by environmental issues
  • Streamlining and fast-tracking local permitting and zoning boards of appeals processes
  • Development of mixed-income communities through public, private and nonprofit partnerships

Habitat’s approaches
Both Collier County HFH and Dallas HFH are using many of these strategies and more in order to maintain the goal of constructing as many as 100 houses per year.

Collier County is stewarding five development projects — all at different stages and using different approaches. Says Durso, “You don’t construct 100 houses a year without a lot of advanced planning.” While one project is on hold due to local restrictions on the development of roads, they are continuing to advance the other projects. The good news is that the affiliate is blessed with church partners, volunteers, funding and land that was purchased early on by an aggressive board that was looking to the future.

Strategies to make the most of these resources include:

  • Construction of two-unit attached villas with plans to also construct four-unit villas.
  • Collaboration with for-profit builders for mixed-use development.
  • Collaboration with the county, accessing Community Development Block Grants
  • Application on behalf of families for various grants from the state or federal government to keep the mortgage at US$600 a month
  • Aggressively seeking new opportunities to purchase or acquire land, using the connections of board members that are experts.

Dallas HFH has three main strategies:

  • Partnerships with for-profit developers to construct mixed-income communities
  • Partnership with the city for land bank lots — lots that the city has foreclosed due to tax liens and are willing to sell to Habitat at reduced rates
  • Cooperation with the public housing agency, the Dallas Housing Authority, funded by the U.S. Department of Housing and Urban Development, to build Habitat housing on agency lands.

In 2005, Dallas Area HFH was awarded the Clarence Jordan Award, one of the Pioneers in Excellence awards for U.S. affiliates, for its role in Greenleaf Village, a mixed-income 305-house development in an area of Dallas that had been occupied by a failed public housing project from the 1950s.

The Greenleaf Village development was a public, private and nonprofit collaboration, involving Dallas Area HFH, the Dallas Neighborhood Alliance for Habitat, the city of Dallas, the Dallas Housing Authority and KB Home/American CityVista (for-profit developers).

The Dallas Housing Authority sold 68 acres of land for the development, roads and infrastructure. KB Home constructed 205 homes that were sold to moderate-income homeowners, and Dallas Area HFH constructed 100 homes for homeowners earning between 25 and 50 percent of the area median family income.

Transforming a run-down, partially abandoned housing project in a high-crime, racially segregated area into a thriving community with families from mixed backgrounds and income levels was not an easy process. Philip Wise, a former president of the affiliate, recognized that the project needed scale and wide community support to be successful: “A project of at least this size and visibility was critical if we were to overcome the negative perception of buying a new home surrounded by public housing,” said Wise.

One of the biggest challenges was reconciling the differences in organizational culture between the Dallas Housing Authority and the private developer. The first developer, Centex, pulled out of the project after two years of planning due to delays, cost increases and frustration of working with the DHA, which was still operating under the burden of years of changing leadership and a lack of accountability. With a commitment from the DHA to change its culture and operations to accommodate a nonprofit and private sector partnership, Wise was able to find another private partner in KB Home and American CityVista.

A case study of this successful project is written up in the 2004 Pioneers in Excellence booklet (available on PartnerNet).[8] However, some of the critical success factors were the following:

  • Flexibility in the house design. Dallas Area HFH modified their house design to blend with the more expensive housing being built by KB Home.
  • Use of public funds to leverage private support. Dallas Area HFH was able to leverage house sponsorships from churches, corporations, foundations and civic groups with government funds, including SHOP and CHDO funding.
  • Aggressive marketing and maintaining a high profile. Dallas Area HFH kicked off the development with a 25-house blitz build, mobilizing the efforts of 10,000 volunteers. The homes were aggressively marketed at area employment centers, to leaders and members of area churches, and to the public through a comprehensive media campaign.

The positive outcomes of the project were many. Here are a few:

  • US$40 million of new single-family home construction in a neighborhood without material new construction for 30 years.
  • Improved quality of life, access to services and economic growth. Funding for construction of two parks was donated by two sponsors. Residents have access to schools, recreational facilities and businesses. As a result of the development, market value of commercial businesses also has increased with new businesses opening in the local shopping center.
  • A homeowner’s association that oversees the maintenance of the park areas and lobbies for city services, including Dallas equestrian police patrols.
  • Streamlining of city development processes. In response to the problems and delays from the city of Dallas, the mayor convened a task force on affordable workforce housing, resulting in specific recommendations for development service, land assembly and use, existing programs, funding and collaboration with for-profit and nonprofit developers.
  • A model for future development within Dallas and other cities. Mayors, city council members, nonprofit and for-profit developers from 20 cities have toured Greenleaf Village. Community leaders in Dallas have targeted three additional communities for similar redevelopment projects.

Wise concedes that another success factor is the fact that Dallas Area HFH has a proven 18-year track record and is the seventh largest homebuilder in the city of Dallas. Clearly, scale and experience are crucial to get all of the players at the table. Finally, both Wise and Durso would agree that the biggest factor is leadership, a local board that has determined, sophisticated, knowledgeable and creative people.

Karan Kennedy is director of international projects for HFHI.


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[1] Joint Center for Housing Studies of Harvard University, “The State of the Nation’s Housing 2005,” Executive Summary, p. 2.
See (www.jchs.harvard.edu/publications/markets/son2005/son2005_executive_summary_bw.pdf)
[2] Ibid., p. 4
[3] Harvard, p. 3.
[4] The Brookings Institution, Urban Markets Initiative, January 2006, “The Affordability Index: A New Tool for Measuring the True Affordability of Housing Choice,” p. 2. (www.brookings.edu/metro/umi/pubs/20060127_affindex.htm)
[5] Harvard, p. 4.
[6] Barbara J. Lipman, “Paycheck to Paycheck: Wages and the Cost of Housing in the Counties, 2004,” Center for Housing Policy, pp. 15–45. (www.naco.org/Content/ContentGroups/Publications1/Surveys1/Housing2/paychecktopck.pdf)
[7] B. Kreisler, “Marking Workforce Housing Work,” Multifamily Trends, March/April 2006 Feature, pp. 1–4. (www.uli.org)
[8] Habitat for Humanity International, “Pioneers in Excellence, 2004 Awards,” pp. 15–26.