South Burlington, VT – Dozens of Chittenden County leaders in the fields of housing, business, local and state government, and social services announced this morning a new campaign to increase the production of housing and setting a target of 3,500 new homes created in the next five years.
“Working together we will accomplish this goal,” said Brenda Torpy, CEO of Champlain Housing Trust. “For the sake of our communities, our workers and local economy, we will educate and advocate together for more housing.”
“The housing shortage in Chittenden County has been well noted with unhealthy vacancy rates and high rents,” added Charlie Baker, Executive Director of the Chittenden County Regional Planning Commission. “Employers can’t find workers, and workers themselves spend more time in commutes and with a higher percentage of their paychecks on housing costs.”
Twenty percent of the 3,500 goal are targeted to be developed by nonprofit housing organizations. The remainder by private developers.
“This step-up in production will not just provide new homes and infrastructure for communities, it’ll be a boost to the economy and contribute to the tax base. Building homes together is a big win for all of us in Chittenden County,” said Nancy Owens, President of Housing Vermont.
The campaign will provide up-to-date data to the community on the need for and benefits of new housing, build cross-sector and public support for housing development, increasing access to capital, and supporting municipalities.
Inclusionary housing programs generally refer to city and county planning ordinances that require or incentivize developers to build below-market-rate homes (affordable homes) as part of the process of developing market-rate housing developments. More than 500 local jurisdictions in the United States have implemented inclusionary housing policies, and inclusionary requirements have been adopted in a wide variety of places—big cities, suburban communities and small towns.
Despite the proliferation of inclusionary housing programs,the approach continues to draw criticism. There have been legal challenges around inclusionary housing requirements in California, Illinois, Idaho, Colorado and Wisconsin, among others.
In addition to legal questions, critics have claimed inclusionary housing policies are not effective at producing affordable housing and have negative impacts on local housing markets. While there have been numerous studies on inclusionary housing, they unfortunately do not provide conclusive evidence about the overall effectiveness of inclusionary housing programs. These studies vary substantially in terms of their research approaches and quality. In addition, it is difficult to generalize the findings from the existing research because researchers have examined policies in only a handful of places and at particular points in time when economic and housing market conditions might have been quite different. Given these limitations, however, the most highly regarded empirical evidence suggests that inclusionary housing programs can produce affordable housing and do not lead to significant declines in overall housing production or to increases in market-rate prices. [emphasis by author]
Beryl Satter knew something like this was bound to happen. Or, rather, to happen again.
The Rutgers historian wrote the book on an obscure form of predatory lending from the mid-20th century that victimized black home buyers when banks would not lend them mortgages. Her book, “Family Properties,” came out in 2009, on the heels of the housing crash. And as she traveled the country talking about it — about families defrauded from the homes they thought they owned, about sellers who promised home ownership but collected deposits and evictions instead — people kept approaching her.
“Pretty much everywhere I go, people say ‘I’ve been hearing about this,'” Satter says. “Contract” lending is making a comeback.
In this model, buyers shut out from conventional lending are offered an alternative: They can make monthly payments on a home directly to the seller, instead of a bank, with the promise of receiving the deed only once the property is entirely paid off, 20 or 30 years down the road. In the meantime, they have few of the legal protections of a typical home buyer but all of the responsibilities of one. They don’t build equity with time. They can be easily evicted. And if that happens, they lose all of their investment.
According to the Detroit Free Press, more homes were bought in Detroit last year using such “land contracts” or “contracts for deeds” than conventional mortgages. In a series of recent stories, the New York Times has reported that Wall Street is now betting on this market, with investors buying foreclosed homes by the thousands and selling them on contract. Earlier this week, the Times reported that the Consumer Financial Protection Bureau is now investigating the practice’s resurgence, although it is not by definition illegal.
What is particularly alarming about the trend, though, is that we’ve seen it before. In its earlier incarnation, it was an explicitly racist form of exploitation. And now it is victimizing the same groups again: mostly lower income and minority home buyers who can’t access traditional credit.
“There’s nothing new here in the slightest,” Satter says. “This is just a continuation of the same old game. That’s what’s so disturbing.”
In the earlier era when this was common, between the 1930s and 1960s, contract lending was in some cities the primary means middle-class blacks had to buy homes. Real estate agents and speculators jacked up the price of properties two- or threefold. Then when families fell behind on a month’s payment or on repairs, they were swiftly evicted. The sellers kept their deposits and found the next family.
Satter’s father, Chicago lawyer Mark Satter, helped organize black Chicagoans to fight the practice in the 1950s. He estimated then that about 85 percent of homes bought by black in Chicago were bought on contract. “It was the way you bought,” Beryl Satter says. “There was no other way.”Many of those families then struggled to keep their homes in a system that was not sustainable by design.
Atlanticwriter Ta-Nehisi Coates based his blockbuster 2014 article “The Case for Reparations”around the story of Chicago blacks who suffered under this system, the outgrowth, as he put it, of a segregated city with “two housing markets — one legitimate and backed by the government, the other lawless and patrolled by predators.”
The Times reports of what’s happening today sound eerily similar. Writers Matthew Goldstein and Alexandra Stevenson report that an estimated 3 million people have bought homes through contracts, although the numbers are hard to track given that the deals are regulated differently in each state and are not subject to the same disclosures as mortgages.
The practice is particularly common, they report, in distressed Midwestern communities like Akron and Detroit, where the government offered hundreds of foreclosed properties to investors in bulk sales. Those same investors, the Times reports, have turned around and sold the properties on contract to moderate-income buyers for sometimes four times as much.
Why now?
But why, though, would a financial scheme created in an era of sanctioned racial discrimination be making a resurgence today? Since Satter’s father tried to sue over the tactic a half-century ago, the Fair Housing Act and Home Mortgage Disclosure Act were passed. And the end of legal discrimination opened up legitimate lending to more blacks who were no longer forced into the housing market’s rapacious underworld.
But a crucial similarity between the two eras exists: Many people still can’t get loans today.
Now, this is the case because lenders have tightened their credit standards since the crash, overcorrecting for the bubble’s exuberance with historic stinginess. The Urban Institute has counted more than 5 million loans currently “missing” from the housing market — mortgages that would have been made between 2009 and 2014 if lenders used the kind of credit standards that were common back in 2001, a benchmark for more reasonable lending prior to the housing bubble.
Millions of Americans over this same time have had their credit ruined by foreclosures — in many cases because of predatory subprime lending that has now put them in the crosshairs of predatory land contracts. Minorities who were disproportionately targeted for the former are not surprisingly concentrated among those caught up in the latter.
“When the banks close down, people still need to buy,” Satter says. And so they find a way. Just as creative investors find a way to meet their demand. Land contracts are to housing whatpayday loans are to banking and Rent-A-Centers are to furniture. What people in need can’t access through credit someone is always willing to provide — for a price.
A lawyer for Harbour Portfolio Advisors in Dallas, one of the larger players in the new wave of contract lending, told the Times that the firm’s business model is “to purchase unproductive residential properties and sell them to other people who will make them productive again.” But Satter frames this differently.
“Choices that black Americans have had for housing loans have been predatory loans, or no loans,” she says. And when banks choose not to loan, she adds, this is who they choose not to loan to.“The result,” Satter says, “is a complete revival of redlining in a slightly different guise.”
This is why she wasn’t surprised to see the practice she’d studied as a historian (and lived through with her family in the 1950s) re-emerge as front-page news.
One other factor, though, helps explain why contract selling is back again. The demand among buyers who can’t get mortgages is deep. But so is the supply of houses that might accommodate buyers at the moderate end of the market. The foreclosure crisis created a vast stock of vacant homes, many of which have deteriorated through neglect. Steven Brown, an affiliated scholar at the Urban Institute, has shown that the number of homes worth less than $50,000 has been growing:
Urban Institute
And this has happened as the number of small loans has dwindled:
Urban Institute
So an investor who has bought up thousands of distressed foreclosures for $10,000-$20,000 a piece has to get creative. These properties need expensive repairs, meaning there likely isn’t much profit in repairing and renting them. They aren’t likely to appreciate much over time in stagnant markets like Detroit or Akron, so an investor can’t simply sit on them waiting for a recovery. And these homes can’t easily be sold at a profit to buyers — even with some modest flipping — because buyers in this market can’t get mortgages.
Contract lending, in other words, is just about the most profitable thing an investor could do with these homes. And that opportunity is colliding right now with a time of desperation for would-be buyers.
One way to look at this situation — today or in the 1950s — is that a market failure exists. Something is not working right in the world of legitimate home lending that’s causing families to reach for dubious alternatives, and that’s prompting dangerous models to proliferate. Satter, though, doesn’t see it this way.
“It’s a market success,” she says, viewed from the standpoint of the investors. “They figured out a great way to make a huge amount of money in this situation.”
As for market failures, she says, maybe we should rethink the term. “If you’re looking at how a market works, this is how it works – people saw an opportunity, they came in and grabbed it,” she says. “The market doesn’t care about fair housing for people, or that families need a place to live.”
And that is the other lesson of history that is repeating itself.
I am sharing here in full an article about a U.S. Ninth Circuit Court of Appeals decision with significant fair housing and Affirmatively Furthering Fair Housing import for planning, zoning and permitting of residential housing development that was published April 28, 2016 in the legal issue blog site, “Manatt.” Especially check out the three basic “Practice Pointers” at the end of the article for the main take away.
Avenue 6E Investments, LLC v. City of Yuma (March 25, 2016)
Author: Michael M. Berger
Why It Matters: The Ninth Circuit Court of Appeals reversed a decision in favor of the City of Yuma, Arizona, and concluded instead that there was sufficient evidence to present to a jury that the City had rejected the developer’s application for an increase in zoning density for reasons of barely disguised animus toward the expected residents of the new development. The Court held that issues of disparate treatment and disparate impact under both the 14th Amendment’s Equal Protection Clause and the federal Fair Housing Act needed to be tried.
Facts: The plaintiffs/developers acquired 42 acres of undeveloped land with the intent of building a “moderately priced” housing project. They are known in the area as a developer of Hispanic neighborhoods. Although the General Plan allowed for homes on either 6,000- or 8,000-square-foot lots, a prior owner had it zoned for 8,000-square-foot lots. Unfortunately, the economy would no longer support lots of that size and the developers sought a rezoning to the smaller size which in turn would allow increased density. The City had done some studies, concluding that its population was racially divided, with most of the low-to-moderate-income housing in the areas populated by Hispanics. These developers wanted to develop their housing on the border of a predominantly white area.
The City’s General Plan acknowledged that racial segregation is wrong and that large-lot zoning raises housing costs and impairs the ability of the City to provide housing for moderate-income buyers. The Planning Commission approved the rezoning to smaller lots and recommended that the City Council do so as well. The City Council, however, was besieged with NIMBY complaints and thinly veiled anti-Hispanic charges, complaining that these particular developers were known to “cater to” the people responsible for the vast majority of major crimes.
Two other facts had some import. First, there were similarly priced and modelled homes available elsewhere in Yuma, a fact that the City thought absolved it of any claims of disparate impact. Second, a fact that proved difficult for the City to impress on the Court was that, in the preceding three years, this was the only rezoning request that had been rejected out of 76 applications.
The developers filed suit under the federal Civil Rights Act, 42 U.S.C. § 1983, for violation of the Equal Protection guarantee, as well as for disparate impact and treatment under the Fair Housing Act. The trial court entered summary judgment for the City on the sole ground that the adequate supply of similar housing elsewhere in the City automatically foreclosed any finding of disparate impact.
The Decision: The Court of Appeals reversed. When the opinion began with a paean to the Fair Housing Act and the way it “strikes at the heart of the persistent racism that so deeply troubles our Nation,” something that the provision of more affordable housing can help to cure, it was apparent that the conclusion was foregone: judgment reversed.
The Court of Appeals was unable to disregard the bright light of the fact that out of 76 applications, the only time the City had denied a zone change in the past three years was this one. There could be no explanation for the denial other than racism, particularly in light of some of the communications made by neighbors to the City Council about the presumed criminal proclivities of the anticipated residents of the new development. Nor would the Court have anything to do with the trial court’s idea that the presence of similar developments elsewhere in Yuma obviated the problem. Indeed, it merely emphasized the fact that the City was racially divided and at least some of its residents wanted things to remain that way.
There appeared to be no principled opposition to the requested zone change. As the Court of Appeals put it, the record was replete with “code words” and “veiled references” for the Hispanic influx that the neighbors anticipated, turning the development into a “low-cost, high-crime neighborhood.” The case had no chance on appeal.
Practice Pointers:
Neighbors frequently oppose projects in their neighborhoods that are intended to be occupied by lower-income families. Local governments often bow to this political pressure. This decision may well serve to justify these projects, even in the face of neighbor opposition.
Language similar to the “code words” used by neighbors in this case is common among project opponents opposing higher-density projects. Local agencies need to be mindful of the exposure that this kind of language may impose if the projects are disapproved by the local agency.
At the very least, local agencies need to include sufficient data and facts in the record to support their decision as not being based on discriminatory rhetoric.
The insufficient supply of housing at a range of affordable prices, especially for rental housing, has important negative impacts on local economic development. Housing costs and availability impacts adequate workforce availability. The causes of high housing costs are multiple but a few factors are controllable by local municipalities, counties and regions with the understanding and political will. Exclusionary housing development zoning regulations for example fall into that category. Housing supply constraints affect local employment opportunities and wage dynamics especially in areas where the degree of zoning regulation barriers are more severe.
It’s getting much tougher to find good jobs in areas with adequate affordable housing opportunities. Even when job markets improve, the absence of strong sustained real income growth means that for more and more communities, the relative cost of housing will continue to climb at the same time the availability of adequately affordable housing is decreasing.
The excellent study referenced above provides a clear discussion of this issue. The primary thesis of the study is that developing more affordable housing in communities creates jobs — both during construction and through new consumer spending after the homes have been occupied. The positive impacts of building affordable rental housing are on par with and in many respects exceed the impacts of developing comparable market-rate units.
The take away from this is that housing affordability, inclusive communities and vibrant economic development, are intertwined in substantial ways. Communities can positively change the dynamics with various policies including favoring appropriate density in zoning laws.
Abijah Manga (Francis) Social Media Outreach and Coordination Specialist, Intern at the Fair Housing Project/CVOEO
Even as Governors of some states are declaring their unfounded and fearful opposition to the resettlement of refugees from Syria in their states, Vermont continues to be welcoming, not only to Syrian refugees but for many others fleeing war, persecution and political or religious oppression. That is as it should be, not only for humanitarian reasons but because it is good for the nation, the states, communities and the world.
For more than twenty five years, the United States has offered assistance to refugees through the U.S office of refugee resettlement. Burlington, Vermont is one of the designated refugee resettlement communities. In recent years the number of refugees and immigrants coming from Africa, East and Central Asia to Vermont has significantly increased. Every year the U.S. Congress decides the number of refugees that will be admitted into the U.S. during the fiscal year. In 2014, the U.S government admitted a total of 58,238refugees into the U.S and approximately 50% of the 58,238 or 29,219 admitted to the U.S fell below 20 years of age.
Process
Once refugees have been approved for admission to the U.S., refugee resettlement agencies (Vermont Refugee Resettlement Program (VRRP) for the state of Vermont) initially helps to resettle the new refugees including securing housing for them, and providing basic assistance with community orientation, medical screening, employment search services, English language instruction for those coming from non-English speaking countries as well as school orientation to the New Americans.
Life has not been easy for these New Americans. The International Rescue Committee explains that numbers of refugee families have survived traumatic life events including years of political conflict, exposure to war-related violence and deprivation, and chaos in refugee camps. Potential risk factors encountered by refugee children and youth include separation from family members, lack of access to education and health care, recruitment into armed forces, sexual exploitation, the loss of home, and exposure to war-related trauma.
Additionally, refugee youth in the U.S. face further challenges such as new language acquisition, social isolation and alienation, social adjustment with peers, negative peer pressure, grief and bereavement, discrimination, cultural misunderstanding, and adjustment to a new educational system. According to the International Rescue Committee, “Associated psychosocial stress can hinder refugee children’s ability to learn English, perform adequately in school, and develop peer support networks”. Because of these challenges faced by New Americans, our efforts to create welcoming communities are all the more important.
Economic and cultural benefits to our state
Despite the challenges that New Americans have to overcome, they have proven to be outstanding achievers in educational advancement and demonstrate a strong work ethic. They are highly motivated to advance themselves and to contribute to their new communities in a positive way. In other words they are a plus to our communities not a negative.
In Vermont we should keep in mind that we are losing population, especially younger people; the state has a declining population which is growing older and at the same time it has the 4th lowest unemployment rate in the country at 3.6 percent. So, many local companies are tapping into the refugee labor pool. Refugees contribute much to the workforce. At the same time, although this is foremost a humanitarian gesture, admitting more refugees can also be a boon for businesses and local economies, particularly in smaller states with labor shortages. There is an interesting recent article to read from PRI about “Vermont businesses” that focuses on a Burlington industry example in particular. New Americans are also market consumers for our local businesses and tax payers – both income taxes and sales taxes – as well as property tax payers as they begin to own real property.
Given both the benefits to our communities and to the refugees themselves of having open welcoming and inclusive communities, we need to continue to welcome and embrace the diversity and economic dynamism that New Americans bring for the good of all concerned.
A higher percentage of people are renting their homes in the U.S. than has been the case for many decades. The market is responding with more rental housing development – but there is a big glitch – too much of that new rental housing now being developed is on the high end of the affordability spectrum.
“…the housing affordability crisis has shown little signs of abating in recent years, as renter incomes continue to lag behind rising housing costs. Though there has been a ramp-up in rental housing construction, much of this new housing is intended for renters at the upper end of the income spectrum…”
Note: Data includes vacant for-rent units and those that are rented but not yet occupied. Excludes no-cash rentals and other rentals where rent is not paid monthly. Source: JCHS tabulations of US Department of Housing and Urban Development, 2013 American Housing Survey.
The Thriving Communities’ blog page, now being without our former outstanding “Blogger in Chief,” Tim Johnson, will be frequently sharing links to articles we think are valuable and interesting but often accompanied by less of our own commentary and critique than Tim offered in past months. Today’s share focuses on some old transportation planning “rules of thumb” and points out the need for some major changes of thinking in that realm. We think many of you who are interested generally in thriving, inclusive communities and how we should plan for them will be interested in this article: “Our old planning rules of thumb are ‘all thumbs’” by Joe Cortright.
Following are some excerpts from the article:
“Old rule of thumb #3: We should require “enough” off-street parking for every use
“As Donald Shoup has shown, parking requirements spelled out in zoning codes—often based on formidably inaccurate estimates … lead to a situation where every business’s parking lot is sized for the peak hour of the peak day of the year (holiday shopping season at the Mall, example). Not only does this produce more parking than is needed the rest of the year, it turns out that parking “requirements” grossly overstate demand even in peak periods, and especially for urban uses where more people arrive by other means, and park for shorter periods of time. The product of this rule of thumb is that parking
The wider the lanes, the easier it is to speed. Credit: Pier-Luc Bergeron, Flickr.
is over-supplied, destinations are further apart than they would otherwise be, and walking, transit and cycling are non –functional.”
“New rule of thumb #1: Closer is better”
“Having more different destinations close at hand facilitates a wide range of mode choices, especially walking and cycling. Mixing uses, which is often anathema under traditional zoning codes turns out to be desirable for consumers and expeditious for transportation.”
The 2016 Homelessness Awareness Day and Vigil was held at the Vermont State House in Montpelier on January 7th. Two House committees Housing, General and Military Affairs and Human Services had a joint hearing on homelessness, taking testimony on housing and homelessness issues. A number of other hearings regarding homelessness happened in the building during the course of the day.
Opening the hearing was nationally recognized pediatrician Dr. Megan Sandel (principal investigator on Children’s Health Watch, Associate professor at Boston University’s School of Medicine, and Medical director, at the National Center for Medical-Legal Partnership at Boston Medical Center), who has done path-breaking work on the effects of housing insecurity and homelessness on children. She gave a brilliant presentation on “Housing as a Vaccine: A Prescription for Child Health.”
At that hearing, Representatives and attending members of the public also heard from Vermont homeless service providers Linda Ryan (Director of Samaritan House) and Sara Kobylenski (Executive Director of Upper Valley Haven) on the latest trends and some recommended solutions to end or decrease homelessness in Vermont.
At Noon, community members, legislative leaders, administration officials, and advocates took the State House steps for a vigil to remember our friends and neighbors who died without homes, and to bring awareness of the struggles of those still searching for safe and secure housing. U.S. Senator Patrick Leahy and other legislative representatives and advocates joined and spoke at the vigil.
How can Housing be a Vaccine?
Dr. Megan presented data to support her thesis that housing can be protective for health. The quality, stability and affordability are important determinants to heath of all people. That means improving housing can provide multiple benefits. According to Dr. Megan, timing and duration of housing insecurity matter greatly to a child’s health. By increasing availability, affordability, and quality of housing, the health effect of housing insecurity can be decreased. Dr. Megan also provided specific evidence regarding housing quality and children’s health. For example, developmental issues, worsening asthma and other conditions have been tied to specific housing conditions such as pests, mold, tobacco smoke, lead exposure and so forth, and tied to long term effect with poor health outcomes.
According to Children’s Health Watch, “unstable housing, hunger and health are linked” because evidence shows that being behind on rent is strongly associated with negative health outcomes such as high risk of child food insecurity, children and mothers who are more likely in fair or poor health, children who are more likely at risk for development delay, mothers who are more likely experiencing depressive symptoms. Research conducted by the National Housing Conference from Children’s Healthwatch illustrates that there is no safe level of homelessness. The timing (pre-natal, post-natal) and duration of homelessness (more or less than six month) compound the risk of harmful childhood health outcomes. The younger and longer a child experiences homelessness, the greater the cumulative toll of negative health outcomes, which can have lifelong effects on the child, the family, and the community.
Several community representatives spoke in support of increasing housing affordability by targeting more public funding to support housing affordability and housing stability and adding to state housing directed funds with a $2 per night fee on hotel, motel and inn stays.
This is the last grant-funded post, so we’ll try to keep it snappy, not sappy. What do we know about housing, anyway? Not a lot, but a good deal more than when we signed on to this gig 10 months ago.
For what they’re worth, we’ll leave you with a gratuitous thought and an anti-climactic ranking.
Housing can’t simply be left to the private market, any more than health care or education. It’s time for people to accept that resolving the housing-affordability crisis will require significant new governmental investment; and alleviating the socioeconomic and racial segregation that continue to stand in the way of fair housing choice, all across the country, will require concerted government intervention. Why shouldn’t the right to decent housing and fair housing choice be a public policy priority commensurate with the right to health care or the right to receive an education?
Rankings abound at New Year, so here’s one with an ancillary question: Rent or buy? 504 counties around the country are listed in order of rental affordability — that is, the percentage of local median income that’s required to pay median rent of three-bedroom apartment in that county. Also listed is the affordability percentage of a median priced home. Compare the percentages to see whether it’s more affordable to rent or buy.
No. 1 in rental affordability (or unaffordability) is Honolulu, at 73 percent. Buy. No. 505 is Huntsville, Ala., at 23 percent. Buy.
The only Vermont county in the table is Chittenden (listed as Burlington/South Burlington). Sorry, Bellows Falls, Bennington, et al, but that’s the way of these national surveys.
Burlington/South Burlington comes in at No. 152 in rental affordability, at 40 percent. Buying affordability: 46 percent. The recommendation: Rent.
That’s despite the fact that, according to the table, the cost of a 3 BR apartment in Burlington/South Burlington went up 12.2 percent in the last year.
Sounds a little high to us (so much for the 3.3 percent figure we’ve been hearing) but again, what do we know?
