Getting Creative and Finding Innovations to Address ‘Worst Case’ Housing Needs

The “Worst Case Housing Needs” report, released by the U.S. Department of Housing and Urban Development earlier this month, illustrates the resurgent problem of unassisted low-income renting that cities have attempted to innovate around for more than a decade.

HUD defines the worst cases as households earning less than half the median income for their area; lacking government housing assistance; and putting more than half their monthly salaries toward rent, living in “severely substandard” conditions, or both.

For the first time, using 2015 data the report estimated the percentage of worst cases among very low-income renter households for the 15 largest metropolitan statistical areas (MSAs), with Miami-Fort Lauderdale-West Palm Beach leading the pack at 80.9 percent—227,000 households out of 373,000. By comparison, the national average was 43 percent of very low-income renter households being worst case.

“Along with most of South Florida, the City of Miami has been dealing with market forces including escalating land values and housing costs for some time now, coupled with stagnant wages,” George Mensah, director of Miami’s Department of Community & Economic Development, told Route Fifty by email. “The study is one of many in the past few years that has shown the incredible housing crisis in our community.”

To meet growing demand, the City Commission added incentives to Miami’s zoning code intended to spur affordable, workforce and mixed-income housing development led by the private sector. That’s on top of parking waivers, impact fee deferrals and streamlined permitting granted to affordable housing developments.

Mensah’s team will gauge the legislation’s effectiveness based on the results, but in the meantime a $400 million general obligation bond will appear on the November ballot—$100 million of which is slated for affordable housing and economic development.

That’s not to say Miami completely agrees with HUD’s process. Lumping Miami’s 424,600 residents into an MSA of 6 million people for the purposes of the report puts the forest before the trees.

Flawed Methodologies

In Southern California, the city of Riverside’s population of 324,700 residents is lumped in with its fellow Inland Empire cities of San Bernardino and Ontario for an MSA. Together they form the 12th-largest MSA in the country, which was second only to Miami’s for worst case housing needs at 57.2 percent of very low-income households, or 123,000 out of 215,000.

Were Riverside to be separated from the rest of the Inland Empire however, it would fall from second to 11th worst case housing needs, according to Emilio Ramirez, the city’s Community & Economic Development Department deputy director.

“Right or wrong, there is a difference between San Bernardino and Riverside in income inequality and development patterns,” Ramirez said in a phone interview. “Those two things kind of matter.”

And that’s just the tip of the iceberg when it comes to HUD’s classification of Riverside, which saw increased permit activity around affordable housing last calendar year and has 273 multi-unit housing permits in the pipeline this year—about one-third of those affordable.

Both the federal government and state of California classify Riverside as an urban city, despite its expansive suburban footprint, which hurts its ability to compete with larger cities on the East Coast and in the Midwest for affordable housing and public transportation dollars.

Riverside has grown exponentially from a city of 5,000 people when Mayor Rusty Bailey’s grandfather was living there, to 20,000 residents in his father’s time, to now. The Southern California Association of Governments’ Regional Housing Needs Assessment determines future need for and mandates production of affordable housing based on that migration.

Meanwhile, SCAG’s Community, Economic & Human Development Committee allocates local resources based on current affordable housing need.

The end result? The city of Los Angeles, with more than 12 times the population, gets the bulk of the current regional need money, while Riverside gets left with the production need based on growth patterns.

“There’s a policy lag between federal, state and regional methodologies,” Bailey said in a phone interview. “If the growth is in our region, but we don’t have the existing housing stock, are you going to put them in tents while construction is going on? They’re not going to move while they need housing.”

Similarly, HUD’s Office of Community Planning and Development offers HOME grants based on demographics like population size, of which Riverside receives a mere $750,000 annually. Grant money alone isn’t enough to build an affordable housing project, and HUD doesn’t allow cities to combine multiple years, leaving a 12 to 15 percent construction funding gap.

Riverside used to have $17 million a year in redevelopment funds available to fill the gap, but those were clawed back by the state to close a budget deficit.

The MSA could pool its funding to get affordable housing built, but that requires getting multiple cities and their councils to agree on projects.

A Numbers Game

Phoenix, with its population of 1.6 million residents, has seen far greater success competing for HUD grants.

The Phoenix-Mesa-Scottsdale MSA had the third-highest percentage of worst case housing needs at 54.6 percent, or 124,000 households out of 227,000 that are very low income. But the Phoenix Housing Department itself houses about 35,000 people with public and affordable housing and housing choice vouchers, said its Director Cindy Stotler.

“[T]he need is greater than what we can address, so we are always looking for opportunities to increase housing options for low-income residents of Phoenix,” she said in an email.

Phoenix uses HUD grants to increase its number of affordable housing units alongside the redevelopment of aged, obsolete public housing. Recently the city turned 138 units of public housing into 250 units of mixed-income affordable housing with a HOPE VI grant intended to eradicate “severely distressed” public housing.

With a Choice Neighborhoods grant Phoenix hopes to obtain, the city will also transition an entire community of 577 distressed public housing units into 1,200 more units of mixed-income affordable housing.

Another Rental Assistance Demonstration program awarded PHD the grants for five more ailing public housing properties, two of which will be redeveloped for at least 30 additional mixed-income affordable rental units.

PHD used low-income housing tax credits to provide gap funding for five new affordable housing developments for 300 more units.

Currently the Housing Department owns and manages 18 affordable housing properties, Stotler said, and is “reviewing redevelopment opportunities that would increase the number of rental units available at key locations.”

Going to Church

Riverside’s relationship with HUD hasn’t been entirely unfruitful, and Bailey still feels the federal government has a role to play in addressing his city’s affordable housing challenges alongside Riverside County, nonprofits and faith-based organizations.

Under the Obama administration, Riverside participated in the Mayors Challenge to End Veterans Homelessness and brought homelessness down to functional zero with Veterans Assistance Supportive Housing vouchers. The vouchers allow the city to place homeless individuals in market-rate housing, creating a pipeline through which Riverside can continuously allocate rental units to veterans with the help of housing owners.

A total of 86 homeless veterans were identified by the housing-first program with 89 planned by year’s end, and housing officers, transportation, substance abuse and mental health experts visit them on a wraparound basis.

Bailey hopes to have the same success with church owners providing affordable housing that he had with housing owners effectively ending veterans homelessness.

Loma Linda University Medical Center is a community-based institution in the Inland Empire that also happens to be Seventh-day Adventist-affiliated, and it gave the mayor an idea.

“The churches were focused on hospitals maybe 100 years ago,” Bailey said. “Why can’t we take that same paradigm into housing?”

About a year ago, the mayor began engaging the local faith-based community to see if they’d be willing to part with their underutilized property for the development of affordable housing. Many of the churches, faced with waning attendance, meet once a week, and the rest of the time their pews and parking lots sit empty. That or they rent the worship space out to Korean or Latino churches and the parking space out to community college students.

Churches are typically found in residential neighborhoods, so rezoning isn’t a challenge. Plus the property costs are cheaper.

Two such churches are getting ready to partner with affordable housing developers, one of which has a 5-acre multipurpose room and a similar-sized blacktop that could fit up to 34 units of permanent, supported housing and a parking structure to serve both the congregation and residents.

Riverside will host a summit in September for the faith-based community on using its property more wisely.

Elsewhere, the city is eyeing corridors of development along expanding bus lines, like many major cities have done. Seniors looking to age in place while staying close to their grandkids are clamoring for downsized housing like condos in town, and such routes grant them accessibility.

“Transportation networks, they’re going to be the next pipeline that’s filling up,” Bailey said.

Adding more lanes to roads is a quick fix, not a cure. So in the next 10 years, Riverside will add more public transit and possibly install streetcar infrastructure as car use declines.

A housing development implementation plan along those corridors is about a year away, but the city is already rezoning 191 acres of land for multi-family residential housing to help alleviate the poverty that comes with high rent.

Compared to 8.3 million households regionally, Riverside has a little more than 100,000. What’s more, it hasn’t had to endure bankruptcy, international terrorism or the closure of a seismically vulnerable city hall over a much-needed earthquake retrofit like nearby San Bernardino has.

Local academic institutions, like the University of California, Riverside’s School of Medicine bolster the regional economy, as will the relocation of the California Air Resources Board’s labs to the city—infusing state money into the municipal budget.

Affordable housing might be seen as a weakness in Riverside right now, but Bailey’s administration is convinced the the city is in a position to attract developers and investors long term.

“Riverside is not a community or city afraid of building affordable housing. We’re not an area saying go build it somewhere else,” Ramirez said. “We want to be responsive to the common person in Riverside. We need to be cognizant of building for the diverse population. Whatever resources are out there to come to Riverside, we welcome them.”