City that came up with bigger and better skyline: a housing battle over money

In the five years since President Obama hosted a summit in Chicago on promoting job creation in low-income neighborhoods, more than $14 billion in investments have been made. In the years that have followed, reports have called attention to how difficult it’s been to navigate current federal programs to expand the type of jobs, training and workforce development that help residents move into livable jobs and better pay.

Among the federal programs that might help address this challenge is the Neighborhood Stabilization Program, which gives grants to states and cities and encourages them to fix up blighted areas by purchasing derelict buildings, rehabilitating them and then putting them into the housing market. In 2017, Congress temporarily preserved the program, but more money has been added through sequestration and conservative proposals that aim to end the program altogether.

If a renovation and sales freeze in the Neighborhood Stabilization Program goes into effect as proposed, it could force cities and states to put more pressure on already scarce low-income housing funds, delaying projects as cities scramble to find money elsewhere to finance them. That might lead to a housing gap for tenants that could eventually lead to slumping wages for low-income workers.

California and New York both contend that the funds they received through the program helped communities stabilize poor neighborhoods. Cities are planning to use NSP funds to rehabilitate or tear down properties with impoverished histories in hopes of attracting new businesses and residents. But advocates worry that without federal funding, cities might use these funds elsewhere and ultimately limit their renovation efforts to newer and nicer buildings.

The NSP grants often provide a relatively stable source of funding for projects. Often, these bonds are sold to local governments or nonprofit groups and then secured through tax-exempt debt. Many large cities, including New York and Chicago, used the program to rehabilitate projects throughout their districts. The city of New York renovated the 5th Avenue hotel project on Houston Street in Harlem, in neighborhoods traditionally long plagued by violence. A report from the think tank New York Community Trust showed that the project created 3,500 jobs — 80 percent of them from people in low-income neighborhoods.

Los Angeles and San Francisco, which also rely on the program to expand affordable housing options, have invested a lot of effort in using the NSP to incentivize local investors to renovate or demolish properties that have been long vacant or are empty. Critics say this causes the cost of building and renovating a development to escalate, since banks won’t lend on construction without a strong tenant base, and that one-size-fits-all redevelopment does not fit the varied conditions in a neighborhood.

A tightening of the loan program would put California and New York at a disadvantage with other states, said Marco Condon, a policy adviser at Housing Trust Fund, the nonprofit that supports New York’s approach to promoting housing markets in low-income neighborhoods.

It’s difficult to estimate how much NSP funds have helped provide affordable housing for low-income residents. In California, some of the funding has also been used for rehabilitating or demolishing the historically black and Latino neighborhood around the downtown area of the San Francisco Bay Area city. While housing industry experts and housing rights advocates often agree that many of the people who live there have struggled with high poverty, lack of transportation and the type of jobs they are able to fill.

Like New York and Chicago, Los Angeles currently has a partnership with the city’s Industrial and Commercial Development Agency, which owns hundreds of vacant property across the city. Under a deal worked out in 2017 with the ICDA, the city of Los Angeles is currently rehabilitating small businesses in the area, such as a printing shop. The city also uses the ICDA’s funding to rehab buildings, in part to put pressure on absentee landlords to sell vacant properties. But like other cities, the program is likely to depend on the success of the city’s other efforts.

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