University of Virginia Library

Housing: The Low-Income Blues

By STEVE WELLS

(The following is the third
in a series of articles dealing
with various aspects of the
housing industry. The series is
aimed at promoting a better
understanding of factors
influencing the construction of
new housing and at shedding
some light on the problems and
considerations affecting its
quality.

The first article presented
the positions of local
developers, contractors, and
real estate agents in regard to
factors which affect the quality
and efficiency of the work.
The second article examined
the often lucrative financial
benefits available to developers
and investors, as well as the
market forces with which they
are confronted.

This article discusses the
mechanics involved in
constructing low income
housing. – Ed.)

CD/Steve Wells

Thomas: Being Blown By The Political Winds

"We know that in this
country right now the greatest
need for housing is with people
who are making less than
$10,000 a year, and we haven't
even scratched it," says local
developer Daley Craig.

That there are millions of
families living in sub-standard
housing simply because decent
housing is not available to
them at a price they are able to
pay is an indisputable fact. But
how great are the efforts to
overcome this problem?
Indeed, can it ever be
overcome?

"Not in this economy," is
the matter-of-fact answer given
by Art Thomas, executive
director of the Charlottesville
Housing Foundation, and as he
gives his reasons for so
believing, one can't help but
see the logic of his words.

"If there was no market in
the middle to upper-middle
income bracket, if that market
was saturated with housing,
then I think you might find
that builders would have to
come down to lower income
families, and they would have
to accept less profits. But as
long as that demand is there
for larger, more costly homes,
then that market is going to be
met before the other market
is."

The Charlottesville Housing
Foundation is a non-profit
organization that was formed
about five years ago by several
churches in the area to provide
housing for low and moderate
income families under the FHA
subsidy program. The
Foundation's goal is to build
approximately 25 single family
dwellings a year for families
(primarily black) with annual
incomes between about $6,000
and $10,000.

Obviously there are families
with lower incomes than that,
and it is usually the job of the
Charlottesville Housing
Authority and its executive
director A.E. Arrington to try
to administer to their housing
needs, to the limited extent
they can.

At present, however,
Thomas and Arrington are
going through a difficult period
of waiting. Since President
Nixon's freeze on
governmental housing subsidies
went into effect in Jan., they
have had to content themselves
with completing projects
already begun, not knowing if
or when there will be any
future funds to enable them to
start on something else.

Although the
Charlottesville Housing
Authority has completed only
one low income public project
– the 126-unit Westhaven
complex on Hardy Drive
between 8th and 10th Streets
– Arrington proclaims the
success of his efforts with
staunch pride. "We're doing a
good job, whether Pres. Nixon
thinks so or not," he says
somewhat defensively.

"In the construction of our
units we have a $93,000
subsidy that's got to come
(from the federal government)
every year to pay the principal
and interest on the bonds. We
in this city have been returning
to the federal government on
that $93,000 somewhere in the
area of $27,000 per year – and
that's a damn good record."

The Charlottesville Housing
Authority is not a
governmental agency but a
"political subdivision of the
Commonwealth of Virginia"
designed to administer two
programs ("when we get funds
for them"): urban renewal and
public housing. It has a
five-person board of
commissioners appointed by
the city council to set policy
and approve programs.

Beginning

The process of constructing
a public housing project
(disregarding the moratorium
of course) starts with this
board of commissioners, which
determines that the Authority
wants to build x units of public
housing. They then ask the city
council for authorization to
file for an application for x
units of public housing, which,
if council concurs, is forwarded
to the federal government for
funding approval.

After having received a
development program from the
Authority, the government
gives them what is known as an
annual contribution contract
permitting the construction of
x units of public housing.

This phase finished, the
next one begins. The Authority
hires an architect, finds a site,
reviews the architect's plans
with HUD, then starts
accepting bids from general
contractors.

"From the time we file
until the time we get ready to
take bids we're talking about
nine months, maybe a year,"
says Arrington. And he isn't
convinced that the alternative
to this procedure–the "turn
key" method, a package deal in
which a developer is brought in
at the beginning to find the
site, draw up the plans, and
build the project within certain
guidelines set by the
Authority–is any more
expedient, although
expediency is supposed to be
one of its advantages.

Private Organization

The Charlottesville Housing
Foundation differs in that
"We're what you might
consider a developer. We buy
land, build houses, and sell
them to families at no profit,"
says Thomas. Moreover, its
endeavors need not be
approved by the city council
since it is a private
organization; rather, it has its
own 19-member board
(including Charlottesville
mayor Francis Fife) which
dictates its policy.

The Foundation's primary
connection with the
government is through the
FHA 235 program, which
provides eligible families with
long-term, subsidized loans
through local mortgage
companies.

"The federal government
subsidizes the loan down to
one per cent," Thomas
explains, "the family paying
approximately 20 per cent of
their net income per month as
their part of the mortgage
payment. So, for example, if
you have a seven per cent
interest loan at $150 per
month, and 20 per cent of the
family's monthly income is
$100, then the government will
subsidize $50 per month,
which goes to the mortgage
payment."

Both Thomas and
Arrington are critical of the
amount of red tape which
accompanies government
involvement in housing
viewing it as a deterrent to
efficiency.

"The FHA is, for the most
part, understaffed," in
Thomas' estimation. "They are
very sensitive to the political
winds because of all the
scandals in the 235 programs
that took place in urban areas.
They require precautions in
site development that, if it was
financed privately, wouldn't
even be an issue."

CD/Steve Wells

Arrington Making A Point About Westhaven: "We're Doing A Good Job, Whether Pres. Nixon Thinks So Or Not"

Or as Arrington puts it,
"Nixon talks about his revenue
sharing and all this, how he's
going to give the money to the
cities and let them do what
they please. Well, the cities are
finding out that that little red
apple is not as polished as they
thought it would be.

"The government ought to
give us more leeway and
latitude," he insists. "Once we
have had our final working
plans approved by HUD, to
make any kind of minor
changes we have to go to them
for approval. Well this takes
months. I had a fuss with them
over 36 cents one time. They
didn't agree with me that
something should cost as much
as it did, and there was 36
cents difference. And they sent
a letter back saying 'Get the
credit.' Well, it's too much."

Governmental Controls

Arrington does, however,
see the need for some
governmental controls. "We are
administering the public's
funds, so I think in all fairness
we've got to have some checks
and balances to protect the
general public's interest."

Arrington is especially
concerned with protecting his
future tenants' interest, and is a
strong advocate of having a full
time inspector–or "clerk of
the works," as he calls
it–checking on the quality of
the construction as the work
progresses.

"I would not build one
thing unless I had a clerk of the
works on the job representing
me, for I guarantee you that's
the best savings for anybody
who's in the business to build
and maintain," Arrington
claims.

Yet what of private
developers' contentions that
such an arrangement is
economically unfeasible, that
they can't afford to hire an
inspector? Given the often low
quality construction apparent
in some finished units today,
Arrington simply asks, "Can
you afford not to have it?"

Not Enthusiastic

Neither Arrington nor
Thomas seems enthusiastic
about the caliber of
construction today, but each
seems more concerned with the
insufficient volume. "The
families we work with, man,"
Thomas says, "they'll take just
about anything as long as they
can call it their own."

Although both men see room
for improvement in the federal
subsidy programs, particularly
in the areas of increased
decentralization and reduction
of unnecessary red tape,
neither thinks the present
moratorium was the answer at
this time.

"He [Nixon] should not
have shot us down until he had
the alternative, whatever it
might be," Arrington argues.

"I don't think the existing
programs were ineffectual; I
think they were misused,"
Thomas contends, "They
were misused by FHA area
offices in some cases, they
were misused by well-known
lending institutions."

As for predictions as to
what the future holds, Thomas
can just say "I get so
depressed, and yet I always
pull out a little optimism -
somethings going to come up,
you know. But right now,
we're just sitting here, waiting,
calling up Washington every
week to find out what the hell
is going on up there. They
keep telling us, 'well, Secretary
Lynn [of HUD] is going to
make a decision next week.' So
you call up next week, and
'Sorry, it's going to be two
weeks from now.' Call up two
weeks from then and, 'Well,
there's a change, and he's going
to make his decision in a
month.' So you get the
runaround all the time. I guess
it's the same old jazz that
everybody else is complaining
about: the damned federal
government is too big and
they're controlling too much."

Standstill

Meanwhile, the subsidized
programs are at a standstill,
and until the moratorium is
lifted there can be little
progress made toward building
housing for those who need it
most.

"Nixon says he's going to
propose an alternative by
September," muses Arrington,
concerned. "If he doesn't lift it
and come up with something in
the near future that is really
going to be a workable
solution....." Arrington's voice
trails off, then he finishes his
thought. "This housing field is
critical, but it's going to be
tragic."

(Next, in the special
summer issue sent to each
student's home: an interview
with the Secretary of HUD,
James Lynn.)