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2001, I SSUE 2 FAITH AND HOUSING Delivering the Dream of Home Ownership NOT IN MY BACKYARD The NIMBY Phenomenon and Affordable Housing REDEFINING AFFORDABLE HOUSING PLUS Major Architect Teams with Students on Low-Cost Housing FAITH AND HOUSING TAKING A LOOK AT HOUSING More than 68 percent of American households owned their own home in Delivering the Dream of Home Ownership third quarter 2001, the highest percentage ever. According to The State of the Nation’s Housing: 2001, published Rev. Kirbyjon Caldwell and his Houston by Harvard’s Joint Center for Housing area congregation have faith in the con- Studies, the number of homeowners has cept of community empowerment and grown by 8.1 million since 1994. Innova- using it to deliver dreams. entire 234 acres and create the Corinthian Pointe community. Tax Increment Reinvestment Zone tive partnerships like those profiled in this Because of this, an offshoot of Windsor Building Corinthian Pointe has required issue of Perspectives have contributed to Village United Methodist Church is devel- the participation of not only the church increases in affordable housing stock and oping one of the country’s largest afford- and its CDC but also a local bank, the city access to home ownership. able housing subdivisions initiated by a of Houston and a major homebuilder. However, the Harvard study points faith-based organization. Pyramid Com- Acquiring the land and developing the out that while progress has been made, munity Development Corp. and its sup- infrastructure for the residential area will housing is becoming less affordable porting corporation, Pyramid Residential cost about $11 million. Pyramid CDC com- overall. Average real home prices have Community Corp., are 501(c)(3) nonprofit mitted $750,000 equity to the project, and increased 26 percent since 1975, while corporations the church created to under- J.P. Morgan Chase provided a $4.8 million median homeowner incomes have risen take community development projects. revolving line of credit. just 22 percent. Today, nearly one in four Once completed, Corinthian Pointe Acting on a petition circulated by the owners spends at least 30 percent of will be home to more than 450 single-fam- CDC, the Houston City Council designated his or her income on housing. ily homes and the kind of amenities usu- the area a Tax Increment Reinvestment Sustaining the current home owner- ally confined to high-end master-planned Zone (TIRZ), enabling Corinthian Pointe ship rate will depend in part on the devel- communities — a park and recreational to receive a portion of the annual incre- opment of more affordable housing facilities, an elementary school, health mental increase in tax revenue resulting stock. Forging partnerships that bring care facilities and retail shops. The major- from the development. When the TIRZ was efficiency to this process is one way to ity of the homes will be priced well below created in 1997, the 234 acres were on the make housing more affordable in our the Houston median of $121,400. Eighty tax rolls at only $13,580, thanks to an agri- urban, suburban and rural communities. percent will cost between $70,000 and cultural tax exemption. The projected tax- You can find the Joint Center report $103,000, making them accessible to fami- able value of the property after everything lies at or below 80 percent of Houston-area is completed is more than $60 million. online at www.jchs.harvard.edu. median income. Twenty percent will sell — Nancy Vickrey Assistant Vice President and Community Affairs Officer Federal Reserve Bank of Dallas for $103,000 to $140,000. The TIRZ anticipates reimbursing the developer—Pyramid Residential Commu- “Our vision is to create a mixed income nity Corp.—for up to $6 million in infra- community, while providing first-class structure improvements. By helping defray homes for low- and moderate-income these costs, the TIRZ enabled Pyramid RCC families,” says Caldwell. to sell lots for $10,000 to $11,500 instead of Caldwell and his congregation know the $18,000 they would otherwise have cost. from experience that community empowerment can be used to improve the quality 2 PERSPECTIVES Homebuilder Steps Up of life. They also know how to seize an unex- Ryland Homes, which builds about 1,200 pected opportunity. The church had found houses a year in the Houston area, is the the perfect spot for a chapel it wanted to principal builder in Corinthian Pointe. build, but the owner would not subdivide Ryland had two reasons for becoming the parcel. With lots of prayer and thought, involved with the project, says Jim Lemming, Pyramid CDC decided to purchase the president of the builder’s Houston Division. | Federal Reserve Bank of Dallas by the property tax increases in the TIRZ, reducing the loan repayment time. Pyramid RCC is responsible for monthly interest payments on the outstanding balance on the line of credit and pays off what it has borrowed as the lots are sold to Ryland. The RCC also committed to increasing the taxable value of the property in the TIRZ. It will pay property taxes on the land it owns rather than take the exemption offered community housing development organizations. The Pyramid–Ryland partnership was key to J.P. Morgan Chase making the loan, says Richard Celli, the bank’s senior vice president for community development Pastor Kirbyjon Caldwell of Windsor Village United Methodist Church (right) and Jim Lemming lending. “Pyramid CDC has a bankable of Ryland Homes discuss plans in a model home at Corinthian Pointe development in Houston. contract from Ryland Homes to purchase the lots. The bank was willing to take the “First, we firmly believe that members of all socioeconomic classes make impor- hundred homes to be built, as opposed to risk on the TIRZ as a source of repayment just our usual 10 or 12.” for the balance of the loan because it made the lots affordable. The capacity of the tant contributions to the city. Second, we see a great potential for profit here. Building affordable houses is the right thing for Structuring a Workable Deal J.P. Morgan Chase worked with Pyra- RCC to provide equity and monthly interest payments was necessary.” mid RCC to bring Ryland Homes into the Debora Grant, senior loan officer with Ryland will construct 80 percent of the partnership. Key to Chase’s ability to Ryland Mortgage, estimates the company homes, using many of the same floor plans extend the line of credit was having Ryland has originated about half the loans for the the company builds in market-priced sub- enter into a firm contract to buy the lots Corinthian Pointe homes Ryland has built. divisions. The houses range from about from Pyramid RCC as they are developed. Other lenders issuing mortgage commit- 1,200 to 2,000 square feet and include such This ensures that the RCC will have a solid ments include Bank of America, Bank One features as brick construction, upgraded source of money for repayment. The loan and J.P. Morgan Chase. Grant is also mak- master baths and ceramic tile entryways. balance will be paid off from the TIRZ ing sure families at 80 percent of median Says Caldwell: “We are the most elegant low- reimbursement to the RCC. Chase antici- income are aware of the city’s down pay- to moderate-income housing development pates that once the development is com- ment assistance program. in America. We are destroying the negative pleted, the city will issue bonds supported Ryland and the community.” Continued on page 8 image of affordable housing projects.” Smaller, minority-owned companies like Amenity Plus Homes are building the PASTOR WITH A PURPOSE remainder of the homes. Ryland is sharing When Kirbyjon Caldwell became its returning to school for his master’s resources with the smaller builders, a prac- pastor in 1982, Windsor Village United in theology. He serves on J.P. Morgan tice Pyramid CDC encourages. Amenity Methodist Church had only 25 mem- Chase’s Texas regional and national min- President Jaromey Roberts says the rela- bers. Today it has more than 14,000, isters advisory boards, as well as on sev- tionship has given his company the chance making it the country’s largest United eral other local and national boards. to learn operational and control systems Methodist Church. Caldwell brings some Among his friends in high places is Pres- that are helping his business run more effi- distinctive credentials to his job. He ident George W. Bush. Caldwell intro- ciently. Another plus, he says, is that the earned an M.B.A. from the University of duced Bush at the 2000 Republican greater access to subcontractors and trades Pennsylvania’s Wharton School of Busi- National Convention and offered the at the site has made it possible to negotiate ness and worked on Wall Street before benediction at his inauguration. better prices. “They know there are several Federal Reserve Bank of Dallas | PERSPECTIVES 3 NOT IN MY BACKYARD The NIMBY Phenomenon and Affordable Housing Many government and corporate projects receive the support of the majority of The Dallas Housing Authority worked with North Dallas residents to design an affordable complex that would fit into their neighborhood. citizens because they are viewed as beneficial, necessary or just the right thing to do. Large retail developments offer consumers convenient access to a variety of products. So if the concept has widespread acceptance, what’s all the fuss about? Landfills provide a place to dispose of refuse. And assisted-living group homes enable the developmentally disabled to equity accounted for 55 percent of the average American’s financial assets. Equally as Root Causes Certainly, some opposition is a result of conviction: “I paid for my house. Why live in the community. data, in the first quarter of 2001 home important, the neighborhood is where people raise their families, send their kids to school and spend their personal time. But when faced with the prospect of shouldn’t everyone else?” However, as the When the Dallas Housing Authority one of these developments in their neigh- NLIHC survey shows, only a small portion announced plans to develop affordable borhood—sometimes, anywhere in their of people completely oppose affordable housing in his neighborhood, Dick Prewitt community—concerned citizens are likely housing. Also, NIMBYism is traditionally a was adamantly opposed. to protest, “Not in my backyard!” local phenomenon, whereas public policy “I was definitely worried that our neigh- Though the phrase’s first recorded use on the government’s role in society is gen- borhood would carry a stigma and there was in 1980, “Not in my backyard”—other- erally thrashed out at the state and national would be an increase in crime and a de- wise known as NIMBY—is a phenomenon levels. So well-organized, vocal opposition crease in property values,” he says. Con- as old as self-interest and community. In to affordable housing at the local level is vinced his personal safety and home equity practice, NIMBY is an attempt by residents unlikely to be purely ideological. were at stake, Prewitt went public with his to delay, diminish or prevent a development from locating in their community. The projects most likely to face intense and well-organized opposition are pris- Some have made the case that opposition to affordable housing is simply a dis- fears, and soon his neighbors joined him in a battle to block DHA’s plans. regard for others. Ann Lott, CEO of the Dallas Housing Authority, disagrees. Powerful Opposition ons, waste facilities, homeless shelters, “I don’t see NIMBY groups as simply Land-use rulemaking has traditionally group homes and the mainstay of com- selfish. The fact is that the poor carry a been the charge of local governments, the munity development, affordable housing. stigma, and NIMBYism is really about idea being that local residents know what’s fear,” she says. best for their communities and it’s at the They may not want it in their backyard, but the public generally supports the con- The fear is that affordable housing will local level that the effects will be felt. cept of providing affordable housing for act as a drag on public resources, diminish Hence it is at the local level that NIMBY those who need it. Seventy percent of neighborhood aesthetics, reduce safety by groups generally exert their influence. By respondents to a 2000 survey by the attracting crime and interfere with normal lobbying local officials, circulating peti- National Low Income Housing Coalition market activity—all of which can lower tions and rallying behind political candi- (NLIHC) said the government should property values. dates running on NIMBY platforms, assume at least some responsibility for Homeowners are understandably con- NIMBY groups can profoundly affect zon- providing low-income people with afford- cerned about preserving their neighbor- ing decisions and the outcome of elections able housing. In fact, only 10 percent felt hoods. A home is a major financial invest- and pose a serious threat to affordable government should bear no responsibility. ment. According to Federal Reserve System housing development. 4 PERSPECTIVES | Federal Reserve Bank of Dallas Lott knows that such opposition comes community development organizations they said would happen did happen. We with the territory. “We expect to face it to have found that acknowledging both is are all living here harmoniously.” ■ some degree anytime we build affordable critical to addressing the issue. — Toby Cook housing,” she says. Opposition is exactly what DHA got in Prewitt’s North Dallas neighborhood, one of the city’s most affluent. Envisioning dilapidated, poorly managed housing that would attract an undesirable clientele, Managing Opposition The key to managing the NIMBY phenomenon lies at its root cause. “Communication is the key. Acknowledge and address the fear,” says Lott. Prewitt and about a thousand other area NIMBY groups are primarily concerned residents spoke against the project at a that a project will negatively impact them DHA public forum. and that someone else will control what happens to their neighborhood. What A Matter of Perspective community developers have found is that For a copy of “Managing Local Opposition to Affordable Housing,” contact the National Association of Local Housing Finance Agencies at www.nalhfa.org or (202) 367-1197. AFFORDABLE HOUSING’S IMPACT ON PROPERTY VALUES Is NIMBYism always bad? When low- including the neighborhood in the plan- income homeowners pack a city council ning process and educating them on Opposition to affordable housing meeting to keep a chemical plant from the project’s impact can greatly reduce often centers around the notion that locating near their neighborhood, it’s diffi- opposition. when it’s constructed, property values cult to accuse them of unenlightened self- DHA included the North Dallas neigh- in the surrounding area will decline. interest. It’s equally difficult to label a borhood in the process by forming a task Well, it makes sense, doesn’t it? group guilty of a total disregard for others force of area homeowners to choose a Won’t the stigma of affordable housing when they try to block a liquor store’s design for the project that would fit in with make it difficult to sell nearby homes? plans to locate near their church. Nor the neighborhood as Dick Prewitt and With lower demand, won’t prices have would most people consider those who other residents saw it. to be reduced to find willing buyers? oppose a nuclear waste site in their community simply selfish. NIMBY is a phenomenon as old as self-interest and community. Easing fears about the impact on prop- An extensive body of research indi- erty values, crime and service levels can be cates otherwise. Studies conducted difficult but is crucial to reducing opposi- in a variety of cities across the coun- tion. Establishing the facts about the try have found that the presence of impact of affordable housing and then affordable housing does not disrupt communicating them to the stakeholders the resale market. can help ease fears. The critical compo- Minneapolis-based Maxfield Research Not only is NIMBYism often under- nent to this strategy is being able to Inc. recently examined affordable standable, it can also sometimes benefit a demonstrate a pattern of success by the housing’s effect on 12 neighborhoods community by raising awareness. It is a key developer and manager. Affordable hous- in the Twin Cities. The study looked at component of the planning framework in ing always faces NIMBYism if it fits the price per square foot, sales to listing most communities. Zoning embodies an stereotype of government-run “projects.” price and the amount of time it took element of NIMBYism by designating sec- Its acceptance requires professionally to sell. The study found that homes tions of a community suitable only for spe- managed, well-maintained developments near affordable housing develop- cific uses, such as commercial or single- that fit in with existing neighborhoods. ments displayed similar or stronger family residential. The idea is to prevent a DHA’s North Dallas complex demon- performance on the resale market convergence of incompatible land uses. strates the power a well-run development than other homes. The researchers Zoning prevents people from starting an can have on public opinion. Since the pro- concluded there is little or no evi- automotive repair business in their garage ject’s completion, Dick Prewitt has changed dence to support the claim that or from turning their home into a motel. his perception. affordable housing adversely affects property values. Recognizing that the motives for NIM- “Most of the homes here are brick or BYism are understandable and that it is stucco and have well-manicured land- often an element in land-use restrictions scaping,” he says. “I didn’t envision a de- Family Housing Fund’s web site at may not make it any easier for community velopment that would conform to our www.fhfund.org/whatsnew.htm. developers to swallow. But experienced neighborhood standards. But everything The study can be found on the Federal Reserve Bank of Dallas | PERSPECTIVES 5 Hester + Hardaway Photographers REDEFINING AFFORDABLE HOUSING Major Architect Teams with Students on Low-Cost Housing When a team of University of Houston public buildings that constitute the bulk of the amount of lumber lost to overcutting architecture students volunteered to par- the Philadelphia firm’s portfolio are the and pilferage. ticipate in the school’s chapter of Habitat Children’s Museum in Houston, the Sains- Once the houses were designed, a team for Humanity, they were disappointed bury Wing at the National Gallery in Lon- was assembled to construct them in the with the boxlike design of the typical Habi- don and the Seattle Museum of Art. heart of Houston’s Fifth Ward. Because the tat house. The students believed that with Approaching the venture as a demonstra- designs were outside the scope of its careful planning and design, the homes tion project and tapping the students’ skills expertise, Habitat approached Fifth Ward could be both attractive and economical. and a nonprofit’s resources, Venturi saw this Community Redevelopment Corp. about as a chance to explore affordable housing being the builder and funding the con- possibilities for inner-city neighborhoods. struction. UH students specializing in Brown and Associates to design two The result proves that “low-cost, inner-city construction management joined those houses that would be low cost and low housing need not be meanly scaled versions from the architecture school to provide maintenance, yet aesthetically pleasing of suburban builders’ houses,” says Houston and easy for the students to build. Turner, Architectural Guide, written by architectural then Menil Collection curator, had known historian Stephen Fox. Robert Venturi for many years and felt his Although the Venturi group is known shop was what he was looking for: a world- for incorporating innovative design ele- class firm that had also done modest resi- ments into its projects, this one was to use dential projects. traditional schemes. Hester + Hardaway Photographers Their advisor, Drexel Turner, asked renowned architectural firm Venturi, Scott Venturi was delighted to take on the “We are architects who are not ashamed challenge of designing an affordable to design buildings that look like build- urban house and pleased with the oppor- ings…[and] that do not impose on the pub- tunity to contribute to the community. lic original/radical architectural symbolism Among the upscale homes and creative …that the public doesn’t want,” says Ven- roughly 50 percent of the needed labor; turi. “We architects should remember it is Fifth Ward CRC supplied the rest. Hester + Hardaway Photographers better to be good than original.” 6 PERSPECTIVES The finished homes look like anything Venturi group, with help from the UH but affordable housing. Each has approxi- students, took special care to ensure that mately 1,450 square feet, with a living the houses were practical for untrained room and kitchen/dining area on the first volunteers to build. This was important floor and three bedrooms and two baths because unlike standard Habitat homes, upstairs. The houses have 8-foot-deep these were designed with a second floor, porches and 120-square-foot toolsheds. complicating construction. To facilitate They also have 9-foot ceilings, groupings assembly, the design team had Calcasieu of oversized windows, pine floors and Lumber Co. in Austin supply precut fram- zoned air-conditioning. ing components. This not only simplified The use of high-quality materials that the building process but also reduced Turner describes as “zero maintenance” | Federal Reserve Bank of Dallas ensures that the homes will be economical ton, executive director of the Fifth Ward at different income levels, and this helps to own. Features such as painted alumi- CRC, says the delays contributed to some rebuild the neighborhood,” she says. num roofs, Hardie plank siding, and non- cost overruns, which the CRC covered with Venturi has donated the architectural rotting Trex plastic and plywood trim a grant from the Fannie Mae Foundation. plans to Habitat and Fifth Ward CRC for ensure they will hold up well over a life- The houses sold for $103,000, the maxi- future use. Turner would like to see more of time, without the problems that plague mum allowable amount under HUD the homes built but has not yet found many low-cost homes. “These houses cost guidelines for the city of Houston’s down another group with the human resources to more to build but will last forever,” says payment assistance program. take on the project on the scale he envisions. Turner, a visiting assistant professor at UH. The CRC, however, considers the exper- “What we hope to do is have 10 to 20 units The project, completed in spring 2000, iment a great success. With some cost- built at once,” he says. “They are too nice and was not without its problems. Because the related modifications, Payton envisions too practical to not keep it going.” ■ students could generally work only on the Venturi homes as a key element in the weekends, the project took far longer to revitalization of the Fifth Ward, where the complete than expected. Construction typical single-family residence is a 50- For more information, contact Fifth took more than 300 days, rather than the year-old shotgun house. “A diverse array of Ward Community Redevelopment Corp. at 120 that had been scheduled. Kathy Pay- housing is important to attracting families (713) 674-0175. — Jackie Hoyer A WOMAN’S PLACE IS IN HER OWN HOME Woman-headed households are a women, regardless of income, in the ing, and down payment and closing cost growing segment of the housing market, homebuying process by December 2002. assistance. due largely to rising divorce rates, later In Houston — where the program is The program is designed to tackle the marriage and increased life expectancy. called Women Headed Household Home- major barriers women face in buying a By 2010, projections show, women will ownership Initiative — the Fannie Mae home. Research shows that women head almost 28 percent — or 31 million Partnership Office and the McAuley Insti- generally have lower incomes than men — of U.S. households. tute have joined local entities that include and frequently have credit issues as a But despite a fourfold growth in the city of Houston, United Way of the result of divorce or widowhood. Other woman-headed households since 1950, Texas Gulf Coast and the Houston Area barriers are a lack of knowledge and only half own their own homes. Fannie Urban League to encourage public and intimidation about homebuying. Fannie Mae and the McAuley Institute initiated a corporate support for educating women Mae focus group research found that program in spring 2001 to promote about homebuying and expanding their women often don’t see themselves as home ownership for women in a number access to it. Five homebuilders, a home homeowners, even when they’re finan- of major metropolitan areas, including improvement store, three banks, five cially capable of handling a mortgage. ■ Houston. Nationally, they hope to help mortgage companies and more than 30 40,000 low-income women achieve community-based organizations are also home ownership. In Houston, the goal is contributing to the effort, which involves to engage 1,000 households headed by educational workshops, credit counsel- For more information on the program, call Fannie Mae at (202) 752-7753. Federal Reserve Bank of Dallas | PERSPECTIVES 7 Faith and Housing Continued from page 3 Plan a Development ✓ Listen to the community’s needs Corinthian Pointe is scheduled for and wants. completion in 2005. As of November 2001, ✓ Conduct a market study in the loans had been closed on 108 homes and neighborhood. demand remained high. In September, it took only 15 minutes for buyers to snap up 30 new Ryland homesites. The homes’ value and affordability are proving irresistible, and Pyramid RCC couldn’t be more pleased. As Caldwell says, “So far, so great.” ■ — Jackie Hoyer What’s a TIRZ? Tax Increment Reinvestment Zones are special districts created by local governments to stimulate the redevelopment of BECOMING A DEVELOPER Initiate a Project ✓ Identify the project best suited for the community. Many faith-based organizations have ✓ Build a development team, which expressed interest in becoming afford- might include members of the congre- able housing developers. Perspectives gation, community and city representa- asked Lorenzo Littles, Dallas director tives, bankers, real estate brokers, of the Enterprise Foundation, for rec- development experts and builders, a ommendations on how to go about it. lawyer, an accountant, an architect, a Here’s what he suggests. marketer and other potential funding Develop a Strong Community Devel- sources. opment Corporation Develop a Sound Financial Plan ✓ Seek out experts for advice at every ✓ Develop a project budget. ✓ Explore all sources of funding, stage of the project’s development. blighted areas or entice investment that ✓ Talk with the organization’s leader- including loans, equity investments, would not otherwise occur. TIRZ authori- ship and review the mission to assess if grants, foundations, public money, pri- ties use their revenues to finance public becoming a housing developer is in the vate donations and member resources. improvements in the district, which attracts organization’s best interest. private investment because costs associated with the development are reduced. Revenues to the authority come from ✓ Prepare information that funding ✓ Assess the organization’s financial sources will need to assess the organi- and operational capacity to expand zation’s stability, resources and experi- activities. ence, as well as its ability to complete incremental tax increases resulting from ✓ Set up a separate organization as new development. When the zone is the development arm of the faith-based established, participating taxing entities organization. the development and, if necessary, provide long-term management. This is only the beginning. The organi- are limited to revenues from the existing ✓ Develop bylaws, a mission state- zation will need to locate suitable and avail- tax base for the life of the TIRZ. Taxes on ment, a strategic plan and a strong able land, provide any needed infrastruc- increased property values resulting from board of directors to support the new ture, review and modify architectural and improvements — the tax increment — go organization’s mission. engineering designs, inspect the final work, to the TIRZ authority to pay any debt incurred for investments in infrastructure ✓ Hire an executive director with and lease or sell what’s built. development experience. or to make additional improvements. ■ perspectives Federal Reserve Bank of Dallas Community Affairs Office P.O. Box 655906 Dallas, TX 75265-5906 Gloria Vasquez Brown Vice President gloria.v.brown@dal.frb.org Nancy C. Vickrey Assistant Vice President and Community Affairs Officer nancy.vickrey@dal.frb.org 8 www.dallasfed.org 2001, Issue 2 PERSPECTIVES Toby Cook Community Affairs Specialist toby.cook@dal.frb.org Diana Mendoza Community Affairs Specialist diana.mendoza@dal.frb.org Veronica Garza Community Affairs Specialist veronica.garza@dal.frb.org Publications Director: Kay Champagne Editor: Monica Reeves Designer: Tonya Abna Issue Editor: Jackie Hoyer Jackie Hoyer Houston Branch Senior Community Affairs Advisor jackie.hoyer@dal.frb.org | Federal Reserve Bank of Dallas December 2001 The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted if the source is credited and a copy is provided to the Community Affairs Office. Webzine e-Perspectives is on the web at e-perspectives.org. Look for a new issue six times a year.
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