HomeMy WebLinkAbout1984-03-27 Info PacketCity of Iowa City
MEMORANDUM
DATE: March 16, 1984
TO: City Council
FROM: City Manager
RE: Informal Agendas and Meeting Schedule
March 20,
1984
Monday
Tuesday
6:30 - 9:00 P.M.
Conference Room
6:30
P.M. -
Discuss
liquor license procedures
6:45
P.M. -
Discuss
beer gardens
7:00
P.M. -
Discuss
Building Extension onto City Plaza
7:15
P.M. -
Discuss
proposed Forestry Plan
7:45
P.M. -
Discuss
Senior Building Inspector Position
8:15
P.M. -
Discuss
proposed Consultant Selection Procedures
8:45
P.M. -
Council
time, Council committee reports
March 26,
1984
Monday
6:30 - 9:00 P.M.
Conference Room
6:30
P.M. -
Review zoning matters
6:45
P.M. -
Sale of Hawkeye CableVision - City Issues
7:00
P.M. -
Establishment of Urban Environment Ad Hoc Committee
7:10
P.M. -
Old Library Redevelopment
7:25
P.M. -
Criteria for Sidewalk Cafes
7:40
P.M. -
Space Needs for City Operations - Alternatives
8:05
P.M. -
Report of Economic Development Ad Hoc Committee
8:35
P.M. -
Council agenda, Council time, Council committee reports
8:50
P.M. -
Consider appointments to the Mayor's Youth Employment
Board and Housing Commission
March 27,
1984
Tuesday
7:30
P.M. -
Regular Council Meeting - Council Chambers
April 3, 1984 Tuesday
6:30 - 8:45 P.M. Conference Room
6:30 P.M. - Sewerage System Facilities Plan - Alternatives
7:30 P.M. - Traffic Signals - Flashing Mode
7:45 P.M. - Melrose Court Improvements
8:00 P.M. - Transit Route Revisions
8:30 P.M. - Council time, Council committee reports
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City Council
March 16, 1984
Page 2
April 9 1984 Monday
6:30 - 8:30 P.M. Conference Room
6:30 P.M. - Review zoning matters
6:45 P.M. - Extension of Scott Boulevard
7:15 P.M. - Minimum Open Space Requirements i
7:45 P.M. - Council Actions with Member(s) Absent
8:00 P.M. - City Employees on Boards and Commissions
8:15 P.M. - Council agenda, Council time, Council committee reports
8:25 P.M. - Consider appointments to the Charter Review Commission
April 10 1984 Tuesday
7:30 P.M. - Regular Council Meeting - Council Chambers
PENDING LIST
Priority A: Iowa -Illinois Gas and Electric Franchise
IRB Policy - Housing
Priority B: Duty/Procedure Changes - Housing and Inspection Services
Lower Ralston Creek Parcels - Use and Configuration
Congregate Housing Development Alternatives
Newspaper Vending Machines
Iowa Theater Type Problems
Parking Study Recommendations
Priority C: Housing Inspection Funding Policy
Housing Market Analysis Recommendations
Willow Creek Park Sidewalk
North Dodge/Old Dubuque Road Project
Appointment to Parks and Recreation Commission - April 24, 1984
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City of Iowa City
MEMORANDUM
Date: March 16, 1984
To: City Council �J
From: City Manager,,��-��;a'—
Re: Consultant Selection Procedures
Some months ago the City Council discussed the desirability of adopting
a policy for the selection of consultants. Attached are procedures and
a resolution for adoption. The original draft was prepared by Chuck
Schmadeke and virtually all departments offered suggestions for
modifications. Input was also received from consultants and various
professional organizations. The procedures are designed to be rela-
tively simple while being comprehensive enough to provide an effective
selection process.
The differentiation between those contracts approved by the City
Manager and the City Council correspond with the provisions of the
purchasing regulations previously adopted by the City Council. This
matter is scheduled for informal discussion on March 20.
/sp
cc: Department Heads
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RESOLUTION NO.
RESOLUTION ESTABLISHING CONSULTANT SELECTION PROCEDURES.
WHEREAS, the City finds it necessary to retain consultants to provide
various engineering, architectural and other professional services; and
WHEREAS, it is in the best interest of the City to establish fair,
reasonable and orderly procedures for selecting professional consultants
of demonstrated competence at fair and reasonable rates of compensation,
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL:
1. That the attached Consultant Selection Procedures hereby are adopted.
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2. That the City Clerk shall furnish said procedures to any citizen
requesting same.
3. That the subject procedures are effective immediately, except for
projects or programs for which proposals have been received before the
date of this resolution.
It was moved by and seconded by the Resolu-
tion be adopted,an upon roT1 call there were:
AYES: NAYS: ABSENT:
AMBRISCO
BAKER
_ DICKSON
_ ERDAHL
_ MCDONALD
_ STRAIT
ZUBER
Passed and approved this day of 1984.
MAYOR
ATTEST:
CITY CLERK
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City of Iowa City
Consultant Selection Procedures
A. Purpose.
These consultant selection procedures guide all City departments involved
in procuring engineering, architectural, and other professional services.
The intent of these procedures is to ensure that the most qualified firm is
selected, taking into account cost of services and available funding, and
that an equitable distribution of work among qualified firms is balanced
with the need for continuity in long-term projects or programs.
B. Local Preference.
When two or more consultants are equally qualified, preference will be
given to local firms; i.e., a principal office in Johnson County.
C. Evaluation Criteria
The Purchasing Division of the Finance Department will provide assistance
in the development of evaluation criteria and a rating system.
D. Informal Contracts (fee of $10,000 or less)
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1. Develop a written general description of consultant services required,
including a definition of the problem to be addressed, the criteria for
evaluation and the basis for award.
2. Contact firms for a written proposal which will include a not -to -exceed
cost, a description of the services to be rendered, and a date of
completion of services. Such proposal is to be based upon the general
description of consultant services prepared by the City.
3. A list of firms contacted shall be maintained and if fewer than three
proposals are solicited, the reasons for this decision shall be
documented.
4. Authorize the selected firm to proceed with the work after acceptance
of the proposal by the City Manager.
5. Upon completion of the project, the responsible City staff shall
prepare a brief assessment of the consultants' work, to include both
positive and negative characteristics, if appropriate, for the selec-
tion process file for future reference.
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E. Formal Contracts (fee of more than $10,000)
i. Develop a written description of consultant services required (request
for proposal, RFP). Include a definition of the problem to be ad-
dressed, a description of the application procedures, the evaluation
process, written evaluation criteria and the rating system for the
criteria. The rating system should be described but not included in
the RFP so that the consultant is precluded from slanting the proposal
based on the rating schedule.
2. Provide the RFP to a sufficient number of firms to ensure that at least
three qualified firms are interviewed.
3. If the project is Federally funded, ensure that all Federal require-
ments are met, including publication.
4. Require consultants to submit written proposals by a specific date and
time. Each proposal shall include: (a) description of services to be
rendered; (b) date of completion of services; (c) estimate of total
cost of services; (d) professional experience of employees; (e)
identification of employees who will be involved in the project; (f)
demonstration of experience, design, and technical competence of the
firm; and (g) capacity and capability of the firm to perform the work,
including any specialized services, within the time limitations; (h)
list of previous clients for whom similar work has been performed; (i)
sub -contractors, if any; and (j) nature of any previous work relation-
ships with sub -contractors.
5. A copy of all proposals received will be filed with the City Clerk.
6. Based on the written evaluation criteria and rating system, staff will
review all proposals received in order to determine a field of final
candidates or may interview all candidates.
7. Staff will conduct personal interviews of all firms included in the
field of final candidates. Staff will judge the performance of those
firms interviewed based on the written evaluation criteria and rating
system.
8. After rating those firms interviewed, staff will ask one or more of the
firms interviewed to submit a final not -to -exceed cost and will
negotiate a fee.
9. Upon completion of the project for which the consultant is retained,
the responsible City staff shall prepare a brief assessment of the
consultant's work, to include both positive and negative characteris-
tics, if appropriate, for the selection process file for future
reference.
F. Variations in Selection Process
When it is deemed that persons other than staff, such as community repre-
sentatives with special expertise and/or City Council members, could
contribute to the selection process, the procedures may be modified to
include participants other than staff in any part or all of the selection
process.
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City of Iowa City
MEMORANDUM
Date: February 21, 1984
To: Senior Building Inspector Selection Committee
From: City Manager
Re: Senior Building Inspector
Although the City has received numerous applications for the position of
Senior Building Inspector, the identified candidates do not seem to possess
the desired mix of technical skills and experience required by Iowa City. In
addition, a significant amount of the time of the previous Senior Building
Inspector was directed to areas of concern other than the traditional
building functions. Therefore, Mike Kucharzak is recommending several
changes in the classification of the Senior Building Inspector position.
All supervisory responsibilities, such as hiring, evaluation, promotion,
discipline and dismissal of employees will be eliminated from the assigned
job duties, along with all responsibilities for budget preparation and
monitoring. These responsibilities will be assumed by the Department Head.
In addition, the coordination with various boards and commissions, together
with all zoning interpretation responsibilities, will be assumed by the
Director.
The position of Senior Building Inspector will be moved from the administra-
tive pay plan into the AFSCME pay plan. This move will correctly classify
the position duties as a lead worker who will give day-to-day directions to
the Building Inspection personnel; i.e. deciding time between plan checking,
the permit counter and field inspection on major projects.
The salary range will be set at $20,363-$25,625, as compared to the present
range of $21,132.80-$30,035.20. The Human Relations Director will immedi-
ately advertise for a Senior Building Inspector. This change should provide
a higher level of direct service to the building trades community.
I have attached a revised job description for your review. If you have any
comments, please contact Mike Kucharzak.
Enc: job description
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cc: City Council
William Frantz
Mike Kucharzak
Dale Heliing
Anne Carroll
M
TITLE: SR. BUILDING INSPECTOR/HOUSING
AND INSPECTION SERVICES
DEFINITION:
Under general supervision performs work of considerable difficulty as a lead
worker in plan review and building inspection activities and performs other
related work as required.
EXAMPLES OF DUTIES:
Reviews construction plans for building, plumbing, mechanical, electrical and
state code compliance.
Conducts meetings with realtors, attorneys, architects, engineers, contrac-
tors and developers to correct code problems. Answers questions and inquir-
ies concerning code requirements; investigates and resolves complaints from
the public.
Interprets and prepares amendments to regulatory codes for life safety
purposes.
Inspects new, remodeled or repaired commercial, industrial, institutional and
residential buildings for conformance with the building code; may inspect for
conformance with a specific code(s): electrical, plumbing, heating, mechani-
cal, zoning, general building specifications and other related codes and
regulations. Identifies code violations and advises of code requirements.
Approves final code conformity upon project completion.
Issues building permits, ascertains contractor's licenses and schedules
prescribed inspection. Collects permit fees. Prepares correspondence,
recommendations and reports. Submits and maintains records and/or reports on
all inspections. ;
Attends Board of Licensing Examiners or appeals meetings and hearings;
presents evidence on behalf of the City; may serve as secretary to boards and
commissions.
May serve as backup inspector for other inspections such as electrical,
building, plumbing, heating, zoning, mechanical and other special inspections
as requested. May advise housing inspectors on technical problems.
Files charges and appears in court to testify on behalf of the City on
matters related to code enforcement.
Assists in the development of budget requests and division goals.
TRAINING AND EXPERIENCE:
High school graduation and four years of responsible experience in building
code enforcement or a related field is necessary. An equivalent combination
of education (in architecture,engineering, or directly related field) and
experience from which comparable knowledge and abilities can be acquired may
be substituted. Specific experience in a particular skilled trade may be
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required. Certification as a Building Inspector or Combination Inspector or
Plans Examiner or mechanical, plumbing or electrical certification is
preferred.
KNOWLEDGE AND SKILLS:
Considerable knowledge of:
the materials, methods and practices used in building construction and the
stages of construction when possible defects and violations may be most
easily observed and corrected.
the codes, regulations and ordinances governing building construction.
legal procedures as related to the enforcement of municipal codes and
ordinances.
codes, regulations and ordinances governing electrical, plumbing, heating
and mechanical installations and zoning specifications.
Some knowledge of:
effective supervisory practices.
Considerable skill in:
reviewing pre -construction plans for code compliance.
establishing and maintaining effective working relationships with archi-
tects, engineers, contractors, property owners, municipal officials and
the general public.
the use of standard equipment and measuring devices in the building trade.
reading and interpreting plans specifications and blueprints and comparing
them with construction in process.
recognizing faulty construction or hazardous conditions likely to result in
collapse or failure of supporting walls, foundations, or structures and
appraising for quality. of condition and physical deterioration.
explaining, interpreting and enforcing codes, regulations and ordinances
firmly, tactfully and impartially.
reading and comprehending construction codes and related materials.
Working skill in:
preparing work reports and keeping records.
identifying property boundaries from legal descriptions.
expressing oneself clearly and concisely, orally and in writing.
REQUIRED LICENSES AND CERTIFICATES:
Possession of a valid driver's license issued by the State of Iowa.
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City of Iowa City j
MEMORANDUM
DATE: March 16, 1984
TO: City Council
FROM: City Manage:
RE: Plaza Leases
At the informal Council session on March 20, 1984, the City Council will
discuss leasing portions of City Plaza. Attached are a proposed lease
agreement from the City Attorney, a memorandum from the Planning and
Program Development Department discussing various lease rate alternatives,
and a memorandum from Andrea Hauer raising several other issues. At the
informal Council session we will want to reach consensus as to whether
or not these proposals are compatible with the Council's wishes.
—5Z /
City of Iowa City
MEMORANDUM
DATE: March 15, 1984
TO: Assistant City Manager
FROM: Robert W. Jansen, City Attorney �\ '
RE: Lease Agreement for City Plaza Additions
Attached is a draft of a lease agreement for additions to
buildings located in the City Plaza. As you know, the City
has not developed a standard lease form and this draft is
intended to meet that purpose. We should be able to use it in
all cases.
I have examined Chapter 9.1 of the City Code (Plaza Ordinance)
and do not see any need to amend the Ordinance at this time.
Section 9.1-8(c) permits leasing public right-of-way for the
purpose of constructing an addition to an existing storefront.
The city manager, upon approval of city council, may enter into
an agreement for the leasing of the area. The lease shall be
subject to a number of conditions contained in the ordinance,
e.g. harmonious design, suitable materials, etc. In addition,
design review committee approval is required for any extensions
to assume architectural harmony with the other buildings on the
Plaza. Sec. 9.1-3 designates Zone 1 as the area where extensions
are permitted and they may not extend more than 10 feet.
The proposed draft is designed to ensure the following:
1. No change in the use or purposes of the extension shall
occur without the approval of the City Manager. (Par. 4).
2. Indemnity for any claims or losses including damage to
utilities located under the extension. (Pars. 6 and 12).
3. Responsibility for maintaining the premises in a clean
and hazard -free condition for. a 10 foot perimeter. (Par. 7).
4. Maintaining the appearance of the extension. (Par. 8).
5. Termination in -the event of the abandonment of the use
or for violations of Plaza ordinance regulations and enumerated
grounds. (Par. 10).
6. Removal of the addition, at lessee's expense, if there
is a revocation of the lease or upon termination at the option
of the City. (Pars. 8 and 15).
cc: City Manager
Andrea Hauer
City Council
AGREEMENT FOR LEASE OF PUBLIC RIGHT-OF-WAY IN THE CITY PLAZA
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THIS AGREEMENT FOR LEASE OF PUBLIC RIGHT-OF-WAY IN THE CITY
PLAZA entered into this day of , 198_,
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by and between the City of Iowa City acting by and through the
City Manager hereinafter known as Lessor and
hereinafter known as Lessee(s) on the following terms and conditions:
1. This Agreement is for the purpose of leasing a portion
of the public right-of-way in the City Plaza for the construction
of an addition to an existing store or building front owned (or
rented) by the Lessee(s), which addition extends into the public
right-of-way for a distance of feet. A diagram showing the
dimensions of the addition and the number of feet same extends
into the right-of-way is hereto attached as Exhibit A. The
address of the building is
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2. This Agreement is executed pursuant to Chapter 9.1 of
the Code of Ordinances of the City of Iowa City and the
provisions contained therein. This Agreement and the parties'
obligations hereunder shall be subject to all City Plaza
regulations now in force or hereafter enacted where applicable.
3. This Agreement shall commence on the day of
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, 198_, and shall terminate on the day of
, 198_ This Agreement shall be renewed for an
additional like period of years on the same terms and
conditions except for the rental to be paid. If neither party
desires to renew this Agreement, the party not wishing to renew
.same shall give the other party notice in writing of its
intention not to renew at least 90 days prior to the termination
SG 9
date of this Agreement.
S. The addition to be constructed shall be used for the
purpose (s) of
No change in the use for the
purposes listed herein shall be permitted unless same is approved
by the City Manager in writing. Any such change shall then be by
written amendment to this Agreement.
5. Lessee(s) shall pay to Lessor the sum of $
upon the execution of this Agreement and the sum of $
payable each year thereafter on the anniversary date of this
Agreement for a period of years for the rental of the
public right-of-way. Thereafter the City Council may, by
resolution, increase the yearly rental for a like period of years
and for each consecutive like period thereafter during the term
of this lease agreement.
6. Lessee(s) shall indemnify, defend and save harmless the
Lessor, its agents, officers and employees, from and against all
claims, damages, losses and expenses in any manner resulting
from, arising out of or connected with the construction, use,
maintenance or removal of the addition or its use. Lessee(s)
shall at all times maintain a policy of liability insurance in
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the minumum amount of $500,000 for personal injuries, and $150,000
for property damage arising out of the construction, use,
maintenance or removal of the addition or its use.
7. Lessee(s) shall be responsible for maintaining the area
adjacent to the leased premises in a clean and hazard -free
condition including ice and snow removal for a distance of 10
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feet surrounding the structure or addition.
8. Lessee(s) shall at all times maintain the exterior in a
manner consistent with the original design and same shall not be
permitted to deteriorate or present an unsightly appearance.
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Failure to maintain as provided herein shall be cause for
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revocation of this Agreement and Lessor may order removal of the
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addition from the public right-of-way at the expense of
j Lessee(s).
9. Lessee(s) represents and warrants that all conditions
concerning building design, signs and Design Review Committee
design criteria have been met at the time of execution of this
Agreement or will be met within months.
10. Any abandonment of the use of the addition or any
violation of the City Plaza ordinance regulations shall be cause
for termination of this Agreement. In addition, the following
may also be grounds for revocation:
A. Failure to pay the annual rental payment.
B. Failure to maintain liability insurance.
C. Assignment or transfer of this Agreement without the
written approval of the City Manager.
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D. Failure to comply with all applicable City building,
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plumbing, fire and electrical codes.
E. Repeated violations of city and state liquor laws.
F. Failure to comply with Johnson County Health Department
regulations.
11. ANY USE OF THE PREMISES FOR THE PURPOSE OF SELLING BEER
OR LIQUOR OR WINE SHALL NOT BE PERMITTED UNTIL THERE IS FULL
COMPLIANCE WITH ALL STATE AND CITY LAWS GOVERNING LICENSING AND
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DRAM SHOP INSURANCE.
12. Lessee(s) shall indemnify and hold harmless the Lessor,
its agents, officers and employees from and against any and all
claims, damages, losses and expenses arising from damage to or
destruction of utilities located in the public right-of-way
during the term of this agreement or any extensions or renewals
thereof.
13. LESSEE(S) SHALL FURNISH A CONSTRUCTION BOND TO THE
LESSOR DURING CONSTRUCTION IN AN AMOUNT TO BE DETERMINED BY THE
CITY MANAGER.
14. THIS AGREEMENT SHALL NOT BE OF FORCE AND EFFECT UNTIL A
BUILDING PERMIT HAS BEEN ISSUED.
15. Upon termination of this Agreement the Lessor may, at
its.option, order the addition removed and all costs for removal
shall be borne by Lessee(s). Removal shall include restoration
of the surface of the Plaza on which the addition was located.
16. Additional Provisions: Additional provisions, if any,
are set forth on Exhibit B attached hereto.
City Manager
LESSOR
Owner
Tenant
LESSEE(S)
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City of Iowa City
MEMORANDUM
Date: March 16, 1984
To: Neal Berlin, City Manager
From: Don Schmeiser, Director of Planning & Program Development
Re: Setting Lease Rates for City Plaza
This memo suggests several different methods of determining lease rates for
businesses using the City -owned right-of-way on or above City Plaza.
In general, lease rates usually are based partly on receiving a portion of
the income produced on the property. In the case of leasing City Plaza,
these conditions are not known. To simplify the City Plaza leasing proce-
dures, it is recommended the lease rate be based on the assessed land value
(not the building improvement value) as is recorded in the City Assessor's
office.
After examining the land valuations for businesses fronting the City Plaza,
the following was found:
1. Lineal frontages on most businesses range from 20 to 40 feet. The
smallest frontage for a ground level business was 13 front feet and the
largest was 270 front feet;
2. The square foot land value of property for most businesses range from
$22-528 per square foot. The lowest land valuation per square foot was
$15.16, the highest was $49.48, and the average was 527.11/square foot;
and
3. The land value of a front lineal foot ranges generally from $2,100 to
$2,700. The lowest front lineal foot value was $1,237, the highest was
$3,500, and the average was 52,765/lineal front foot.
Because of the range of values, it seems fair to charge a set of rates rather
than a flat fee for leases. Lease rates should also reflect (1) an amortiza-
tion rate for the improvement and (2) an escalator clause to allow for a
charge in the land value over the life of the lease. Suggested is a 15 year
amortization period based on the federal tax depreciation rates and a review
of the land value once every two years for the escalator clause.
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Shown below for discussion purposes are suggested rates for leases.
AVERAGE LAND VALUES METHODS
Rates for Use of City Plaza Based on Average Land Values
Size of Rate per Front Lineal Rate per Square Foot
Buildino Addition Foot/Lease Lenath Value/Lease Lenath
0-100 Sq. Ft.
$2,000/15
Years
$20/15
Years
101-200 Sq. Ft.
$2,500/15
Years
$25/15
Years
200 Feet+
$3,500/15
Years
$35/15
Years
Signs and other Permanent Extensions into City Plaza: Fifty percent of the
building addition rate.
Awnings and Other Temporary Extensions: $1.00 and subject to any Coun-
cil -imposed restrictions.
Actual Land Values Methods: Rates could also be based on the actual square
foot or front lineal land value for the individual property rather than using
average values. Signs and other permanent extensions would pay fifty percent
of the building addition rate. Awnings and other temporary extensions would
pay $1 and be subject to any Council -imposed restrictions.
i To illustrate the revenue yielded by each method, the following example is
given. A business, with an assessed land value of $28.00 per square foot and
a $3,000 front lineal foot value, which would like to add a 15' wide x 10'
deep building front extension, would be charged:
A. Average front lineal foot lease rate: $37,500 over a 15 year period.l
B. Average square foot lease rate: $3,750 over a 15 year period.
C. Actual front lineal foot value lease rate: $45,000 over a 15 year
period.3
D. Actual square foot value lease rate: $4,200 over a 15 year period.4
Many retail businesses chose a location based on lineal frontage and for that
reason, the front lineal rate may be the most reasonable rate to consider.
Both the average and actual square footage lease rates in this typical case
are about the same or are lower than the City Plaza vendor fee. Given the
permanent nature of a building addition, which will decrease the amount of
City Plaza space available for pedestrian use, versus the seasonal or tempo-
rary use of Plaza by vendors, it seems reasonable that the building addition
lease rates should be more than vendor fees.
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1The average front lineal foot lease rate value was found by multiplying the
lineal front footage of the building addition (15 feet) by the average front
lineal foot rate ($2,500): 15 X $2,500 = $37,500.
217he average square foot lease rate value was found by multiplying the square
footage created by the building addition (150 square feet) by the average
square foot land value found in the average land values chart ($25): 150 x
$25 = $3,750.
317he actual front lineal foot value was found by multiplying the lineal front
footage of the building addition (15') by the actual front lineal foot value
($3,000): 15 x $3,000 = $45,000.
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4The actual square foot lease rate value was found by multiplying the square
footage created by the building addition (150 square feet) by the actual
assessed square foot land value ($28): 150 X $28 = $4,200.
bj3/5
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City of Iowa Cit,;
MEMORANDUM
Date: March 14, 1984
To: Don Schmeiser
From *'Andrea Hauer
Re: Additional Considerations in Leasing City Plaza Space
This memo should be considered in tandem with the leasing rates memo for City
Plaza. During the lease rates discussion, a number. of problems presented
themselves. These include:
1. Whether or not direct entries or exits in a. building extension on City
Plaza should be permitted;
2. Whether the building extension should be handicapped -accessible; and
3. How to deal with sidewalk cafes or other seasonal uses (such as a flower
stand in front of a florist's shop).
Another issue raised was if the full ten foot depth of the lease space was
used by a business, that in some cases such as Plaza Centre One, there is no
remaining space left in front of the stores because the building additions
would extend up to the City Plaza planters. One concern expressed was that
window shopping would then be severely restricted and negatively affect the
ambience of City Plaza.
Lastly, justification should be provided when setting these lease rates as to
why the City is charging for use of this particular public right-of-way while
it has not charged for other business's use of the right-of-way on a compa-
rable basis. Consideration should also be given to executing a lease with
businesses which have signs or other items overhanging in the City right-of-
way outside of the City Plaza. Also, some thought should be given to the
issue of charging for vault and other below -ground uses of the public
right-of-way.
bj5l7
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City of Iowa City
MEMORANDUM
Date: March 9, 1984
To: City Council
,c�
From: City Managerz�
Re: Comparable Worth
Comparable worth is viewed by many groups as the major human rights agenda
item in both public and private employment for the rest of the '80s. The
recent court decision in the State of Washington and the comparable worth
study by the State of Iowa both are indicative of the significance of the.
issue.
The attached memorandum from Anne Carroll describes how Iowa City has
been at the forefront in the resolution of this issue. Major comparable
worth changes have been made in Iowa City's personnel system in recent
years.
We are not aware that the process, which used a participative
union/management job evaluation study, has previously been used by either
government or private business for resolving comparable worth issues.
tp/sp
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City of Iowa City
MEMORANDUM
Date: February 24, 1984
To: City Council
From: Anne Carroll, Director of Human Relations
Re: Comparable Worth in City Employment
The subject of comparable worth - that employees should receive equal pay
for work of comparable value, has generated a considerable amount of
publicity following the judgment against the State of Washington and with
the current State of Iowa comparable worth study in progress. This memo
is intended to summarize the City of Iowa City's efforts in the area of
comparable worth over the last several years.
Comparison of the "worth" of jobs relative to each other for purposes of
establishing pay is accomplished through a process known as job evalua-
tion. Through job evaluation all jobs are rated in relation to each other
and to a common set of job dimensions built into an evaluation system. The
job dimensions usually include, for example, interpersonal skills/com-
munication requirements, physical labor, adverse weather exposure, likely
result of errors, supervisory responsibilities, etc. The weighting of
these job dimensions is determinative of whether the system is oriented
towards comparable worth. "Non -comparable worth" systems tend to weigh
more heavily dimensions such as physical labor which are more typically
founfemaleijobsauch aslp publicmale
relationsnd underrate
requireme requirements, elericalemands oprecisionoand
accuracy, etc.
During 1981, the City Council funded a job evaluation study of all
Administrative positions. This study was followed in 1982 by a study of
Confidential positions and negotiation of an AFSCME position study. The
job evaluation system purchased was developed by the consultants
Hayes/Hill, Inc. and was selected for a balanced weighting of job dimen-
sions which reflected a comparable worth orientation. All studies were
conducted by employee committees, which evaluated information submitted by
questionnaire for each covered City employee's position. The AFSCME
committee, comprised of four AFSCME employees and four management em-
ployees, is the first such participative union/management job evaluation
study that we are aware of nationally. AFSCME members had the right to
vote on the results of the' study and did vote to accept them. For all
three employee groups, standing committees now meet to evaluate occasional
job changes and job evaluation requests from employees, and make recommen-
dations to the City Council.
We believe that the results of these studies do reflect a comparable worth
orientation and a balanced evaluation of traditional male vs. traditional
female jobs. The following representative AFSCME salary grade (Grade 5,
$13,915 - $17,721) illustrates this balance between the predominantly male
Maintenance Worker positions and the predominantly female clerical
positions:
S76
Page 2
Salary Grade 5
M.W. II - Senior Center
M.W. II - Traffic Engineering Signs
M.W. II - Transit
Sr. Clerk/Typist - Treasury
Sr. Clerk/Typist - Police Records
Sr. Account Clerk - Accounting
M.W. III - Parts Clerk
M.W. II - Water Service
M.W. II - Water Meter Repair
M.W. III - Equipment
It is also important to add that we have been increasingly successful in
placing females in formerly male dominated positions, and for example, in
this salary grade, both the 14W II - Water Service and MW II - Water Meter
Repair are held by females.
Positions are assigned to salary grades based solely on the job evaluation
system (internal equity) and collective bargaining, if applicable. The
"labor market" received no specific consideration (except if positions are
found to be underpaid by 15% or more in comparison to other large Iowa
cities). Consequently, our traditional female clerical positions are
relatively highly paid in comparison to other, such positions within the
Iowa City community. The "labor market" does, of course, receive general
consideration in bargaining the across-the-board increase applicable to
the entire salary grade structure.
The AFSCME study is a good example of our implementation procedures. Study
results were implemented by a special allocation, established through
collective bargaining, of $30,000 which was deducted from the AFSCME
across-the-board increase in FY83. This allocation was sufficient to move
all positions needing adjustment at least to the minimum of the appro-
priate salary range and also provided for a small special increase to the
affected job incumbent. As a result of the AFSCME study, a large number
of positions (1/3 of all positions) and both "male" and "female" positions
increased or decreased in classification to reflect the new internally
established worth of jobs.
In summary, we feel that the City's current job evaluation system provides
for equity in compensation for all positions based on the knowledge,
skills, and abilities necessary in those positions but especially recog-
nizes through its comparable worth orientation the real value to the City
of traditional female positions.
Please contact me if I may provide any additional information with regard
to our job evaluation system or the concept of comparable worth.
/sp
-5 70
CITY OF
IOWA CITY
CIVIC CENTER 410 E. WASHINGTON ST. IOWA CITY, IOWA 52240 (319)356-500C)
March 9, 1984
Dr. Steven Hedlund
Councilmember, University Heights
1490 Grand Avenue
Iowa City, Iowa 52240
Dear Dr. Hedlund:
Several weeks ago you inquired as to whether or not the City of Iowa City
would be interested in renewing its water service contract with University
Heights upon its expiration in 1991. Except for technical changes so that
the contract will comply with current standards and ordinances of the
City, I see no reason why the City would not wish to continue providing
University Heights with water service. However, a final decision will be
made by the City Council at the appropriate time. I have sent a copy of
this letter to the City Council for its information. If you have any
other questions concerning this matter, please contact me.
Sincerel yours,
leBerlin
City Manager
bdw/sp
cc: City Council
.57/
i
I
0
RCCC?': ED ?':'.. 1 `, 1984
March 13, 1984
Mr. Neal G. Berlin
City Manager
City of Iowa -City
410 East Washington Street
Iowa City, IA 52240
RE: Bushnell's Turtle
Dear Neal:
The Engineering Report on the cracking problem is attached
for your review and analysis. As you can see, the problem
is minor in nature and readily repairable. Although some
of the cracking seems to have occurred prior to construction
of our hotel, we propose to repair all items covered by the
engineering report. We would propose to delay repair until
completion of the hotel so that any additional problems can
also be taken care of at the same time.
We believe our proposal to be a fair and equitable way to clear
up a problem estimated by our contractor to be an item of
$4,000 +. We would be willing to have independent bids taken
and would provide a bond in the amount of $25,000 to insure
our performance of the repairs.
Mr. Ed Zastrow has rejected our proposal on the advice of Mr.
Adrian Anderson. Since we believe our proposal is very fair,
we believe it is unreasonable to deny us access to the UDAG
funds over this issue. This denial is costing us $5,000 weekly
and endangering the completion of the project.
Vernon Beck & Associates, Inc.
Commercial Financing .. Commercial Real Estate Development
612/927.5310
3100 West Lake Street • Minneapolis, Minnesota 55416 57_7—
Mr. Neal G. Berlin
March 13, 1984
Page 2
We need immediate action to avert a potentially serious
problem with the completion of our hotel. The financial
losses from our side are completely out of proportion
to the level of the damage to Bushnell's.
To allow Mr. Zastrow (a long term opponent of this project)
to hold up our funding is outrageous. I seriously question
the methods being employed and demand relief.
Begards,
es�
Vernon R. Beck
President
Enclosure
cc: Adrian Anderson
HUD Regional Office
Charlene Dwin
Richard B. Peterson
Al Vijums
Governor of Iowa
S7�2—
I
1
SHIVE-HATTERY ENGINEERS (j f
Hlgnway 1 8 Inlerstaw 80 PCC B •. 1050 R
Iowa City IA 52240
319.354-3040
February 23, 1984
Adolfson & Peterson, Inc. Re: College Block Building
P.O. Box 9377 "Bushnell's Turtle"
Minneapolis, Minnesota 55440
Attention: Mr. Al Vijums
Dear Mr. Vijums:
h'a C.ty
Unr•npn.I
Uvs 1A,��rt
Duuuuun
Rur.F IS4"t0
On January 16, 1984, you requested our assistance to provide technical services
to monitor and evaluate the behavior of the above captioned structure. This
being in response to the building Owner's claim of damage resulting from
Ii construction operations at the Holiday Inn site on adjacent properties.
In response to your request, we have made continuing field observations
commencing on January 17, 1984. The immediate preliminary evaluation permitted
the conclusion that some foundation movements had recently occurred. These
movements would be reflected in conditions as observed and noted in the Owner's
claim. This preliminary evaluation also permitted the conclusion that the
stability of the structure and safety of the occupants of the building was not
compromised and the functional usage only nominally impaired. We also Concluded
that the adjacent construction should be continued and desirably should be
expedited.
Recognizing that movements had occurred, it was deemed necessary to determine if
movement was continuing and if so, the rate of movement. To this end, a
monitoring program was initiated with daily observations for a two week period
and thence with weekly observations. In our opinion, this monitoring should
continue with bi-weekly observations until equilibrium is demonstrated or until
restorative corrections are complete.
FIELD MONITORING
Twenty-three monitoring points on and in the structure are observed and
reported. Additionally, sixteen points on the temporary earth retaining
structure at the construction excavation have been monitored for horizontal
movement. At the date of this reporting, most of the monitoring points within
the structure have shown some minimal movement since the first observation.
Magnitude of movement, typically, is too small to measure with one measuring
point showing movements of about 1/16 inch. The survey monitoring of the
temporary retaining structure has been discontinued as the backfilling of the
excavated area to the new construction has commenced. During the monitoring
efforts lateral movements of .01 feet were reported.
�; �N,4':, Le-,, ...Ir 16 }•p c, „IHIIL'I L IA.: . l,F^11 NIJb 41 ! WHIRL 1`11V4F!:141 . I64N$PC'PT.:tION
Adolfson 6 Peterson, Inc.
February 23, 1984
Page '2
The building owners, Mr. Bob Barker and Mr. Ed Zastrow, have been most
cooperative throughout the investigation and monitoring period. They have
supplied information as needed and as available with unrestricted access to the
facilities. This spirit has permitted an orderly gathering of information and
should promote an orderly progression to complete the satisfactory correction of
the problems as they now exist.
BUILDING MOVEMENT
Based upon our observations and the information available to us, i2 is our
opinion that the excavation for the Holiday Inn has influenced the behavior of
the College Block Building. The cross-sectioned geometry of the site, the
schedule of construction operations, the absence of execution of prerequisite
construction details of the containment retaining wall, and the elastic
flexibility of this retaining wall all contribute to the reduction of lateral
containment to foundation materials at the edge of the excavation. The
decreased lateral containment in combination with elastic lateral deformations
permitted vertical settlements within the zone of influence of the retaining
wall. It is important to note that this is a predictable behavior, with the
magnitude a function of the many contributing variables.
With the partial completion of the compacted backfill between the new
construction and the lines of excavation, lateral containment of the foundation
materials has now been re-stablished. With the edge of the excavation frozen at
the time of backfilling, and a natural moisture content of 20 to 25 percent, an
expansion of 1/8 -inch to 1/4 -inch per foot of frost was possible. As the frozen
materials thaw, -a reduction of confining lateral pressure is possible with
additional relaxation and vertical settlement within the zone of influence.
In our opinion, the behavior of a structure that experiences foundation
settlement may be cyclic with a time lag behind the subsurface movements and the
structure movements. That is, as the supporting capacity of the foundation
material reduces, these materials seek equilibrium and reconsolidate. As the
supporting capacities of primary paths of resistance relax, secondary paths
develop and support the superimposed loads with residual stresses within the
structure. When these secondary stresses become excessive, local failures occur
to re-establish equilibrium and reflect in structural movement.
Our observations have permitted us to reach some probable conclusions relative
to magnitude of movements since defineable times of normal building maintenance
operations. The east side wall has moved out (east towards the new construction)
about 3/8 -inch since the basement was painted as measured on the first floor
joists. At the northeast corner, the east sidewall has moved down about
5/16 -inch in relation to the north endwall as measured internally on the
foundation and externally on the joint calking. There is no discernable
evidence to confirm or deny the settlement of the north end wall. The east side
wall does not reflect any signs of differential settlement which may be expected
since the adjacent new construction is nominally similar in length. The actual
magnitude of movements may be academic and this report will address the probable
SHIVE•HATTERY ENGINEERS
S7-2—
Adolfson & Peterson, Inc.
February 23, 1984
Page 3
direction of movement, the effects of such movements with resulting problems to
the structure and finally, the correction of the problems.
EFFECTS ON THE BUILDING
Our visual observations and evaluation identify the following effects on the
building and permit the development of the following hypothesis of movement:
1. The east foundation and bearing wall settled with rotation at the
bottom of the footing to permit movement outward at the first floor
ground line.
2. The north end wall foundation experienced little or no movement.
3. The north end wall from second floor line to top moved laterally to the
east.
4. The south wall reflects the combination of several effects, as follows:
a. The southeast corner of the foundation (new in 1978 restoration)
remains intact as a unit with southeast corner settlement
accommodated by rotation of the base at the joint with the original
stone foundation near the building center.
b. Diagonal shear failure in the masonry propagating from the
re-entrant corners of window and door opening.
c. Tension failure of the masonry to accommodate the eastward movement
of the east wall.
d. The interior of both the north and south walls refelct the stresses
created by movement of the east wall through openings of vertical
joints and mitered joints in the wood trim.
5. The center (north -south) foundation wall does not reflect transverse,
longitudinal or vertical movement and is presumed to be unaffected by
the new construction.
6. The north -south walls above the foundation are not affected by the new
construction except as they may be subjected to lateral movement of the
endwalls.
With hypothesized movements, potential problems that have been identified, but
which are not apparent with our evaluation, are as follows:
1. Racking windows on second floor; the apartment manager has opened one north
and one south. Conclude that a possible problem may exist and should be
addressed in corrective restoration.
SHIVE•HATTERY ENGINEERS
Adolfson & Peterson, Inc.
February 23, 1984
Page '4
2. Lateral movement of east wall from floor; visual evaluation on February
15th revealed that wall covering (paneling or base) projects over the
floor covering and conceals the movements that may have occurred.
3. Tension failure of dry wall ceilings; visual evaluation revealed no
problem.
4. Negative movement effects for first floor joint over interior support
with the east wall depressed by bearing settlement; visual evaluation
on February 15th reveals no evidence of loss of bearing on wall
support, no visible distress in the floor joints, and no deflection
reflection in the floor covering.
5. Failures of the roof membrane; visual evaluation on February 15 reveals
that this built up roof is sound and free of defects that could be
attributable to the recent movements experienced. The flashing at the
parapets and roof edges show no problem. Thus, we have concluded that
there is no concern with this building element.
6. The building front at the sidewalk shows no distress or movement that
might permit future surface water penetration and resulting problems to
the foundation and/or basement.
Those reported problems that are not readily attributable to the movements of
the structure, are as follows:
{
1. Vertical separation of the interior walls and/or wall coverings from
the floor.
2. Vertical separation of the counter tops from the wall mounted splash
boards (in second floor apartments).
3. Cracks in dry wall propagating from re-entrant corners on second floor
hallway walls.
4. "Bulging° dry wall on second floor longitudinal walls.
5. Improper fit of door trim to drywall in southwest apartment.
6. Cracks in masonry, east wall, exterior, appear to be old cracks and
shrinkage cracks in joint of 1978 construction appear to be old.
CORRECTIVE ACTION
The previously listed problems that are attributed to the foundation settlement
and resulting building movements require a restorative corrections. The
restoration procedures should be consistant with the character of the building,
cost effective, reasonable, fulfill the functional requirements, utilize
quality materials, and reflect high standards of workmanship. It is not the
intent of these procedures to correct deficiencies not related to the movements
SHIVE•HATTERY ENGINEERS .J 7-2—
Adolfson & Peterson, Inc.
February 23, 1984
Page• 5
experienced or to replace undamaged elements or to appreciate the value of the
structure.
Within these guidelines, we are proposing that the techniques of repair be as
hereinafter described.
1. Basement floor: Remove and replace existing damaged floor to existing
surface profile; about 4 feet wide along east wall with additional
widening as necessary at two north interior columns. Removal to be to
saw cut edge.
2. Foundation wall joints: Northeast corner and at south wall
construction joint; pressure grout with tubes to fill joint and hand
tool inside finished surface. Exterior surface where visible to be
neat and true.
3. Painting: At locations hereinafter required; paint to match existing
color. Typically, spot touch up will not be the intent. Painting to
extend over total area to existing wall breaks, corners, trim, etc.
4. Doors: Correct all doors that are racked and/or not freely operating
and all first floor doors such that door edges parallel the door
opening. Typically, this to be accdmplished by trimming and/or
planing. If this would create excessive gap between door and frame,
the frame to be reset as required. Finish raw edges with sealer and
paint or stain.
5. Windows: All windows shall be checked and corrected if not freely
operating or if they do not close and seal properly. Correction by
planing and/or resetting. Finish with paint or stain as appropriate.
6. Mitered Wood Trim: All applicable areas on first floor.
a. Typical cornice and small open joints. Fill with wood filler,
sanded to blend with surface, paint.
b. Open cracks on window and door trim. Remove, refit, and remount or
replace with new matching trim cut to fit. Fill and paint.
7. Brick Masonry Walls (Exterior and Interior): Typical south end wall
exterior at windows and interior in southeast apartment.
a. Rake full depth all cracked joints and extend 1/2 brick from crack.
b. Remove in total all broken masonry units and replace with new units
like in kind.
c. If matching new units are unavailable, broken units to be banded
and reset as a singular unit.
SHIVE•HATTERY ENGINEERS
,57�2—
Adolfson & Peterson, Inc.
February 23, 1984
Page' 6
d. Mortar all raked and open joints. Mortar to match existing in
color and texture. Shrinkage control shall be excercised. Joint
tooling to match existing.
8. Broken Cap Stone: At northeast corner. Remove and bond broken
elements with an epoxy adhesive. Seal crack with non staining sealant.
Reset stone as singular unit. Caulk as appropriate.
9. Joints between masonary and wood trim; typical exterior south wall.
Clean bond area and caulk with one part acrylic -latex cadlk.
10. Dry wall cracks: Typical end walls and intersection of walls to east
wall; second floor. Sand crack area, tape and fill, sand with paint
finish.
11. Masonry to Masonry Joint; at northeast corner exterior. Rake and clean
joint, seal with one part, Type 1I, Class A urethane caulking.
Painting is not desired, Owner to select color of caulking materials.
12. Masonry to Masonry Joint: Exterior to adjacent building. Clean joint,
place backer rod as appropriate, prime bond areas, and seal with two
part, Type II, Class A polysulfide caulking. Owner to select color of
caulking materials.
13. Brick Masonry Wall (Exterior): At south end wall over and west of
second floor exit. Visual evaluation of this joint suggest that this
crack is not new and may well be a shrinkage crack of the 1978
construction or a thermal relief joint that developed before the recent
building movement. The recent building movement is reflecting in an
opening of this joint. This minimal wall cross section will remain a
point of weakness for thermal stress relief. The projected corrective
efforts for similar problem areas as in 7 above probably will not
retain continuity. Therefore, we recommend the installation of a
vertical relief joint in this area. This relief joint should be sawed
through the outer width of the brick vertically up from the existing
crack location (about 8 -inches west of the door cap stone). Joint
nominal width would be 1/4 -inch to 3/8 -inch. Treatment of this
artifical joint as in 12 above. Correction of the balence of the
masonry crack as it angles up and to the west to be as in 7 above. The
existing horizontal shear joint from "saw joint" to door opening to be
surface raked and sealed with caulk.
TIMING
In our opinion, a final correction of the noted problems of the College Block
Building should not be accomplished before fall, 1984. This will permit a
minimum period for equilibrium to develop in the foundation materials and permit
a thermal cycle in the structure to trigger any impending residual movements.
This delay should minimize the opportunity for latent movement effects to
surface. As an exception some of the first floor interior work may well be
SHIVE•HATTERY ENGINEERS
57-z-
Adolfson & Peterson, Inc.
February 23, 1984
Page 7
scheduled at an alternate time so as to minimize interruptions to the normal
business activities.
In order to minimize water damage to the structure during the period until final
corrective action is accomplished, we recommend the open joints in the exterior
walls be temporarily closed by caulking.
This concludes our report of findings and recommendations. If you have any
questions or comments, please contact our office.
Yours very truly,
SHIVE-HATTERY ENGINEERS
Bob Lentfer, P.E./
BL:dh
184116-0
.`ytVC ll.��^ry QVI`H.Cp n.!
,57,2—
City of Iowa City
MEMORANDUM
Date: March 14, 1984
To: City Council
From: Dale Helling, Assistant City Manager
Terry Reynolds, Equipment Superinten
Re: FY85 Equipment Replacement
The cover memo which was attached to the replacement schedule you recently
received was written in November 1983. Since then the Forestry Division
has expressed an interest in truck number 211 (a two ton dump truck now
assigned to the Airport). Council has approved the addition of this truck
in the FY85 Forestry budget and so we will transfer truck number 211 to
Forestry. At the time of the earlier memo, we could find no use for this
truck and we thought it best to sell/trade it while the value was still
reasonably high.
One two -ton flatbed truck, number 918, is in above average condition for
its age and will not be replaced in FY85. This truck has been moved to
FY87 for replacement. Therefore, we will replace only three two -ton
flatbed trucks in FY85.
Each year, as an ongoing process, we look at the equipment scheduled for
replacement and determine its condition. Sometimes equipment is replaced
earlier than scheduled and sometimes equipment is retained so that we may
receive additional use from it. Decisions in this regard are based on the
general condition of each piece of equipment, both physical and mechani-
cal, as well as the cost -per -mile operating expense which is monitored
monthly for all vehicles in service.
tp/sp
City of Iowa City
MEMORANDUM
Date: September 20, 1983
To: City Clerk
From: Assistant City Manager
Re: Beer Gardens/Sidewalk Cafes
Attached please find copies of responses from relevant city departments
outlining concerns regarding the operation of beer gardens and sidewalk cafes.
It is evident from their input that there are really two separate concerns and
that sidewalk cafes should be treated differently from beer gardens.
SIDEWALK CAFES
An ordinance providing for the use of sidewalk cafes could be written so as to
prohibit those types of activities which would allow these to become 'outdoor
taverns." For example, it could specify hours of operation, perhaps restricting
these to daylight hours, or could even prohibit the sale of alcoholic beverages
in sidewalk cafes altogether. If alcoholic beverages are allowed, some
provision should be made to extend the liquor and beer permits to apply to the
sidewalk cafe.
Sidewalk cafes would be those outdoor extensions of an adjacent business onto
the public right-of-way. This is entirely different from a beer garden, which
is an extension of an adjacent business only onto private property. Therefore,
these should be approached entirely separately, with provisions in the sidewalk
cafe statute which would indicate how regulations regarding alcoholic beverages
would apply.
The responsibility for drafting an ordinagkce to permit the use of sidewalk cafes
has been assigned to Andrea Hauer, Development Coordinator. I do not anticipate
that she will complete a draft before November 15, 1983.
BEER GARDENS
I have summarized my own comments along with those received from other
departments into the following points which should apply to any beer garden.
I. It must be on private property and should probably be restricted to the
premises of the sponsoring business. In no instance would a beer garden be
allowed on the public right-of-way.
2. Beer gardens shall not be in front of a business establishment. Location
shall not represent a safety hazard for patron or public.
3. All beer gardens should be required to satisfy the requirements of the
State of Iowa (appropriate license, diagram included, proper insurance,
etc.).
4. There should be some specification of the type of structure adequate to
separate a beer garden from adjacent property and/or the public right-of-
way. A reasonably effective barrier should be required.
2
5. Means and type of access and/or egress from the property shall be
specified.
6. Beer gardens shall be restricted to certain zones and/or a specified
distance from residential or other incompatible uses. It might be
advisable as well to specify a minimum distance from an adjacent beer
garden.
7. A provision shall be included to require compliance with all appropriate
building/housing/fire codes applicable to this type of structure.
8. We should determine if and when inspections of the premises will occur. In
addition, it should be decided if inspection fees are warranted and if so,
what these will be. It would seem feasible to include inspection of the
beer garden area along wtih the normal inspection of the remainder of the
premises to which beer and liquor permits are issued.
9. The authority shall clearly specify that problems determined by the City to
be directly related to the existence of a beer garden could result in
revocation of permission to operate the beer garden. The City should
retain clear discretion in this area. Perhaps a determination of the
existence of a "public nuisance" could be referenced.
10. The definition of a beer garden should include language which would make it
clear that it is an outdoor area where beer or liquor is served, carried,
or consumed. It should be clear that it is part of the licensed premises,
and that the same regulations which apply to the remainder of the license
premises also apply to the beer garden.
11. There should be a procedure which allows the City Council to approve beer
gardens separately from the beer/ligkor license of the same establishment.
This will allow denial or revocation of the beer garden authority without
revoking the liquor license or beer permit of that establishment. The item
for Council consideration could be part of the consent calendar if the
criteria are specific enough that staff can judge objectively whether
compliance with all requirements will exist. However, if the decision of
Council is to be more subjective, then I would suggest that these items be
separate on the agenda.
12. I would strongly suggest that you attempt to obtain existing ordinances or
other criteria to review prior to drafting a proposal for the City Council.
In addition, if any case law exists regarding regulation or control of beer
garden activities, this should also be reviewed. Perhaps an inquiry to the
Iowa Beer and Liquor Commission staff would help to identify such
information.
There are probably a number of other concerns which have not been expressed to
me and which I have not thought of. However, I believe those concerns listed
above should be incorporated, at a minimum, into any regulatory ordinance or
criteria.
Please let me know if I can be further assistance. I would be happy to review
any draft and to offer my comments or discuss the draft with you.
57`1
City of Iowa City
MEMORANDUM
DATE: March 16, 1984
TO: Assistant City Manager 1 C�
FROM: Robert W. Jansen, City Attorney4//\J�'�- W
RE: Outdoor Service Areas ( Beer Gardens)
Reference is made to your memorandum to the City Clerk dated
September 20, 1983 wherein you list certain criteria which should
be included in any proposed ordinance designed to regulate
outdoor service areas.
I am also attaching a memorandum from David Brown, Assistant City
Attorney, dated June 24, 1983 to me summarizing the applicable
state law with regard to licensing of outdoor service areas and
the reference to the State Code provision that permits outdoor
service areas.
The City Clerk has also furnished me with a list of the
establishments which are presently operating outdoor service
areas as well as two establishments that are inquiring about
possibly establishing beer gardens.
I agree with the distinction that you have drawn in your
memorandum of September 20th between sidewalk cafes which are to
be considered as outdoor extensions of an adjacent business on to
the public right-of-way and outdoor service areas which are
merely extensions of the licensed premises on to private
property.
You will note that David Brown's memorandum points out that the
State Beer and Liquor Control Department will not permit the
establishment of an outdoor service area unless there is a letter
from the local authority (City) approving the outdoor area.
This, of course, is the leverage which the City has to regulate
the establishment or location of outdoor service areas. In order
to most effectively regulate these areas, I recommend that the
City beer and liquor ordinance be amended to provide regulation.
Regulation by the City would consist of requiring applicants_to
meet certain criteria such as outlined in your memorandum prior
to the issuance of a letter from the City approving the outdoor
area and subsequent state licensing.
The City Clerk and I have reviewed the criteria provided in your
memorandum of September 20th for inclusion in a possible
ordinance. Our comments concerning the points raised by you are
as follows:
1. The area Must be located on private property and must
not encroach on the public right-of-way.
551-
�Alc
2. We agree that outdoor service areas should not be
located in the front of the licensed premises and we recommend
screening from public view. The screening could consist of
fencing with a minimum of five (5) feet up to the maximum of six
(6) feet permitted in the zoning ordinance. In addition, fire
code exits need to be provided and the question is whether there
should be an exit from the area itself or the exit.from the
adjoining building.
3. Although we concur in the recommendation that these
areas should not be located in front of the licensed premises,
there are several businesses which.have inquired and wish to
locate in the front or the side of the building, e.g. Time Out
Restaurant and The Studio. Council will need to decide this
question.
4. There should be established a minimum and maximum size
and how many chairs, tables or benches will fit within that
space.
5. With regard to access and egress, there should not be
j access to the outdoor area itself other than through the building j
j which adjoins it. This would at least prevent minors from
If sneaking into the beer garden without having to walk through the f
tavern itself. i
6. If we restrict outdoor service areas to a specified
distance from residential or other uses we would probably lose at
least half of the establishments that now have outdoor service
areas. For example, even Bushnell's has an apartment above the
restaurant and, of course, the hotel might present a similar
problem.
7. We certainly agree that we should require compliance
with all appropriate building/housing/fire codes applicable.
8. We would recommend yearly inspections at the same time
that the City inspects the licensed establishment. We also
recommend that no inspection fee be established since the City
does not charge for the regular premise inspections anyway.
9. If an outdoor service area presents a noise or other
problem, we recommend that the ordinance retain discretion by the
City to request the State to withdraw the license. Another way
to approach this problem would be to retain the power to revoke
our approval letter on file with the State.
10. We agree with Item 10 of your memorandum.
11. The state law requires yearly beer and liquor license
renewals and we recommend that outdoor service areas also receive
yearly renewals since that is probably a state requirement
anyway. We agree that approval should be separate from the beer
and liquor license renewal in order to permit denial or
revocation of the outdoor service area authority without revoking
57�1
- 3 -
the liquor license or beer permit itself.
You will also note that David Brown points out in his memorandum
that those establishments currently operating outdoor service
areas which are not licensed by the State apparently can dispense
beer and not be in violation of Sec. '123.95 of the Iowa Code,
although under the City Code it is illegal to consume beer in any
public place. However, "public place" is not defined in the City
Code. we would also need to cover this loophole in any proposed
ordinance.
Depending upon Council discussion and approval, we will prepare
the appropriate ordinance and since spring is approaching action
should be taken reasonably soon if any action is going to be
taken at all.
]b
Attachments
cc: City Manager
City Clerk
Assistant City Attorney Brown
57T1
City of Iowa City
MEMORANDUM
Date: June 24, 1983
To: Robert Jansen, City Attorney
From: David Brown, Assistant City Attorney
Re: "Beer Gardens"
Pursuant to 5 123.3(31), Code of Iowa, a licensed premises may include outdoor
service areas since such premises may consist of "contiguous grounds." However, the
City does have the authority to withhold approval of outdoor service areas pursuant
to Rule 150 - 4.13(123) of the Iowa Administrative Code which provides as follows:
150-4.13(123) Outdoor service. Any licensee or permittee having an outdoor,
contiguous, discernible area may serve the type of alcoholic liquor or beer
permitted by the license or permit in the outdoor area. A licensee or
permittee, prior to serving in the outdoor area, must file with this
department:
1. A new diagram showing the discernible outdoor area.
2. A letter from the licensee or permittee telling what dates the outdoor
area will be used.
3. A letter from local authority approving the outdoor area. (Emphasis
added)
4. A letter from the insurance and bonding companies acknowledging that the
outdoor area is covered by the dramshop insurance policy and the bond.
This rule is intended to implement Sections 123.3(31) and 123.36, The Code.
If the City does not approve a proposed outdoor service area, the State Beer and
Liquor Control Department will not allow it.
Those establishments in the City which are serving or allowing the consumption of
alcoholic liquor in outdoor areas which are not approved and covered by a
license/permit are in violation of 5123.95, Code of Iowa, which in pertinent part
provides as follows:
It is unlawful for any person to allow the dispensing or consumption of
intoxicating liquor, except sacramental wines and beer, in any establishment
unless such establishment is licensed under this chapter.
Unfortunately, an apparent loophole exists here in that dispensing/consumption of
beer is not covered by State law under these circumstances. However, pursuant to
824-51(a) of the City Code, it is illegal for any person to consume or drink any
intoxicating liquor or beer in any public place. "Public place" is not defined in
Chapter 24, City Code, but under Chapter 123, Code of Iowa, it is defined as "any
place, building, or conveyance to which the public has or is permitted access."
tp5/6
cc: Neal Berlin, City Manager
Marian Karr, City Clerk
NAME
Bushnell 's Turtle
127 E. College
Gabe's
330 E. Washington
Howard Johnson's
1-80 & N. Dodge
Magoois
206 N. Linn
mm's
21 W. Benton
Sheep's Head
209 N. Linn'
List of Establishrents
With Beer Gardens
DIAGRAM
On Diagram
Not on Diagram
Not on Diagram
Not on Diagram
On Diagram
Not on Diagram
List of Establishirents Inquiring
re Possible Future Bees Garden
NAME
Time Out Restaurant
1220 Hwy. 6 W.
The Speakeasy
630 Iowa Avenue
The Studio
j 114 Wright St.
Septerber 8, 1983
June 30, 1984
June 16, 1984
Septeuber 22, 1983
May 18, 1984
March 19, 1984
EXPIRATION DATE
September 16, 1983
May 15, 1984
City of Iowa City
MEMORANDUM
DATE: February 17, 1984
TO: City Council
FROM: Robert W. Jansen, City Attorney
RE: Council Powers -- Beer Permits/Liquor Licenses
The purpose of the memorandum is to outline your powers
in connection with the approval, suspension or revocation
of beer permits and liquor licenses. To a large extent
the Iowa Code governs these matters with certain powers
granted to cities. City powers deal mainly with the ap-
proval and issuance of permits and licenses and in some
cases suspension or revocation of same. The right to vend
beer is conferred by a permit; the right to vend liquor
is conferred by a license.
ISSUANCE
City Code Sections 5-25, 26, 27, 29, and 34 prescribed the
procedures to be followed by applicants for permits and
licenses. These are as follows:
(1) It is the responsibility of the applicant to
obtain an application for the appropriate license from
the city clerk at least 21 days before the date on which
the applicant wants the city council to consider the ap-
plication. (City Code Section 5-25). This section also
provides that the council will normally consider such
applications only at regularly scheduled formal meetings.
The application form.must also be submitted to the police
chief, fire chief, county sheriff, county attorney, county
health inspector and the city building inspector. Each of
thse officials is required to "make an investigation, sign
the form, and recommend approval or denial of the applica-
tion". The applicant must then file the completed appli-
cation with the city clerk at least seven d_a_yy__s� before the
date on which the applicant wants the couni�to consider
the application.
From time to time situations have arisen where appli-
cations for renewal are brought in for council consideration
when the application has not been on file with the clerk at
least seven days before council action. The council has
somewhat reluctantly agreed to place these applications on
the agenda. We made a search of the council minutes for the
past two years to determine whether or not there was a formal
S%s
City Council
Re: Council Powers --Beer Permits/Liquor Licenses
February 17, 1964
Page 2
council policy that these late applications would not be
considered and would have to wait until the next council
meeting. we have been unable to find any indication that
there is such a policy, although some individual council
members expressed in rather strong terms that they did not
wish to consider later filed appliations. If the Council
wishes to adhere to the requirements of the City Code, I
would recommend that a policy resolution be adopted making
this clear and followed by the Council.
(2) Section 5-26 requires that the premises for which
a beer permit or liquor control license is sought must con-
form to all applicable laws, provisions of this Code and
other ordinances, resolutions, and health and fire regula-
tions. This, of course, means all applicable building,
plumbing, electrical and fire codes.
(3) Section 5-27 requires posting of financial re-
sponsiblity by the applicant either by existence of a lia-
bility insurance policy or posting bond.
(4) .Code Section 5-29 states that action taken by
the City Council must be endorsed on the application and
thereafter the application, fee and bond shall be forwarded
to the State Beer and Liquor Control Department for such
further action as it provided by the Iowa Code. Iowa Code
Section 123.32 then comes into play. The State Code provision
requires that the city council shall either approve or dis-
approve the issuance of the liquor license or beer permit
and same shall then be forwarded to the Iowa Beer and Liquor
Control Department.
(5) This same Iowa Code provision states that should
the city council disapprove the application for license or
permit, the Director of the Department shall also disapprove
the application. The applicant does then have appeal rights
to the Liquor Control Department Hearing Board in case of
disapproval and eventually to the district court for judicial
review should the Hearing Board uphold the disapproval.
SUSPENSION OR REVOCATION
City Code Sections 5-35 and 36 are the provisions governing
suspension and revocation. A liquor license or beer permit
may be suspended for a period of up to one year or revoked
for any violation of law including violations of the City
Code, but only after notice to the application and a hearing
before the City Council. In addition, the permit or license
City Council
Re: Council Powers --Beer Permits/Liquor Licenses
February 17, 1984
Page 3
must be revoked where there has been a misrepresentation
of any material fact in the application; violation of any
of the provisions of the Iowa Beer and Liquor Control Act;
any change in ownership or interest without prior reporting
and approval by the City; the sale or transfer of the
license or permit, refusal to pay or remit any taxes due the
Department; and lastly a provision that does not appear in
the State Code which requires revocation if the establishment
is operated in such a manner as to constitute a nuisance.
I believe that this last provision dealing with nuisance
is probably illegal since the establishment and maintenance
of a nuisance on the licensed premises is not a ground for
revocation under the State Code. It is likely that the City
could, however, suspend the license or permit for a nuisance
violation, but could not revoke.
City Code Section 5-36 provides for mandatory revocation
where there have been convictions under the State Code where
gambling, solicitation or immoral or disorderly conduct has
occurred on the premises; liquor is kept on the premises not
in the original container; and original containers are reused
as recepticals for alcoholic liquor. In addition, if there
has-been a conviction for sales to minors, the license or per-
mit must be suspended for a period of 14 days upon the first
conviction; 30 days upon a second conviction within two years
of the first; 60 days upon a third conviction within a period
of five years and upon a fourth conviction within a period of
five years the license or permit shall be revoked.
City Code Section 5-37 provides appeal rights where a
license or permit has been suspended or revoked to the Dis-
trict Court. However, the license or permit holder must first
exercise his/her right of appeal to the State Hearing Board.
STATE LAW
Iowa Code Section 123.39 also provides that a permit or
license may be suspended or revoked by the State Director
for the six causes that also listed in our City Code. How-
ever, this provision does contain one important qualification
and that is that cities may not revoke permits or licenses
for violations of city ordinances or regulations. Thus, a
violation of the building, electrical, plumbing or other codes
would not permit a revocation of the license.
The foregoing is a brief overview of the City and State law
concerning the issuance, suspension or revocation of permits
and licenses and the powers of both the City and the State to
J 7s—
City Council
Be; Council Powers --Beer Permits/Liquor Licenses
February 17, 1984
Page 4
do so. I will be clad to answer aon ouec*inns that znv < ! U
City of Iowa City
MEMORANDUM
Date: March 15, 1984
To: Robert Jansen, City Attorney
From: David Brown, Assistant City Attorney�/
Re: Discrimination by Private Clubs
This is a follow-up on my March 5, 1984 memo on this subject. As pointed
out therein, state action in granting a liquor license or beer permit to a
private club which restricts membership an the basis of sex, race,
religion, or national origin is not involvement in discrimination.
Accordingly, such private clubs may hold a liquor license or beer permit.
However, they may not be granted the privilege of selling or dispensing
alcoholic liquor or beer on Sunday, pursuant to 5123.49(4), Code of Iowa,
as set forth below:
Sec. 123.49. Miscellaneous prohibitions.
4. No privilege of selling alcoholic liquor or beer on Sunday as
provided in Sections 123.36, subsection 6, and 123.134,
subsection 5, shall be granted to a club or organization which
places restrictions on admission or membership in the club or
organization on the basis of sex, race, religion, or national
origin. However, the privilege may be granted to a club or
organization which places restrictions on membership on the
basis of sex, if the club or organization has an auxiliary
organization open to persons of the other sex.
It may be advisable to determine if the private clubs in Iowa City which
have been granted a Sunday sales permit are in compliance with the above
provision.
tp4/9
cc: Neal Berlin, City Manager
Marian Karr, City Clerk
City of Iowa City
MEMORANDUM
DATE: March 16, 1984
TO: City Council J
FROM: Rosemary Vitosh, Director of Finance
RE: Selection of C.P.A. Firm for Annual Audit
After reviewing the matter with the City Manager and receiving his
approval, I am proceeding to bid out the City's Annual Audits for
the fiscal years ending June 30, 1984, and June 30, 1985. Several
other Iowa cities have been bidding out their audit in recent years
and have found that the competitiveness of the marketplace has paid
off by lowering audit costs.
The Request for Proposal will be sent out to prospective bidders on
March 21, 1984, with proposals due back to the City on April 20,
1984. The Proposals which are received will be analyzed by the
Finance Department. A recommendation for Council's approval of an
audit firm will be submitted to Council in early May. Items to
be evaluated in arriving at a recommendation will include the firm's
technical experience, the audit team's experience, size and structure,
and the cost.
.577
11
■
City of Iowa Cit,
MEMORANDUM
Date: January 6, 1984
To: City Manager and City Council
From: Dennis E. Showalter -
Re: Forestry Plan
In April 1983, a qion was raised about the number and condition of trees
which were contracteduestto be removed from city streets. In response, the City
Council asked for a Tree Plan for Iowa City which would establish criteria
for tree removal, trimming and planting. When the plan was forwarded to the
Council and discussed, the Council felt that the plan was too rigid and
binding and should be altered. The revised attached plan results from that
discussion and includes a maintenance section.
It is desirable for the City to have a Forestry Plan to spell out policy and
set goals. The adoption of this plan will help.ensure uniform administration
of city trees over a long period of time. The item will be scheduled for
informal discussion.
bj5/5
—57f
II
W
FORESTRY PLAN - IOWA CITY, IOWA
I. Removal
II. Trimming
III. Planting (New)
IV. Maintenance (New)
I. Removals.
December 23, 1983
Trees will not be removed unless absolutely necessary. Every care and
precaution will be exercised to preserve existing valuable trees. Trees will
be removed when the following conditions are present:
A. The tree is 50% or more dead.
B. The tree is weak structurally and dangerous to people or property.
C. The Forester will declare these trees to be in "imminent peril".
At the present level total removal of street trees probably will not
exceed 30 per year. A consistent average should hold at 20. These estimates
include both trees to be removed by contract and by City staff.
II. Tree Trimming.
Criteria for determining priorities.
A. Trim younger, healthy trees first.
B. Trim other healthy middle-aged and specimen trees of a desirable
species which are favorably located, so that they have an excellent
chance of achieving maturity.
C. All other trees which are obviously deteriorating and dying should
not have trimming money spent on them. Exceptions may be made for
a dangerous limb, etc.
III. Planting Goal.
A. One -hundred trees will be planted per year on City street right-
of-way or private property, as provided below, and will not include
City Park or other City property. Any planting performed on these
areas will be in addition to street tree plantings, and will be
budgeted for by the respective division or department head.
Approximate cost estimates:
FY85 - 100 trees @ $100 $10,000.00
(includes inflation estimate)
Approximate labor hours - 2 laborers @ 100 hrs.
@ $4.00/hr. 400.00
1 tractor operator @ 50 hrs. @ $10/hr. 500.00
Total $10,900.00
57f
r`
FORESTRY PLAN - December 23, 1983
Page two
B. First priority will be given to replacing all trees removed by
previous years' removal contracts, conditioned on the trees meeting
the following criteria.
1. The parking area must be 10 feet minimum from inside curb to
inside sidewalk.
2. The replacement will not cause undue competition with other
adjacent trees; i.e., too close.
3. The replacement position must not create any major problems
with utilities, sight or traffic problems.
4. The adjacent homeowner wishes to have the tree replaced and
agrees to water the tree for the first two growing seasons.
C. If 1, 2, or 3 of the above criteria cannot be met and the homeowner
still wishes to have the tree replaced, the City will replace the
tree on the homeowner'sprivate property subject to criteria being
met for that purpose; i.e., location, species, maintenance.
D. In 1, 2, and 3 above, approximately 40% of the trees will not meet
the criteria to allow replacement. This will leave an average of
60 trees per year to be incorporated into the uniform planting
described below.
E. The uniform planting will follow a logical progression through the
City. These plantings will usually occur in newer sections of the
City, but may in some cases overlap with replacement of trees at
contract removal sites previously mentioned. i
Currently there are three major areas which can be categorized as
having low tree densities. The areas are bordered by the follow-
ing roads: (1) east of Morman Trek, south of Melrose to Emerald
Street, south of Benton and west of Weber Street; (2) south of
Highway 6, east of Keokuk to Lakeside Drive; and (3) east of First
Avenue, north of Highway 6, south of Rochester Avenue.
Granted there are areas within these designated areas that have
perfectly acceptable tree densities, however, for the ease of
explanation, these general boundaries have been used.
There are areas located between the Central Business District and
these outlying areas which will require some plantings, however,
they can be included in removal transplanting as they are not
major in size.
F. The area south of Highway 6, east of Keokuk to Lakeside Drive,
will be the first area to be planted and will be done in the
spring of 1984. This will be the first large scale area where
we will purchase and plant the trees on private property, with
the understanding that the homeowner will maintain the tree at
their expense.
We will also test this procedure with some of the homeowners
who had trees removed from the parking during the summer of 1983
removal contract.
X700
FORESTRY PLAN - December 23, 1983
Page three
G. This planting plan will be projected over a five-year period
during which time it can easily be modified to accomodate more
trees per year, or the same amount of trees over a longer period
of time.
IV. Maintenance.
One year ago, the Forester completed the street tree inventory, which
shows that we have 8,500 street trees to maintain. This figure does not include
public trees in City parks, alleys, and highway right-of-way.
To maintain the present tree resource in an acceptable condition and
provide adequate care for newly planted trees, the following personnel will be
needed in addition to the Forester/Horticulturist. They are included in the
proposed FY85 budget.
1 Maintenance Worker II $13,457.00
1 Temporary - 9 months @ 40 hrs./wk. @ $4.50/hr. 7,020.00
2 Temporaries - 16 weeks ea. @ $4.00/hr. 5,120.00
Total 25,597.00
Additional equipment will also be needed. The proposed FY85 budget
includes $6,000 for the transfer of a two -ton flatbed truck from the airport
to Forestry. When the Forester's pickup is replaced, a quarter -ton pickup
(approximately $8,000) should be purchased. A high -lift boom attachment, which
will reach 36' above the ground (approximately $12,000) should be purchased for
the pickup. This will greatly increase our ability to trim trees, and reduce
contracting amounts for same.
$7cf
City of Iowa City
MEMORANDUM
DATE: March 14, 1984
TO: City Council
FROM: Marian K. Karr, City Clerk
RE: Public Hearing on Human Rights Ordinance Changes
At Council request I am forwarding my notes of the public
hearing considering certain amendments to the Human Rights
Ordinance held March 12, 1984.
These notes were for internal office use to help locate
transactions on tape and were not intended as a summary of
individual speakers remarks.
s7'�'
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♦ / RECEIVED H,'R 1 5 1984
iowa d
convention&visitorsbureau
logeasi•b ington
P.O. bOX2358
icwacN iowa 52244
Awlik 319.337.595.37
Dear Iowa City and Coralville City Councils:
You are rordially invited to a Rrecial reception sponsored by the
Convention 6 visitors Bureau. The event will be:
Thursday, March 29, 1994
5 pm -7 pm
The Abbey Retreat
(The motel directly east of the Abbey)
We hope you will take time to stop by and meet our Board of Directors
and see what activities and events the bureau has been working on.
Best wishes and we will look forward to seeing you March 29th,
Yours truly,
Renee Jedlicka
r•
WE
March 13, 1984
RECCEVED :;=.:, ± 5 1984
Heritage Communications, Inc.
2195 Ingersoll Avenue
Da Moine, Iowa 50312
515.245.7585
Mr. W. 0. "Bill" Terry, Chairperson
Broadband Telecommunications Commission
City of Iowa City
Iowa City, IA 52240
Dear Mr. Terry:
As General Counsel for Heritage Communications, Inc., the
parent company of Heritage Cablevision, Inc., I am charged
with responsibility for concluding the purchase by Heritage
of the group of Iowa systems owned by American Television
and Communications Corporation, including the Iowa City
system.
Our present plan is to close this acquisition sometime
during the period from April 1, to April 15, 1984.
It is my understanding in visiting with others at Heritage
that the Iowa City City Council has submitted the request
for transfer of the franchise*to the Commission for review
before they act on it. It is important for me to know how
long you think the Commission's review process will take so
that we might be able to do a better job of planning the
change of ownership.
I feel sure that you can appreciate the need to move the
transfer process along as expeditiously as practical.
Hence, our more than timely response to your request for
information. I would very much like to receive a proposed
schedule of events from you with a projected date for
approving the transfer.
—52F/
Mr. W. 0. Terry
March 13, 1984
Page Two
Please let me hear from you if you need further information.
Sincerely,
HERIT�AG"E� COrICATIONS, INC.
Wayne Kern
General Counsel
WK/jh
cc:
Neal Berlin, City Manager
Robert Jansen, City Attorney
David Brown, Assistant City Attorney
Joe Collins, President, ATC
58)
PRIORITIES FOR AMERICA'S CITIES - 1984
I. Insuring Economic Recovery
1. To insure continued economic recovery and city ability to
2. finance governmental activities at reasonable interest rates,
3. NLC recommends enactment of a substantial and balanced deficit
4. reduction package in 1984, through
5. (1) tax increases (such as delay in indexing, a temporary
6. income tax surcharge or energy tax, and repeal and/or
7. modification of various tax expenditures);
8. (2) significant reductions in growth of defense spending
9. (to no more than five percent in real growth
10. annually);and
11. (3) restraints on growth of non-meane-tested entitlements
12. (by changing indexing mechanisms to lower of CPI or
13. wage index, or providing cost -of -living adjustments
14. below the full increase in the CPI).
15. NLC opposes, in any deficit reduction package, further funding
i
16. reductions in such means -tested programs as medicaid, AFDC,
17. SSI, low-income fuel aid, and housing and major discretionary
18. programs that benefit people who live in cities. These
19. programs have been held below inflation-adjusted levels during
20. the past three years to help finance liW tax cute and defense
21. expenditures.
22. NLC reaffirms its opposition to a constitutional amendment to
23. mandate a balanced Federal budget and opposes a constitutional
24. amendment to provide for a line item veto of spending bills.
25. The first is unworkable; the second would shift too much power
26. from Congress to the President.
�02"
27. II. FY 1985 Budget
28. (1) Tax Priorities
29. NLC opposes efforts to end city authority to issue mortgage
30. revenue bonds; to restrain use of industrial development bonds
31. through state caps; and to sharply restrict tax benefits for
32. traditional city leasing practices. We recommend extending
33. issuing authority for mortgage revenue bonds; restricting use
34. of private purpose industrial development bonds to those in
35. distressed areas and areas targeted by local officials for
36. industrial use; and exempting from new leasing rules projects
37. involving new or substantially -rehabilitated property,
38. equipment, and service contracts.
39. (2) Spending Priorities
40. NLC supports Administration requests for full funding of
41. General Revenue Sharing, Community Development Block Grant,
42. Urban Development Action Grant, employment training, and
43. wastewater treatment plants and increases in "superfund",
44. highways, and airport grants. We oppose cuts in
45. (a) housing ($3.6 billion from FY 84 levels due to
46. expanded use of untested housing vouchers),
47. (b) Economic Development Administration ($218 million
48. from FY 84 level, due to proposed termination of
49. program),
50. (c) summer youth ($100 million from FY 84 level), and
51. (d) mass transit operating assistance ($329 million
52. from FY 84 level).
53. NLC further opposes proposed cuts of $2.1 billion below cur -
54. rent service levels in medicaid, food stamps, and AFDC.
55. III. Legislative Priorities
56. NLC supports enactment of
57. (1) cable legislation that preserves city authority to
58. regulate subscriber rates for basic services; to
59. require adequate public, educational, governmental
60. and leased access channels; to ensure a competi-
61. tive renewal process; to establish franchise fees;
62. to own and operate cable systems; and to enforce
63. existing franchise commitments;
64. (2) antitrust liability legislation that exempts cities
65. from liability under federal antitrust laws on
66. same basis as states under Parker V. Brown and
67. subsequent court decisions;
68. (3) fair housing enforcement legislation that
69. strengthens administrative enforcement of
70. antidiscrimination laws under the Fair Housing Act
71. of 1968;
72. (4) comprehensive infrastructure legislation that
73. includes a taxable bond option for essential
74. infrastructure projects; supplemental grants for
75. essential public facilities for cities suffering
76. from fiscal stress; annual evaluation of existing
77. federal infrastructure programs to improve
78. effectiveness; and an annual federal capital
79. investment budget;
80. (5) urban enterprise zone legislation to demonstrate
81. the value of tax and regulatory relief in
82. rebuilding distressed areas, and
83. (6) environmental legislation that affirms the national
84.• commitment to reduce and control pollution (through
85. reauthorization of the clean air, clean water, and
86. resource conservation and recovery acts); and,
87. specifically, clean water legislation that assures
88, cities adequate resources to meet the clean-up
89. requirements by the Federal government on publicly -
90. owned treatment works.
100. IV. The President's Five -Year Domestic Plan
101. NLC strongly opposes the President's 5 -year budget
102. proposal for a "decade-long domestic real spending
103. freeze". If adopted, it would further shift costs to
104. states and localities and retreat from long-established
105. Federal responsibilities in numerous areae, including
106. those recognized by the President as part of the national
107. "safety net". Such a radical departure from current
108. policies should not be undertaken without full national
109. debate.
5Y02-
City of Iowa City
MEMORANDUM
DATE: March 23, 1984
TO: City Council
FROM: City Manager
RE: Material in Friday's Packet
Memoranda from the City Manager:
a.' Waste Water Program
Actions
S8
b. Summary of Economic Development Ad Hoc Committee
c. Travel Expenses
FB S
Material relating to sale of Hawkeye CableVision:
a. Letter from City Attorney to Heritage Communications, Inc.
86
b. Memorandum from the Assistant City Manager
58
c. Memorandum from the Legal Staff
615 ly
Memoranda from the Department of Planning and Program Development:
a. Proposed Schedule for Review of the Sign Ordinance Revisions
679 9
b. Use of Maiden Lane right-of-way
5 0
c. Housing Survey - City Council Referral of March 13
5 �/
Memorandum from the Human Relations Director and the Finance Director
5 9�
regarding Blue Cross/Blue Shield Utilization Review Report.
Memorandum from the Finance Director regarding payment for radio ads..
5 3
Legislative Bulletin No. 6, March 16, 1984.
-�
Articles: Who will foot the bill for sewage treatment?
�9 S
Locally -Initiated high-tech efforts most likely to succeed.
S 9�
On My Mind
All about Accessibility
S9 9
Calendar for April 1984
Ioiva City Parking Study - request for proposal
600
City of Iowa City
MEMORANDUM
DATE: March 23, 1984
TO: City Council
FROM: City Manage��r.!
RE: Waste Water Program
Attached is a detailed proposal for the City's waste water program.
While the Council discussion will be held on April 3, it is sent to
you a week in advance so that you will have ample time to review the
information and call me with questions if you wish.
,�3
City of Iowa City
MEMORANDUM
Date: March 23, 1984
To: City Council
From: City Manager -,Ie.
Re: Waste Nater Program
In recent weeks City Council members have offered various suggestions
concerning the waste water program. These comments have been summarized
as Attachment 1.
Based on that information, this memorandum presents a process for solicit-
ing professional engineering advice, criteria for evaluating proposals,
alternative selection processes, a list of issues to be considered and a
time schedule.
The intent is to advertise this work nationally. The City Council will
receive copies of all proposals at the same time as the staff committee
begins initial review. In addition, the Council will interview all
finalists.
It is recommended that the City Council adopt a procedure similar to that
used when the City received proposals for cable TV. That po-licy provided
that individual contacts with City Council members by bidders and associ-
ates were discouraged and that proposals were to be presented to the
entire Council. Use of this method will allow the City to maintain an
orderly process, permit the Council to produce maximum benefit for its
participation, ensure that all Council members receive the same informa-
tion, and require all consulting firms to maintain a high professional
standard. Under the proposed procedures, the appropriate time for
consultants to contact the City Council will be after the Council receives
recommendations from the staff.
It is expected that the City may receive a very large number of proposals.
To reduce the necessity for reviewing proposals from unqualified.appli-
cants, it is recommended that a minimum standard be established. It is
proposed that the City not consider proposals from firms unless the firm
principals, in the last three years, have been primarily responsible for
wastewater projects which involved new plant construction or extensive
expansion of existing facilities, including trunk sewers, and construction
cost in excess of $10,000,000.
Alternative processes and the time schedule are detailed in Attachment 2.
Alternative A provides for the selection of a firm and the preparation of
a final report. Alternative B provides for a preliminary screening, the
selection of three finalists who will prepare preliminary reports, the
selection of a final firm and then the preparation of the final report.
It is recommended that the Council adopt Alternative B, because it will
provide for a much better understanding of the quality and comprehen-
siveness of the firm's work before a final selection is made.
.503
■
2
�l
The time schedule provides for the completion of the report by March 1, or
April 1, 1985, depending upon the alternative selected.
At the informal Council session on April 3, the City Council should:
1. Consider policy on Council contact by consultants.
2. Determine whether minimum standards should be adopted for considera-
tion of proposals.
3. Approve process and adopt Alternative A or B.
4. Adopt time schedule.
5. Determine if additional information is desired from proposers, other
than items covered in Attachment 4.
6. Determine whether the consultant should consider other issues or
include some or all of those listed in Attachment 5.
The following materials are enclosed:
1. Summary of City Council comments. (Attachment 1)
2. Time Schedule and Selection Process. (Attachment 2)
3. Letter to prospective bidders. (Attachment 3)
4. Evaluation questionnaire. (Attachment 4)
5. Issues to be considered by consultant. (Attachment 5)
bdw/sp
�k3
ATTACHMENT 1
SUMMARY OF CITY COUNCIL COMMENTS
1. Explore other alternatives.
2. Consider privatization - discuss with a couple of firms; perhaps
submit proposal.
3. Investigate renovation, improvement and expansion of existing plant
and costs for various time intervals.
I
4. Forget about Kimm study.
5. Have several firms be specific as to what can be done to upgrade
existing plant and then have a firm submit proposal.
6. Seek a less expensive solution.
7. Seek competitive proposals from consultants.
8. Consider satellite treatment plant.
9. Would prefer that the City not have to pay additional consulting
fees.
10. Consider alternative funding for project; i.e., special assessments,
tap -in fees.
11. Consider other locations for new plant.
12. Consider alternative locations for interceptor sewers.
13. Investigate purchase of additional land around present site.
14. Consider other alternatives for project.
15. Do not consider a "quick fix" solution.
16. Explore difference in short- and long-term cost for rehabilitation of
existing plant.
17. Investigate alternatives for reducing stormwater inflow in sewers.
18. Explore costs of removing footing drains and benefits.
19. Explore innovative funding sources.
20. Consider innovative pumping facilities to relieve surcharge conditions
in the Rundell Street area.
21. All engineering proposals shall comply with Federal, State, profes-
sional and other accepted design criteria.
22. Engineering proposals to be received by City Council at a meeting.
5f3
i
ATTACHMENT 2
fft rviews
TIME SCHEDULE AND
SELECTION PROCESS
7.
Staff makes recommendation to
July 30
ALTERNATIVE
ALTERNATIVE
City Council
A
B
---
1.
Approval of process by City Council
April 3
April
3
2.
Prep. of RFP, printing and mailing
April 3-23
April
3-23
3.
Pre-bid conference
May 14-18
May 14-18
Staff negotiates contract
4.
Receipt of Proposals
June 11
June
11
5.
Staff review of proposals
June 11 -July 9
June
11 -July 9
15.
firms (6 maximum)
July 16-20
July
16-20
6.
Sta in e
7.
Staff makes recommendation to
July 30
--'
City Council
8.
Staff selects 2 or 3 finalists
---
July 30
9,
City Council interviews 3 finalists
Jul 30 -Aug 3
---
10.
Finalists prepare preliminary studies
---
Jul 30 -Aug 31
11.
City Council selects preferred firm
Aug 3
---
12.
Staff negotiates contract
Aug 3 -Aug 10
---
13.
City Council approves contract
Aug 14
---
14.
Firm prepares proposal
Aug 14 -Mar 1
---
15.
Staff reviews preliminary proposals,
---
___
interviews all finalists and makes
---
-'
Aug 31 -Sept 21
recommendation to City Council
16.
City Council interviews 3 finalists
- -
Sept 24 -Oct 5
17.
City Council selects preferred firm
---
Oct 9
18.
Staff negotiates contract
-
Oct 9 -Oct 19
19.
City Council approves contract
---
Oct 23
20.
Firm prepares proposal
---
Oct 23 -Apr 1
1
ATTACHMENT 3
Letter to Prospective Bidders
March 22, 1984
Re: Request for Proposal - Waste Water Program
Dear Sir/Madam:
DRAFT
You are invited to submit qualifications and a proposal for reviewing the
status of Iowa City's waste water program and developing alternative
construction proposals. The enclosed letter of July 30, 1982, (Attachment
and memorandum of October 7, 1983 (Attachment _), review the status
the project.
Without Federal funding for the project, it does not appear the City could
finance the estimated total facility cost of $58,000,000. In addition,
the City wants to be assured that any construction project offers the most
cost effective and environmentally sound alternative, both short and
long-term, for achieving the goal of satisfactory waste water collection
and treatment.
Your task is to evaluate all existing facilities and previously prepared
reports and plans. Based on this review you are to prepare a detailed
report which recommends specific solutions for Iowa City's waste water
problems. The City seeks alternatives to existing proposals, only when
such proposals are less costly. Your report will include a detailed
description of facilities, cost estimates, site requirements, sewer
charges and financing methods. A draft report will be prepared for staff
review to ensure the feasibility and comprehensiveness of your proposals.
All firms are invited to review the documents and plans previously
prepared by Veenstra & Kimm. In addition, Arthur Young and Company has
prepared a privatization study of the Iowa City project. These materials
may be obtained by contacting Charles Schmadeke, Director of Public Works
(319) 356-5141.
A questionnaire (Attachment ) is to be completely answered in response
to this request for proposals. Responses to the questionnaire will be
evaluated by the City and submission of a proposal constitutes authoriza-
tion for the City to seek verification of all information.
Issuance of this Request for Proposals does not commit Iowa City to award
a contract, to pay any costs incurred in preparation of a proposal to this
request, or to procure or contract for service or supplies. The City
reserves the right to reject any and all proposals and to resolicit.
883
2
As an equal opportunity/affirmative action employer, the City prohibits
discrimination on the basis of race, creed, color, sex, age, religion,
sexual orientation, marital status, disability or national origin.
Minority and Women's Business Enterprises will be afforded full considera-
tion and are encouraged to respond.
In order to answer any questions raised by firms intending to respond, an
informational conference will be held at
in the Iowa City Civic Center Con erence oom. 1
interested firms are encouraged to attend this meeting. All other
questions, directed to the City either before or after the informational
conference, must be submitted in writing. The City will respond in
writing.
All responses to the RFP must be received by the City Clerk, City of Iowa
City, 410 East Washington, Iowa City, Iowa 52240, no later than
1984. '
i The selection process is provided (Attachment It is a policy of the
City Council that it is inappropriate for any firm, or representative
thereof, to contact any Council member prior to the submission of the
final staff recommendation to the City Council.
All information submitted in response to this Request for Proposals and
any subsequent work performed for the City shall become the property of
the City to be used by the City without restriction of any nature.
I All recommendations must comply with all applicable Federal and State
requirements and generally recognized professional standards.
I
This letter and its attachments will become a part of any subsequent j
agreement. fI
The City will consider proposals only from firms whose principals in the
last three years have had primary responsibility for waste water construc-
tion involving major trunk line construction and new plant construction or
extensive plant expansion with contract costs exceeding $10,000,000.
Sincerely yours,
I
Neal G. Berlin
City Manager
bdw/sp
Attachments
I
i
ATTACHMENT 4 DRAFT
IOIIA CITY EVALUATION QUESTIONNAIRE
WASTE WATER PROJECT
In an effort to select the best qualified firm for this project, the City
requests that you provide the following information in the same order
presented herein. Responses to this questionnaire constitute authoriza-
tion to the City to seek verification of all answers. Responses shall not
exceed 25 pages. You may attach brochures and other similar information,
provided that 30 copies of every item are included.
Should you have any questions regarding the purpose or intent of this
questionnaire, please contact Mr. Charles Schmadeke, Director of Public
Works, at (319) 356-5141.
1. Name, qualifications, and relevant experience of the person who will
be in charge of this project (include, as a minimum, the individual's
name, professional discipline(s), license(s), in which states, length
that the license(s) has been held, length of service with the firm,
relevant experience, estimated percentage of his/her time that will be
dedicated to this project, and office location).
2. Name, qualifications, and relevant experience of other professionals
who will be assigned to TFe—project (include, as a minimum, the
individuals' names, professional disciplines, licenses in which
states, length that the licenses have been held, length of service
with the firms, relevant experience, estimated percentage of his/her
time that will be dedicated to this project, and office location).
3. If the submittal is by a team, list participating firms and outline
specific areas of responsibility for each firm.
4. Has this team previously worked together? If yes, list the pro-
ject(s), owner(s), location(s), brief description of project(s), and
name and phone number of a responsible party familiar with the
performance of the team. If only some members of the Team have
previously worked together, provide the above requested information,
specifying the exact relationship.
5. List completed construction projects that the team members have
designed within the previous three years, with approximate construc-
tion costs and the name and phone number of a responsible party
familiar with the team members' participation.
6. List completed waste water construction projects that the team members
have designed within the previous five years, with construction costs
and the name and phone number of a city official familiar with the
project and the team members' participation.
7. Describe the team's design approach for the Iowa City project and the
responsibility of each key team member applicable to this project.
8. List team members who are a minority business enterprise or a female
business enterprise.
S�3
9. List completed waste water or other municipal projects involving
privatization that the team members developed within the previous five
years, with construction costs and the name and phone number of a city
official familiar with the project and the team members' participati-
on.
10. List and describe completed waste water or other municipal projects
involving innovative processes, construction techniques, funding or
financing methods with construction costs and the name and phone
number of a city official familiar with the project and the team
members' participation.
11. Provide work schedule with a specific timetable from the date you are
authorized to proceed through the time the selected alternative is
approved by the EPA and the State of Iowa.
12. List the name, address, and phone number of a person on the team who
the City may contact regarding this proposal.
13. Describe the corporate structure of the firm. List all persons/enti-
ties controlling 10% or more of the company's stock.
14. Complete the following and include as part of your proposal:
I understand that thirty (30) copies of the responses to this ques-
tionnaire and also thirty (30) copies of all relevant information
submitted in response to this RFP must be filed with the City Clerk,
City of Iowa City, 410 E. Washington Street, Iowa City, Iowa, 52240,
no later than 2:00 P.M., 1984.
I further understand that t e responses and other to orma il; on will be
used to evaluate the qualifications of the team members, and that
proposals received after the time and date specified may not be
accepted.
Signature Title
Name of Firm
SIF3
■
i
Attachment 5
o. Issues to be Considered by Consultant
a. Existing Site
b. New Site Alternatives
c. Alternatives for inflow
d. Alternatives for trunks
e. Alternatives for storm water
f. Review of previous reports
g. Privatization
IOWA CITY, IOWA
SUMMARY OF ALJERWAIIVES
WASIIWAIIR COLLECTION AIIO IRCATHIIII
COSI_ ESI 1MATC AOVALII /!G[S
Immediate
SIC interceptor Segaent $ 4,670,000 Relieves SI. Side and Rundell Street
Pumping Station 1.7BU,000
Slormwater Holding Pond 920,000 Reasonable Cost
Force Main to Plant 1,750,000
Repair Existing Plant 5511,000 flay reduce bypassing
Land 7UOs000
Ilse f9,5UO,000
Future
See Table A
a�
IDED requirements; combines with Al ternalive 6.
I
Future construction would include Rehabilitation
ISSUO,OD01. University heights 11600,000),
i
Falrmeadows Branch (1750,000), SE Trunk Relief
a`
($1,100,0001 and Outfall Relief ($975.0001•
Excludes or defers downstream end of SE
ALTERNATIVE
_ _-^I
ACTION
2 SE Treatment Plant
—FulTd7pperl�h of SE Interceptor; defer
Immediate
Eeptor Segment t O,fiJU,000
Sifnerc
SE Pum Ing Station
—bulla UpVci pua-Ch of 51. Interceptor; defer
r$
7
Downstream Reach
Falneadovs Branch, SE Trunk Relief and
Build a tertiary treatment plant HE of
Repair Existing Plant
Downstream Reach
700,000
Lend 128'960;000
effluent to Snyder Creek
Build Stormdeter Hal -lin I Pond and Pumping
Repair Existing Plant
Use 123,000,0110
Station LIE of Bypass and Scott Boulevard;
Future
poop wet weather overflow to existing
Future sewer construction would be the same as
plant via force main In Highway 6 Bypass
for Alternative 1
7 New Plant Site Pumpinq Station
Repair Existing Plant
IOWA CITY, IOWA
SUMMARY OF ALJERWAIIVES
WASIIWAIIR COLLECTION AIIO IRCATHIIII
COSI_ ESI 1MATC AOVALII /!G[S
Immediate
SIC interceptor Segaent $ 4,670,000 Relieves SI. Side and Rundell Street
Pumping Station 1.7BU,000
Slormwater Holding Pond 920,000 Reasonable Cost
Force Main to Plant 1,750,000
Repair Existing Plant 5511,000 flay reduce bypassing
Land 7UOs000
Ilse f9,5UO,000
Relieves SE Side and Rundell Street
Relieves emisting plant; provides
additional treatment capacity
Relieves SE Side and Rundell Street
May reduce bypassing
provides outlet to.- west side
Headworks can be used with new plant
Provides for SE development
w�
L
OISnDVANIPG(S
i
Doesn't provide additional treatment
capacity
Doesn't provide for growth to south
and southwest
Cost -benefit ratio
Infrequent use I�
Investment lost if downstream plant
Is built
Doesn't provide for growth to south
and southwest
Higher cost
Doesn't provide additional
treabmeot capacity
I 1
Future
See Table A
lleididditiondl treatment capacity to meet EPA B
IDED requirements; combines with Al ternalive 6.
Future construction would include Rehabilitation
ISSUO,OD01. University heights 11600,000),
i
Falrmeadows Branch (1750,000), SE Trunk Relief
($1,100,0001 and Outfall Relief ($975.0001•
Excludes or defers downstream end of SE
Interceptor, Outfall Sewer and Downstream Plant
2 SE Treatment Plant
—FulTd7pperl�h of SE Interceptor; defer
Immediate
Eeptor Segment t O,fiJU,000
Sifnerc
Falmeadows Branch, SE Relief and
New Advanced Plant 16.000.000
Downstream Reach
Outfall Sewer 550,000
Stormwater Holding Pond 920,000
Build a tertiary treatment plant HE of
Repair Existing Plant
Bypass and Scott Boulevard; discharge
700,000
Lend 128'960;000
effluent to Snyder Creek
Repair Existing Plant
Use 123,000,0110
Future
Ray—need a portion of Al ternative 6
Future sewer construction would be the same as
for Alternative 1
7 New Plant Site Pumpinq Station
[mediate
-We
'NITd'95;FiIream ReacF_jrnnOpper Reach
SE ceptor Segment $10,010,000
of SE Interceptor; defer Falmeadows
Headwerks 2,900,000
Storwater Holding Pond 920,000
Branch and SE Trunk Relief
Force Hain to Plant 900,000
Oulld Stormwater Holding Pond and
Repair Existing Plant 550,000
Ileadworkf Building [Pumping Station)
Land 700,000
U.SUE1,000
at Mev Plant Slte; pumpwet weather
overflow to ed sting plant via force
main In Sand Road and Gilbert Street
Use fIS,fi00,OW
Repair Existing Plant
Future
See Table 2
tiny need a portion of Alternative 6. Pumping
Station and Holding Pond can be made a part of
Downstream Plant. Future sewer construction
would Include those In Allerna tive 1 plus the
Outfall Sewer 110,000,000) If downstream site
I
Is used
Relieves SE Side and Rundell Street
Relieves emisting plant; provides
additional treatment capacity
Relieves SE Side and Rundell Street
May reduce bypassing
provides outlet to.- west side
Headworks can be used with new plant
Provides for SE development
w�
L
OISnDVANIPG(S
i
Doesn't provide additional treatment
capacity
Doesn't provide for growth to south
and southwest
Cost -benefit ratio
Infrequent use I�
Investment lost if downstream plant
Is built
Doesn't provide for growth to south
and southwest
Higher cost
Doesn't provide additional
treabmeot capacity
I 1
yr
ALTERNATIVE
ACTION
A
Pine Street Puul_ng Station
—5uf13`�ping �Fu[iun near e, sting Pine
Street Pumping Station; connect SE
Trunk and Lower Muscatine Road Trunk
to Pumping Station; dewater upper end
of Rundell Street sewer
Build force main south In Sycamore to
Nighwzy 6 Bypass and west to existing
plane
Repair Existing Plant
See Table 0
5 Rented le oon treatment at New Plant Site
u wns[ream eac an Aper eQ acF
of SE Interceptor; defer Falneadows
Branch and SE Trunk Relief
Bulls Meadworks Building and 7 cells of
Aerated Lagoon at New Plant Site; size
lagoons to treat flows from SE Side
Build Outfall Sewer to River
Repair Existing Plant
soand and U rade EAifuln Pg lant
pouble Edna c cepac if
Replace existing equfpaent
Add treatment units
Fill In lagoons
See Tables 7 and 4
i
i•
r
COST ESIIMATE ADVANTAGES DISADVANTAGES
Immediate
onnec lfng Sewers s 20S.OB0 Relieves SE Side and Rundell Street Doesn't
ote lly provide additional trvetnent
Pumping Station 2,170,000
Force Main and Gravity Sewer 1,000,000 Ha provision far growth
Repair Existing Plant 550,000
Land25 s000
r.4..3
-7-, 71d,060 Nill flood existing plant
Ilse $4,700,000 Ito roam for holding pond; must punp
flow as received
Infrequent use
Future
Tlecd Wditional treatment capacity to meet EPA
and IDEO requirewents. Combines with Alternative
6. Future sewer construction would exclude or
defer the SE Interceptor 1112.080,0001 and
Outfall Sewer. Would Include Rehabllftatlon,
University Heights and Outfall Relief
Immediate
W-FiEerceptor Segment 510,070,000 Relieves SE Side and Rundell Street Uses entire plant site
Headworks 2,900,000
Aerated Lagoons 8,000,000 Relieves existing plant; provides Very expensive to redevelop site when
Outfall Sewer 1,020,000 additional treatment capacity conventional plant It built
Repair Existing Plant 55U,000
Land 700 m000 Provides for SE development Odor passibility
' S22;BOD,DOD
Use 527,000,000 May reduce bypassing Cost
Ileadworks can be used for new plant
Futuee
TF(s alternative was not reconnended by
Subcommittee
Immediate
Expo -and Upgrade Plant 119,000,000 steeps treatment at one site
Ilse 119,000,000
Future
Th -1i .nnsl he canbined with Al ternative I or 0
Future sewer construction Includes sewers listed
under Alternative 1 or e
Limited space
Location
Obsolescence
Almost 50 years old - warn oat
Limits develaµnent
Doesn't relieve SE Side and Rundell
Street without consllerable sewer
construction
`i
ALTERNATIVE ACTION COST ESTIKATE
lhrou h_ Plant Imrsedlate
?I, —9utl streams Reach and upper Retch V Rerceptor Segment
of SE Interceptor; defer Fairmtsdows New Plant and Readworks
Branch and SE trunk Relief Plant Outfall to River
Repair Existing Plant
Build Stormwater [folding Pond and Land
"F .through* secondary treatment plant
IexPandablel at New Plant Site Use 523,000,000
Build Outfall Sewer to Iowa River
t ) Build Sludge Pumpfng Facility and Farce ,
V Naln to Existing Plant
Repair Existing Plant
i
'L
1�
i
ADVANTAGES DISADVANTAGES
$10,030,000 Relieves SE Side and Rundell Street Cost
11,400,000
1,020,000 Relieves existing plant; provides
SSO,000 additional treatment capacity
300,000
VT700,D60 Provides for SE development
Reduces bypassing
Plant I$ expandable
Future
{pRi See table 1
Future
need plant expansion and Outfall Sewer
Plan would Include future construction of all
sewers previously mentioned
City of Iowa Cit's
MEMORANDUM
Date: March 8, 1984
To: City Council
From: Neal Berlin, City Manager/
Re: Summary of Economic Development Ad Hoc Committee Actions
The Economic Development Ad Hoc Committee has been meeting since September
1983 to explore methods for directing economic development efforts.
The Committee decided the best method to focus economic development
efforts was to create a formal, incorporated development organization
with bylaws. Articles of Incorporation and Bylaws have been drafted and
are attached.
This organization would represent local public and private interests and
hire staff to carry out specific projects. The governing board for the
organization would be composed of the Mayor of Iowa City, the City Manager
of Iowa City, five persons named by the Chamber of Commerce, and two
persons named by the Board of Directors of the University of Iowa Research
Foundation. Funding for this organization is to be provided by local
private businesses and individuals, the City of Iowa City, and possibly
the University of Iowa through a separate agency such as the Research
Foundation, and on an in-kind basis.
The major areas of concern raised by the Committee's discussion were
whether:
(1) sufficient funds could be raised for such an organization;
(2) an economic development corporation should promote Iowa City only or
the greater Iowa City area; and
(3) this organization should develop future industrial and office land
parks or if that's more appropriately performed by a separate
entity.
bdw/sp
5W
12/20/1983
ARTICLES OF INCORPORATION
OF
IOWA CITY DEVELOPMENT CORPORATION `
TO THE SECRETARY OF STATE OF THE STATE OF IOWA:
I, the undersigned, acting as incorporator of a
Corporation under the Iowa Nonprofit Corporation Act,
Chapter 504A of the Laws of Iowa, adopt the following
Articles of Incorporation for such Corporation:
y
ARTICLE I.
CORPORATE NAME AND DURATION
1. The name of the Corporation is Iowa City
Development Corporation.
2. The corporate existence of the Corporation shall
begin on the date the certificate of incorporation is issued
by the Secretary of State of the State of Iowa and shall
continue perpetually unless dissolved by the appropriate
actions of the Directors and sole Member.
ARTICLE II.
PURPOSES
1. The Corporation shall be operated exclusively to
promote, stimulate, develop and advance the economic
iprosperity and welfare of 'the Iowa City, Iowa metropolitan
and adjacent geographic area; to encourage and assist the
location of new businesses, professions and industries in
such area; to rehabilitate and assist existing businesses,
professions and industries in such area; to stimulate and
assist in the expansion of any kind of business,
professional and industrial activity which would tend to
promote economic development and maintain economic stability
in such area; to provide maximum opportunities for
employment, encourage thrift, and improve the standard of
living of the residents of such area; and to cooperate and
act in conjunction with other organizations, public or
private, in the promotion and advancement of business,
professional, industrial, commercial, agricultural and
recreational development in such area.
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2. Notwithstanding any provision of these Articles of
Incorporation, the Corporation shall not carry on any
activities not permitted to be carried on by a corporation
exempt from federal income tax under Section 501(c) of the
Internal Revenue Code of 1954, as amended (or for the
corresponding provision of any future United States Ihternal
Revenue Law).
ARTICLE III.
REGISTERED OFFICE AND AGENT
I. The registerr_d office of the Corporation shall be
at , Iowa City, Johnson County,
Iowa 52240. ---'_._
2. The name of the registered ayr.nt of the
Corporation at such address shall be
s
ARTICLE IV.
INCORPORATOR
The name and address of each incorporator is:
Name Address
ARTICLE V.
DIRECTORS
The
prthe
operty,
1 be be under y n
thedire tion of od affairs f Board
of Directors composed of nine individuals. One of such
Directors shall be the Mayor of Iowa City, Iowa, one shall
be the City Manager of Iowa City, Iowa, two of such
Directors shall be named by the Board of Directors of the
University of Iowa Research Foundation and five of such
Directors shall be named by the Board of Directors of the
Iowa City Chamber of Commerce persons from businesses,
professions or industries located in the Iowa City, Iowa
metropolitan and adjacent area.
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12/20/1983
2. The number of Directors constituting the initial
Board of Directors of the Corporation is nine, and the names
and addresses of the persons who are to serve as the initial
Directors are:
Name Address k
r
LZR
3. The Directors shall be elected by the Board of
Directors as provided in the Bylaws.
AR,rICi,E VI.
DISTRIBUTION OF ASSETS
No part of the assets or the net earnings of the
Corporation shall be distributable to or inure to the —
benefit of its Directors, individuals, or officers
(provided, however, that reasonable compensation for
services rendered shall not be deemed a distribution of
assets), other than to one or more organizations which are
exempt from federal income tax under Section 501(c) of the
Internal Revenue Code of 1954, as amended (or the
corresponding provision of any future United States Internal
Revenue Law), and other than in furtherance of the purposes
of the Corporation.
ARTICLE VII.
DISSOLUTION
Upon dissolution or liquidation of this Corporation,
all assets available for distribution shall be transferred
to one or more organizations which are exempt from federal
income tax under Section 501(c) of the Internal Revenue
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Code, as amended (or the corresponding provision of any
future United States Internal Revenue Law) to be designated
by the Board of Directors.
ARTICLE VIII.
A14ENDMENT
i
The Articles of Incorporation of the Corporation may be
amended by the affirmative vote of two-thirds of the
Directors.
ARTICLE IX.
PROPAGANDA
No substantial part of the activities of the
Corporation shall consist of carrying on propaganda or
otherwise attempting to .influence legislation or engaging in
activities pertaining thereto. The Corporation shall not
participate or intervene in any political campaign on behalf
of any candidate for public office.
ARTICLE X.
EXEMPTION OF DIRECTORS AND OFFICERS
FROM PERSONAL LIABILITY
The Directors and Officers of this Corporation shall
not be individually liable for and their respective
properties shall be wholly exempt from liability for any and
all debts, liabilities and obligations of this Corporation.
Dated: , 1983.
Incorporator
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STATE OF IOWA
) ss:
COUNTY OF JOHNSON
On this day of , 1983, before me,
the undersigned, a notary public in and for said Coenty in
said State, personally appearedI
to me known to be the person named in and who executed the
within and foregoing Articles of Incorporation, and
acknowledged that she executed the same as her voluntary act
and deed.
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NOTARY PUBLIC IN AND FOR
THE STATE OF IOWA
12/20/1983
BYLAWS
OF
IOWA CITY DEVELOPMENT CORPORATION
ARTICLE I.
PURPOSES
SECTION 1. GISNERAL PURPOSES. The Corporation is
organized and shall be operated exclusively as a nonprofit
corporation to promote the economic development of the Iowa
City metropolitan and adjacent geographic area.
SECTION 2. SPECIFIC PURPOSES. The purposes of the
Corporation are to encourage and assist the location of now
businesses, professions and industries in the Iow9 City
metropolitan and adjacent geographic area; to rehabilitate
and assist existing businesses, professions and industries
in such area; to stimulate and assist in the expansion of
any kind of business, professional and industrial activity
which would tend to promote economic development and
maintain economic stability in such area; to provide maximum
opportunities for employment, encourage thrift, and improve
the standard of living of the residents of such area;;and to
cooperate and act in conjunction with other organiz.itions,
public or private, in the promotion and advancemo nt of
business, professional, industrial, commercial, agricultural
and recreational development in such area.
ARTICLE II.
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of
the Corporation in the State of Iowa shall be located in the
city of Iowa City, in the county of Johnson. The
Corporation may have such other offices, either within or
without the State of Iowa, as the activities of the
Corporation may require from time to time.
SECTION 2. REGISTERED OFFICE. The registered ..office
of the Corporation shall be at ,
Iowa City, Iowa 52240.
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SECTION 1.
affairs of the
direction of the
all of the power,
given the Board
under the laws of
SECTION 2
OF DIRECTORS.
12/20/1983
ARTICLE III.
BOARD OF DIRECTORS
MANAGEMENT. The property, activity, and
Corporation shall be managed under the
Board of Directors. The Board shall have
authority, responsibility, and obligation
of directors of a nonprofit corporation
the State of Iowa.
QUALIFICATIONS
(a) The number of Directors of the Corporation shall
be nine '(9) , to be elected or determined as provided herein.
The Mayor and the City Manager of Iowa City, Iowa, shall
each serve as a Director by virtue of his or her position,
two Directors shall be designated by the Board of Directors
of the University of Iowa Research Foundation anti five
Directors shall be elected by the Board of Directors of the
Iowa City Chamber of Commerce from businesses, professions
or industries located in the Iowa City, Iowa metropolitan
and adjacent geographic area.
(b) Prior to April of each year, the Chairman of the
Board of Directors shall designate a Nominating Committee of
three (3) Directors. Directors whose term of office shall
expire at the next annual meeting shall not be appoiAted to
the Nominating Committee. The Nominating Committee shall
submit a slate of candidates, including any designee of the
University of Iowa Research Foundation, to be Directors to
the Board for acceptance at the annual meeting.
(c) Each Director, other than the Mayor and City
Manager of Iowa City, Iowa, shall hold office until his or
her successor is duly elected and qualified or until his or
her death, resignation or removal from office, whichever
occurs first. The Mayor and the City Manager of Iowa City,
Iowa, shall serve as a Director only during the time he or
she is also serving as Mayor or City Manager of Iowa City,
Iowa. His or her term of office as a Director shall
terminate when he or she is no longer the Mayor or the City
Manager of Iowa City, Iowa.
(d) The Directors other than the Mayor and t}le City
Manager of Iowa City, Iowa, shall be classified by dividing
them into three classes of as nearly equal numbers as
possible with the term of office of all Directors within a
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class to expire at the same time. The terms of office of
the persons initially elected as Directors shall be
staggered so that one class of Directors serves an initial
term of one year, another class serves an initial term of
two years, and the remaining class serves an initial term of
three years. Thereafter each Director shall be elected to
serve a three year term.
SECTION 3. ANNUAL AND REGULAR MEETINGS. The annual
meeting of the Board of Directors shall be held in April at
a place and on a date fixed by resolution of the Board for
the purpose of electing Directors and for the transaction of
such other business as may come before the annual meeting.
Regular meetings of the Board shall be held at such
intervals as the Board determines. The Board may provide,
by resolution, the time and place, either within or without
the State of Iowa, for the holding of regular meetings
without notice other than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings .of the
Board of Directors may be called at any time by the Chairman
of the Board or at the request of the President or upon the
written request of one-third of the Directors. The person
or persons authorized to call special meetings of the Board
may fix any place, either within or without the State of
Iowa, as the place for holding the special meeting of the
Board called by them.
SECTION 5. NOTICE. Notice of any special meeting of
the Board of Directors shall be given to each Director at
least forty-eight (48) hours previous thereto either by
written notice delivered personally to the Director at his
or her address as shown on the records of the Corporation or
by orally conveying such notice to the Director in a
telephone call. If notice is given orally by telephone, the
individual giving such notice shall memorialize the
conversation by preparing and signing a written record
summarizing the conversation, which written record shall be
filed with the minutes of the special meeting. The
attendance of a Director at any meeting shall constitute a
waiver of notice of such meeting except where a Director
attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special
meeting of the Board need be specified in a notice or waiver
of notice of such meeting unless required by law or, these
Bylaws.
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12/20/1983
SECTION 6. QUORUM. A majority of all the Directors
shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors; provided that, if
less than the majority of all of the Directors are present
at such meeting, the majority of the Directors present may
adjourn the meeting from time to time without further
notice.
SECTION 7. VOTING; MANNER OF ACTING. Each Director
shall have one vote on each matter submitted to the vote of
the Board of Directors. The act of the majority of
Directors present at a meeting at which a quorum is present
shall be the act of the Board, unless the act of a greater
number., is required by Iowa law, the Articles of
Incorporation, or these Bylaws.
SECTION 8. VOTING AS A MEMBER OR SHAREHOLDER. The
vote of the Corporation as a Member or shareholder of
another corporation shall be determined by the vote of a
majority of Directors of the Corporation present,, at a
meeting at which a quorum is present.
SECTION 9. INFORMAL ACTION BY DIRECTORS. Any action
required or permitted to be taken by the Board of Directors
may be taken without a meeting, if all Directors
individually or collectively consent in writing to such
action. Such written consent or consents shall be filed
with the minutes of the proceedings of the Board and shall
have the same force and effect as a unanimous vote .of the
Directors. Any certificate or other documents filed under
law which relate to action so taken shall state that the
action was taken by unanimous written consent of the Board
of Directors without a meeting, and that the Bylaws
authorize the Directors to so act.
SECTION 10. INTERESTED DIRECTORS, OFFICER AND
COMMITTEE MEMBERS. No contract or transaction between the
Corporation and one or more of its Directors, officers or
committee members (any one of which may hereinafter be
referred to as an "insider") or between the Corporation and
any other corporation, partnership, association or other
organization (other than an "affiliate" as hereinafter
defined) in which one or more of the insiders are Directors,
trustees, partners or officers or have a financial interest,
shall be void or voidable solely for this reason, if:
(a) The interested insider informs the Board of
Directors (or the committee of the Board which is
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considering the contract or transaction) of the conflict as
soon as he or she becomes aware of it; and
(b) After the interested insider becomes aware of the
conflict, he or she does not participate to any
deliberations of the Board of Directors or a committee of
the Board which is considering the contract or transaction
or vote with respect thereto, and he or she excuses himself
or herself from any meeting or portion thereof at which such
deliberations or vote occur.
Notwithstanding the foregoing, an interested insider
may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which is
considering the contract or transaction if he or she is a
Director or a member of such committee. For purposes of
this Sdction 10 of Article III of these Bylaws, an affiliate
means any corporation, association, partnership, trust,
joint venture or other entity directly or indirectly
controlling, controlled by or under common control with the
Corporation.
SECTION 11. VACANCIES. Any vacancy occurring in the
Board of Directors, other than a vacancy in the four
assigned Directors shall be filled by the Board of
Directors. The Director elected to fill a vacancy shall j
hold office for a term expiring when the term to which he or
she has been elected expires.
SECTION 12. COMPENSATION. Directors shall not receive
any salaries for their services as such, but by resolution
of the Board of Directors, a fixed sum and expenses of
attendance, if any, may be allowed for the attendance at
each regular or special meeting of the Board or a committee
thereof; provided that nothing herein contained shall be
construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation
therefor.
SECTION 13. RESIGNATION OR REMOVAL OF DIRECTORS. A
Director may resign at any time by tendering his or her
written resignation to the Chairman. Resignation as a
Director shall also constitute resignation as a member of
any committee of the Board. Any Director, other than the
Mayor and the City Manager of Iowa City, Iowa, may be
removed at any time for any reason by the affirmative vote
of two-thirds of the remaining Directors.
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ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. COMMITTEES. The standing committees of the
Board of Directors shall consist of such committees as the
Board by resolution may authorize. Each committee shall
consist of two (2) or more Directors and such other persons
as the Board shall designate. The members of each of said
committees shall be appointed by the Chairman of the Board
or in such other manner as may be provided for in the
resolution creating such committee.
SECTION 2. QUORUM. A majority of all of the members
of a committee shall constitute a quorum for the transaction
of business of such conunittee; provided, hoWover, that if
less than a majority of the
such meetcommittee members are present at
meet* the majority of the members present may
adjourn the meeting from time to time without further
notice.
SECTION 3. MANNER OF ACTING. The act of the majority
of the committee mombors present at a mnet.ing at which a
quorum is prooent shall be the act of the c0unnittce unless a
greater number is required by the laws of the State of Iowa.
SECTION 4. TERM OF OFFICE. Each committee member
shall serve for such term as may be set forth 'in the
resolution authorizing such committee.
SECTION 5. VACANCIES. A vacancy in the membership of
any committee may be filled by an appointment made in the
same manner as the original appointment.
SECTION 6. RESIGNATION OR REMOVAL OF COMMITTEE
MEMBERS. A member of any committee of the Board may resign
at any time by tendering his or her resignation in writing
to the Chairman. Resignation as a Director shall also
constitute resignation as a member of any committee of the
Board. The Board may at any time remove any member from a
committee of the Board, with or without cause.
SECTION 7. ADVISORY NATURE OF COMMITTEE ACTION. Any
actions taken and recommendations made by a committee which
has as a member a person who does not also serve as a member
of the Board of Directors shall be advisory and shall not
have any effect until such action or recommendation is
formally approved by the Board of Directors.
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1 ARTICLE V.
ADVISORY ECONOMIC DEVELOPMENT COUNCIL
The Board of Directors by resolution may establish an
advisory Economic Development Council composed of such
individuals and organizations as the Board may determine.
The resolution establishing such Council may provide for its
membership, governance, status, and role with regard to the
Corporation's activities.
ARTICLE VI.
OFFICERS
SECTION 1. NUMBER. The officers of the Corporation
shall consist of a Chairman of the Board of Directors
j (Chairman), a Vice Chairman, a President, a Secretary, a
i Treasurer, and such other officers and assistant officers as
may be deemed necessary by the Board of Directors. Any
two (2) or more offices may be held by the same person.
SECTION 2. ELECTI0N AND 'r ERM OF OFFICE. All officers
of the Corporation shall be elected annually, from a slate
of nominees prepared by the Nominating Committee of the
Board of Directors of the Corporation, by the Board at its
j annual meeting. If the election of officers shall not be
held at such meeting, such election shall be held as soon
thereafter as is convenient. Vacancies may be filled or new
offices created and filled at any meeting of the Board of
Directors. Each officer shall hold office until his or her
successor is duly elected and qualified, or until his or her
death, resignation or removal from office, whichever occurs
first.
SECTION 3. REMOVAL. Any officer or agent elected or
appointed by the Board of Directors may be removed from
office by the Board at any time for any reason, with or
without cause. The removal of such officer or agent shall
be without prejudice to the contract rights, if any, of the
person so removed.
SECTION 4. SALARIES. Persons serving as officers of
the Corporation, other than those who are deemed to be
employees of the Corporation, shall receive no salaries or
other compensation for the performance of their 'duties;
provided, however, in the event that special or
extraordinary services are rendered to the Corporation by
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such officer, the Board of Directors may, by resolution,
authorize payment to such officer of such compensation as it
may deem reasonable; and provided, further, that any officer
who advances his or her own funds to meet expenses in the
performance of his or her duties as an officer -of the
Corporation shall be entitled to reimbursement therefor.
SECTION 5. CHAIRMAN. The Chairman shall preside at
all meeting of the Board of Directors, and shall perform
such additional duties as may be prescribed from time to
time by the Board.
SECTION 6. VICE CHAIRMAN. There shall be a Vice
Chairmen who shall perform such duties as may be assigned to
him or her by the Board and shall perform the duties of the
Chairman in the absence or disability of the Chairman.
SECTION 7. PRESIDENT. The President shall have
general control over the affairs and business of the
Corporation, subject to the direction of the Board of
Directors. He or she shall sign all deeds, leases,
conveyances, agreements and contracts authorized by the
Board of Directors and shall perform such additional duties
as may be prescribed from time to time by the Board of
Directors or by the Articles of Incorporation or the Bylaws
of the Corporation.
SECTION 8. SECRETARY. The Secretary shall -keep a
record of all votes and minutes of the proceedings.of all
Directors' meetings, and shall give notice as required by
these Bylaws of all special meetings of Members and
Directors. He or she shall have the custody of all books,
records, and papers of the Corporation.
SECTION 9. TREASURER. The Treasurer of the
Corporation shall keep account of all monies and valuables
in the name of and to the credit of the Corporation in such
bank or banks and depositories as may be designated by the
Board of Directors.
ARTICLE VII.
BOOKS AND RECORDS
The Corporation shall keep correct and complete books
and records of accounts, and shall also keep minutes of the
proceedings of the Board of Directors and committees having
any of the authority of the Board.
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1 ARTICLE VIII.
CONTRACTS, LOANS, CHECKS, DEPOSITS Aft GIFTS
SECTION 1. CONTRACTS. The Board of Directors may,
from time to time, authorize any officer or agent of the
Corporation, in addition to the officers so authorized by
these Bylaws, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined
j to specific instances.
SECTION 2. LOANS. No loan shall be contracted on
behalf .of the Corporation and no evidence of indebtedness
shall Abe issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be
general or confined to spr_cific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or
other orders for the payment of money, notes or, other
evidences of indebtedness issued in the name of the
Corporation shall be signed by an officer or agent of the
Corporation authorized to do so in accordance with
resolutions of the Board of Directors then in effect.
SECTION 4. DEPOSITS. All funds of the Corporation not
otherwise employed shall be deposited from time to time to
the credit of the Corporation in such banks, trust companies
or other depositaries as the Board of Directors may select.
SECTION 5. GIFTS. The Board of Directors may accept
on behalf of the Corporation any contribution, gift, bequest
or devise for the general purposes or for any special
purpose of the Corporation.
ARTICLE IX.
FISCAL YEAR
The Corporation shall operate on a fiscal year basis
beginning on the first day of July of each year and ending
on the thirtieth day of June of the following year.
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1 ARTICLE X.
WAIVER OF NOTICE
Anything herein contained to the contrary
notwithstanding, whenever any notice whatsoever is required
to be given under the provisions of the Iowa Nonprofit
Corporation Act, the Articles of Incorporation or these
Bylaws, a waiver thereof, in writing, signed by the person
or persons entitled to such notice, whether before or after
the time stated therein, shall be equivalent to the giving
of such notice.
ARTICLE XI.
INDEMNIFICATION
,
SECTION 1. ACTIONS AGAINST DIRECTORS, OFFICERS,
EMPLOYEES OR AGENTS. The Corporation shall indemnify any
person who was or 'is a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit
or proceeding, whether civil or criminal, administrative or
investigative, by reason of the fact that he or she is or
was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a Director, officer, partner, employee or
agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or'her in
connection with such action, suit or proceeding.
SECTION 2. EXCEPTION. No indemnification shall be
made with respect to any Director, officer, employee or
agent referred to in Section 1 above who has been adjudged
in such action, suit or proceeding (referred to in Section 1
above) to be liable for negligence or misconduct in the
performance of duty. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person was liable
for negligence or misconduct in the performance of duty.
SECTION 3. EXPENSES. To the extent that a Director,
officer, employee or agent of the Corporation has been
successful, on the merits or otherwise, in the defense of
any action, suit, or proceeding referred to in Section 1 of
this Article, or in defense of any claim, issue or matter
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1 therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred
by him or her in connection therewith.
SECTION 4. AUTHORIZATION OF INDEMNIFICATION. Any
indemnification under Section 1 of this Article (unless
ordered by a court) shall be made by the Corporation only as
authorized in the specific case, upon a determination that
indemnificatiun'of a Director, officer, employee or agent is
proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Section 2. Such
determination shall be made either (1) by the Board of
Directors by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable, a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion.
SECTION 5. PAYMENT OF EXPENSES IN ADVANCE. Expenses
incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding, as
authorized by the Board of Directors in the specific case,
upon receipt of an undertaking by or on behalf of the
Director, officer, employee or agent to repay such amount,
unless it shall ultimately be determined that he or she is
entitled to be indemnified by the Corporation as authorized
in this Article.
SECTION 6. RIGHT NOT EXCLUSIVE. The indemnification
provided by this Article shall not be doomed exclusive of
any other rights to which those seeking indemnification may
be entitled under any agreement, vote of disinterested
Directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who
has ceased to be a Director, officer, employee or agent, and
shall inure to the benefit of the heirs, executors and
administrators of such person.
SECTION 7. INSURANCE. The Corporation may purchase
and maintain insurance on behalf of any person who is or was
a Director, officer, employee or agent of the Corporation,
or who is or was serving at the request of the Corporation
as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him or
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her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her
against such liability under the provisions of this Article.
ARTICLE XII.
LOANS
No loans shall be made by the Corporation to its
officers or Directors. The Directors of the Corporation who
vote for or assent to the making of a loan to an officer or
Director of the Corporation, and any officer or officers
participating in the making of such loan, shall be jointly
and severally liable to the Corporation for the amount of
such loan until the repayment thereof.
ARTICLE XIII.
AMENDMENTS
These Bylaws may be altered, amended or repealed, and
new Bylaws may be adopted by the affirmative vote of
two-thirds of the Directors at any meeting of the Board;
provided, however, that written notice of the proposed
change shall have been given to the Directors in the notice
of the meeting.
Secretary
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City of Iowa City
MEMORANDUM
DATE: March 23, 1984
TO: City Council
FROM: City Manager/¢„� j
RE: Travel Expenses
Because Council members do not frequently travel, you may not be
familiar with the travel policy (enclosed) which was adopted by the
City Council on July 5, 1977. Also, to as you we will provide a
City of Iowa City
MEMORANDUM
DATE: March 23, 1984
TO: City Council
FROM: City Manager/. ; j
RE: Travel Expenses
Because Council members do not frequently travel, you may not be
familiar with the travel policy (enclosed) which was adopted by the
City Council on July 5, 1977. Also, to assist you we will provide a
summary of the policy (enclosed) for you when you travel and a small
booklet or folder in which you can record and file the required infor-
mation.
Enclosures (2)
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CITY OF IOWA CITY - TRAVEL GUIDELINES
1. If a cash advance is provided in excess of $100, purchase travelers
checks at City expense. The City is not responsible for loss of
funds.
2. Receipts are required to document all expenses claimed. If a
receipt is not obtained, a statement explaining lack thereof must
be provided.
3. Use the most economical form of transportation; i.e., coach, super-
i
saver, public transportation, City vehicle (taxi only as last resort).
4. Rental cars only with advance approval by City.
5. Lodging - only for minimum number of nights required to conduct City
business at the rate for a medium priced room.
6. Meals - No reimbursement for entertainment or for alcoholic beverages.
7. No reimbursement for personal phone calls.
8. The following items are eligible for reimbursement if receipts or
documentation are provided: parking fees, telephone (for official
business), tips (15 percent limit), travelers checks.
9. Expenditure detail form must be filed within three days after return
from travel.
10. Prompt and complete expenditure filings will avoid audit exceptions.
March 1984
25
RESOLUTION NO. 77-241
RESOLUTION ESTABLISHING A TRAVEL POLICY
REGULATING TRAVEL FOR MUNICIPAL PURPOSES
WHEREAS, during the conduct of municipal affairs, officers, employees,
and agents of the City of Iowa City incur various travel related expenses, and
WHEREAS, it is necessary to reimburse individuals who incur such expenses
while conducting official City business, and
WHEREAS, the City Manager has formulated a travel policy, which is attached
to this resolution and by this reference made a part hereof,
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF IOWA CITY,
IOWA, that the attached travel policy be adopted as the official travel policy
governing expenses incurred by municipal officers, agents, and employees while
on official business.
It was moved by deProsse and seconded by Foster
that the Resolution as read be adopted and upon roll call there were:
AYES: NAYS: ABSENT:
X Balmer
x deProsse
x Foster
x Neuhauser
x Perret
x Selzer
X Vevera
Passed and approved this 5th day of July 1977
i
Mayor
I
Attest:
City Clerk
RECEIVED h APPROVED
BY T AL DFRARTMENT
��S
2.
3.
SECTION I - GENERAL INFORMATION
POLICY
Officials and employees required to travel out of Iowa City in the
interest of the City may do so at City expense in accordance with
the following regulations and limitations. For the purpose of this
policy, official travel shall include the following types of
travel: operational, educational, moving expenses and pre-employment
(see definitions in Section 2).
APPLICABILITY
This policy applies to all City employees, prospective employees
who travel for pre-employment interviews, councilmembers and
commission or board members.
Prior to any official travel, employees and appointed officials
must obtain approval from their respective Department Heads and the
City Manager.
Councilmembers must obtain the prior approval of the City Council.
A simple majority is required.
The City Manager will sign all Council requests in order to certify
date of Council approval and the Finance Director will certify fund
availability. For the purpose of approval and reimbursement,
employees/officials must submit Travel Authorization Form T-1 prior
to departure and Expenditure Detail Form T-2 upon return (see
instructions in Section 5).
RESPONSIBILITY OF DEPARTMENT HEAD
Before submission for approval of the City Manager, it will be the
responsibility of the Department Head to insure that adequate funds
are budgeted and unexpended for the estimated cost of the travel
request. If funds are not available, a budget amendment sheet
shall be included for its allocation. The Department Head also
will justify on Form T-1 the reason for the employee/official's
travel and the expense.
4. RESPONSIBILITY OF EMPLOYEE/OFFICIAL
It will be the responsibility of each employee/official traveling
as an official representative of the City of Iowa City to maintain
sufficient documentation of expenses incurred during the trip to
aid in completing the expense form and to document any expenditures.
5. LI14ITATIONS ON TRAVEL
The number of employees/officials attending the same conference or
meeting held within the State of Iowa shall not exceed the minimum
number of employees/officials the Department Head deems necessary
to accomplish the goals established by the department for such
attendance. Normally, approval will not be granted for more than
two employees/officials to attend the same conference or meeting in
the Midwest. In all other areas of the country, approval will
normally be restricted to one employee/official. Obviously, special
circumstances will be considered. The number of councilmembers
attending the same conference or meeting is subject to the approval
of the council.
SECTION 2 - TYPES OF TRAVEL OR REIMBURSABLE EXPENSES
EDUCATIONAL
Attendance at professional meetings or conferences and training
sessions which increase the job knowledge and qualifications of the
City representative is considered educational travel. Department
Heads should consider providing for any employee appropriate educational
opportunities which are deemed to be in the City's interest.
2. OPERATIONAL
Any travel outside the metropolitan area necessary to conduct City
business and/or to perform activities associated with the normal
duties of a department is considered operational travel.
3. MOVING EXPENSES
Moving expenses to be incurred by the City for a newly hired department/
division head when moving from outside the metropolitan area to
Iowa City will be approved by the City Manager in advance of a
position offer being tendered. The amount shall be the minimum
necessary for the City to attract the selected candidate.
The employee may select the carrier. However, the City will contract
for the service.
The department head will prepare for the Manager's approval a
letter of authorization to the selected moving company authorizing
such a move, specifying the extent of services desired, and thereby
obligating the City for the expenses incurred. The insurance
coverage desired will be detailed in the letter to the moving
company. In all cases the maximum insurance limit permitted by the
moving company will be authorized.
Payment for any moving expenses will not be allowed unless the
appropriate letter of authorization has been issued. After the
move has been completed a copy of the authorization letter along
with the invoices must be attached to Form T-1.
-2-
JXS
4. PRE-EMPLOYMENT INTERVIEW
Transportation and accomodation expenses incurred by candidates
interviewed for positions with the City will be paid by the City
when such interviews are requested by the City. Candidates for
department/division heads or professional positions are eligible
for reimbursement under this category. The concerned department
will make arrangements for the applicant's lodging and airfare.
These expenses may then be billed to the City. Incidential expenses
incurred by the applicant must be submitted on Form T-1 for reimburse-
ments by the City.
5. MISCELLANEOUS
Meals during meetings and expenses of non -City employees are covered
in Sections 6 and 7.
SECTION 3 - PROCEDURES FOR FILLING OUT FORMS
1. TYPES OF FORMS USED:
A. Form T-1 - Travel Authorization: To be filled out at least
ten (10) working days before leaving, or as soon as possible
for unscheduled trips.
B. Form T-2 - Expenditures Detail: To be completed within three
(3) days after return.
2. DIRECTIONS FOR USE:
Directions for submission and routing procedures are written on
these forms.
3. ADVANCES:
In order not to make the employee on official travel incur a
financial hardship in paying for expenses as they are incurred, an
advance, not to exceed $50/day, for the estimated cost of the
travel will be granted if justified on Form T-1, Section III. It
will be the responsibility of the employee/official to return any
unused advance to the Finance Department cashier within 3 days
after return. It will also be the responsibility of the employee/
official in custody of an advance to cover any loss of City funds.
Travelers Checks are advised for out-of-state travel and/or advances
over $100 and under these circumstances the cost of Travelers
Checks will be borne by the City.
4. RECEIPTS
Expenses claimed for reimbursement normally will be documented by
receipts. Those expenses not documented by receipts will be justified
by the employee/official in writing upon his/her return. Reimburse-
ment will be based on actual expenses.
-3-
.9✓(
I
SECTION 4 - TRANSPORTATION
1. POLICY
All travel must be by the usually traveled (most direct) route. On
those occasions when an indirect route is selected by an employee/
official, expenses will be reimbursed on the basis of a direct
route. All extra expenses due to indirect route will be borne by
the employee/official.
All transportation arrangements are to be made by the employee or
that individual designated in the department to do so. All employees/
officials are expected to use the most economical form of trans-
portation.
2. MODES OF TRANSPORTATION
A. Airfare
Reimbursement will be on the basis of coach airfare only. It
is the individual's responsibility to reserve their own airplane
tickets through a local travel agency which will bill the
City. When reserving a ticket, the standard requisition
procedures must be followed. Notice of any cancellation of
tickets should be given immediately to the Purchasing Division.
Travel to and from airports shall be by bus, limousine,
private or City vehicle. The taxi may be used only as a last
resort.
Special prior authorization for rental airplanes or chartered
airplanes must be obtained from the City Manager.
B. City Vehicles (also refer to City Vehicle policy)
City vehicles will be used for all in-state travel, unless
unusual circumstances warrant the use of alternative types of
transportation. Reimbursement will be made upon presentation
of receipts for gas and oil used.
C. Private Vehicles (also refer to City Vehicle policy)
The use of private vehicles for official travel requires prior
authorization of City Manager on Form T-1. Reimbursement will
be made on the basis of fifteen cents (15d) per mile by the
most direct route. If out-of-state travel is authorized via
personal car, the mileage reimbursement shall not exceed the
cost of coach airfare to the same destination. Likewise, meal
and lodging reimbursements will be based on the travel time by
air. All extra expenses incurred due to increased travel time
will be borne by the employee/official. In addition, extra
time away from work due to increased travel time will be
deducted from accumulated leave.
-4-
6-1f.6—
D. Rental Cars
Rental cars for official travel are prohibited unless prior
authorization is obtained from the City Manager.
i
E. Taxi Cabs
The use of taxi cabs shall be restricted to situations where
less expensive means of transportation are not available or
are impractical.
I
SECTION 5 - LODGING
1. POLICY
Reimbursement for lodging will be limited to the minimum number of
nights required to conduct the assigned City business. Employees
will be reimbursed at a rate not greater than the cost of a medium
priced single room suitable for the purposes of employees/officials
on City business. If the lodging receipt includes expenses of non -
City employees, reimbursement will be based on the price of an
equivalent single room as certified by the innkeeper on the receipt
or other documentation.
SECTION 6 - MEALS
1. POLICY
Employees/officials will be allowed three (3) meals for each full
day of travel. This three (3) meal allotment will be reduced while
attending conventions which include pre -paid meals. No reimbursement
will be made for entertainment or for meals of persons other than
City employees unless such expenses are specifically approved by
the City Manager. Reimbursement for alcoholic beverages is prohibited.
2. MEALS DURING MEETINGS (within metropolitan area)
Reimbursement will be made only if documented that it was necessary
to hold a meeting during a meal time hour outside of regular working
hours or if the employee is required to attend a meeting on City
business which normally he/she would not attend. Meals during the
mid-day (lunch) will not be paid within the Iowa City area. Appropriate
documentation must be submitted to the Finance Director for approval
I
and for petty cash reimbursement.
3. PAYMENT OF EXPENSES OF NON -CITY EMPLOYEES
Form T-2 must be used if the expenses are more than ten dollars
($10.00). If less than $10.00, petty cash is used for reimbursement.
Documentation of expenses must accompany both forms of reimbursement
requests. Prior approval of the City Manager is required.
-5-
r`1
SECTION 7 - MISCELLANEOUS FEES
1. REGISTRATION FEES
The City will pay the actual cost of fees associated with conference
or meeting registration. If pre -registration is requested, attach
registration form to T-1. If the fee is paid by the employee/official
at the meeting, a receipt shall be attached to Form T-2 as proof of
payment.
2. PARKING TELEPHONE, AND TIPS
The following expenses are eligible for reimbursement provided that
receipts or documentation for such expenses are attached to Form T-2.
A. Parking fees
B. Telephone (for official business)
C. Tips (15% limit)
D. Travelers Checks (see Section 3 for limitations).
Other expenses will be considered for reimbursement upon justification
on Form T-2. Laundry and valet expenses are not reimbursable
expenses.
3. EXCEPTIONS
Exceptions may be allowed only upon presentation of documentation
and approval by the City Manager.
i
JANSEN & LYNCH LAW OFFICES
ATTORNEYS AT LAW
LAWRENCE L. LYNCH HIGHWAY ONE WEST
ROBERT W. JANSEN P. O. BOX 2500
STEPHEN N. GREENLEAF IOWA CITY. IOWA 52244.2508
March 22, 1984
Mr. Wayne Kern
General Counsel
Heritage Communications, Inc.
2195 Ingersoll Avenue
Des Moines, Iowa 50312
Dear Mr. Kern:
AREA CODE 319
351-1056
Your letter of March 13, 1984 addressed to Mr. W. 0. Terry,
Chair, Broadband Telecommunications Commission for the City of
Iowa City has been referred to me for reply. In addition, a
letter of March 5, 1984 sent to the attention of the City Clerk
from Annette Howe, Associate Counsel for Heritage, has also been
referred to me for reply.
Ms. Howe submitted a proposed ordinance approving and
confirming the transfer and assignment of the franchise and at
the appropriate time that proposed ordinance will be reviewed by
the legal staff. Our practice, of course, is to prepare all
ordinances for passage by the City.Council and we do not submit
ordinances prepared by outside attorneys. Once all procedural
matters of concern to the City have been cleared, we will, of
course, work with you on the wording of the ordinance.
Your letter of March 13th asks Mr. Terry to furnish a
"proposed schedule of events" with a projected date for approving
the transfer from American Television and Communications
Corporation/Hawkeye CableVision Corporation to your client. As
you may know, the City Council has referred the matter to the
Broadband Telecommunications Commission for comment and review
concerning the proposed sale. Neither the Commission nor the
City Council has established a schedule, although preliminary
discussion by the City Council of those issues of concern to the
City is scheduled for Monday, March 26th, at an informal Council
session at 6:45 P.M.
I believe that you are familiar with the franchise ordinance
requirements that any sale of the franchise requires City consent
expressed by a Council resolution and the requirement in the
ordinance that any sale shall be only on such conditions as the
Council may establish. Sec. 14-90(a), City Code.
JAG
For reasons unknown to us, the parties to this sale have
apparently not considered the provisions in the franchise
ordinance requiring Hawkeye/A.T.C. to first offer the cable
network for sale to the City. The City's right to purchase is
contained in Secs. 14-68 and 15-71, City Code. I would
appreciate receiving your comments or those of counsel for
Hawkeye/A.T.C. as to why this requirement is not being
considered.
very truly yours,
Robert W. Jansen
City Attorney
RWJ:jb
cc: W.O. Terry
City Manager
Assistant City Manager
Drew Shaffer
Bill Blough
Assistant City Attorney Brown
M
City of Iowa City'
MEMORANDUM
Date: March 23, 1984
To: City Council
From: Dale Helling, Assistant City Manager
Re: Sale of Hawkeye CableVision
Attached to this memorandum* please find an opinion from David Brown
regarding the sale of Hawkeye CableVision which outlines those options
available to the City under the terms of the current franchise enabling
ordinance.
At this time it is necessary for Council to decide what general direction
should be taken. If the Council has any interest in City acquisition of
the system, staff will further pursue this alternative. It would ini-
tially require an appraisal of the existing system estimated to cost
between $5,000 and $10,000 and a feasibility study to determine the cost
effectiveness of acquisition at an estimated minimum cost of $25,000.
These figures are based on estimates obtained from consulting firms who
provide this type of service.
If the City does not wish to acquire the existing system, other alterna-
tives are available for modifying the terms of the franchise as stated in
the attached legal opinion. During budget discussions, Council expressed
particular interest in a franchise fee increase, exploration of available
grants, and development -of the institutional network.
At the present time, direction from Council is needed in two areas.
1. If there is interest in acquisition of the system by the City, staff
will further pursue this option.
2. If Council is- not interested in acquisition, some direction on your
priorities for modification of the franchise should be provided so
that the Commission and staff may develop specific recommendations.
This matter has been scheduled for discussion at your informal meeting
on March 26, 1984. Staff and Commission representatives will be
present to answer your questions at that time.
tp5/2
cc: City Attorney
Broadband Telecommunications Commission
Broadband Telecommunications Specialist
�0 %
i
City of Iowa City
MEMORANDUM
Date: March 19, 1984
To: City Council
Broadband Telecommunications Commission
From: Robert Jansen, City Attorney �" W.
David Brown, Assistant City Attorney
Re: Pending Sale of Hawkeye CableVision
Upon our review of the March 7, 1984, letter to you from Nile McDonald of
Heritage Communications, Inc., and the March 5, 1984, letter to the City
from Annette Howe, Associate Counsel for Heritage Communications, Inc., it
is now evident that the pending sale of Hawkeye CableVision Corporation by
A.T.C. to Heritage involves the purchase by Heritage of all the assets -of
Hawkeye CableVision. Such a transaction would constitute a transfer or
sale of the cable TV franchise currently held by Hawkeye, and, therefore,
cannot be consummated without prior approval of the City Council pursuant
to Sec. 14-90(a), City Code, as set out below:
Sec. 14-90. Transfer.
(a) Consent prior to transfer of franchise. Any franchise granted
hereunder shall be a privilege to be held for the benefit of the.public
by the grantee. Said franchise cannot in any event be sold, trans-
ferred, leased, assigned or disposed of in whole or in part, either by
forced or voluntary sale, merger, consolidation, mortgage, trust,
receivership or any other means without the prior consent of the city
expressed by a council resolution and thenonl under such conditions
as the council may establish. (Emphasis a def
As provided, the sale of the franchise cannot take place unless approved by
the City "under such conditions as the Council may establish." Since the
franchise does not specify what type of "conditions" might be established,
a just and reasonable construction of that phrase is required. Sec. 34-45,
"Franchises," Municipal _Corporations (McQuillin). It is our opinion that
the phrase cannot be cons rue so broadly as to allow the City to re -write
the franchise as a condition for granting approval; a more restrictive
reading is required. We believe, however, that "such conditions" could
include a limited number of reasonable amendments to the ' franchise to
address existing problems/concerns as perceived by the City. For example,
we believe that "such conditions" might include terms to ensure a contin-
ued commitment to access, performance testing of the existing system by an
outside agency at the company's expense, etc. These examples are listed for
purpose of illustration only. In any event, the "conditions" imposed
should not be so onerous or burdensome as to be tantamount to an unreason-
able withholding of approval of the sale.
It has been suggested that one "condition" the City might consider is
increasing the franchise fee from 3% to 5%. Such an increase, however,
would require approval from the Federal Communications Commissions since
franchise fees in this range are regulated by federal law as set forth
below in Sec. 76.31, Code of Federal Regulations:
L
Sec. 76.31. Franchise Standards.
Franchise fees shall be no more than 3 percent of the franchise's gross
revenues per year from all cable services in the community (including
all forms of consideration, such as initial lump sum payments). If the
franchise fee is in the range of 3 to 5 percent of such revenues, the
fee shall be approved by the Commission if reasonable upon showings:
(a) By the franchise, that it will not interfere with the effectuation
of federal regulatory goals in the field of cable television, and (b)
by the franchising authority, that it is appropriate in light of the
planned local regulatory program. With respect to a system community
unit that was franchised or in operation prior to March 31, 1972, the
provisions of this paragraph shall not be effective until the end of
the system's current franchise period, or until 15 years from the date
of initial grant of the franchise, whichever occurs first.
Thus, the franchise fee may not be increased unilaterally by the City. Such
an increase can be accomplished only by the FCC granting a waiver petition
submitted by the City and/or the system operator. The waiver petition must
include cost justifications and other data to support the fee increase.
II. Because the proposed sale of Hawkeye appears to involve a "change of de
facto control," we also believe that said sale triggers the right of the
City to purchase the system pursuant to Sec. 14-68(h), City Code, as set
forth below:
Sec. 14-68. Rights reserved to city.
(h) City's right to acquisition: Upon expiration of the term of the
franchise or revocation or other termination as provided by law, or
upon receipt of application for approval of an assignment of the
franchise or u on change [of] de facto control, the city shall have a
right to purchase t e re
and telecormunicatibns network as set forth
in Section 14-71(c) herein. (Emphasis added)
"De facto" means "in fact, actual," Black's Law Dictionary, and we believe
that such a change in control is inherent in the pending sale since
Heritage intends to purchase from ATC all the assets of Hawkeye. Upon such
a change of control, the grantee (which is Hawkeye/ATC) must first offer
the cable network for sale to the city pursuant to Sec. 14-71(c), City
Code, as set forth below in pertinent part:
Sec. 14-71. Termination of franchise.
(c) Purchase of system by city. If the city determines not to reissue
the franchise for reasons other than a material breach of the franchise
or reasons unrelated to the performance of the franchise holder or upon
receipt of an application for assignment of the franchise or upon
change of defacto control, the grantee shall first offer the broa3=
band telecommunications network for sale to the cit at a fair and just
mare value, which value s a include e air market value of the
system as a going concern including the franchise itself and the rights
and privileges granted by the city. (Emphasis added)
As provided above, the grantee is obligated to first offer the system for
sale to the City at a "fair and ust market value." If this value cannot
be "negotiated or determined," 1ec. 14-71(c) further provides that said
value shall be determined by "an impartial arbitration procedure pursuant
SEE
3
to state law." Once the fair market value of the system is determined,
either through negotiation or arbitration, the City shall have 90 days from
that time (determination of sale price) to exercise the right of first
refusal to purchase the network. If the City opts not to purchase the
network, it may still grant approval of the proposed sale pursuant to the
provisions of Sec. 14-90(a), as discussed above. However, to date, the
City has not received from the grantee an offer of sale of the network as
would appear to be required under Sec. 14-71(c). The grantee has merely
requested the City's approval of the pending sale (Hawkeye's letter of
February 10, 1984). We believe the grantee must make an offer of sale to
the City before the City should take any action on these matters.
III. In summary, we believe the City has the following options available:
1) After offer of sale from the grantee and a determination of value of
the system, the City has 90 days to decide whether to exercise the
right of first refusal to purchase the network.
2) If the City decides not to purchase the network, it may grant approval
for the proposed sale under reasonable conditions established by the
City Council. Such contingent approval should be communicated to the
grantee within a reasonable period of time after the City decides not
to purchase the network.
3) The City may grant approval of the proposed sale with no conditions
attached, since the right to establish "such conditions" is discre-
tionary.
4) The City may refuse to grant approval for the proposed sale. Such
refusal could be supported only upon evidence that the proposed sale
would not be in the best interests of the public and that such
concerns could not be cured by the establishment of "conditions"
attached to an approval of the sale.
cc: Neal Berlin, City Manager
Dale Helling, Assistant City Manager
Drew Shaffer, Cable TV Specialist
bdw3/8
City of Iowa C its
MEMORAN UM
Date: March 16, 1984
To: Heal Berlin Y
From: Bruce A. Knight, Associate Planner-9,1k—
Re:
lanner,Re: Proposed Schedule for Review of the Sign Ordinance Revisions
In order to expedite the adoption of the new zoning ordinance, virtually
no revisions were made to the existing sign provisions because of its
controversial nature. Since that time, both the City Council and Planning
and Zoning Commission have indicated that this item should be placed high
on the list of priorities. The following represents a proposed schedule
for the review of the sign ordinance revisions by staff:
MARCH
15 Route draft of ordinance to staff.
26 Hold first meeting for staff review.
I 1 1 APRIL
2 Hold second meeting for staff .review of proposed ordi-
nance.
2-13 Revised ordinance.
13 Reroute revised draft.
17 Final meeting for staff comments.
23-27 Final revisions.
27 Send draft ordinance to the Planning and Zoning Commis-
sion.
Concurrent with staff review, the ordinance will be reviewed by the
Environmental Concerns Committee of the Iowa City Chamber of Commerce. In
addition, copies of the draft ordinance, as revised following staff
review, will be sent out to all licensed sign erectors in Iowa City.
Review of the ordinance by the Planning and Zoning Commission will begin
at their first meeting in May, and will continue at meetings held during
the Commission's off meeting week. It is impossible to tell how many
meetings will be required to complete the Commission's review of the
ordinance. However, they have indicated that this is a priority item.
bdw3/10
cc: Don Schmeiser
Doug Boothroy
58%
I
City of Iowa City
MEMORANDUM
Date: March 23, 1984
To: City Council
From: Bruce A. Knight, Associate Planner
Re: Use of Maiden Lane Right -of -Way between Prentiss Street and Ralston
Creek to the North
In a letter dated February 23, 1984, William Lucas, on behalf of Joe Kennedy,
indicated support for a recommendation made by the Board of Adjustment that
the City investigate the use of the Maiden Lane right-of-way described above
to solve a parking problem in -that area. This recommendation was made by the
Board at their January 19, 1984, meeting as a result of their discussion
regarding Mr. Kennedy's application for a variance to the off-street parking
requirements of the Zoning Ordinance. The variance was necessary to permit
a use of three unoccupied floors of the building at 529 South Gilbert
Street since any new use would require compliance with the off-street parking
requirements of the Zoning Ordinance (see attached staff report). The
variance was subsequently granted at the February 8, 1984, meeting of the
Board to.allow the building to be occupied by uses which require parking at a
ratio of one space per 200 square feet of floor area or a lesser ratio
without providing any parking (see attached decision).
Mr. Kennedy's building, along with the other buildings in that block, are
faced with a situation where they have no room available on-site for the
provision of off-street parking. Further, because both Gilbert Street and
the portion of—Prentiss Street from Linn Street to Gilbert Street are posted
for no parking, on -street parking is not available either. The only parking
which is availabT is in the Maiden Lane right-of-way located immediately to
the rear of these properties. This street has a rock surface and dead ends
just north of the properties in question at Ralston Creek. It no longer
functions for street purposes.
At the two Board of Adjustment meetings where this item was discussed (see
attached minutes) several alternatives were reviewed regarding how the Maiden
Lane right-of-way could be used to resolve the parking problems in the
neighborhood. The following is a brief synopsis of the feasibility of each
alternative discussed:
1. Vacate the ri ht-of-wa and sell it to thero ert owners. This would
require retaining a permanent access easemen o a ow those properties
north of Prentiss Street access to their parking spaces since access from
the front is not possible. Also, it would require a waiver of past City
Policy to give property owners on each side of a vacated right-of-way
first option to purchase half of the right-of-way. In this case, it would
be necessary for those property owners located on the east side of the
right-of-way to purchase the entire portion of the right-of-way adjoining
their property.
j 5D
s
2
2. Vacate the rioht-of-way for street purposes and establish a municipal
parking lot. The major drawback to this plan is that the adjoining
proper y owners would not have the right to reserve spaces for their
customers only. It also would not resolve their problems with the Zoning
Ordinance since proximity to a City-owned parking area (within 600 feet)
allows only a 50% reduction in required parking spaces. The property
owners in this area cannot provide any parking spaces.
3. Vacate the right-of-way for street u[oses, develo a it -owned ark
area an ease s aces to a oim n usinesses. is a ernative wog
a ow t e businesses to appy Tor a speciaT exception from the Board of
Adjustment to provide their required parking off-site. It also would
allow property owners to reserve those spaces which they lease specific-
ally for the use of their customers.
Generally speaking, it appears that development of the Maiden Lane right-
of-way into a formal parking area would increase the available parking for
two reasons. First, a great number of people are not now aware that parking
is available on the existing Maiden Lane right-of-way. Therefore, many
people do not make use of it. Second, because of its rugged nature, a great
number of available parking spaces are lost due to the inefficiency of its
use. A paved and striped parking area would result in more efficient use of
Ij the space and, therefore, a greater number of available spaces. I have
attached a copy of a proposed parking layout for the right-of-way which was
submitted by Mr. Kennedy at the February 8, 1984, Board of Adjustment
meeting.
ATTACHMENTS
1. Staff report
2. February 8, 1984 Board of Adjustment decisions
3. January 19, 1984 Board of Adjustment minutes
4. February 8, 1984 Board of Adjustment minutes
5. Proposed parking layout for the Maiden Lane right-of-way
bj4/3
cc: Neal Berlin
Don Schmeiser
516
STAFF REPORT
To: Board of Adjustment
Item: V-8346. 529 S. Gilbert St
GENERAL INFORMATION
Applicant:
Requested action:
Existing land use and zoning:
Surrounding land use and zoning
:I:LIR4*119IIi,
Bruce Knight
Date: January 11, 1984
Joseph Kennedy
P.O. Box 2052
Iowa City, IA 52240
Variance to Section 36-58.
Off -Street Parking Requirements.
To permit use of a building
located at 529 S. Gilbert Street
with provision of no off-street
parking spaces.
529 S. Gilbert Street
Commercial and CC2
North - commercial and CC2
East - commercial and CC2
South - residential and RM44
West - commercial and CC2
December 15, 1983
The applicant is requesting a variance to the off-street parking require-
ments of the Zoning Ordinance. As is shown on the attached plot plan,
some parking is currently available on the adjoining Maiden Lane
right-of-way (which is no longer used for street purposes). However,
these parking spaces cannot be counted for the purpose of the zoning
ordinance. The building in question consists of four floors and currently
has one tenant in the lower (or basement) level. The remaining three
floors are vacant at this time. Although the top three floors have had
tenants within the last year, City records do not show that those uses
were ever established in conformance with the Zoning Ordinance.
A variance has been applied for in this case because the applicant can
provide no parking on site. Therefore, the 50% reduction allowed by
special exception is not appropriate. As described in the Zoning Ordi-
nance, the Board should grant a variance only if the applicant can
demonstrate that such action would not be detrimental to the public
interest, and that not granting a variance would result in 'unnecessary
hardship for the applicant.
ANALYSIS
Because no City record exists nor evidence been provided by the appli-
cant that the previous tenants were ever established in compliance with
the Zoning Ordinance, no legal nonconforming use has been established.
.59d
Page 2
Therefore, any use would be a new use and would require compliance with
the off-street parking requirements. Since no off-street parking can be
provided, the applicant cannot establish any of the vacant portion of his
building to any use. Further, the same situation appears to be the case
for the Vine Tavern, and if it were ever to move, that space would also be
unusable.
To demonstrate unnecessary hardship, the applicant must meet three tests:
Reasonable return - Since no use can be made of the majority of the
building, it does not appear that a reasonable return can be made.
2. Unique - Although there are several buildings in this immediate area
suffering the same problem, this situation appears to be unique to the
majority of the city. In most cases, excluding the downtown, some
parking can be provided on most lots which allows for a reasonable
return on the property.
3. Not of the Landowner's Making - This situation results from changes in
the Zoning Ordinance regarding parking, and the general nature of this
area as a result of the relocation of Gilbert Street. It is not a
result of any action of the property owner.
It appears that the applicant can make the required showing of unnecessary
hardship. The next question is whether the variance would be contrary to
the public interest. The concern in this case is what is the impact of
using a property with no provision of off-street parking. Any impact would
be highly dependent on the type of use which is established and how great
a parking demand it generates. If certain uses are established which
generate a high demand for parking, there is a strong potential for
overflow parking to occur on adjoining properties and thus negatively
impact those uses. It would therefore appear that an unconditional
variance to the off-street parking requirements for this property would be
contrary to the public interest.
The Zoning Ordinance provides that in granting a variance, the Board
"...may impose appropriate conditions and safeguards including but not
limited to planting screens, fencing, construction commencement and
completion dates, lighting, operational controls, improved traffic
circulation, highway access restrictions, yards, parking requirements, the
duration of a use or ownership, or any other requirement which the Board
deems appropriate under the circumstances, upon a finding that they are
necessary to fulfill the purpose and intent of this chapter." In this
case it is appropriate to grant the variance only for those uses which
generate a low to moderate demand for parking similar to the uses existing
at this location previously. In order to provide some flexibility, staff
recommends that a complete variance to the requirements of Section 36-58
of the Zoning Ordinance, off-street parking requirements, be grantedonly
for those uses requiring parking at a ratio of one spate/200 square feet
of floor area or less. The only exception of this would be for that space
currently used by the Vine Tavern which would be allowed to maintain the
existing use, or any use permitted in the CC -2 Zone which requires the
same amount of parking or less.
,y9a
Page 3 1
STAFF RECOMMEHOMON
Staff recommends that the variance to Section 36-58 be granted for the
property located at 529 S. Gilbert Street and 330 Prentiss Street with the
condition that only those uses requiring parking at a ratio of one
space/200 square feet of floor area or less are permitted.
ATTACHMENTS
1. Location map
2. Plot plan
Approved by: �'y/J
Donald Schmeiser, irector
Departmene of Planning and
Program Development
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MINUTES a D
IOWA CITY BOARD OF ADJUSTMENT F r 8 91984
FEBRUARY 8, 1984
DECISIONS MARIAN K. KARR
MEMBERS PRESENT: Randall, Fisher, Barker, Slagle CITY CLERK (3)
MEMBERS ABSENT: VanderVelde
STAFF PRESENT: Boyle, Franklin, McCormick
1. V-8345. The Board denied the application submitted by James Alberhasky
for a variance to the number of roomers permitted in a single family zone
at 1126 Rochester Avenue.
2. V-8346. The Board approved the variance requested for the property
located at 529 South Gilbert Street and 330 Prentiss Street with the
following conditions:
1. Only those uses requiring parking at a rate of one space per 200
square feet of floor area or a lesser ratio will be permitted.
2. That a sign stating 'parking available in the rear" be erected in a
permissible location; provided that such a sign can be. erected in
conformity with the ordinances of the City of Iowa City.
3. SE -8402. The Board granted a special exception submitted by Ben -Moore on
behalf of St. Patrick's Church to expand a religious institution in an
RM -145 zone.
4. SE -8403. The Board granted a special exception for Mid -Eastern Iowa
Community Mental Health Center to reduce the number of parking spaces for
1800 square feet of office space from six to three. The Board also
granted a special exception to permit use of the municipal parking
facilities at Chauncey Swan Plaza and the Iowa City Recreation Center for
up to 50% of the eight required parking spaces under Section 36-58.(d)(6)
of the Code for the property at 5(}S�East Collegr`reet.,
Approved by:
uougias uoocnro
Board of A 'ustmen
59a
Board of Adjustment
January 19, 1984
Page 2
VanderVelde stated that she supported the exception because she felt
that continued use of this property as a single family home was
beneficial to the neighborhood and that it appeared that the exception
would help encourage the continuation of that use.
Fisher moved and Randall seconded that the findings of the staff be
adopted as the findings of the board with regard to both the specific
standards of Section 36-69(b) and the general standards for the
granting of special exceptions, contained in Section 36-91(g)(2). The
motion passed unanimously.
Randall moved and Fisher seconded that special exception be granted
for the purpose of constructing a recreation room over an existing
garage which currently extends 8 inches into the required side yard
area with the following 3 conditions:
(1) That no such addition extend further into the required side yard
area than the existing garage.
(2) That the addition be no greater than 1 story above the existing
garage.
(3) That the addition be compatible with the design and architecture
of the existing structure. The motion passed unanimously.
VARIANCE ITEMS:
1. V-8345. Public hearing on an application submitted by James
Alberhasky for a variance to the number of roamers permitted in the
RS -8, medium density single family residential zone at 1126 Rochester
Avenue.
Knight stated that the applicant was not present, and observed •that he
had attended the meeting on January 11, 1984. Knight explained that
Mr. Alberhasky may not have known about this meeting.
VanderVelde requested a motion to defer this item until the next
regular meeting. Randall moved and Fisher seconded to defer item
V-8345 until the next regular meeting. The motion passed unani-
mously.
2. V-8346. Public hearing on an application submitted by Joseph Kennedy
for a variance to the off-street parking requirements for the property
located at 529 South Gilbert Street.
Knight reviewed the staff report and distributed photos of the site
and letters opposing the granting of the variance. Knight stated that
the staff recommended that the variance to Section 36-58 be granted
for the property located at 529 S. Gilbert Street and 330 Prentiss
Street with the condition that only those uses requiring parking at a
ratio of one space/200 square feet of floor area or less are permitted
without providing the required off-street parking.
The following spoke in favor of the variance.
`9a
Board of Adjustment
January 19, 1984
Page 3
Joe Kennedy explained why the previous tenants did not renew their
leases and the hours that the Vine is open. He said he has 15 letters
of persons wishing to rent space for the art studios which he is
proposing to construct on the second and third floors of his building.
VanderVelde asked if any attempts had been made to purchase parking
space. Kennedy stated yes, but there isn't anything available. Fisher
asked about parking behind the building and Kennedy explained that
Maiden Lane is behind the building and it still is an existing street.
Knight observed that the City Council needs to be made aware of the
parking problem which exists there. Knight remarked that the Maiden
Lane right-of-way could be converted to a Municipal Parking Lot or
could be vacated by the City and sold to the adjoining property owners
with an access easement to allow people to get into the back lots.
The following spoke against granting the variance.
Chuck Skaugstad, representing The Mansion, stated that parking is a
problem. His son has difficulty finding a parking space in their
parking lot at times, which is across the street from Mr. Kennedy's
building. Skaugstad stated he was concerned about the type of
businesses which may move in and the future demands on parking if the
variance is granted.
Knight stated they had received a number of calls stating concerns
about parking. He also referred to the letters from Gary Fitzpatrick,
Bruce and Grace Johnson, and Wayne Sullivan opposing the variance.
Randall questioned Kennedy if he was aware of the problems when he
purchased the building and Kennedy stated he thought the previous
tenants were in compliance with the Zoning Ordinance and found out
later that they weren't.
VanderVelde asked if there was any way of conditioning the granting of
the variance on the City taking action. Knight said no because that
had nothing to do with the zoning ordinance requirements.
VanderVelde observed that while there is a good case of hardship,
there is also a good case that granting a variance would conflict with
the public interest.
VanderVelde suggested sending a request to the City and asking them to
consider developing parking in the space behind the building.
Boyle recommended deferral to the next meeting to give the board a
chance to make a final decision.
VanderVelde proposed the following motion:
The Board finds that without any variance at all, Mr. Kennedy
cannot earn a reasonable return.
2. A variance to allow a hundred percent use of the building, without
requiring some parking, would be contrary to public interest, but
S90
Board of Adjustment
January 19, 1984
Page 4
3. When we balance the public interest and the applicant's hardship,
we find that granting a variance to the same extent will offset
the damage to the public interest caused by the additional cars
that will generate.
Boyle commented that according to the language of the Code, the Board
should not grant a variance if it is contrary to the public interest.
Knight remarked that he did not believe it had been shown that a variance
for types of uses which would generate daytime parking demand was contrary
to the public interest. He suggested that the Board defer action to give
the applicant an opportunity to deal with the public interest question.
VanderVelde moved to defer acting on this variance to next meeting. The
motion passed unanimously.
Randall moved and Fisher seconded that the Board recommend that the City
look at the parking problem immediately.
The meeting adjour ed at 6:30 P.M.
Minutes take(by can ohn on.
Submitted by.
Approved by:
Lea Vandervelde
Temporary Chairperson
Syv
ri
MINUTES ,
BOARD OF ADJUSTMENT r
FEBRUARY 8, 1983 4:30 P.M.
CIVIC CENTER COUNCIL CHAMBERS
14EMBERS PRESENT: Randall, Fisher, Barker, Slager
ME14BERS ABSENT: VanderVelde
STAFF PRESENT: Boyle, Franklin, Knight, McCormick
FINAL ACTION TAKEN:
1. V-8345. The Board denied the application submitted by James Alberhasky for a
variance to the number of roomers permitted in a single family zone at 1126
Rochester Avenue.
2. V-8346. The Board approved a variance for the property located at 529 South
Gilbert Street and 330 Prentiss Street to exempt the property from compliance
with the required parking with the following conditions:
1. Only those uses requiring parking at a rate of one space per 200 square feet
of floor area or a lesser ratio will be permitted.
2. That a sign stating "parking available in the rear" be erected in a permis-
sible location; provided that such a sign can be erected in conformity of
with the ordinances the City of Iowa City.
3. SE -8402. The Board granted a special exception submitted by Ben Moore on behalf
of St. Patrick's Church to expand the religious institution in an RM -145 zone.
4. SE -8403. The Board granted a special exception for Mid -Eastern Iowa Community
Mental Health Center to reduce the number of parking spaces from six to three.
The Board also granted a special exception to permit use of the Chauncey Swan
and Recreation Center municipal parking facilities for up to 50% of the eight
required parking spaces under Section 36.58.(d)(6) of the Code for the property
at 505 East College Street.
SUMMARY OF DISCUSSION:
The meeting was called to order at 4:45 p.m. by Chairperson Barker.
Variance Items:
1. V-8345. Public hearing on an application submitted by James Alberhasky for a
variance to the number of roomers permitted in a single family zone at 1126
Rochester Avenue.
Knight reviewed the staff report, and explained the occupancy requirements of
Section 36-8 of the Zoning Ordinance, medium density single family residential
zone (RS -8). According to these provisions, up to three unrelated individuals
would be permitted to reside on the premises in question. City records classi-
fied this house as a single family dwelling. Under the old zoning ordinance,
single family dwellings were allowed to have two roomers. The applicant has,
59d
Board of AdjustmenL
February 8, 1984
Page 2
therefore, suffered a reduction of only one roomer in the rezoning process.
Knight also noted that compliance with the new roomer restrictions is not
required for existing uses until November 30, 1984.
The applicant is requesting a variance to allow a use with more roomers than
would otherwise be permitted in the zone in question. Knight observed that the
City Council recently established a specific legislative intent on this issue by
acting to reduce the number of roomers permitted in single family dwellings from
two to one. Knight argued that the requested variance would be contrary to
public interest and that it is not in harmony with the general purpose and
intent of the zoning ordinance or the objectives of the Comprehensive Plan.
Staff recommended that the variance be denied on the grounds that the applicant
could not demonstrate unnecessary hardship and that granting of a variance would
be contrary to the public interest.
Public Discussion:
Letters of protest were received by the Board from 1) Viola Whitmer who stated
in her letter that her driveway had been used on several occasions by the
tenants next door. Another letter from Renee M. Huntley protesting upkeep of
the property and vehicle noise on the streets. 3) A letter from John S. Nelson
who expressed concern over the balance of single family dwellings and rental
properties in the neighborhood.
Mr. Tom McDonald, attorney representing the owners of the property, spoke on
behalf of Mr. Alberhasky. He stated that he did not believe the owners were
interested in destroying the neighborhood and that but additional roomers would
not cause any parking problems. Parking in the rear of the property had been
paid for by the owners and that there had been no previous complaints. This is
a very large six bedroom home. Presently there are three roomers. The problem
seems to arise when the current roomers have subleased to other roomers and
have them move in without the owners permission. Mr. McDonald stated that his
client would suffer apparent unnecessary hardship if the variance is not
granted in that the home cannot yield a return due to its size and heating
expenses, etc.
Discussion of the Board:
Slager asked Mr. McDonald if the owners were aware at the time they purchased
the property a year and one-half ago of the zoning changes. Mr. McDonald stated
that at that time current zoning ordinance was not in effect.
Fisher stated that he believed that the applicant had not demonstrated hardship
due to the fact that the house could be sold again as a single family residence
without loss to the current owner. Also, that the house could be rented as a
single family residence.
Randall arrived at the Board meeting at 5:15. He stated that he was going to
abstain from comment on this issue.
A motion was made by Fisher to grant Mr. James Alberhasky a variance to the
number of roomers permitted in the single family zone at 1126 Rochester Avenue.
The motion was seconded by Slager and was unanimously denied.
590
Board of Adjustment
February 8, 1984
Page 3
V-8346. Public hearing on an application submitted by Joseph Kennedy for a
variance to the off-street parking regulations for uses at 529 South Gilbert
Street.
Knight explained that this item had been deferred from the January 19, 1984
Board of of Adjustment meeting. He stated that the major issue at the time had
been in regard to the impact of a variance on the public interest because there
is no parking available on the property in question. The parking that is used
is actually the Maiden Lane right-of-way and is owned by the City of Iowa City.
The building in question has four floors, three above grade and one in the
basement. The top three floors have had tenants in the last year, however, they
were not recognized as non -conforming uses because no records exist that they
were established in conformance with the City zoning ordinance. For that reason
the top three floors are essentially unusable unless off-street parking can be
provided. It was staff's opinion that unnecessary hardship can be shown in this
case. Staff feels that this location is unique in relationship to the rest of
the City in that most property has some land that they can use for off-street
parking. Also, the situation exists because of the general nature of the area
and not as a result of the applicant. At the time the property was acquired the
tenants that were in the building and had options to renew their leases and gave
every appearance of staying on. The applicant therefore was not aware that he
would be in a position where he would not have tenants and could not bring new
ones in. Public interest in an issue here due to the lack of parking and the
potentially negative impact on surrounding property owners. Staff recommended
that a variance be granted requiring no parking for any use which by the terms
of the Zoning Ordinance would be required parking at a ration of one space per
200 square feet of floor area or greater.
Board Discussion:
The Board requested additional clarification on the status of the Maiden Lane
right-of-way. Knight stated that the current condition of the street behind the
building is unimproved and gravel. This is currently being used for parking.
Two possible suggestions were made by Knight that the City could sell the
street, however, the Council policy is that first option will be given to
adjoining property owners. Secondly that the Council could vacate the property
for street purposes and converting it to a municipal parking lot. At the last
meeting the Board submitted a recommendation to the Council meeting that they
look into that possibility.
Barker questioned staff's interpretation of the non -conforming use provisions.
He stated that the building has previously been used for years as a commercial
establishment and that it was only recently that the top three floors vacated.
Knight stated while that may be true, that those were never established in
conformance with the zoning ordinance. Barker asked if a new business was
required to come to City Hall when they moved to a new location to determined if
they need a building permit or if they comply with zoning ordinance regulations.
Knight stated yes, if the use changes a certificate of occupancy is always
required, even when a building permit is not. This ensures compliance with the
zoning requirements.
.5d
Board of Adjustment
February 8, 1984
Page 4
Public Discussion:
Mr. Bill Lucas, attorney for Joseph Kennedy, came forward and presented a plot
plan which showed the number of potential parking spaces on the Maiden Lane
right-of-way. Pictures were also presented to the Board. Barker stated that the
drawings appeared correct. Mr. Lucas stated that previous uses of the property
included a furniture store, health food store, Iowa City Women's Press,
Titronix, and Studio Project. The property was purchased one year ago at which
time the leases seemed assured. For various reasons the tenants chose not to
stay in the building and it has been empty for four months. During the last
four months there has been no cash flow and this creates a hardship on the
applicant. Lucas brought forth floor plans showing the plans for remodeling the
top two floors He feels that the real problem is not hardship, but public
interest. Public interest constitutes the impact of a variance on the surround-
ing businesses and the concerns that parking will be a problem after 5:00 p.m.
when the greatest parking demand exists. Lucas indicated that Mr. Kennedy had
surveyed the number of cars parking in the Maiden Lane right-of-way in the
daytime and that the numbers showed no excessive use of the lot. It was noted
that according to the plot plan, Maiden Lane would accommodate approximately 42
cars. Part of that property is currently being blocked by supplies of neighbor-
ing businesses. Lucas stated that the intent of the owner was to turn this
building into artist studios and he would include within his lease a requirement
that would limit tenants at 529 S. Gilbert Street from parking in the Maiden
Lane right-of-way.
Mr. Gene Dieken of 228 South Summit Street came forward on behalf of Mr.
Kennedy. He stated that he was a potential tenant and as such did not plan on
driving to his studio. He also pointed out that there was nowhere else in town
where he could rent an artist studio. i
Mr. R. Best of 221-1/2 Washington Street also came forward stating that as a
potential tenant he would also not be parking in that area on a consistent
basis.
Barker stated that the Board had received a letter from Mr. Fitzpatrick repre-
senting Fitzpatrick's Tavern. He stated that the variance would add to the
existing parking problems and be detrimental to his business.
Another letter dated January 10, 1984, signed by Bruce Johnson, Grace Johnson
and John Sullivan, also of neighboring businesses Knock on Woods and Stones,
stated that this area had a severe parking shortage and was a troublesome
intersection. They felt that a variance should not be granted.
Slager suggested that concerned partie approach the City Council for the
vacation of the Maiden Lane right-of-wa,y�to allow them to purchase the street.
Mr. Lucas replied that they would prefer municipal lots with leases and that Mr.
Kennedy will be approaching City Council.
Randall stated that currently the owners buy rock and the City does the mainte-
nance work on Maiden Lane. Fisher stated that he felt the other owners
shouldn't have any more rights than Mr. Kennedy providing that the total amount
of all parking of all persons was not excessive.
590
Board of Adjustment
February 8, 1984
Page 5
Randall suggested some sort of sign so that the customers would know where to
park. Slager stated that the owners could not put up a sign for parking as the
City owned the street and the City had those rights. Randall suggested a
"parking in the rear" so that the public knows where to park. A motion was made
by Randall to approve the variance to Section 36-58 be granted for the property
located at 529 South Gilbert Street and 330 Prentiss Street with the following
condition:
1. Only those uses requiring parking at a ratio of one space per 200 square
feet of floor area or lesser ratio be permitted.
� 2. A sign indicating parking available in this area be erected in a permissible
and visible location provided that such a sign can be erected in conformity
with the ordinance of the City of Iowa City.
The motion was seconded by Fisher. Motion was approved unanimously.
SPECIAL EXCEPTION ITEMS:
1. SE -8402. A special exception request submitted by Ben Moore on behalf of St.
Patrick's Church for a special exception to expand a religious institution in an
RM -145 zone.
i Chairperson Barker recommended that a motion be made to approve SE -8402 as
recommended by staff. Randall noted a typographical error in the staff report
under the section of requested action, Section 36-15(d)6 should read 36-15(d)7.
Franklin pointed out that the staff recommendation include the suggested
conditions in the staff report.
Mr. Ben Moore spoke on behalf of St. Patrick's Church concerning the requirement
of a curb to be installed with appropriate breaks and signage indicating that
the alley was one-way. Mr. Moore expressed concern for safety of the children
and a sign existed further down the alley, he felt that the sign should be left
out. He also requested that the conditions requiring parking curbs be elimi-
nated. Mr. Moore explained to the staff and Board members that if curbing were
installed members leaving the church would then have to back out into the alley
and he was concerned about the safety of the children and the difficulties that
may be encountered by the elderly parking at the church.
Slager questioned whether or not there was definite distinction between the
parking lot and the alley. Mr. Moore stated that there was. Franklin stated
that the conditions included in the staff report were included in response to
previous concerns raised by the church regarding parking and traffic in the
alley. Mr. Moore stated that at this time the church preferred not to include
the curbing and the signage and that if there was a problem at a later date they
would in fact include those items.
Barker stated that he was willing to trust the integrity of the church to act on
behalf of the best interest of the children.
A motion was made by Randall that special exception SE -8402 be approved as
requested. The motion was seconded by Slager and was approved unanimously.
,590
Board of Adjustment
February 8, 1984
Page 6
2. SE -8403. A request submitted by Mid -Eastern Iowa Community Mental Health Center
for a special exception to reduce the number of required off-street parking
spaces and to provide up to 50% of the required parking in a municipal lot.
Franklin reviewed the staff report. It was the staff's recommendation that this
request be discussed in two separate sections; one, the request to reduce the
parking spaces from six to three for a total parking requirement of eight
spaces, and secondly, the request for 50% (four spaces) of the parking to be
provided in a municipal lot. Franklin expressed concerns for the availability
of future parking in the downtown area due to the eventual closing of the old
library parking lot. Fisher questioned whether the center was currently leasing
spaces from the City of Iowa City to provide the previous reduction in parking.
Franklin commented that the City of Iowa City is no longer granting leases.
Robert Burns spoke on behalf of the center concerning the six to three reduction
of parking spaces. He stated that the new 1800 square foot facility would only
be employing three persons, and that three parking spaces would be adequate for
those employees. He brought to the attention of the Board the uniqueness of the
center's clientele stating that most of the clientele are either from Hillcrest
Family Services and are not allowed to have cars or that they are employees from
Goodwill Industries and because of physical or mental handicaps do not own or
have access to vehicles, and therefore do not require parking in the parking
lot. Mr. Verne Kelley, Executive Director of Mid -Community Mental Health Center,
submitted to the Board a letter from himself and Hillcrest Family Services as
well as Goodwill on behalf of their request. He stated that the day treatment
center's purpose was to reduce hospitalization for those patients who required
more than one hour a week of care but less than 24 hours a day. He stated that
office hours were from 9 a.m. to 2 p.m. He also stated that the current staff
as well as the new staff has a specific need to have ready access to the clinic
from their office as they are on call and could be needed on an immediate basis.
He stated that the maximum patient load per day would be about twelve patients,
and that there were no persons living in the home. Mr. Kelley stated that on a
day-to-day average there were 17 employees currently employed at the center.
Ms. Gladys Jenkins, member of the board for the center, spoke on behalf of the
uniqueness of this population. She stated that the patients were seriously
mentally ill and heavily medicated. They were not likely to be aided by other
agencies. She stated that most patients do not and should not drive cars, and
that the medication the patients use require constant monitoring. Karen
Thurlman, director of the center, stated that due to the bus line and the
downtown business district this made an ideal location for those patients.
Randall asked what alternatives the center had if this proposal were not
granted. Thurlman stated that currently they had no alternatives.
Franklin stated that she had received a call from Dr. Terry McDonald who
practices east of the center. He wanted to express concerns about parking. He
stated that there was a driveway in between the two offices and felt patients
had been parking in his lot. Barker stated that the fact that the Center had
received a variance eight years ago and there had been very little reaction to
the posting of the property was testimony to the fact hat the neighbor's did not
feel strongly about a problem. He also stated that it was difficult to deter-
mine who in fact was parking in Dr. McDonald's lot and reminded other board
members that parking was a universal problem in this city, and that the center
59,1)
Board of Adjustment;
February 8, 1984
Page 7
had seemed to cope very well. Barker asked Mr. Kelley if they restrict the
staff's parking currently and Mr. Kelley responded that the center pays for
staff's parking in nearby municipal lots.
Randall moved that a special exception be granted to reduce the number of
parking spaces from six to three. Slager seconded the motion.
The motion was approved unanimously.
Discussion concerning the 50% reduction in parking:
A survey of the surrounding parking areas was made by both the center and the
City staff and the result of those surveys seemed consistent with each other
showing a number of sufficient vacancies currently in the lots. Staff stated
concerns over the future parking situation of the downtown area when the old
library lot closes. Barker stated that he felt the center's obligation was to
prove parking availability under the current status.
Fisher moved to approve special exception SE -8403 to permit use of a municipal
parking facility for up to 50% of the eight required parking spaces under
Section 36.58(d)6 under the Code be granted for the property at 505 East College
Street; the motion was seconded and approved unanimously.
OTHER BUSINESS:
A request had been made concerning changing the date of the board meetings from
Wednesdays to some other time. Barker stated that he was opposed to this idea.
Slager made a motion to keep the meetings on Wednesday. The motion was seconded by i
Fisher and was approved unanimously.
Minutes of November 23, 1983.
Randall moved to approve the minutes subject to any changes that might be phoned in.
The motion was seconded by Slager and approved unanimously.
The next meeting was set for March 14, 1984.
The meeting was adjourned at 8:30.
Minutes take by Colleen McCormick.
Submitted by:
Doug Boot roy, Secretary
Approved by:
Scott Baker, Chairperson
S9d
7-T7
I
Date
To:
City of Iowa City
MEMORAN4DU
March 16, 1984
Ileal Berlin, City Manager
From:." Jim Hencin, CDBG Program Coordinator
Re: Housing Survey - City Council Referral of March 13, 1984
The following comments are provided in response to questions about the
multi -family housing survey which is to be done later this month.
1. Can information on rental policies (dependents, etc.) be obtained? Yes.
However, information of this nature would be best obtained through a
separate survey or other means. The survey to be conducted by this
department is basically designed to obtain two pieces of information
--current rents and vacancy rates. Given the sensitivity of the family
housing issue, I believe a question pertaining to it would have a
chilling effect on apartment owners/managers responding to our survey.
2. What is the cost of doing this survey? The direct costs for doing the
survey will be less than $600, including printing costs, data entry,
tabulation and analysis on computer. Funds for this purpose are
budgeted in the FY84 CDBG Division budget. Personnel costs are mini-
mized by mainly utilizing JCCOG interns and other interns who are paid
through a HUD technical assistance grant to the University of Iowa.
3. Who will perform the survey? We have arranged to use two JCCOG interns;
four HUD -funded interns; a work study student; and one unpaid practicum
student during the last week of March. These interns will work along-
side Associate Planner Marianne Milkman, under my supervision.
4. What is the purpose and value of the survey? The purpose of the
multi -family housing survey is to obtain an accurate indication of
current rents and the vacancy rate for rental housing in the Iowa City
area. This information would be used to compare with vacancy rates
obtained in 1982 and rents obtained in 1983, prior to the recent apart-
ment construction boom.
A survey such as this one has considerable value to the City for its
housing programs. For example, information on rents can be used to
document the need to adjust HUD's fair market rents for the Section 8
Housing Assistance program which, for Iowa City, have generally been set
very low. Vacancy rates and the numbers of units available at lower
costs are reported in the City's Housing Assistance Plan which is sent
to HUD. There is a clear indication that in the future, HUD will place
emphasis on awarding housing grants, vouchers, etc. to communities which
can demonstrate the greatest need. For example, one of the criteria for
HUD's new housing development grant program states that HUD will
consider "the shortage of decent rental housing opportunities in the
area for families and individuals without reasonable and affordable
alternatives in the private market."
_.�7/
____._.....-_.._...__..--........ ...
I hope that this memorandum responds adequately to the City Council's
questions. Please let me know if further information is needed.
cc: Don Schmeiser, Director of
Planning and Program Development
/sp
1
City of Iowa City
MEMORANDUM
Date: March 16, 1984
To: Members of the City Council
From: Anne Carroll, Human Relations Director
Rosemary Vitosh, Finance Director
Re: Blue Cross/Blue Shield Utilization Review Report
Twice yearly BC/BS presents to the City a report of recent utilization of
health insurance services by members of the City of Iowa City group in
comparison to all other Iowa BC/BS members. Summaries of our experience from
the most recent period for which information is available (July 1, 1981 -June
30, 1983) are attached for your review. These statistics represent a con-
tinuation of trends seen previously which we hope to maintain and improve on
through implementation of changes such as the recently approved mandatory
outpatient surgery and outpatient treatment of substance abuse coverages, and
cost control incentive payments to employees.
Significant indicators are:
*The City patient hospital day rate decreased 22% to 416 days per 1000
members.
Plan -wide (all other Iowa BC/BS subscribers) the patient day use rate fell 9%
to 690 days per 1000 members.
*The average charge per hospital admission for City members decreased by 16%
to $1,683.
Plan -wide, the average charge per stay increased 19% to $2,327.
*The average hospital per diem charge for City members increased 8% to $371.
The plan -wide average charge per day increased 21% to $411.
Representatives from all employee groups within the City workforce are now
included on our Health Incentives Committee which reviews this information
and recommends changes and incentives related to the health insurance
coverage and employee wellness programs.
Please feel free to contact either of us if we may supply any additional
information with regard to this report.
bj3/7
S9�
CURRENT PERIOD
690
PATIENT DAYS/1,000 MEMBERS
i
ADMISSIONS/1,000 MEMBERS
AVERAGE. LENGTH OF STAY
EXECUTIVE SUMMARY
OVERVIEW
BLUE CROSS
• Your patient day use rate decreased by 22% to a new level
of 416 days per 1,000 members.
Plan -wide, the patient day use rate fell 9% to a level of
690 days per 1,000 members.
'•*The patient day use rate is a function of how frequently individuals
*ekare admitted and how long they stay in the hospital.
• The admission rate for your membership remained steady at 92.
The Plan -wide rate of admission decreased 8% to 122.
%* The admission rate can be perceived as the probability of being
^-^`admitLed to the hospital.
• For City of Iowa City, the average length of time spent in the hospital
decreased 22% to 4.5 days.
Plan -wide, the average length of stay in the hospital remained the same
at 5.7 days.
*`^^Short average lengths of stay may imply frequent admission for one and
*A'A•two day stays, while long average lengths of stay may imply many
i-^kadmissions for severe illness episodes.
t�I
i
�1'...�i•�• ��j ¢ eti "i till .. '')�:;..71
CURRENT PERIOD
i
CHARGE PER ADMISSION
CHARGE PER DAY
VISITS/1,000 MEMBERS
Executive Summary Overview
City of Iowa City
• The average charge per admission for your members decreased
by 16% to $1,683.
,327 Plan -wide, the average charge per stay increased 19% to $2,327.
***The average charge per admission is affected by the average length C1
***of stay of your members and the average per diem charge.
• The average per diem charge for City of Iowa City increased B% to $371.
The Plan -wide average charge per day increased 21% to $411.
***This charge is influenced by the hospital's costs for providing
***services and the intensity with which those services are provided.
• The rate of visits to the outpatient setting by your members decreased
B 4% to 16B.
Plan -wide, the number of outpatient visits per 1,000 members increased
82 13% to 182.
***An increase in outpatient usage coupled with a decrease in inpatient
***usage is generally viewed as favorable; whereas the reverse is
***viewed as unfavorable.
-2-
CURRENT PERIOD
IP PROCEDURES/1,000 MEMBERS
L'1
OP PROCEDURES/1,000 MEMBERS
i
Executive Summary Overview
City of Iowa City
BLUE SHIELD
• The rate of inpatient procedures performed for this membership C
increased by 8% to 298.
The Plan -wide rate of inpatient procedures performed increased
slightly to 433.
i -^^The rate of inpatient procedures performed is closely correlated
^`*with the admission rate since most inpatient procedures are
^'^'Itypically performed at the beginning of the hospital stay.
• Outpatient procedures per 1,000 performed for your members
decreased by 2% to 512.
Plan -wide, the rate of outpatient procedures performed climbed
36% to 839. '
^^'This is a function of the rate of visits to the outpatient department
^^*of a hospital, the emergency room, the doctor's office, ambulatory
kcenters, the number of ambulance trips, or the services provided
^^by independent laboratories.
QED
City of Iowa City
- MEMORANDUM
Date: March 19, 1984
To: Neal Berlin, City.Manager
From: Rosemary Vitosh, Director of Finance 1'
Re: Payment for Radio Ads
The payments for advertisements to four radio stations, as listed on the
January disbursements list, were for Christmas ads which were run as a part
of the marketing program of the Transit System. The cost covered a total of
108 30 -second ads at a total cost paid to the four individual radio stations
of $1,434. The funding for such advertising is provided from State Transit
Assistance funding, a portion of which is designated for the marketing
program.
bj5/8
S93
t,cue
LEGISLATIVE
BULLETIN
on uomw. iw. wne
15151 765m961
Second Session, Bulletin No. 6 March 16, 1984
MODIFIED PUBLIC RECORDS BILL PASSES SENATE
The Senate has passed and sent to the House SF 2294, a bill modifying the state
open records law.
This bill is a result of a three-member panel appointed by Governor Branstad last
year to recommend changes in the open records law.
In January the committee released a list of 52 changes and recommended a major re-
writing of the current state law. This bill is a response to the Governor's pro-
. posal and only adopts some of the less controversial changes recommended by the
panel and calls for the creation of an interim committee to review the remainder
- - - - - I of the proposals after the session ends.
ANTITRUST BILL TO GOVERNOR
House File 2335, an Act relating to the liability of a county, city or an adminis-
trative or legal entity created by a county or city, has passed the House and
Senate and has been sent to the Governor for signature.
The bill provides that certain activities of a city, county or administrative
entity of a county or city are not prohibited by the Iowa competition law if they
- would not be prohibited for the state.
The bill also limits the availability of exemplary damages against a city, county
or administrative or legal entity created by a county or city for those activities
which violate the Iowa competition law.
The bill becomes effective July 1, 1984.
BOND REGISTRATION BILL TO GOVERNOR
House File 2322, a bill relating to public bonds, has been passed by the Houseand
Senate and sent to the Governor for signature. This bill provides that the costs
related to the registration of public bonds or obligations may be paid from the
fund from which the principal and interest of the bonds is payable.
This bill takes effect July 1, 1984.
LAST CHANCE FOR VETS' PREFERENCE
jAs reported in the last bulletin, the Senate State Government Committee has still
not acted on HF 378, the veterans' preference bill already passed by the House.
Action on this bill must occur prior to March 23. Failure to act on the bill by
j this date will mean that no further action on the bill is possible this session
under the rules of the House and Senate.
We are very close to securing the necessary eight votes to bring this bill free
committee. One last effort is necessary in order to insure at least committee
consideration prior to March 23.
Members of the committee are: Senators Slater, Carr, Nystrom, Stiles, Bruner,
Coleman, Dieleman, Drake, Gettings, Miller, C., Rife, Schwengels, Soorholt: and
Welsh.
They can be reached by calling (515) 281-3371.
HOUSE PASSES POLICE REIMBURSEMENT BILL
House File 2247, a bill relating to the reimbursement to cities for law enforce-
ment training costs, has passed the House an a vote of MS -15 and has been assigned
(over)
5 9�l
z-
to the Senate Local Government Committee. `
City officials should contact committee members and urge immediate passage of this
bill.
Members of the committee are:
Alvin i'. Miller, Chair Norman J. Goodwin
.lames D. Wells Thomas Mann, Jr.•
James E. Briles Charles P. Miller
Joe E. Brown Richard VandeHoef
Milo Colton Arne Waldstein
SENATE DEFEATS POLICE CERTIFICATION BILL
Senate File 2256, a bill relating to the authority of the Iowa Law Enforcement
Academy Council and Director to establish standards for professional conduct in -
eluding rules for revocation of certification, was defeated on a 20-27 vote.
A motion to reconsider the vote has been filed by Senator Priebe.
PSYCHOLOGICAL TESTING BILL PASSES
-- House File 2592, an Act relating to psychological testing procedures for law an-
forcement officers, passed 55-42 despite objections and arguments that the bill
was another mandate on local government without compensation.
The bill provides for the establishment of mental fitness standards for law an-
forcement officers and correction officers and requires the use of psychological
testin
suita-
bility ae lawmenforcementtoreskills.
in corectionsrcareert forcharacteristics
suita-
applicants-
"RIGHT TO KNOW" BILL PASSES SENATE
Senate File 2248, a bill relating to the collection and dissemination of informs-
- I tion regarding hazardous chemicals, has passed the Senate.
Of particular importance to cities is the fact that while the state is removed
from liability for damages involving any claim based upon an act or commission of
e in carrying out the duties imposed by the bill, cities
an employee of the stat
are not exempt from liability.
The League had offered an amendment in committee which was removed from the bill.
Similar attempts to provide the exemption from liability will be made in the House
H¢uso Energy Committee and re -
and city officials should contact members of the
quest the exemption. Members of the committee are:
Ralph Rosenberg, Chair Betty Jean Clark Donald J. Paulin
BS11 D. Royer
Louis J. Muhlbauer John Groninga
6 Sue Mullins Randy Hughes Don Shoultz
James 0. Anderson Daniel J. Jay William Sullivan
Elaine Baxter Donald J. Knapp Janis Torrence
Dennis H. Black Joyce Lonargan Mike Van Camp
Ned F. Chiodo John E. Mclntee Harlan Van Gerpen
�I As passed the bill creates a program for the Collection and dissemination of in-
formation regarding the use of hazardous chemicals in the workplace and in the
community.
The bill adopts the federal occupational safety and health administration's haz-
and communication regulation as the basis for the workers' right to know provi-
sions.
All employers are covered by the bill except educational research laboratorlesand
activities covered under the labeling requirements of the federal insecticide,
fungicide and rodenticide act.
The League believes that the bill as passed places a great deal of liability on
emergency response personnel in local government including ambulance, fire and
police units and some exemption from liability similar to what the state was pro-
vided is absolutely necessary.
5�1
.
PUDLIC HEARING, DEBATE SCHEDULED FOR COMPARATIVE NEGLIGENCE
A public hearing on IIF 2387 has been scheduled for Monday, 'larch 19, in the House
chambers beginning at 7:30 p.m. Debate on the issue has also been scheduled for
today although numerous amendments have been filed to the bill and unless a com-
promise can be worked out debate could be extensive.
The bill would replace common law principles governing actions for damages arising
out of personal ,injury, death or property damage and prohibiting recovery of a
person who is mntributorily negligent or prohibiting contribution among the joint
tort-feasors. Under this bill, recovery of damages would not be barred by contri-
butory fault, but the amount of damages would be reduced based upon the percentage
of fault attributable to the claimant, as determined by a jury.
'.he bill would also repeat the language passed last session which would prevent
cities from being sued for failure to meet standards for design and construction
of public improvements which were not in effect at the time the public improvement
was designed or constructed unless gross negligence is proven.
Finally, the bill modifies the sidewalk liability bill passed and signed by the
Governor earlier this session by limiting the liability to abutting property
owners.
As the bili is currently drafted the League is opposed to its contents along with
the amendment filed by Rep. Dan Jay (D -Centerville) because it does not eliminate
joint and several liability.
The H-540 b
Re. Roge
orson (R -Monona)
wouldoague is eliminateujoi ting andyseveralt liabilityyandpreturnrtoaavch
modified comparative
negligence approach.
Without any legislation the Iowa Supreme Court has established a pure comparative
negligence standard in the state. This rule means that all parties suffering in-
jury or loss as a result of an accident may recover that portion of damages not
caused by their own negligence.
This situation is further compounded by Iowa's doctrine of joint and several lia-
bility. This doctrine means that if one of the defendants cannot pay their share
of the damages, then the other defendants (cities) must pay all of the damages
owed. In other words, emphasis is shifted.from who is at fault to who can pay.
The current situation affects all cities or their taxpayers and property owners.
The League's position, which is contained in the Halvorson amendment, would return
to a modified comparative negligence standard which means the right to sue is
limited without denying reasonable opportunity to recover damages and removing
joint and several liability concept from Iowa law. Joint and several violates the
principle of accountability in favor of the "deep pocket" theory. It falsely
equates obligation to pay with ability to pay. Cities should not be expected to
pay the debts of others.
PLEASE CONTACT YOUR STATE REPRESENTATIVE AND ASK THEM TO SUPPORT THE HALVORSON,
ET AL AMENDMENT TO HF 2487.
MOBILE HOME BILL PASSES SENATE
SF 2228, a bill prohibiting zoning regulations or other ordinances eS
whichenate disallow
plans and specifications for manufactured housing, passed
and been
messaged to the House.
The League is opposed to this legislation and has been successful in previous
sessions in preventing passage of this legislation.
City officials must contact members of the House Local Government Committee im-
mediately to prevent action on the bill in that committee.
As passed a city would be prohibited from adopting or enforcing toning regulations
or other ordinances for homes built since 1976.
s an
ntrusion
to
al
let0ryaauthorityvandt imposes hat sal standard on gislation i local igovernmentnwhich czoning
should be left
to local government.
(over)
S9�
.d.
.Members of the House Local Government Committee are:
.James 0 -Kane, Chair Donald Hemann Dennis Renaud
.James Cooper Raymond Lageschultc. Bill Royer
Bob Renken .lean Lloyd -Jones Richard Running
Dennis Black Lester Menke Gary Sherzan
Florence Buhr Myron Oxley Clay Spear
John Connors naris Peick George Swearingen
Robert Grandia Charles Poncy Semor Tofte
.Janis Torrence
Reps. Renken, Black and Spear are members of the subcommittee.
House members can be reached by calling (51:) 281-3221.
ENTERPRISE ZONE LEGISLATION IN WAYS AND MEANS
House File 2479, a bill relating to the establishment of enterprise cones, has
been introduced and sent to the [louse Ways and Means Committee for consideration.
A subcommittee of Representatives Osterberg (D -Mt. Vernon), Clark (R -Rockwell) and
Swartz (0 -Marshalltown) has been appointed to review the bill.
As written the bill authorises the Iowa Development Commission to declare areas
designated by cities or counties as enterprise tones.
Certain conditions of eligibility are outlined in the bill and the commission is
given the authority to develop additional criteria for eligibility. Included in
the listed criteria an area so designated must have unemployment of 150 percent
of the national average, a poverty rate of twenty percent or more of each census
tract or at least 70 percent of the households in the area with incomes below 80
percent of the median income of the households in the city nominating the area or
a decrease in population of at least 20 percent between the two most recent fed-
eral censuses.
Once designated an enterprise tone a number of enumerated property tax exemption
packages and financing mechanisms would be available to "qualified real estate. -in
the designated area.
TORT LIABILITY BILL TO WAYS AND MEANS
House File 2483, a former Local Government Committee bill, has been assigned to
the House Ways and Means subcommittee chaired by Rep. Jim O'Kane (D -Sioux City)..
The bill as drafted allows a self-insured city to levy an additional tax to pay the
costs of self-insurance and provides that a person cannot be disqualified from a
jury in a case where a municipality is defendant on the basis of being a municipal
taxpayer unless real, substantial and immediate interest is shown on the part of
the person which would unfairly prejudice a plaintiff.
IMPORTANT
STATE TO DELAY PERSONAL PROPERTY TAX REPLACEMENT REVENUE
Senate Study bill 2250 has been introduced which makes a number of significant
changes in funding state government operation including the creation of an Iowa
Economic Emergency Fund and imposing a two percent income surtax on the amount of
taxable income exceeding thirty thousand dollars for the tax year beginning after
December 31, 1983.
Of primary importance to cities is Division VI of the bill which would delay pay-
ment of one-half of the additional personal property tax credit funds in the fis-
cal year beginning July 1, 1984 and ending June 30, 1985 with the remainder paid
not later than July 15, 198S.
As written the state comptroller shall pay to the respective county treasurers on
May 15, 1985 an amount equal to one-half of the amount due and payable for the
fiscal year beginning July 1, 1984 and ending June 30, 1985.
ALL CITY OFFICIALS SHOULD CONTACT THEIR STATE SENATORS AND OUTLINE THE FINANCIAL
DIFFICULTY THIS DELAY IN PAYMENTS WILL MEAN TO CITY BUDGETS.
Senators can be reached at (SIS) 281-3371.
5W
-5 -
HOUSE PASSES BID PREFERENCE LAN
The House has passed SF 2160, an Act providing a preference for residents in award-
ing of public contracts.
As originally passed by the Senate, no reference to political subdivisions was in-
cluded in the bill. The House, however, adopted an amendment by Rep. Halvorson
which defines public improvements to mean public improvements as defined in Chap-
ter 23 and applies to the state, its agencies and any political subdivision of the
state.
As passed by the House, the bill provides for preferential treatment of state resi-
dents in the award of contracts for public improvements where the resident is com-
peting with a non-resident who is provided preferential treatment in the non-resi-
dent's state of residence.
SENATE COMMITTEE ACTS ON BOND BILL
The Senate Local Government Committee has approved HF 2111, an Act authorizing
cities to issue revenue bonds to refund general obligation bonds.
This bill has already passed the House and will now be considered by the full
Senate.
As passed the bill authorizes cities to issue revenue bonds to refund general ob-
ligation bonds if the proceeds of the general obligation bonds were expended for
a city utility, city enterprise, or a portion of a combined city utility or city
enterprise. Presently, revenue bonds can be issued for those purposes but not to
refund general obligation bonds.
SENATE COMMITTEE ACTS ON Ur1LITY BILL
The Senate Local Government Committee has approved HF 2003, an Act relating to the
reporting of property owned by a city utility.
This bill has already passed the House and will not be considered by the full
Senate.
As passed the bill removes the requirement that a city utility must annual report
all of the property owned by it within a city to the department of revenue.
SENATE COMMITTEE ACTS ON CONFLICT OF INTEREST BILL
The Senate Local Government Committee has approved HF 2389, an Act relating to the
interest of an elected city officer or employee in contracts for the purchase of
goods and services by a city.
The bill has already passed the House and will now be considered by the full
Senate.
As passed, a new provision is added to section 362.5 which as a general rule pro-
hibits a city officer or employee from having a financial interest in contracts
for goods and services sold to the officer's or employee's city. Current law pro-
vides ten exceptions to this general rule and this bill adds another exception
which allows contracts for cumulative total purchases of up to one thousanddollars
per fiscal year that benefit directly or indirectly a single elected officer or
employee.
x e 1
59�
',.:.:"+-.,.�rY.aul3:w�w.u.W:�wa.L.v�. ._- �—•-a'`fi���aYv�Ytl�MK '.
Who Will Foot the Bill
For Sewage TFUU114141ent?.
Government officials and industry leaders agree that treatment facilities
need to be constructed and rehabilitated, but differ on project funding.
By Jeff Atkinson, Assistant Editor
he battle lines have been drawn.
On one side stands Congress, and
on the other side is the wastewa-
ter treatment industry. Both sides agree
on the need for construction of new
wastewater treatment facilities to meet
growing industrial and population de-
mands and that old facilities require re-
habilitation. But they disagree about
how to pay the bills.
With its power of the purse, Con-
gress has approved a construction
grants program that industry officials
believe is insufficient to meet the exist-
ing needs. In order to compensate, an-
other bill has been introduced in the
legislative chambers that would nearly
double the available amount of sewage
grant funding.
Yet, industry officials still balk at
Congress' latest solution proposal. The
officials want the money, but not in the
form of charity handouts, which could
lead to a "Robin Hood syndrome,"
where the rich get richer and the poor
gel poorer.
"Despite the progress that has been
made in cleaning our nation's waters
since 1972, much remains to be done,"
says Kermit L. Prime, chairman of the
legislative and government affairs com-
mittee of the National Society of
Profexsional Engineers (NSPE). His
:L•:
comments came during testimony be-
fore the House Subcommittee on Water
Resources, Committee on Public Works
and Transportation.
"The construction grants program
has played a major role in bringing
about that progress," says Prime.
"However, we believe the time has
come for Congress to give serious con-
sideration to alternative financial ar-
rangements to support state and local
governments for the construction of
publicly owned treatment works."
Robert Canham, executive director of
the Water Pollution Control Federation
(WPCF), agrees. "In view of the real
world and the format of the construc.
tion grants program, Congress needs to
look at other ways of substitute financ-
ing."
"Even with federal funding, local
governments need to raise money them-
selves," Canham adds.
When President Ronald Reagan
signed the Municipal Wastewater Treat-
ment Construction Grant Amendments
of 1981, authorizing a continuation of
the construction grants program at a
funding level of $2.4 billion a year
through fiscal 1985, the federal govern-
ment continued Its commitment to help
municipalities with wastewater treat-
ment problems.
The 1981 grants program amend-
ments continued the federal funding
share at the 75 percent project level
through fiscal 1984. However, in fiscal
1985, only secondary and advanced
wastewater treatment facilities, inter-
ceptors and infiltration/inflow mainte-
nance correction will be federally
funded, and at a reduced federal share
of 55 percent of project cost. After Oc-
tober 1, 1984, local government must
pay for planning and design costs.
Legislation proposed by Rep. James
Howard (D-N.J.) would provide $23.5
billion for sewage grants during the next
five years. Howard, chairman of the
House Public Works and Transporta-
tion Committee, proposes sewage grants
of $4 billion in fiscal 1984, S4.5 billion
in fiscal 1985, and 55 billion each for
fiscal years 1986, 1987 and 1998.
Howard's legislation is a proposal to
restore the pre -1981 level of funding,
which was part of the Reagan adminis-
tration's budget cut, without making
any other changes in the program. "We
owe this effort to the American public
and to future taxpayers who will be
paying more if we don't continue the
fight against pollution," says Howard.
"The program of construction of
wastewater treatment plants contained
in the federal Water Pollution Control
Amedean City 6 County/March 1984 C9 j
Act of 1972 was one of the more suc-
cessful pans of the environmental
movement," says Howard.
Based on existing authorizations, the
ISuvironmental Protection Agency esti.
mates that 5,000 communities will not
receise federal construction grants and
thus have w desclop their own alterna.
tive financial plans for achieving sec.
ondary wastewater treatment.
However, the NSPE don not believe
the construction grants program is the
best method of financing wastewater
treatment projects. '-rhe grant pro-
gram has prosen unfeasible," says Bill
Fogen y, deputy director of legislative
and government affairs for the society.
"Grams programs have caused long
delay, in the design and construction of
%:aslcualer treatment facilities. It Is d's.
couluging mem hen from laking on
these projects."
Prime adds, "The very existence of
the grants program actually discourages
many communities from prncecding
with construction, esen when they could
do so by utilizing local financial re.
sources.
"ss'c prupu,c Thal tic grant, pro.
Plot]' he phased our." says Prime. "Our
basic purpose is lit seek an end lit Iles•
costs of delayed projects, which the
co, er [nhml i, ;;]"sing by ntfcrinc false
American City L County/March 1984
hopes of future grant funding.
"It is imperative that communities
across the nation know, in no uncertain
terms, who will and who will not re-
ceive grants. Only then will those local.
ities that have avoided committing their
own resources have an incentive to
move projects ahead."
If the grants program is to be phased
out, the federal government should es.
tablish a timetable so that municipali.
ties currently receiving funds will not be
detrimentally harmed, says Canham.
Loan program
"What we are advocating is a loan
program," says Fogerty. -We're not
saying no federal funding, we're saying
don't expand the grants program. The
federal government cart he insnlved
with the loan program."
One such loan program was provided
in H.R. 3678, life Water Resources
Conservation, Development, and In.
frosiructure Improvement and Rehabil.
itation Act of 1983. This act provides
for a four-year, 1800 million annual
loan program for the repair or deterio-
rated water syvems, according to Rep.
Howard.
"In the funding of treatment plants,
a determination must he made nn file
desirability of cliauvnhe a :taut pro.
gram to a loan program after a decade
Of operation," states Howard. "That
determination has not been made," he
adds.
The NSPE suggests that it is possible
for the federal government to structure
a low-interest loan program to cover
100 percent of project costs, which
would not place unreasonable burdens
on the community or ratepayers in
comparison to the current grants pro.
gram.
Currently, both the Environmental
Protection Agency and the Farmers
Home Administration have programs
for the construction of publicly owned
treatment works, and the Farmers
Home Administration loan program
generally has seemed to work well ac-
cording to the engineering group.
"Ratepayers in many communities
might be better off if the entire project
is funded through a federal low-interest
loan than if it is funded in part by a
grant and in part by financing at mar.
Let interest rates," says Prime.
Besides backing a loath program, the
NSPE is very interested in the concept
of state "inl'rmtrucmre banks," says
Fogeny. "When the money gets paid
back, we will hove a revolving fund that
can be used by meal govcrnnu•nf.
"Infrastructure banks are one of the
41
11
Municipalities Face
Clean Water Deadline
By Cathy Dombrowski, Washington Correspondent
Federal funds for sewage treatmenl may be drying up, but not federal stan-
dards. As communities struggle to find alternate methods of financing treat-
ment facilities, the Environmental Protection Agency (EPA) has released a
National Municipal Policy. The agency's goal is to have all municipalities comply
with the Clean Water Act as soon as possible, but no later than July 1, 1988.
The absence of federal grant money will be no excuse for non-compliance with
the July 1, 1988, deadline, according to staff instructions on policy implementa-
tion. The Instructions continue in a more conciliatory vein, noting that an exten-
sion beyond 1988 will be allowed if "extraordinary circumstances" preclude com-
pliance.
In such cases, municipalities having acted in good faith will be able to work with
their state agency and the EPA to develop an enforceable schedule for achieving
compliance.
The agency has no definite figures on how many communities will be allowed to
go beyond the 1988 deadline, but clearly it will be less than 100, maybe less than
20, says James Elder, deputy director of the Office of Water Enforcements and
Permits. These communities primarily will be large cities with financial or physical
problems in completing their plants on schedule.
The EPA estimates that 6,500 communities must take steps to meet the deadline
for both secondary treatment and advance treatment needed to achieve cleanup on
water quality limited streams.
In policy discussions, the word is "we mean business," says Elder. A violation
of the 1988 deadline without an extension will make a community liable for fines
under the Clean Water Act. The EPA is committed to enforcing the 1988 deadline.
"Extraordinary circumstances" that can qualify a community for an extension can
be either financial or physical. Elder explains. A financial extension will occur if it
is financially impossible for a community to build a treatment facility.
The second extraordinary circumstance is physical incapability, such as a city
being so populated that it cannot easily acquire the land needed for a treatment fa.
cility. In this case, the city may have to go through condemnation proceedings, thus
extending the time needed to come into compliance, Elder says.
Elder predicts that quite a few law suits will be filed to enforce the deadline be.
cause cities will resist, thinking that the EPA is not serious or that more federal
money will be forthcoming. The first suits will probably involve operation and
maintenance problems and could come as early as this year, he says.
The approximately 1,800 communities that have operation and maintenance
problems, Elder says, will be identified in strategies prepared by the slates this
spring. Such facilities probably will be given six months to comply. The EPA will
begin establishing new schedules this year and should finish the job by the end of
fiscal 1985.
To deal with operational problems at completed plants, the EPA will ask com-
munities to improve facility operations. To this end, municipal officials may have
to perform an in-depth, diagnostic evaluation of the causes of non-compliance and
develop a detailed composite correction plan, If the correction plan is technically
and financially sound, the permitting authority can use an administrative order or
judicial consent decree to have the municipality carry out the plan at its own ex.
pense.
Facilities built with construction grants after May 12, 1982, must be certified as
complying with performance and design standards one year after initial operation.
The EPA plans to place a high priority on tracking these performance certifier.
tions and resulting corrective actions to ensure that operation and maintenance
problems do not arise in the future.
A municipality that does not receive federal aid is to prepare a municipal com-
pliance plan to show how it plans to meet the requirements of the Clean Water Act.
The plan should identify the needed treatment technology, the financial mecha-
nisms for funding construction and operation; the proposed, fixed -date compli.
ance schedule, including construction start and completion dates; dates for attain.
ing operational levels and effluent limits; and appropriate interim steps to ensure
progress toward compliance. ❑
42
pussiblitics to federal government assis.
tance," says Canham. "Out, we would
like to see some results (before we
react)," he adds.
The NSPE suggests that considera-
tion be given to providing states with
seed money to set up revolving loan
funds specifically for wastewater treat.
ment projects. The interest rates should
be low enough in comparison to market
rates to make the utilization of loans
attractive to communities that require
financial assistance.
In addition, NSPE believes that a
loan program administered on the state
level would help reduce some of the
procedural requirements currently asso.
ciated with the grants program.
"We have received various proposals
for new financing schemes along the
lines of an infrastructure bank," says
Howard, "We will be studying these
proposals during this session of Con-
gress with an eye toward developing an
overall approach for infrastructure re-
pair."
Utility approach
"There is no requirement that the
federal government give funds to local
governments for wastewater treaunent
and collection," states Canham. "The
only requirement is that local govern.
ments meet state and federal require.
ments for degree of treatment."
One possible way for local govern-
ments to provide adequate wastewater
treatment and collection is the self -sus.
taining utility approach, says Canham.
Canham believes sound user charges are
the key to this approach and need to be
developed for operation and maintai.
nance of new and more sophisticated
treatment facilities, while providing
funds for future expansion and replace.
trent.
In an effort to move toward the
WPCF's long-term goal of self-sup-
porting public wastewater treatment
utilities, the WPCF outlined a seven.
point program that would maintain the
momeotun of the current grants pro-
gram, while allowing time for the devel-
opment of alternative financing meth.
ods.
The \PPCF recommendations in-
clude:
OContinuing the existing cunshruc-
tion grants program for three more
years;
Oinduding the water pollution cone.
trol program under a new, federally
supported trust fund from 1985 until
1992;
O funding the program at $2.4 billion
for fiscal 1982 and 1981 and $7..6 bil-
lion for fiscal 1984;
*funding the program at not less
than $2 billion annually for fiscal years
1985 through 1988:
•reducing the annual level of fund-
ing 211 percent each year from fiscal
amedenn City & ennnty!Mareh 1984
S9.S
Chandler Privatizes
Wastewater Facility
By Robert M. Davidson, Senior Vice President, The Parsons Corp.
Lrke many Sun Belt cities,
Chandler, Arizona, has under-
gone dramatic growth.
Founded in 1912 as an agricultural
community 35 miles southeast of
Phoenix. Chandler underwent a
Population explosion in the 1970s
because of an influx of goods -pro.
ducing industries ranging from elec-
tronic calculators to mobile homes.
The city's population grew from al-
most 14,000 in 1970 to nearly 30,000
in 1980 and has since risen to more
than 45,000.
As is the case in other cities,
growth has strained Chandler's abil.
ity to provide municipal services, in.
cluding wastewater treatment. Chan.
dler, however, has taken a step to
solve its problems, by becoming the
first municipality in the nation to opt
for the privatization of a new waste.
water treatment plant.
An extended aeration, activated
sludge facility capable of processing
UP to five million gallons of waste.
water per day will be built on a 40 -
acre plot in Chandler, and the entire
facility will be privately financed as
well as privately owned and oper-
ated. Chandler will pay a monthly
service fee to have its wastewater
treated and will retain ownership of
the end product. The new plant will
be a reclamation facility with the
treated water sold to local agricul.
tural interests for irrigation purposes
and later to developers for recrea.
tional and industrial use.
Chandler's decision to turn to the
private sector for help in providing
needed municipal services began in
1979 when the city commenced an
extensive program of planning for
future growth. With the population
swelling by an estimated 1,000 peo.
ple per month. Chandler officials
recognized that needs would over.
burden the city's ability to deliver
municipal services unless careful
planning was undertaken. According
to City Manager Hal Schilling, pri.
vatization was one of the alterna.
lives under early consideration,
"We are a city with no reserva.
tions on the issue of the private
ownership of public services," says
Schilling. "As long as the service of.
fered is equal to or better than that
which could be provided by a public
agency, and as long as the cost is
right, we will go to the private sec-
tor."
That philosophy had already led
Chandler to contract with private
enterprise for refuse and garbage
collection, as well as some public
groundskeeping and civil engineering
review services. But the development
of a new wastewater treatment facil-
ity differed from those projects, due
to the required heavy capital outlay.
Among the people providing fi-
nancial advice to the city was
Boettcher & Company, a Denver.
based investment banking firm.
Steve Butterfield, a municipal fi-
nance specialist in the firm's Phoe.
nix office, recommended a privately
financed program.
"Privatization was a much-dis-
cussed, but yet untried, method of
financing treatment plants," says
Butterfield. "But the more we
locked into it, the more sense it
seemed to make."
Boettcher identified numerous ad.
vantages for Chandler in privatiza-
tion. Privatization would free the
city from having to raise user fees,
and left Chandler's bond capacity
unimpaired, thus permitting conven.
tional bonds as an option for financ-
ing other needed services.
Privatization would also save
Chandler both time and money in
bidding the job, and Boettcher con.
vinced the city that a new wastewa.
ter treatment facility could be built
and operated by private enterprise
for less money than Chandler could
build and operate the plant itself.
Boettcher's plan, accepted by the city
council, called for raising approxi.
matcly S23 million through indus.
trial development revenue bonds to
be issued by the Industrial Develop.
ment Authority of the city of Chan-
dler.
The next step was to find a com-
pany with the expertise to build and
operate the plant and the willingness
to take the financial risks. The Par-
sons Corporation, an engineering/
construction organization headquar.
tered in Pasadena, California, was
selected for the project.
In order to take advantage of in.
1989 until the end of fiscal 1992;
•terminating appropriations after
fiscal 1992; and.
•continuing the availability of fed.
erally appropriated funds for several
years after fiscal 1992 until all file
money has been obligated, awarded and
expended.
"Privatization is something that we
are very interested in also," says Can-
ham. "There was a lot of interest in
privatization two or three rears ago, but
then the Treasury Department beean
nuking into the tax advanmges."
The tax code currcnfiy provides in-
centives for private companies to fi.
notice the construction of nesr waste-
water treatment facilities by using non.
public funds, and to own and operate
such facilities while leasing file facilities
back to the communities, according to
the NSPE.
"The point we are trying to make is
that privatization of a municipal waste.
water treatment plant requires a finan-
cially sound company that is willing to
guarantee its municipal client that it will
expand or alter the facility in the future
to meet community needs," says Mi.
chael Robbins, senior vice president of
Professional Services Group, Inc.
(PSG). PSG is a non -design consulting,
engineering and management firm spe.
cializing in the operation of water and
wastewatcr treatment systems.
There are many methods by which a
wastewater treatment facility can be fi-
nanced by the private sector. Robbins
says financing methods include:
*Equity ownership:
0100 percent debt financing using
industrial development bonds: and,
• 100 percent debt financing using
floating rate monthly demand bonds.
"Wastewater treatment today is not
what it was 10 ,years ago," says Rob.
bins. Canham agrees. "Wastewater
treatment requires specialized skills and
experience," Canham says. "Everyone
has a responsibility."
This responsiblity is enormous. As of
December 1982, 2,960 wastewater treat.
ment projects using federal funds were
being constructed, according to the
WPCF. More than 1,000 projects were
awaiting construction.
In addition to federal monies, states
and local governments have contributed
nearly SIO billion for capital improve.
ments during the past decade, accord.
ing to the WPCF. However, there is
much more work yet to be done.
The Environmental Protection
Agency predicts that communities will
have to spend more than S92 billion on
wastewater treatment plants and sewers
to meet existing population needs. The
federal government is expected to can.
tribute only S37 billion to this replace.
ment and rehabilitation effort. The
question remains, who will "font the
bill" for the remaining S55 billion?
44 American Clly 6 County/March 1984 59j
centives that would stake industrial
development bonds attractive to po-
tential investors, the funding phase
of the project needed quick inslitu-
tion. Worried by a possible loss of
federal tax dollars through the sale
of tax-free industrial revenue bonds,
some members of Congress have
threatened legislation that would
make the issuance of such bonds
more difficult. Since Arizona has no
laws prohibiting the private owner-
ship of public facilities, it was im-
portant to close the project in 1983,
before the effective dale of any ad-
verse legislation.
The funding plan Parsons offered
included two alternative proposals to
the industrial revenue bond concept
Chandler was using. The first was
the use of the financial strength of
the corporation to back the issuance
of the bonds. The second was the use
of a variable or floating rate rather
than a fixed rate to pay bond hold-
ers.
The two Parsons' proposals were
accepted by Chandler officials.
Three weeks after Parsons was se.
lected, a comprehensive service
agreement was completed. Chan-
dler's Industrial Development Au-
thority subsequently issued nearly
$23 million in floating rate industrial
development bonds secured by an ir-
revocable letter of credit from the
Bank of America and backed by
Parsons.
The agreement included review of
the initial wastewater treatment plant
design by Parsons' subsidiary, Engi-
neering -Science. This option allowed
Parsons to assume design respon-
siblity for certain aspects of the
plant. Construction and plant oper-
ations and maintenance will be the
responsibility of a nese subsidiary,
Parsons Municipal Services, Inc.
The decision to privatize a needed
public facility has allowed Chandler
to provide its residents with a public
service without a significant increase
in user fees or a general tax increase.
The use of floating rate industrial
development bonds will save the city
an estimated $1.1 million per year in
the cost of financing the wastewater
treatment project.
Schilling secs privatization as a
possibility for other public works
projects in Chandler. "We need to
get more and more private invest-
ment in our communities, but you
can't if you don't have the infras-
tructure to support new facilities,"
he says. "Since you won't have the
federal government to defray as
many of the expenses in the years to
come, this kind of financing of pub.
lic facilities is the frame." 0
46
Mt. Laurel Improves
Efficiency of Plant
Inlproving efficiency in older munic.
ipal sewage plash enabled \It. Lau.
rel, New Jersey, to keep pace with
rapid suburban expansion. Municipal
sewage treatment "as III need of Inl-
prevennent, \Inst of (lie equipment was
not functioning properly and difftntlty
whit personnel was a by-product.
The residential Philadelphia suburli s
sewage treatment system comprises a
1.4 million Ballon per clay (nl@pd) aeli-
sated sludge plant, huilf in 1971; a .120
mgpd fixed growth aeration unit, built
in the laic 1960's; and an activated
sludge plant, built in 1961.
New Jersey had more urgent priori-
ties for municipal funding, so Mt. Lau.
rel made do with what it had regarding
its plants. This meant maintaining 91
percent In 97 percent biological oxygen
demand (BOD.) and suspended solids
removal :it all plants.
The problem -soling approach con.
centraed on making things work. \fan-
agemem instituted proper record -keep.
ing,upgraded employee training,
planned maintenance Procedures, and
set up an analytical laboratory that en-
abled the township to react to problems
before they gut out o1' control. All three
Bacterial additives are applied
of the pct chamber and of the
primary Clarifier.
phots were made to work at ma.xinunn
efficiency.
For example. an Infileo unit in the
activated sludge plant had included a
digester to generate methane pas. Since
no trained operator was available, the
unit tended to blow its top regularly. As
a consequence, it was deaciirued and
turned into a holding tank.
hnproved efficiency was also realized
by Irving other approaches. A program
of microscopic analysis was instinoed to
deteei early signs of deterioration in the
system's performance. By utilizing mi.
croscopic analysis, higher life forms
such as protozoans and rotil'crs were
observed and charted weekly by labora-
torvv technicians. This allowed the tech
nicians to sec what was happening right
away, without haying to wait for the re-
sults it' a IIOD test.
Pscn with the in -toren plain running
at nm0nuni efficiencv, there were
problems. The design of the secondary
clarifier in the systcm did not have a
skimmer for removing floating mune.
rials. Grease from garbage disposers
overflossed the clarifier and accumu-
lated in the chlorination tanks.
In addition, sludge settling was pour.
The holding lank had to be emptied
regularly with the sludge being trucked
to a sanitary landfill. The conical, of
(Continued an page 50)
American City 6 Counly,/March 1984
S9 -s
Contract Assures Vancouver
Quality Sewage Treatment
Victor Ehrlich, city engineer, left,
John Osfrowskl, director of
public works, and Paul Gratlef,
city manager, were Instrumental
In advancing Vancouver's
wastewater treatment facility
(below).
46
Six years ago. Vancouver, 11:I•binc-
lon, found itself in x(: ateb-'_2
nation. After upgrading t. pli-
Ilmry wastewaler Ireatmenl plant In
prlcide better service lou a growing
population. the cit) experienced a series
of operational problems causing re-
pealed effluent violations, negative
publicity and a threatened shutdown.
The problrnu could have halted further
industrial and residential development
in Vancomecr.
City officials were lerl with a dift'icuh
decision — whether to contiaoc ailh
their efforts to operate the taciliI% of
seek qualified outside help.
"We sought assistance from every
acailablc resource," says Director of
Public \Yorks John Oarowski, recalling
the city's plight in 1978. "Like cities
across the country, we were committed
to efficient. effective city services. One
of the resources we considered Inas the
private sector, since we already had
contracts for municipal building maim
tenance. garbage collection and dis-
posal.
,,White I contend that a public
agency ought to be able to perform ser-
vices just as well as a contractor." Os-
trowski says, "the reality is that in cer-
tain cases, because of local factors.
technological expertise or ecommiies of
scale, contractors can dcliccr those scr.
vices more efficiently and eIIectitclf."
To solve the immediate wastewater
treatment problem in 1978. Vancouver
officials entered into a contract kith
Envirotech Operating Services IEOSI.
Within six months, says Ostrow'ski.
EOS had he plant operating at effluent
discharge standards. "They worked co.
operatively with the city .lift, stale reg-
ulatory agencies and local indoor),'. he
adds.
In fact. the partnership between Van-
couver and Encinaech has been ro suo
ceseful, the city has :marded LOS a 10 -
year cmuract to operate its w'a,le"aler
treatment facilities. The contract is the
longest of its kind in the wastenater
treatment field. The 10 -year agreement
gives the city stability in the operation
and maintenance ol'the facilities. .a>.
I('onlinuvd on page SII q
American City 6 County/March 1084 5"S
Mt. Laurel
IConllnued from page 46)
the tank had to be recycled to increase
solids from 5 Percent to 6 percent be.
fore trucking.
In an effort to control the grease
problem, freeze-dried bacteria were
added to the grit chamber and primary
clarifier at the rate of one pound per
day. Improvement In grease and sus-
pended solids removal allowed M1lt.
Laurel to lower the chlorination feed
rate. But, the improvement did not jus•
tify the cost of the addition and sludge
removal was unaffected.
0 go Wed
ee ..1Ltra
OVER AQ YEARS
MANUFACTURING
EXPERIENCE
INTERNATIONAL
STANDARDS
HIGH QUALITY
STEADY
PRODUCTION
IMMEDIATE
DELIVERY
__-2.p.n RELIABLE "rew6"
ASTURQUIMICA,S.,k
AD. 19 011EDOSR.uN
85124C04- T.... 67303
NORTH AMERICAN MARKET
Am ri an Inunnatonal Chemical lnc
359 wesi C.^tm 51 NATICK - V93111+.renv W 760
.^o^r 61716555905 169. 91-034
50
)n January, 1982, dit. Laurel
switched to a mutant bacteria formula-
tion developed by Poly'bac Corp. The
new additive incorporated bacteria se-
lected from nature, adapted to typical
municipal wastewater constituents, and
mutated to fix the adaptation. The for.
mulation disfavored and displaced fila-
mentous forms responsible for sludge
bulking and poor suspended solids re.
muval in wastewater treatment.
The new additive reduced the main-
tenance dosage u3 one-half pound per
day, while decreasing the weekly de.
Posit by one wheelbarrow load per
week. During the first 10 months of
1981, the township recycled 97,000 gal.
lons and trucked 317,000 gallons of
sludge. During the same 1982 period, no
sludge was recvcled and the amount
hauled was 153,000 gallons. Recycling
of sludge is practiced schen the sludge in
the holding tank is not concentrated
enough for efficient disposal.
An aerator and flaw
equallsallan basin Increased
the sludge unit's capacity.
benefits from the mmant bacterial ad.
dition. During, 1981, when bacterial ad.
ditives were first tested, the removal rate
was 95 percent. During the use of the
new additive, removal rate has averaged
97 percent. Suspended solids removal
during the same periods averaged 94
percent and 96 percent, respectisdy.
Like all municipal sewage treatment
plants, the in -town unit is subject ho oc-
casional "upsets" that weaken or de.
stroy the biomass. Prior to using the
new additive, recovery took two weeks
or more, and involved trucking in acti•
vaned sludge from one of the other
treatment plants. Recovery now takes
place in less than a week without re-
seeding with trucked -in sludge.
In \It. Laurel's plants, however, as in
many others, conditions do fluctuate•
and there is a constant loading of grease
and oil. Alicrobial additives have calved
the grease problem. giving the township
added insurance against shock loading
while providing an extra margin of
treatment effectiveness. The additive
has cut sludge trucking in hall' and %If.
L:u rcl will continue to use it as lung as
it is cost effective.
I,k t.:a, . lr . ' �� I'f.
I _s4IL
i.
T�
's n• Yr
_� a .�� :• � .�,�.
},�,trH.J ,.•:�f'•w-+/r'r.f� 791 /
:IiJ,�ja•'.i6;u, nrp�.'� "
Ne
Arn�rfcon C;ty A County/March 1984 5!7S
Vancouver
(Continued from page 411)
iOstrowski. as "I[ as keeping sewage
treatment costs from increasing.
When it was time m renew the initial
five-year contract with Envirotech,
Vancouver officials once again put the
job out for bids. Seven responses were
received. "Of those seven, we deter.
mined that some fires were not quali.
(led according to the criteria we had
set." Omrowski says. "For example, we
were nut interested in doing business
,riot a firm put together, in a sense, just
fur this proposal. nor in firms that
lacked essential experience in operating
plans as large as ours."
"We were pleased with the LOS per-
formance." says Osltow%ki, "but we
wmued to explore the marketplace to
,CC if we could maintain or improve on
that performance and at whin cost. We
also believed that we had an obligation
to the public to develop a competitive
process that would clearly ,how we were
getting the best performance at the best
price.'
Vancomer City Manager Paul Grin-
' tet agrees. "It secured logical to pro-
ceed with the same steps the private sec-
tor would employ in developing a nniti.
year contract fur professional services;
that is, evaluate professional qualifica.
tions, organizational capabilities, oper.
ating and starting plans, personnel pro.
grams, maintenance plans, track record
and management philosophy in addi-
tion to price — particularly when the
city's own success and reputation would
be affected by the contractor'% per-
forlmtce."
Once the proposals were received, the
city's higgest problem was in comparing
the offer of the three firms, since they
each proposed to accomplish the per-
lurmance criteria in different wavy.
Analysis of the contractor', approach
can he sensitive, according to Os-
umvaki, particularly cost evaluation and
interpretation of each proposal.
"It is a sensitive area, particularly
when the contract is attractive and the
cnmpefitiun is as surf as it was in our
case," he adds.
Vic Ehrlich, city engineer, who had
been responsible for contract adminis-
tration, monitoring and liaison with
1:7IS during the fir%t contract, took the
lead with his engineers in anallving the
propnmis. A [lost of factors wcr: c%al-
oated, with an emphasis placed on 1U.
tan essential by maintaining the level ut
performance expected and ensuring
maximum protection of the municipal
im esuncnt.
Ilased nn those evaluanium, lite rec.
ommendation was made In the V:utcou-
ver City Council In negotiate with EOS
on .I linal contract. liven though 1'nvi.
totech was our the low bidder, city of
American City 6 County/March 1904
ficials believed that the experience the
firm had gained with the plant would be
lost if another contractor was accepted.
"The council agreed to a new con-
tract with C'OS at a substantial savings
over our existing contract," says Os.
trowski. "The end result, in fact, gave
ratepayers a break since we were able to
maintain our present sewer rates When
we had expected to have to raise them."
In January, a 10 -year contract be-
Iween Vancouver and C'nvirowch be-
gan. "We feel confident that the pro-
cess we used was meaningful and essen-
tial for sound public decision-making
on an essential service," states Os-
trowski.
City Manager Grattet notes that in
Vancouver, as in other communities,
the costs and benefits of contracting
services have to be evaluated on a case-
by-case basis. "I don't like general
rules," Ile says, "but I believe it you
think it through carefully and do it right
from the beginning, it is a very, very ef-
fective approach.
"Recently, there have been articles
reciting the horror stories of contract-
ing out public services," he adds. "My
own experience has been quite contrary
to that. When contracting is done with
care, and administered and monitored
for the city by a knowledgeable staff,
the community is the beneficiary."
Proper preventive maintenance stops pot
holes before they start. Crafco products
outlasts and out perform the conventional way
of repairing roads, but most important they
STOP POT HOLES. Crafco's maintenance
system includes crack repair equipment,
sealants, stress absorbing membrane and a
stress absorbing membrane interlayer. STOP
POT HOLES!
Plo,nvina LandoaMP and
��� Innerallon In 0ualllr
Paromml Mdnbmm�
Mabdrlr.
'Keep your roads and budgelr
Isom crumbling call ��7 CRAFOO INC.
CRAF n crTalumreebling
lodayl"
P.O. Boa 20133Circle No. 2glzona 8506 Phone: nn ReaderSerrvice Card 00.520.0244 `i5_
51/
James E. Peterson. Executive Director 1730 K Street, N.W.. Washington, D.C. 20006 (202) 223-4735
Volzoee I%, Nwnber 5
Mcrch 15, 1984
Locally -Initiated High -Tech Efforts Most Likely To Succeed
High technology development efforts
stand a better chance of success if they
are initiated and implemented locally,
according to a report just released by
the congressional Office of Technology
Assessment.
Also high on the list of factors
contributing to success are linkages with
overall development strategies and gov-
ernment partnerships with local entrepre-
neurs and business groups.
(Encouraging High Technology Devel-
opment looks at state, local, university -
and private sector initiatives, with an
emphasis on those undertaken by state and
local governments. A future Developments
article will focus on how the approaches
and goals of each of these sectors dif-
fer.)
Observing that state and local econo-
mic development policies are at a cross-
roads, OTA points to a gradual shift from
the zero-sum game of enticing a firm to
locate in one city or state rather than
another to a more positive approach of
encouraging economic activity that would
not have occurred without intervention.
The net results of such efforts are im-
proved links among the financial, acade-
mic and business communities; increased
entrepreneurship; and an overall improve-
ment in the scientific and technological
base of state and local economies.
Ingredients for Success
Although most of the high tech ini-
tiatives reviewed by OTA are too new to
evaluate, the report focuses on some of
the factors seen as important to achiev-
ing increased employment, business devel-
opment and economic diversification.
Among the desirable conditions are a
strong research university, available
financing, skilled labor pool, transpor-
tation, good climate, the presence of
corporate headquarters and cultural amen-
ities. Added to these, however, are sev-
eral other factors which can only be
brought together through public-private
cooperation and commitment:
• Local initiative and partnership:
While acknowledging the role of state and
federal assistance,'the report asserts
that efforts are generally most success-
ful when "the objectives and strategies
are developed locally, and local repre-
sentatives play a major role in the de-
sign and implementation of the initia-
tives." Moreover, because the public and
private sectors are less distinct at the
local level, public-private partnerships
are a significant aspect of successful
programs.
• Linkage with broader development
efforts: The most substantial results
come from high-tech initiatives that are
part of more traditional development
strategies such as efforts to strengthen
or diversify the local industrial base.
• Identification of local needs and
resources. States and communities can
learn from each other, but must tailor
their programs based on a specific anal-
ysis of existing resources and needs.
• Adaptation to external constraints:
Recognizing and adjusting to the uncon-
trolables--climate, terrain, proximity of
existing high-tech centers --is important
in setting realistic goals.
• Sustained effort: High-tech de-
velopment is not recommended for those
who seek immediate results. A minimum of
10 or 20 years of commitment and stable
funding is likely before a significant
number of local jobs can be credited to a
community's high-tech initiatives.
C —1
r.....:..,.....: "'"
To: All library patrons
From: YPL (Your Public Library)
Re: Fees for library services
by Carol Hole
Qs you may have noticed, inflation
has increased in the past few
years. Governing bodies have re-
sponded to the increase with an
orgy of budget -crating. Some say this
shows statesmanlike concern for respnnsi.
ble use of the taxpayer's dollar. Otherssay
politicians are chicken to raise taxes be-
cause taxpayers will vote them out of
office.
In any case, libraries across the land are
under pressure to bring in revenue. The
move to user fees is on.
Your Public Library, always on the
cutting edge of new developments in li-
brary science, has moved rapidly to meet
this demand for revenue. Encouraged by
its beloved governing bodies and by loyal
patrons who frequently snarl. "Why the
heck don't y'all charge fines and make
those bozos pay?" YPL has instituted fees
for nearly all library services.
Our goal is to become the first profit.
making public library in history. Our new
motto is, "CH.A-A-ARGE!" For every.
thing. You, our patrons, can help us
achieve a resounding victory over
inflation.
Bring money.
YPL Fee Schedule
Circulation Department
Book checkout
JuvWI8 book@ .10 each
Adult fiction .75 each
Best sellers $1.50 each
Dirty books 52.50 each
polnOn out good parle.751good put
Nonfiction
Sox manuals $5/day
Computer manuals s5/Mur
How-to books S1+1115 deposit
Car•repalr manuals 510+car Vile
(title hell until book returned)
Carol Hot* Is outreach librarian for Nu Santa
Fe Regional Library, Gaines4le, Fla, Your
Public Library Is IkVtlous. Any resemblance
between Its services and suggested fees and
Wase of any other library Is coincidental.
7115
Self-help books 32
(money back 0 personality does col Improve)
Keeping book under counter for
favored patron 111 each
Keeping new record under counter:
Rock, sap, country 53.50
All other records $2.500
Not telling your kid checkouldirtybookt s10
Overdue books
First 15 mksdn .50
Each half-hour thereaft*r .25
Clearing 601quent's record .50751 owed
Damaged or lost books
ToW charges equal cost of replaosmenl book
+ fn for seWdrg out-of-prinl book dealers. 0
necessary +the following:
NVdrewirg cud MI 51.99
Reordering 7.50
Shipping and hmndWg - 2.50
Recatalogklg 6.85
Reprocessing 350
Reshelvklg .10
Refiling eatd eel 1.99
Coplar
Use copier .25/page
Explain haw to use coder .100711lrate
Give change for copler 10%. of amount
charged
OB -Track Betting
The Clrculalion Department makes book on
the following dally totals:
Clrwlalion Sloryhour aneedanos
Reserves called for Books cataloged
Books stolen Staff on diets
Bels must be down by noon each day. Payoffs
al 5 p.m. Odds and previews day's winners
posted at main desk 9 a.m. to noon.
Outreach Department
Bookmobile slop at your door
1-30 circulations sim"M
30-60 circulations s10o/yeer
60-100 circolaVons S 50yaar
miss" charge, all slops .&MW
No bookmobile stop atpar door S2ootirm
Advertising on sides of bookmobile
3I -fool Gerslensleger $150 par main
12doof alp van S75 per mond
Children's Department
BabplBing (while there's space)
If Icilel-trained s2tbmn
It not 354au
Supervision of teenagers Millar
Nometeolk
Lording shortest took on reading list s2
Reading book and writing report 95
Translating assignment shoal and explain.
Ing what teacher wants $1.98
Looking up subject in Wood Book .75
Copying Wald Book article
In longhand S31pap
Doing math (ell levan) slotpage
Reader guidance
Locating books on football, snakes, a video
games $1.50
(Valeo game tokens not ecoepled In lieu of
U.S. coinage.)
Inside dope on where babies =9 from SS
AMERICAN LIBRARIES DECEMBER 1057
597
I
Story noun
elovles $2
Picture book road aloud $5.50
with Ilgerplays $1.50
Storytelling $5.50
Puppet darn:
orchaaba 38.50
be" $5.50
Reference Department
Telephone Reference
Ready Marerae .2513 mit.
0 stall nail gel up to answer .5013 rain.
Singing enswr $5
In my ne id
with musical backup $7.50
Guaranteed correct answer $10
Relerence materiels
Books: Ikq half-hour 3.35
suxser1mg half-hours .50
Periodicals: Bads Was .25
Current Wars, per half-hour .75
(Note: Magazine birder locks when 0me Is up.)
Reader guldeore
Looking In card catalog for patron
par authorneM .35
per subject •50
(Prtany of 25 for each Incurred aWtor or MW
Shen to 9bradan.)
Explaining Dewey system 32.98
Explaining LC system 35.98
Explaining AACR2 $1000
Reference Questions
Dkeclionsl questions .05
Research questions (geceraq .503 rain..
Switching subject In mid-questlon $1.50
Municipal or govemmenl documents $2
Looking up symptoms In Merck Manual t5
SID
repairing ep hring mcroilnlnt ready $20
(Note: Contracis for the following reference
questions available at reference desk. Notary
on duty at all times.)
Business questions 10% of profits
Explaining lax form 30% of refund
Explaining how to get divorce 20% of
alimony
Looking up ranpayers In city directory for
collection agency 50% of recovery
(flow: 20% discount on reference questions 0
you know what you want and can explain It In
plain English.)
If lormallon and referral questions
Cop who fixes tickets 3 1.98
Honest mechanic $21.50
Generaf Fees
Isthrooms
Soap, towels, or running weir .10 each
Toilel paper Free
Direcilons to bathroom $1
Use of drinking fo miam .05
Use of drinking fountain w/cold water .25
problem patrons
Verbal abuse of still 31015 min.
AMERICAN LIBRARIES DECEMBER 1983
Shwnng obscenities 32015 min.
Physical abuse Make es an offer
Sleeper, (deposit coin N slot In
chair) •501hour
Vagrants, bums. pantlemwrouthe-road:
Sleep on carpet as right $1
Baths end laundry In men's room:
towel, acep, razor .601ho r
shampoo, laudry del ergeM .25 earth
daub your hark $2
Fleshre 35, or we wonl look
Book naive 30 days and 3100 lice
Additional attrections
for discerning patrons
Video pmu
AvWabie in an depulmeMs. Buy (stun at
MW desk.
Door prices
Given daily at dosing um. Prizes are do" -
ad by bed mrrluints and are wy tasty.
Sign up for drawing at main desk.
Overdue loupe
Take a study break In du svhgkg aano-
aphers of our rneznme lounge. Happy
Hour 5-7 daily. Live musk. Free drWm If
your spats reference question shonpa ria
bartender. r
A final word
Every panty you sperd in Your Library In ■
penny saved on yoataxes. sociml hold badd
And remember—
THERE'S NG SUCH THING AS
A FREE LUNCHI
"... _ —You Library Stats
Reprinted by permission of the American Library
Association from American Libraries 14(11):716-17
(Dec. 1983); copyright 1983 by Carol Hole.
—7'-
r.-1
S9 J
o ■■ c
•
JOHNSON COUNTY
CITIZENS' COMMITTEE
for the HANDICAPPED
Presents
Q
"ALL
"ABOUT ACCESSIBILITY"
Monday, March 26, 7p.m.
Iowa City Recreation Center
(Everyone invited to attend)
'* Speakers:
Donald Westergard,
Executive Secretary
Governor's Committee on Employment of the Handicapped
Pete Greene,
Engineer
Iowa State Building Code Commission
Bring Your Questions to be Answered?
S
M
T
W
TH
F
S
/
2'
V
s
LOAM-Parkin9 Stud
Study
LOAM -Staff Meetin.
SAM -Magistrate
SAM -Magistrate
g
Info Meeting for
(Conf Room)
Court (Chambers)
Court (Chambers)
bidders (Conf Rm)
2PM-Handicapped
8AM-Basic Elec.
LOAM-Handicapped
Accessibility
(Conf Room)
7:30PM-Informal
Accessibility
(Chambers)
(Chambers)
7:30PM-Formal P&Z
(Chambers)
P&Z (Conf Room)
3PM-Housing Comm
(Conf Room)
6:30PM-Informal
7:30PM-Riverfront
Council (Conf Rm)
Comm (Law Librar
'ce
7:3 $M -P Ori
-
8
y
/O
// IOAM-Staff Mtg
/Z
/3
I$e
8AM-Magistrate
8:30AM-Housing
(Conf Room)
1PM-AgenG� Cgmnep
8AM-Magistrate
Court (Chambers)
Court (Chambers)
Bd of Appeals
sation 11 ont Rm!!
•30PM-Informal
Council (Conf Rm)
(Conf Room)
1PM-Aqen4Y Compep
3PM-Se or,Ctr
C )
m (hens r tr
Co4:djustBoar
satien !Conf Rm)
of
1PM-Agency Comppen
Conservation
Conservation Comm
7(Cham-Council
Adjustment (Cha
sation (Conf Rm )
(Law Library)
(Chambers)
Rec
7Comm a(Rgcrks &Ctr)
7:30PM-Public
7.30PM-Hi.stori
Hearing on IRSs
Preservation �`om
(Con f Room)
(Conf Room)
/L
/y
/I
/T
JO
BAM-Magistrate
LOAM -Staff Meeting
8AM-Magistrate
Court (Chambers)
3:30PM-CCN
(Conf Room)
Court (Chambers)
(Public Library
7:30PM-Informal
qPM -Broadband
P&Z (Conf Room)
Telecymmu❑icatio
Comm lConr Rm)
s
7:30PM-Airport
'
Comm (Conf Rm)
6:30PM-Informal
Council (Conf Rm
7:30PM-Formal P&Z
(Chambers)
2]-
=G
8AM-Magistrate
Court (Chambers)
LOAM -Staff Meeting
(Conf Room)
8AM-Magistrate
Court (Chambers)
6:30PM-Informal
Council (Conf Rm)
7:30PM-Council
(Chambers)
4PM7Library Board
(Library Conf Rm)
7.30PM-Human Righ
s
Comm (Senior Ctr
�q
30
8AM-Magistrate
Court (Chambers)
7:30PM-Informal
P&Z (Conf Rm)
Informal Council Discussion
March 20, 1984
Informal Council Discussion: March 20, 1984, at 6:40 p.m. in the Council
Ch
am ers a e Civic en er. Mayor John McDonald presiding.
Council Members Present: McDonald, Zuber, Strait, Erdahl, Dickson.
Absent: Ambr sco, Baker.
Staff Members Present: Berlin, Helling, Jansen, Karr, Schmeiser, Hauer,
Reynolds, Showalter.
Tape-recorded: Reel 84-C22, 84-C28, 84-C29.
LIQUOR LICENSE PROCEDURES:
Jansen noted the City Code requirement that liquor license applications
be filed with the City Clerk seven days before Council consideration.
Exceptions had been made on an individual basis. Karr explained that the
Clerk's office would benefit from a consistent Council policy on late
applications. Berlin suggested that the liquor license ordinance should be
written to match the actual policy followed by the Council. Erdahl said
that late applications should be allowed if the reason for being late is
beyond the control of the applicant. Karr said that past informal policy
has been to allow late applications if the applicant appeared before the
Council at their informal session and requested addition to the agenda.
Council discussed a fee for administrative costs for late applications.
Jansen will research options and make a recommendation. Until the
ordinance is modified, late applicants must appear before the Council.
BEER GARDENS: Reel 84-C22, Side 2
Berlin noted that there has been some interest for beer gardens and since
six already exist in Iowa City, a controlling ordinance is in order. Karr
reviewed her list of establishments which have beer gardens or are
considering beer gardens. The Council discussed geographic limitations of
some beer gardens. Erdahl suggested limiting hours of beer gardens.
Berlin noted that the noise ordinance would limit noise at a beer garden.
Berlin will report back to the Council with recommendations on regulating.
PLAZA LEASES: Reel 84-C22, Side 2
McDonald noted that since the plaza was first designed, leasing of a
portion of the city right-of-way has been encouraged but no policy has
been set. Now merchants are showing interest in leasing on the plaza.
Berlin said that the City wouldn't authorize all extensions into the
plaza. The City would maintain reasonable walkways and aesthetically
pleasing additions. In answer to a question from'Strait, Berlin said that
proof of maintenance of liability insurance would have to be filed with
the City Clerk. Strait said he feels that $500,00 liability for personal
injury is too low. Schmeiser explained the property values as listed in
his March 16 memo were obtained from the City Assessor's office. Schmeiser
also reviewed the suggested rate structure for leased space. Strait noted
that the City would lease the land but retain possession of it. Schmeiser
said that staff found no comparable leasing by a municipality in Iowa.
1
t•
Informal Council Discussion
March 20, 1984
Informal Council Discussion: March 20, 1984, at 6:40 p.m. in the Council
Chambers a evic en er. Mayor John McDonald presiding.
CouncilMembers Present: McDonald, Zuber, Strait, Erdahl, Dickson.
Absent: Ambr sco, Ba er.
Staff Members Present: Berlin, Helling, Jansen, Karr, Schmeiser, Hauer,
Reynolds, Showalter.
Tape-recorded: Reel 84-C22, 84-C28, 84-C29.
LIQUOR LICENSE PROCEDURES:
Jansen noted the City Code requirement that liquor license applications
be filed with the City Clerk seven days before Council consideration.
Exceptions had been made on an individual basis. Karr explained that the
Clerk's office would benefit from a consistent Council policy on late
applications. Berlin suggested that the liquor license ordinance should be
written to match the actual policy followed by the Council. Erdahl said
that late applications should be allowed if the reason for being late is
beyond the control of the applicant. Karr said that past informal policy
has been to allow late applications if the applicant appeared before the
Council at their informal session and requested addition to the agenda.
Council discussed a fee for administrative costs for late applications.
Jansen will research options and make a recommendation. Until the
ordinance is modified, late applicants must appear before the Council.
BEER GARDENS: Reel 84-C22, Side 2
Berlin noted that there has been some interest for beer gardens and since
six already exist in Iowa City, a controlling ordinance is in order. Karr
reviewed her list of establishments which have beer gardens or are
considering beer gardens. The Council discussed geographic limitations of
some beer gardens. Erdahl suggested limiting hours of beer gardens.
Berlin noted that the noise ordinance would limit noise at a beer garden.
Berlin will report back to the Council with recommendations on regulating.
PLAZA LEASES: Reel 84-C22, Side 2
McDonald noted that since the plaza was first designed, leasing of a
portion of the city right-of-way has been encouraged but no policy has
been set. Now merchants are showing interest in leasing on the plaza.
Berlin said that the City wouldn't authorize all extensions into the
plaza. The City would maintain reasonable walkways and aesthetically
pleasing additions. In answer to a question from Strait, Berlin said that
proof of maintenance of liability insurance would have to be filed with
the City Clerk. Strait said he feels that $500,00 liability for personal
injury is too low. Schmeiser explained the property values as listed in
his March 16 memo were obtained from the City Assessor's office. Schmeiser
also reviewed the suggested rate structure for leased space. Strait noted
that the City would lease the land but retain possession
o pality Schmeiser
ower
said that staff found no comparable leasing by
Informal Cou 1 Discussion
March 20, 1984
Page 2
Erdahl suggested that the lower rate (based on square foot) would better
encourage plaza leasing and noted that the leasing fee is only for the use
of land and commits the leasee to the full 15 year agreement. Property
sale would require that the City Manager approve continuance of the lease.
Council agreed that an actual square foot value lease rate (option D)
would be most appropriate. McDonald said that direct access to the plaza
from an addition might have to be restricted. Berlin noted that each
addition would have to be judged on its own merits regarding handicapped
accessibility. Berlin will report back to the Council on the issues
discussed.
Dean Thornberry
company pay for
approved. Berlin
FORESTRY PLAN:
from Burger King stated it would be unfair to make his
its overhang (marquee sign) since it had already been
will discuss it further with Burger King.
Reel 84-C28, Side 1
The Council discussed the expense of planting trees. Dickson noticed the
plan to provide trees on private property (item 3F) Berlin said that the
City cannot monitor all tree planting by utilities. Strait said the
forestry plan is well developed. He mentioned that it might be wise to
allow Project GREEN to study the plan and make suggestions. Reynolds
reviewed the bids for trees and said that the market demands high prices.
Berlin noted that the market is becoming more competitive. Reynolds said
that people periodically donate trees to the City.
SENIOR BUILDING INSPECTOR: Reel 84-C28, Side 1
Berlin said that the goal is to reduce the trivial duties of the Senior
Building Inspector. Zoning administration may be switched to the Planning
Department. Zuber said that he would like Berlin to continue working to
solve departmental problems. The two open positions in Housing Inspection
Services will probably be filled simultaneously. In answer to a question
from Strait, Berlin said that the new salary range for the Senior Building
Inspector position is fully justified in terms of duties. Erdahl noted
that some changes outlined in the February 21 memo should be subject to
Council approval. He also said that the department is small to handle
such a large volume of work.
CONSULTANT SELECTION PROCEDURE: Reel 84-C28, Side 1
The policy as outlined in staff's position resolution is in large part
existing informal policy with input from all departments. The $25,000
consultant fee level for approval by City Manager versus approval by
Council is fixed by past practice. Berlin explained that informal
contracts are less detailed and complex and are still legal, binding
contracts. The informality is only informality of process. In answer to
a question from Erdahl, Berlin said that staff is developing further
alternatives for handling design work that is done as part of the bidding
process without compensation. The Purchasing Division will be available
for assistance to other departments on bidding and evaluation procedures.
--I\
Informal Council cussion
March 20, 1984
Page 3
COUNCIL TIME: Reel 84-C28, Side 2
1. Absence. Zuber noted he would not be present for the April 9th
informal session.
2. Weeber and Harlocke. Zuber said that public response has been
positive about Council action to concerns about the Weeber and
Harlocke problems.
j 3. 109 South Johnson. Helling said that he is in the process of provid-
ing further in ormation to Lorna Mathes.
4. Hotel /Bushnell's Turtle. Strait asked about the Vernon Beck letter
and the City's responsibility. Berlin said that there are daily
discussions with all parties. The Federal Advisory Panel has said
that the hotel project is too advanced to stop. When the paperwork is
complete, the Panel will refer the matter to HUD for a decision. HUD
advises that the City complete the paperwork regarding Bushnell's
Turtle and describe in the case report the commitment of the developer
towards the problem. HUD would then make a decision about UDAG. The
preliminary report to the State Historical Office was delayed because
the final design decisions on the hotel had not been made. The City's
agreement with the hotel developer agreed that the City should be held
harmless from all claims against it.
5. DISCRIMINATION IN PRIVATE CLUBS. Jansen'said that the Council could
act through the Human Rights Mice. The Human Rights Specialist will
determine if in fact there are violations.
6 SELECTION OF CPA. Berlin said that the selection of a CPA firm for
the annual audit could be opened for bids if the Council so desires.
Council agreed.
7. DOOLEY'S BAR. Strait inquired if the City had heard anything from the
bar's attorney regarding the marquee sign. Jansen reported no
communication had been received and will follow-up.
8. CABLE SPECIALIST. Berlin said that Carroll is in the process of
reviewing the classification of cable specialist.
9. CITY MANAGER'S SECRETARY. Dickson inquired as to a reclassification
of this position. Berlin said that the City Manager's secretary's
classification is being studied. Dickson said that the position has
not been changed in the past and should be. Council discussed ways of
upgrading the position. Berlin said that the reclassifications are
handled through normal City channels unless the Council directs
otherwise. Berlin suggested waiting for Carroll's recommendation
before acting. Berlin pointed out that the evaluation process has
been accepted by bargaining units as taking comparable worth into
consideration.
10. SOUTHEAST IOWA LEAGUE OF CITES. McDonald said that he and Strait are
attending the next League meeting.
I'
Informal Council I'-,:ussion n
March 20, 1984
Page 4
11. HUMAN RIGHTS. McDonald repeated the recommendation that a committee
be established with Human Rights Commission chair Futrell and Housing
Commission chair Krause as co-chairs and about eight people on the
committee. Berlin met with Futrell and Krause who agreedto co-chair
the committee to try to resolve the questions raised in the proposed
Human Rights Ordinance amendment. John Watson, Carol Carstens, Karen
Kubby, Fred Breckner, a member of the Apartment Owners Association,
and Gary Smith are possible members of the committee. Erdahl ques-
tioned whether a single parent was represented on the committee.
Berlin noted that Carstens is a single parent as well as a past
Housing Commission member. Berlin will dicuss this matter with the
co-chairs and may add an additional member. Strait recommended
passing all other sections of the amendment except the issue of
children. Erdahl suggested not making a decision until after an
initial report of the new committee. The Council agreed to postpone
any decision until April 23rd.
Meeting adjourned at 9:05 p.m.
G
Informal Council Discussion
March 26, 1984
Informal Council Discussion: March 26, 1984, at 6:30 p.m, in the Confer-
ence Room at the Civic Center. Mayor John McDonald presiding.
Council Members Present: McDonald, Zuber, Strait, Dickson, Ambrisco,
Baker, Erdahl (7:10 p.m.).
Staff Members Present: Berlin, Helling, Karr, Brown, Franklin, Jansen,
Miller, Shaffer, Tiffany.
Tape-recorded: Reel 84-C29, Side 1, 14 -End, and Side 2, all; 84-C30, Side
11 Ih33II����
LIQUOR LICENSE REQUESTS: Reel 84-C29, Side 1
The Mayor stated that HappX Joe's and The Sorts Column wish to be added
to Tuesday's Council meeting agenda to consider their liquor license
requests. The City Clerk announced both establishments did not have
approval from the building inspector or the Fire Department. Council
agreed to consider their liquor license requests and grant conditional
approval at the Tuesday meeting.
ZONING APPLICATIONS: Reel 84-C29, Side 1
Set public hearing on an ordinance to rezone 3.52 acres east of First
venue extended rrom iu-KJ to Kb -5. in response to uaKer, rranxiin sai
that this property is owned by siasgow.
Set public hearing on an ordinance to reione 524 North Johnson Street, P
to RM -12. No discussion.
Public hearing on an ordinance to amend the off -stet parking design
standards. Franklin stated the changes restrict therenumber of parking
spac icking into an alley and restricts the location of parking spaces
near windows and doorways to five feet from residential dwellings. Zuber
expressed confusion re the term "backing into alleys." Further discussion
about the change will be held at the public hearing.
Public hearin on an ordinance to amend theplanned develo ment housinc
lan o resu ivi a of 2 McOr a ition ar is is o permit
construction of a x 12- telephone equipment enclosure on Lots 7 and 8.
It will be located on the crest of the hill on Mormon Trek.
Applicant requests the readings be waived an
1 passage at this time.
Informal Council Discu..ion
March 26, 1984
Page 2
Consider ordinance to amend Cha
scussion.
SALE OF HAWKEYE CABLEVISION: Reel 84-C29, Side 1
Helling explained that the Council needs to decide if there is interest in
pursuing acquisition of the cable system by the City or, if the Council is
not interested in acquisition, look at other possibilities such as
modifying the franchise agreement. Drew Shaffer said there are five
systems in Iowa and 40-50 systems nationally that are municipally owned.
The tendency has been for smaller communities to have the municipality
owned systems. Cooperatively owned systems is another type of ownership
used, but less frequently. In response to Strait, Bill Terry said that a
subcommittee from the Broadband Telecommunications Commission has been
working on this issue with City staff. Councilmembers discussed whether
to consider City acquisition of the cable system. Dave Brown explained
that the franchise agreement requires the grantee (Hawkeye CableVision) to
make "first offer the broadband telecommunications network for sale to the
City at a fair and just market value... once the fair market value of the
systemlis determined, either through negotiation or arbitration, the City
shall have 90 days from that time to exercise the right of first refusal
to purchase the network." McDonald asked if a preliminary report could be
prepared by City staff as to the advantages or disadvantages of a munici-
pally owned system without having to invest a lot of money in private
consultation fees. Berlin and Shaffer said a preliminary report could be
prepared and another discussion will be scheduled in two weeks. This
cursory study would include some of the advantages and disadvantages of
alternative forms of ownership; some of the various issues involved in
making such a decision; a list of available resources; and what a full
blown study would entail if the Council wants to go into a different form
of ownership and the approximate costs of such a study. Strait requested
all Broadband Telecommunications Commission members be notified of the
next scheduled discussion. Berlin will respond to the bond -financing
issue when he has obtained more information. Helling said the Broadband
Subcommittee should continue working with City staff. In response to
Terry, McDonald said there is not much for the BTC to do, except work with
staff, until Council decides what direction to take.
SPACE NEEDS FOR CITY OPERATIONS: Reel 84-C29, Side 1, Side 2
Berlin referred to the space needs study by R. Neuman Associates and the
follow-up evaluation of space needs. Council discussed the priority of
City space needs. McDonald noted that space needs has reached a critical
level and needs to be addressed now. Berlin stated that the original plan
is only conceptual and the next step would be to have an architect design
actual preliminary plans. The Fire Department will probably need to stay
located at its present site. The U Smash 'Em building is inappropriate
for locating a new fire station because of the grade of the hill,
relocating the large transformer, obtaining the Wilson's Sporting building
and negative community response to construction on the Chauncey Swan area.
Berlin said the staff Space Needs Committee will develop a request for
preliminary design proposals from architects. Erdahl requested that a
financing report and timing of the project be presented when a preliminary
design is developed.
Informal Council
March 26, 1984
Page 3
Disco. Aon
1
COUNCIL ACTIONS WHEN MEMBERS ABSENT: Reel 84-C29, Side 2
McDonald said that the discussion of specific issues will be rescheduled
upon request if the interested Councilmember will be absent. Zuber stated
he is satisfied with the current informal policy.
COUNCIL AGENDA AND TIME: Reel 84-C29, Side 2
1. (Agenda item 9) Berlin said that the Urban Environment Ad Hoc
Committee composition should include one citizen representing develop-
mental interests. Baker suggested adding a member from the Chamber of
Commerce Environmental Committee. Erdahl suggested that the number be
increased to ten members to accommodate the additional member from the
Environmental Committee. Council discussed problems of conflicts of
interest with the Chamber of Commerce member on the Ad Hoc Committee.
Council agreed to the additional member but stipulated it as a
non-voting member. Council requested the report deadline be changed
to the end of 1984.
2. Baker inquired about the David Panther request (Item 3f.(3)). Berlin
said a report about outdoor cafes will be prepared within the next
week.
3. In reference to agenda item 14, Baker asked what guidelines are used
in accepting bids when bid amounts are very close. Berlin replied
that the lowest bid is usually accepted unless major -overriding
factors are involved.
4. In response to agenda item 6, Strait asked what effect this easement
agreement will have on the adjacent lot. Berlin said it will probably
be an asset to the development of the lot.
5. Strait inquired about the street lighting report. Helling explained
the street lighting report should be available by the end of April.
6. In reference to a letter received from Mary Hartwig, Ambrisco urged
the City to become a member of the Iowa Good Roads Assn. Berlin will
follow-up on it.
7. In response to Zuber, Berlin said the Human Rights Ord. Ad Hoc
Committee has been formed and plans to report to the Council by April
19 about changes in the Human Rights Ordinance re children.
8. Strait inquired about the Sueppel correspondence (3f.(4)) regarding
Kennedy's Waterfront Addition. McDonald stated that a better response
will be possible after the wastewater treatment facility is underway.
9. Baker noted the memo from staff member Knight re use of Maiden Lane
r -o -w between Prentiss Street and Ralston Creek to the north. Berlin
said the property owners along Maiden Lane are currently being
contacted about the use of the right-of-way.
Informal Council Discussion
March 26, 1984
Page 4
10. Baker inquired about the school district establishing fees for the use
of their facilities by the Parks and Recreation Division. Berlin
explained that discussions are being held with the school district due
to the City's increased use of the school's facilities for the
recreational programs.
11. Baker questioned whether there would be difficulties if the staff
tried to work on both the Sign Ordinance and the Urban Environment Ad
Hoc Committee at the same time. Berlin said that, because the draft
of the Sign Ordinance is complete, there should be no problem.
12. McDonald stated that the Council should tour the old library prior to
the discussion about the building. A tour of the old library is
scheduled for next Tuesday at 6:30 p.m.
APPOINTMENTS: Reel 84-C30, Side 1 (Norm Bailey and
Martin Kelly present)
Council will appoint Danel Trevor and John Moore to the Housing Commis-
sion. No applications have been received for the Mayor's Youth Bd. The
vacancies will be readvertised. Councilmembers questioned why the School
Bd. had declined to appoint a representative to that Bd. and the reason
for the name of the Bd. to include "Mayor's." Staff will report.
ECONOMIC DEVELOPMENT AD HOC COMMITTEE: Reel 84-C30, Side 1
Norm Bailey reported on the development of an 'Iowa City economic develop-
ment corporation. The new corporation will have nine members and has
already been endorsed by the Ad Hoc Committee, Chamber of Commerce and the
University. By-laws of. the Economic Development Corporation stipulate
that City appointed members be the Mayor and the City Manager. Berlin said
that Ernie Lehman wrote the City indicating the Chamber members of the
committee will be Norm Bailey, Bill Bywater, Martin Kelly, Lyle Miller,
and Jim Shive. McDonald explained that the Ad Hoc Committee was formed
about a year ago to show interested individuals what Iowa City has to
offer. The City has allocated $40,000 in FY85 for economic development.
The Chamber of Commerce will contribute staff help and possibly funds.
Ambrisco praised the concept of the Committee and said that the private
sector must take the lead. McDonald said that the City should have a
strong supporting role. Bailey said that the Coralville and Linn and
Johnson counties may well be involved in the future. Erdahl noted that
the corridor plan could be an aid to economic development. Bailey said
that Cedar Rapids representatives have shown interest. Kelly said that a
research and development park could be one way of starting such a corri-
dor. Kirkwood Community College is also a possible resource with the
possibility of state funded training programs. Kelly said that the heavy
industries are not interested in an Iowa City location. Bailey stated the
encouragement and growth of local businesses is possibly the best way to
stimulate economic growth. Berlin said that legislative action may be
sought to encourage economic development.
Meeting adjourned at 8:30 p.m.
4
IOWA CITY
ST DY
VEST FOR PROPOS
CITY OF 10\A/A'
CITY
CIVIC CENTER 410 E. WASHINGTON ST. IOWA CITY, IOWA 52240 (319) 356-500D
March 15, 1984
Re: Request for Proposal - Iowa City Parking Study
Dear Sir/Madam:
This request for submission of qualifications is directed to Architectural
and Engineering firms (A&E firms) interested in providing design and
engineering services for the Capitol Street and Dubuque Street Parking
Ramps in the Iowa City Central Business District.
The analysis of the Capitol Street Ramp located adjacent to Burlington
Street between Clinton and Capitol Streets will include the study of
internal/external traffic circulation and development of recommended
improvements to facilitate this circulation.
The analysis of the Dubuque Street Ramp located adjacent to Burlington
Street between Linn and Dubuque Streets will include determining the
feasibility of increasing its capacity by adding additional levels as well
as studying the impacts of such additions on -internal /external circula-
tion. The firm selected also will be requested to investigate the
potential for additional parking by expanding the Dubuque Street Ramp
south over Burlington Street or by integrating it with a mixed-use (re-
tail -office -parking) structure which could be constructed on a vacant
parcel north of the ramp. If the City chooses to expand the ramp's
capacity the firm will develop design and construction drawings for the
addition.
Additional responsibilities of the consultant will be to estimate con-
struction and operational costs, develop a construction schedule, and
prepare a financial feasibility report for marketing of Parking Revenue
Bonds. The firm will also be expected to work closely with City staff and
be willing to meet with the staff, Chamber of Commerce Parking Committee,
and City Council as requested. The City desires aesthetically and
environmentally acceptable solutions.
In addition to the study of both ramps, the City staff will be conducting
an overall study of parking needs in the Iowa City CBD. This study will
include projecting future downtown development and subsequent parking
needs, coordination with the University of Iowa parking study presently
underway, and developing recommendations for future improvements to the
perking system. It is anticipated that the City staff will be primarily
responsible for this study; however, an .A&E firm will also be retained to
provide assistance. A separate selection process will be undertaken for
this portion of the study and the City is free to award the work to the
firm deemed to be most qualified. However, for the benefit of firms
l 04
s^i
IOWA CITY PARKING STUDY
REQUEST FOR PROPOSAL
Table of Contents
1. Introductory Letter . . . . . . . . . . . . . . . . . . . i
2. Description of Parking Study . . . . . . . . . . . . . . . 1
PartI ..........................2
PartII.........................5
3. Questionnaire . . . . . . . . . . . . . . . . . . . . . . 8
4. Description of Evaluation Procedures . . . . . . . . . . .11
Appendix: Iowa City Parking Study Phase I: Analysis of
Additional Parking Requirements for the Dubuque
Street Parking Ramp
V
PRECEDING
DOCUMENT
CITY CSF 10\/VA CITY
CIVIC CENTER 410 E. WASHINGTON ST. IOWA CITY, IOWA 52240 (319) 356-5000
March 15, 1984
Re: Request for Proposal - Iowa City Parking Study
Dear Sir/Madam:
This request for submission of qualifications is directed to Architectural
and Engineering firms (A&E firms) interested in providing design and
engineering services for the Capitol Street and Dubuque Street Parking
Ramps in the Iowa City Central Business District.
The analysis of the Capitol Street Ramp located adjacent to Burlington
Street between Clinton and Capitol Streets will include the study of
internal/external traffic circulation and development of recommended
improvements.to facilitate this circulation.
The analysis of the Dubuque Street Ramp located adjacent to Burlington
Street between Linn and Dubuque Streets will include determining the
feasibility of increasing its capacity by adding additional levels as well
as studying the impacts of such additions on -internal /external circula-
tion. The firm selected also will be requested to investigate the
potential for additional parking by expanding the Dubuque Street Ramp
south over Burlington Street or by integrating it with a mixed-use (re-
tail -office -parking) structure which could be constructed on a vacant
parcel north of the ramp. If the City chooses to expand the ramp's
capacity the firm will develop design and construction drawings for the
addition.
Additional responsibilities of the consultant will be to estimate con-
struction and operational costs, develop a construction schedule, and
prepare a financial feasibility report for marketing of Parking Revenue
Bonds. The firm will also be expected to work closely with City staff and
be willing to meet with the staff, Chamber of Commerce Parking Committee,
and City Council as requested. The City desires aesthetically and
environmentally acceptable solutions.
In addition to the study of both ramps, the City staff will be conducting
an overall study of parking needs in the Iowa City CBD. This study will
include projecting future downtown development and subsequent parking
needs, coordination with the University of Iowa parking study presently
underway, and developing recommendations for future improvements to the
perking system. It is anticipated that the City staff will be primarily
responsible for this study; however, an .A&E firm will also be retained to
provide assistance. A separate selection process will be undertaken for
this portion of the study and the City is free to award the work to the
firm deemed to be most qualified. However, for the benefit of firms
W
responding to the city's request for assistance with the Capitol and
Dubuque Street Ramps, an outline of this second portion of the parking
study is also provided.
Enclosed with andsanletter ioutlinesofaworkctaskson of for bothetheorampdIowa analysisity
as
parking study,
tudy. Also enclosed is a questionnaire
well as the overall CBO parking so
be questiwered eywfirms
ill be evaluated ulnato by sthedCity to Land RFP.
authorization
for the City to seek verification of all answers.
Included in the Appendix of this RFP is a copy of a study recently
completed by the City staff which sanalyzesthened for additient desconal ription
in the Dubuque Street Ramp. y provides the need for
tional parking due too the wn pconstrrucarking tione ofaad178 nroomshotel adjacent todthe
Dubuque Street Ramp.
Issuance of this any costs or incurredlinoes not preparationiofl aw proposal toto ard a
this
contract, r pay y lies. The City
request, or to procure or contract for service or supplies.
reserves the right to reject any and all proposals and to resolicit.
As an equal opportunity/affirmative action employer, the City prohibits
discrimination on the basis of race, creed, color, sex, age, religion,
sexual orientation, marital status, disability or national origin.
Minority and Women's Business Enterprises will be afforded full considera-
tion and are encouraged to respond.
In order to answer any questions raised by firms intending to respond to
April 2P�in nthefIowatCityl Civic Center Conferencrence will be e Room at 10 All AMnterestMondaed
firms are encouraged to attend this meeting.
he
All res410 sEastothis RFPWashington Street, received
City,thIowait5Clerk,
2240,no later than
Of Iowa
City,
2:00 p.m., Monday, April 16, 1984.
If you have any questions, contact Mr. John Lundell, Transportation
lanner, at (319) 356-5252. Your interest in our project is app
Si cerel yours,
Neal G. Berlin
City Manager
bdw/sp
o
IOWA CITY PARKING STUDY
REQUEST FOR PROPOSAL
Table of Contents
1. Introductory Letter . . . . . . . . . . . . . . . . . . . i
2. Description of Parking Study . . . . . . . . . . . . . . . 1
PartI ..........................2
PartII .........................5
3. Questionnaire . . . . . . . . . . . . . . . . . . . . . . 8
4. Description of Evaluation Procedures . . . . . . . . . . .11
Appendix: Iowa City Parking Study Phase I: Analysis of
Additional Parking Requirements for the Dubuque
Street Parking Ramp
!-1
Description of Parking Study
The City of Iowa City (City) desires to procure architectural and engineering
(A&E) services from a firm which will have full responsibility for the
integrity of the design produced. The contract will be executed with a
single entity however this does not preclude a consortium effort. The
selected 'firm (or team) must have a full range of capabilities for performing
professional architectural, engineering, and study design services for a
multi-level parking facility.
The City's intent is to divide the parking study into two parts. Part I
focuses attention on the two existing parking ramps and adjacent property.
Part II is an overall, longer range study of Iowa City parking needs. At
this time the City_ only intends to contract with a consulting firm for Part
I. Due to the projected completion of a 178 room hotel adjacent to the
Dubuque Street Ramp in September 1984, it is critical that the selected
consultant have the necessary resources available to complete Part I under
critical time.constraints.
To assist the firm with the examination of the Dubuque Street Ramp, the City
will make available original contract drawings modified to reflect as -built
conditions along with a complete set of structural design notes.
The following is an outline of consultant work tasks for Part I. 'While this
outline is meant to identify major work tasks, final arrangements and tasks
remain subject to negotiation between the City and consultant.
Iwo
-2 -
Iowa City Parking Study Part I
Consultant Work Tasks:
1. Careful coordination of work efforts with members of the City staff. Meet
regularly with the staff, prepare minutes of these meetings as well as
bi-weekly progress reports, and, upon request, meet with the Chamber of
Commerce Parking Committee or City Council. Also, submit draft reports
to the City staff for review.
2. Examine the internal and external traffic circulation of the Capitol
Street Ramp. Upon completion of this examination, develop. recommended
improvements and cost estimates.
3. Examine as -built drawings and engineering design notes of the Dubuque
Street Ramp to determine the feasibility and number of levels which can
be added.
4. Examine and inspect actual construction and condition of existing Dubuque
Street Ramp and provide engineering certification as to its condition and
i
ability to withstand additional levels.
5. Examine impacts of any expansion of the Dubuque Street Ramp on internal
and external traffic circulation. Upon completion of this examination
develop recommended improvements to facilitate circulation. Specific-
ally, the feasibility of an additional exit onto Linn Street or a spiral
on adjacent Parcel 64-1a must be examined.
PSE
I
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i -
I6. Prepare alternative schematic design concepts for recommended improve-
ments or additions.
i7. Develop a construction schedule and preliminary cost estimates for -any
recommended expansion or other improvements to the Dubuque Street Ramp.
The cost estimates should also forecast any increased operational costs.
8. Examine the potential for a mixed-use structure (retail -off ice:parking)
on Parcel 64-1a and potential for providing additional parking 'south over
Burlington Street. This examination should include:
a. Description of how these additions could be integrated with existing
(or expanded) Dubuque Street Ramp.
b. Assessment of impacts of these additions on internal and external
traffic circulation of existing (or expanded) Dubuque Street Ramp and
adjacent streets.
c. Development of preliminary construction and operational cost esti-
mates of these additions.
i
d. Determination of potential to construct these additions at a later
date.
-a-
9. Upon written acceptance by the City of any recommended improvements
and/or expansion of the Dubuque or Capitol Street Ramps, the firm will
be requested to:
a. Prepare design development documents for, but not limited to,
architectural, mechanical, structural, electrical and circulation
aspects of the improvements.
b. Prepare working design and construction documents consisting of all
plans, specifications, and bid documents.
c. Be.responsible'for construction contract administration (e.g. project
scheduling, review change.orders, review of payment requests, etc.).
The selected consultant, however, will not have prime responsibility
for construction inspection.
10. Complete an economic analysis and evaluation of the Parking System's
ability to market Parking Revenue Bonds to finance the recommended
improvements and/or expansion of both ramps. This analysis shall include
a parking rate study for the entire Parking System. The firm shall
prepare a financial feasibility report to be utilized in the marketing of
the Parking Revenue Bonds.
11. Prepare a final report describing the analysis applied to each ramp,
alternatives developed, and recommended improvements. The firm may then
be requested to make a presentation to the City Council or other group.
MI
I
I
j Note: Specific responsibilities of the City, firm, contractors, and suppli-
ers will be further defined when the contract documents are developed and
t
i executed.
3
j
Iowa City Parking Study Part II
i
Following is the outline for Part II of the Iowa City parking study. This
portion of the study will involve projecting future downtown development
i
patterns, coordination with the University of Iowa's parking study, and
identifying needed improvements to the parking system beyond any additions to
the Dubuque Street Ramp.
It is anticipated that the ,City staff will have major responsibility for this
portion of the study; however, a firm probably will be retained to assist the
staff in evaluating potential sites for other parking facilities. This
portion of the study will be underway concurrently with Part I.
Part II Study Outline:
1. Hold meetings with City staff, City Council,. and Chamber of Commerce
Parking Committee to refine study outline and assign responsibilities.
i
2. Document history of City Council parking decisions in the CAD.
I
i
2. Meet with University of Iowa officials to insure coordination with the
University parking study.
(0 0 0
4. Develop inventory (i.e. square footages) of various CBD land uses (e.g.
office, retail, service, etc.).
5. Project future development by type of use in the CBD.
6. Explore alternative programs (e.g. vanpool/carpool, transit pass subsidy,
park and ride, etc.) aimed at reducing CBD parking requirements.
7. Determine need for additional parking in CBD by user group (i.e. employ-
ees, professionals, shoppers, students).
9. Examine existing traffic flows within the CBD.
9. Identify potential sites for additional needed parking facilities.
10. Evaluate impacts of each site in terms of:
a. User group (student, professional, shopper, etc.).
b. Potential for mixed-use.
c. Potential for serving parking needs of the University of Iowa.
d, Traffic circulation in, out, and around the new parking facility and
impact on adjoining streets.
e. Unique construction costs and considerations (e.g. property acquisi-
tion, utilities, soil conditions, historical significance, etc.).
I
r�
C0
IOWA CITY EVALUATION QUESTIONNAIRE
Parking Study - Part I
i
In an effort to select the best qualified firm for this project the City
requests that you complete the following questionnaire in the same order that
it is presented here so that your qualifications may be evaluated. Responses
to this questionnaire constitute authorization to the City to seek verifica-
tion of all answers. Responses shall not exceed 20 pages. Should you have
any questions regarding the purpose or intent of this questionnaire, please
contact Nr. John Lundell, Transportation Planner, at (319) 356-5252.
1. Name, qualifications, and relevant experience of the person who will be
in charge of this project (include, as a minimum, the individual's name,
professional discipline(s), license(s) in which states, length that the
licenses) has been held, length of service with the firm, relevant
experience, estimated percentage of his/her time that will be dedicated
to this project, and office location). j
2. Name, qualifications, and relevant experience of other professionals who
will be assigned to the project (include, as a minimum, the individuals'
names, professional disciplines, licenses in which states, length that
the licenses have been held, length of service with the firms, relevant
experience, estimated percentage of his/her time that will be dedicated
to this project, and office location).
3. If the submittal is by a team, list participating firms and outline
Specific areas of responsibility for each firm. Identify any firms whirr
are Minority or Women's Business Enterprises.
MIM
a
4. Has this team previously worked together? If yes, list the project(s),
owner(s), location(s), brief description of project(s), and name and
phone number of a responsible party familiar with the performance of the
team.
5. List completed construction
p projects that the team members have designed
within the previous three years, with approximate construction costs and
the name and phone number of a responsible party familiar with the team
members' participation.
6. List the three most recently completed projects of a similar nature
performed by the lead firm of the team showing the owner, location, brief
description of the project, estimate of construction cost, date of
estimate, original construction contract amount, and final construction
cost.
7. Describe the team's design approach for the. Iowa City project and the
responsibility of each key team member applicable to this project.
8. Provide work schedule with a specific timetable from the date you are
authorized to proceed to the time the job will be ready for letting. This
information should be provided for specific items, products, and events
from Part I of the Parking Study.
I
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9. Has the team had experience examining internal/external traffic circula-
tion of existing parking ramps? List which recommendations were imple-
mented. (List project, dates, owner, and name and phone number of a
responsible party familiar with the team's participation.)
i
10. Has the team had experience with the study of Central Business District
l
parking needs including investigating the potential for mixed-use
developments? List which recommendations were implemented. (List
project, dates, location, owner, and name and phone number of a responsi-
ble party familiar with the team's participation.)
I
11. Has the team had experience preparing a financial feasibility report to
facilitate the marketing of Parking Revenue Bonds? (List project, dates,
owner, location, and name and phone number of a responsible party
familiar with the team's participation.)
I
12. List the name, address, and phone number of a person on the team who the
City may contact regarding this proposal.
13. The following must be completed and included as part of any proposal:
I understand that five (5) copies of the responses to this questionnaire
and other relevant information concerning this proposal must be submitted
to the City Clerk, City of Iowa City, 410 E. Washington Street, Iowa
i
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City, Iowa, 52240, no later than 2:00 P.M., Monday, April 16, 1984. I
further understand that the responses and other information will be used
to evaluate the qualifications of the team members, and that proposals
received after the time and date specified may not be accepted.
Signature
Title
Name of Firm
Date
Description of Evaluation Procedures
The City will use the responses to the questionnaire in this RFP to select
firms to interview. The City has developed a system which assigns weights to
each question. After all the proposals have been scored by a committee of
City staff members, at least three firms scoring the highest will be selected
for an interview. After rating those firms interviewed, the staff will then
ask one or more of the firms to submit a final not to exceed cost and will
negotiate a fee. The City Manager will then recommend the selected firm to
the City Council for final approval.
RIM
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i
Iowa City Parking Study
Phase I:
Analysis of Additional
Parking Requirements for
the Dubuque Street Parking Ramp
December 1983
Jeff Davidson, Assistant Transportation Planner
jJohnson County Council of Governments
r 000
I. Background
During the early 1960s the City of Iowa City recognized that the
vitality of the Iowa City central business district (CBD) as a center
for business, retail, government, and educational activities was
endangered by deterioration. Through its Community Development
Department the City initiated a rigorous program of urban renewal to
reverse this declining trend.
I
In 1965 funds were made available by the U.S. Department of Rousing
and Urban Development (RUD) to begin planning for the redevelopment
and rehabilitation of the Iowa City CBD. Delays primarily caused by
legal action occurred throughout the late 1960s. By 1970 these
matters were resolved and the City was awarded a federal grant to
proceed with activities such as acquiring land; relocating people and
businesses; demolishing structures, and improving utilities, streets,
and pedestrian space. City funds also were provided.
in 1972 the City of Iowa City adopted an official parking policy
i
emphasizing the following elements:
1. The City government will provide the major share of future CBD
parking.
1
2. All on -street metered parking in the CBD will eventually be
eliminated and parking facilities concentrated in off-street
locations.
3. Parking facility construction shall be coordinated with the
development of viable mass transit and bikeway systems.
In 1972 a 600 car parking facility was presented to voters for
consideration and rejected primarily on environmental and financial
grounds. The project was to have been funded with tax increment
"financing.
i
i
Revisions were made in 1973, resulting in City Council adoption of an
$8 million parking facilities plan as part of the 1973-77 Capital
Dmprovements Program. A 1974 BUD report concluded that the overall
impact of the proposed plan was positive and that the plan should be
implemented.
I
Iowa City completed two major CBD redevelopment projects in the late
1970s. One was the closing of College Street between Clinton and Linn
Streets and Dubuque Street between Washington and Burlington Streets
i
for development into a pedestrian mall. This project was completed in
1977 and has been the focus of several adjacent projects: The plaza
Centre One building, the new City Library, several rehabilitations of
older buildings, and the new downtown hotel.
2
I
1
The second major CBD redevelopment project is located on Block 83/84,
the two city blocks bounded by Washington Street on the north, Clinton
Street on the east, Burlington Street on the south, and Capitol Street
on the west. The portion of College Street at mid -parcel was vacated
and included in the redevelopment. All buildings on the Block 83/84
parcel were demolished, and in 1978 the City Council selected Old
Capitol Center Partners as developer of this property. Old Capitol
Center Partners developed this parcel into Old Capitol Center, a
278,000 square foot retail shopping mall completed in 1981. The City
retained 70,000 square feet of Block 83/84 for construction of a
perking facility, which would connect to the shopping center. Carl
Walker and Associates, Inc., parking consultants, were commissioned to
prepare plans for the Block 83/84 parking facility (the Capitol Street
Ramp). A schematic plan with several alternate concepts was produced
in June 1978, and the consultant's recommended alternative for Block
83/84 was selected by the City as the preferred development scheme.
Carl Walker 8 Associates were then selected to prepare an economic
analysis and evaluation for the Block 83/84 parking facility, based
upon the conclusions and recommendations in the schematic plan and the
proposed City plans for redevelopment of the CBD.
During the evaluation of the Capitol Street Ramp the scope of the work
was extended to include the analysis and evaluation of a parking
facility for Block 64, the proposed site of a new hotel and department
store. This extension to include the Block 64 parcel (the Dubuque
=I
1
ir
i
Street Ramp) was authorized because the CBD redevelopment time
schedule required that the projections of revenue and expenses for the
City Parking System include both projects.
In October 1978, Carl Walker and Associates submitted the final report
supporting the development of parking facilities in Block 83/84 and
Block 64. The report concluded that the redeveloped CBD would support
the construction of 900 parking spaces in the Capitol Street Ramp and
450 spaces in the Dubuque Street Ramp. The report proposed financing
the parking facilities with a $5.2 milion Parking System Revenue Bond
Issue, with a total project cost of $7.2 million. It was also
concluded that provisions should be made in the design of the Dubuque
street Ramp for future expansion of 185 parking spaces.
On December 1, 1978, the City Council of Iowa City approved the $5.2
million bond issue. The Capitol Street Ramp was opened in 1979 and
the Dubuque Street Ramp in 1981.
4
M
i
II. Existing Conditions
The City of Iowa City operates two parking ramps and several surface
I
parking lots in the CBD (Fig. 1). The Capitol Street Ramp, adjacent
to Old Capitol Center Mall, holds 900 cars. The Dubuque Street Ramp,
located between Dubuque and Linn Streets at Burlington Street, holds
450 cars. These ramps are intended to serve the parking needs of
downtown customers and employees. Both ramps charge 25 cents per hour
between the hours of 7:30 A.M. and 3:00 A.M. and a flat fee of 50
cents between 3:00 A.M. and 7:30 A.M.
There are 180 parking permit holds who use the Dubuque Street Ramp.
Some of these permit holders formerly used the Capitol Street Ramp;
however, effective November 7, 1983, all
permit holders were moved to
the Dubuque Street facility. This move was necessitated by the
i increased use of the Capitol Street Ramp and the need for additional
short-term parking. A fee of $25 per month is charged for permit
parking in the Dubuque Street Ramp, and the City has frozen the number
of permit holders at 180.
The City also operates seven surface parking lots in the CBD area. TWO
of the lots, Schwan (24 spaces) and Market Street (50 spaces), are
located north of the CBD and not primarily utilized by downtown
customers and employees. The other five lots are Civic Center (120
spaces) , Chauncey Swan (120 spaces) , Rec Cuter (92 spaces) , Library
(79 spaces), and Burlington (27 spaces). These five lots form a ring
around the south and east edge of the CBD and are divided into
5
M
i
SGHUMAN LOT MARKET ST. LOT
I I UVl6 C ivae LOT
in
MARKET
" I F �-
JEFFERSON
UNIVERSITY OF IOWA IOWA
WASHINGTON
0
H H .. ;,,:.4
Q�a z
SIN!IVA
55
91
V V V l l I' rrn 1 r ••
wfmL ST. RAMP DUBUQUE Q PAd/P REC CENTE,4 LOT
BURLINGTON LOT OLD LIBPvARYLDT CHAUNCEY.i11:9N
, XIS TING CBD PARKING FACIL I TIf S
short-term spaces (Burlington and Library), long-term spaces (Chauncey
Swan and Rec Center), and permit parking (Rec Center and Civic
Center). The Burlington, Library and Chauncey Swan lots charge 20
cents per hour, and the Schuman, Market Street and Rec Center lots 10
cents per hour. Permit parking at the surface lots is available for
$16 per month, and has been frozen at the current number of 261.
It is expected that downtown surface parking lot capacity will be
reduced by 25% within the next year, with the elimination of the
79 -space Library lot. The developer of the adjacent old library site
retains an option to the parking lot property and has indicated an
interest in exercising this option within the next year.
in keeping with the spirit of the City's parking policy, zoning
regulations have been adopted which prohibit private parking facili-
ties in the CBD unless a special exception is granted by the Board
I
of Adjustment. The only exception is for hotels or motels in the CBD,
in which case a developer has the option of providing private parking
I
for the development or contracting with the City for parking.
III.Existing Utilization
Detailed statistics have been kept in 1983 regarding utilization of
the two parking ramps. counts have been taken each day at 9:00 a.m.,
noon, and 5:00 p.m., and levels of utilization recorded. Noon is the
highest usage time of the three, with the ramps receiving maximum use
from both employment -oriented long-term parkers and shopping -oriented
short-term p3rkers. Figures 2 and 3 present this information graphi-
cally.
Capitol Street Ramp. Utilization of the Capitol Street Ramp at 9:00
a.m. has been moderate in 1983, averaging 258 of capacity. Utiliza-
tion picks up considerably throughout the morning, with figures
indicating average utilization at noon to be 538. More. notable than
this is the trend of increased usage which is occurring. Since August
29 this ramp has averaged 758 full at noon, with a high of 838
occurring the week of October 10. This very high usage rate is of
concern since it is already comparable to previous holiday shopping
season levels.
Utilization of the Capitol Street Ramp declines between mon and 5:00
p.m., with utilization at 5:00 p.m. averaging 388 of capacity. Usage
levels at 5:00 p.m. have also taken a jump since August 29, averaging
538 of capacity during this time.
F,
MI
i
900 F/G, Z
UIII/ZATION Of PARK/NO RXWP A
doo 9.400 AAf ..... DAILY AVERAGE PER WEEK - f993
12'Co 47.ON -- MONQAY- FR/L1AY
Soo Fri
boo
tL
soo
Z-
4, 400
�t
y 300 _
Z
N
w
f00
w
n
iY'CEI�
fI_a._" J._111��,JII� a lj emsa s=�z�t't s11 ri o=.v
10 r-.2 S•16 'S-30`'` 11,7 6 17 1*
r16..3
UTILIZATION Of PARKING /?/4 11111D B
DAILY AVERAGE PER WEEK 1983
4lO1VDr9Y-FR1DAY
9'00 AM —
/2'OO NOAH
b"OO 1%1 . -----
1-171 1-31.
----
1-1711.31. 1 4.11 1 41S l Sy 1 S;b I iY 1 i-,:01 7"f 17-,V l 8•I I g%S 195 I f-iyI �9I
1.24 3.2/ 4-/1 S -Z S•16 Slo 411 627 ?-// 7.16 8$ Oty f -/t -9-U
I
1
c
r16..3
UTILIZATION Of PARKING /?/4 11111D B
DAILY AVERAGE PER WEEK 1983
4lO1VDr9Y-FR1DAY
9'00 AM —
/2'OO NOAH
b"OO 1%1 . -----
1-171 1-31.
----
1-1711.31. 1 4.11 1 41S l Sy 1 S;b I iY 1 i-,:01 7"f 17-,V l 8•I I g%S 195 I f-iyI �9I
1.24 3.2/ 4-/1 S -Z S•16 Slo 411 627 ?-// 7.16 8$ Oty f -/t -9-U
i
A problem with presenting information in weekly averages is that it
ignores the issue of peak usage days. For example, the Capitol Street
Ramp has averaged 758-908 full per week at noon during the month of
1 I
( October. However, there have been several individual days where peak
usage has been in the 958-1008 range.
Dubuque Street Ramp. The Dubuque Street Ramp has averaged 338 of
capacity at 9:00 a.m. during 1983, with a high of 418 occurring during
the week of September 19. Utilization increases throughout the day
with noon figures showing an average of 538 capacity. Usage at noon
has averaged 588 since August 29, reflecting a trend of increased
usage similar to the Capitol Street Ramp although not nearly as
intense. Usage tapers off by 5:00 p.m. to a level similar to the
i morning: average 5:00 p.m. usage in 1983 was 348 of capacity.
It is apparent that usage of the parking ramps, especially Capitol
Street, has increased considerably since August 29. With midday usage
rates averaging as high as 838 and 5:00 p.m. rates averaging over 508,
it is evident that demand for parking at the Capitol Street Ramp will
likely be over capacity by the 1983 holiday season. The Iowa City
Parking Superintendent estimates that during the 1982 holiday season
demand for parking in the two ramps increased by 250-330 cars per day.
i
At 808 capacity the Capitol Street Ramp has 180 empty spaces. At the
current midday usage level of 588, the Dubuque Street Ramp has 189
empty spaces. This indicates that current usage levels combined with
an increase in demand similar to 1982 holiday season will result in
utilization levels as high as 978 for both ramps.
11
i
Surface Lots. Statistics have not been kept regarding usage of the CBD
surface parking lots. However, discussions with the Iowa City Parking
Superintendent indicates that during midday peak usage, utilization of
the old library lot is averaging 100% of capacity, the Rec Center lot i
alYtrnri mainly Ono nF .nA 46e n..... 1... '1 . _a
I
Iv. Existing Financial Situation
In December 1978 revenue bonds in the amount of $5.2 million were
issued by the City of Iowa City to finance the construction of the two
City parking ramps. Covenants contained in the resolution authorizing
this bond issue stipulate that parking fees will be set at a level
I
adequate to generate sufficient revenue to cover the bond debt, interest
on the bonds, and a 358 coverage factor.
The budget for the City's Parking Division contains a line item for
expenditures associated with the parking system revenue bonds. In fact,
revenue bond -related expenditures make up nearly one-half of all Parking
Division expenditures. Following is a summary of FY 83 Parking Division
expenditures.
Item
wages, salaries &
fringes
Supplies
Services & Charges
Bond Debt Exp.
Carryover
Mal
FY 83 FY83 8 of FY84
Budget Actual Budgeted Budgeted
$383,322
$388,284
101.38
$404,578
22,794
19,143
84.08
16,139
170,316
172,260
100.98
172,226
508,990
519,562
102.18
506,290
1,720
51,085,422
$1,100,969
101.48
$1,099,233
13
M
It can be seen that labor costs are the other major expenditure item for the
Parking Division (358 of budget). The revenue side of the FY83 Parking
Division Budget follows:
FY83 FY83 8 of FY84
Item Budget Actual Budgeted Budgeted
Daytime Ramps $444,000 $ 482,543 108.78 $ 468,.660
Evening Ramps 34,000 42,324 124.58 48,792
+ Ramp Permits 24,000 52,886 220.48 -0-
Parking Lot Meters 58,800 65,411 111.28 64,800
Parking Lot Permits 27,800 27,183 97.88 20,000
f
On -street Meters 174,000 191,064 109.88 180,000
Parking Fines 144,000 136,055 94.58 125,000
Misc. Sources 9,000 134,915 1499.08 131,866 !
`I
Total $915,600 $1,132,318 137.88 $1,039,118
i
Actual FY83 revenue received by the Parking Division exceeded budgeted
revenue in all but two categories. Miscellaneous income exceeded the budget
by 1,4998, mostly interest income. Income generated from the two parking
ramps exceeded budget by $75,753, or 158. Total FY83 Parking Division
i
revenue exceeded budget by $345,926, a 388 surplus.
The Parking System Revenue Bonds require a 358 coverage factor to be main-
tained by the Parking Division. This requires parking fees to be set at a
level adequate to provide a 358 surplus in revenue received over expendi-
tures. This provides bondholders with the assurance that the Parking System
is generating sufficient revenue to adequately cover annual costs so that a
14
default on the bonds won't occur. In FY83 the coverage factor achieved by
the City was 2.98. The only way to justify not increasing parking rates at
this time is because of the availability of the fund balance in the Parking
Operations Fund. As of July 30, 1983, the fund balance was $612,918, more
than sufficient for the 35% required coverage.
A cost-saving measure was implemented in FY83 which has had a favorable
impact on the Parking Division. This was to begin staffing the exit booths
for both parking ramps until 3:00 a.m. Formerly the ramps were staffed until
10:00 p.m., with parkers required to pay a 50 cent flat fee to exit between
10:00 p.m. and 7:00 a.m. While this has only been a break-even proposition
based on revenue received versus cost to staff the booths,: it has.saved many
thousands of dollars by reducing vandalism in the ramps.
i5
■
V. Future CBD Development
The City of Iowa City began its CBD revitalization program in the mid
1960s. After nearly 20 years the program is finally approaching comple-
tion. Major projects completed include Old Capitol Center, Plaza Centre
One, the two City parking ramps, the new Public Library, the Downtown
Transit Interchange, various CBD streetscape improvements, and the City
Plaza pedestrian mall.
There are several CBD development projects awaiting completion which will
impact the future parking needs of downtown Iowa City (see Fig. 4). These
include:.
1. The new downtown hotel. Presently ureter construction adjacent to the
Dubuque Street Parking Ramp is a new Holiday Inn Hotel. This hotel
is being developed privately in conjunction with a $2.08 million
Urban Development Action Grant (UDAG). The hotel will include 178
rooms, a 150 seat restaurant, group meeting space for 450 attendees,
and a public walkway which will connect City Plaza to Dubuque Street.
The City has agreed to make parking available for hotel patrons in
the Dubuque Street Ramp.
2. Parcel 64-1a. Directly adjacent to the east of the hotel site is the
final remaining urban renewal property, Parcel 64-1a. This 40,000
square foot parcel is scheduled to be developed as a multi-level,
multi -use facility which could include a department store, retail
-Face, office space, or housing. Proposals from private developers
W
i
REMAIN/N6 C3D DfVELOpiYIE/V7-
MARKET]
I � ill u�sor.
JEFFERSON
UNIVERSITY OF IOWA IOWA
771
iJ IR
WASHINGTON'S
G
a
a`;.
z
Z
RT'' J
OLD IiAPTOLUNSF NEW/HOTEL
PAQLEL 64 -/O
Oto
OLO L/BRA.QY
a,eY RWRINC LOT
,..
will be evaluated and a final decision on development made by the
Iowa City Council. The City will attempt to market this property in
1984, with development completed by 1986.
3. Old library. In June 1981 the Iowa City Public Library moved into
its new building on City Plaza. The old library building was
purchased by a local developer and has been leased to the University
of Iowa for use as temporary office space. This arrangement is
I
expected to last 3-5 years, whereupon it is expected the building i
j
will be developed into same type of commercial use. The building i
itself is a 1903 Carnegie library of 9600 square feet with a 13,800
I
square feet addition added in 1962. It is expected that any redevel-
opment will involve preserving the existing building since the
developer is contractually obligated to put $495,000 of improvements
into the structure (3008 of the purchase price).
4. Old library parking lot. The old library parking lot presently �.
consists of 79 parking spaces with five hour meters. It is 29,000
square feet with frontage on Gilbert Street and College Street. The
Iowa City Parking Superintendent has stated that this lot presently
receives nearly 1008 utilization during the day. The developer of
the old library retains an option to purchase agreement for all or
part of the old library parking lot. It is possible that the
developer will exercise the option on the property by January 1984,
removing the lot from use as public parking.
■
The Parking System Revenue Bond Resolution is very specific in
prohibiting the assets of the Parking System from being disposed of
if such disposal would cause a decrease in parking revenues. The
sale price of the old library parking lot must be set at an amount
which when invested would generate annual income equivalent to the
parking revenue presently generated by the lot.
5. Old Capitol Center. Old Capitol Center mall is currently leased at
93% of capacity. Approximately 19,110 square feet of commercial
space remains to be leased.
These five projects are expected to provide most of the impact on future
parking demand in the Iowa City CBD. There are no major development
projects in fringe areas of Iowa City nor any major demographic changes
expected to occur that would provide additional significant impact.
19
W
i
VI. Forecasting Future CBD Parking Demand
The estimation of future parking demand is perhaps the most critical step
in an assessment of parking needs. It is also the most complex and often
misunderstood step in the process. A common mistake in demand estimation
involves the use of generation factors to arrive at estimates of parking
demand. Using generation factors a person can take each generator
(retail space, office space, residential space, industrial space, etc.)
multiply the various square footages by the generation factors, and
mathematically arrive at an absolute number of parking spaces that will
be needed. The advantage to this method is that it is very neat and
conclusive; the problem is that the limitations of this method are often
forgotten and it is assumed to be much more accurate than is actually
possible. This method assumes the generation factors to be precise,
which they are not; assumes transportation and land use characteristics
will stay the same, which they will not; assumes population and demo-
graphic characteristics will stay the same, which they will not; and it
does not take into consideration such issues as municipal parking
Policies, environmental constraints, or mass transit usage.
Bather than listing several magic factors for estimating parking demand,
it will instead be much more effective to examine the several local
development issues which will affect future parking demand, and direct
our efforts toward answering the question before us: Should two more
levels be added to the Dubuque Street Ranq�7
20
r --
Existing demand. Utilization of the two parking ramps (outlined in
Section III) has increased since the ramps were opened for operation,
with significant increases since August 1983. Peak usage occurs during
midday, when the two facilities receive maximum use from shopping,
i
i
office, and University -related parkers. Midday usage of the Capitol
Street Ramp has been averaging approximately 758 of capacity since August
29, with usage approximately 508-558 during daytime off-peak. Nighttime
usage declines further to the 258-306 range.
Peak midday usage of the Dubuque Street Ramp has averaged nearly 608 of
capacity since August 29, declining to around 408 in the daytime
off-peak. Usage of the Capitol Street Ramp has become intensive enough
that all ramp permit parking has been shifted to the Dubuque Street
j facility and frozen at the current number of permits. If holiday season
usage levels increase at a proportion similar to last year, daytime
utilization of the two ramps is expected to be in the 908-1008 range this
holiday season.
New downtown hotel. The Iowa City Zoning Ordinance gives the developer
of a CBD hotel or motel the following options pertaining to parking:
provide 1 1/4 parking spaces for each room in the facility or negotiate a
contract with the City for provision of parking in a public facility. The
City is presently engaged in negotiations with the developer of the new
Holiday Inn Hotel for provision of parking in the Dubuque Street Ramp.
This ramp was designed and built with the intention that it would
f•-anction as a parking facility for the new hotel and the adjacent Parcel
64-1a, in addition to serving as a public parking facility.
21 600
There is much speculation as to what the parking requirements of the new
hotel will be. Hotel occupancy for the first year of operation is
projected at 528, indicating an average of 50-100 parking spaces needed
per night. Hotel officials, however, have stated that based on estimates
of similar facilities they may need as many as 220 parking spaces per
night. The restaurant will require an additional 70 spaces per night.
Officials at the Iowa City Chamber of Cocmerce estimate the hotel meeting
facilities will eventually attract 1 to 3 meetings per week with an
average size of 100-150 persons. Meeting space is available for as many
as 450 attendees. Meetings are split approximately 50/50 between those
lasting a single day and those lasting 2-3 days. Because of the wide
range in sizes and types of meetings which will be held in the new hotel,
parking needs will also vary widely. However, it is not unreasonable to
assume that a meeting of 100-150 people will generate approximately
50-125 parkers.
A very important consideration in assessing demand for parking is
determining when peak activity times are for the various parking genera-
tors. This is important because often a single parking space can be used
to serve two or more individual land uses without conflict. An existing
example of this in the Iowa City area is the parking lot adjacent to
Carver-Hawkeye Arena on the University of Iowa campus. During the day
this lot is used for University of Iowa employee permit parking. During
the evening and on weekends it is used for athletic and cultural event
parking. In an instance such as this, total parking demand is signifi-
cantly less than the sum of the'individual demand values, and a smaller
parking facility is adequate. Parking demand from the new hotel may
22
i
,•.
allow for some shared parking, chiefly from restaurant patrons. Demand
for parking from restaurant patrons will occur primarily in the evenings
when existing demand is lowest and plenty of excess parking is available.
I
Special events occurring in the evening and on weekends will also allow
for shared parking. Peak demand for people staying at the hotel will
also occur during the evening, but with
patrons permitted to check in
during the afternoon and stay until mon the next day, demand will spill
J
over into present high demand timeperiods. Parking demand for people
attending meetings at the hotel will mirror existing demand patterns.
Parcel 64-1a. It is difficult to estimate parking needs for this site
because the type of development which will ultimately occur is unknown at
this time. Based on a previous development bid for a 75,000 square foot
use on this Parcel, it is not unreasonable to assume a generation factor
Of 1.0 to 2.0 Parking spaces per 1,000 square feet of leasable area, for
a total parking demand of 75 to 150 spaces. A development involving
retail or office use will not facilitate shared
parking at existing
parking facilities since peak demand periods will coincide with existing
high demand periods.
Old library. Current utilization of the old library as office space
by
the University of Iowa has not created a
parking problem. It is diffi-
cult to assess the specific effect this use has had, since the Univer-
sity's move into this facility coincided with the beginning of the fall
academic semester and an increase in Parking demand in general. The City
Parking Superintendent reports that utilization of this building as
office space has not created a noticeable parking problem.
23
W
■
Plans for the old library call for its eventual utilization as commercial
space. A report by the Urban Land Institute indicates that commercial
usage of a building will generate increased parking demand of between 25%
and 100% over the same building used as office space.
Old library parking lot. Although there are presently no specific plans
for the old library parking lot, speculation is that it will be developed
into a commercial, office, or residential use within the next year. This
will have two effects on CBD parking:
1. Displacement of existing parking spaces The Iowa City Parking
Superintendent has indicated that utilization of this 79 -space lot is
presently near 100% of capacity during midday peak demand periods.
The demand for these spaces will remain even if the lot itself is
closed. There does not appear to be adequate rapacity in the
remaining City parking lots to absorb the demand for 79 parking
spaces during midday.
2. Site development. Obviously, any development on this site will be a
parking generator. The type of development - commercial, office,
residential, etc. - will impact on the amount of parking needed. At
the present time there is no indication as to the type of use this
site will receive.
I
Old Capitol Center. With only 19,000 square feet of space remaining to
be leased, Old Capitol Center is not expected to generate a large
i
increase in the demand for CBD parking. Nevertheless, retail land uses
24
are the highest generators of parking, and figures published by the Urban
[and Institute indicate that this remaining 19,000 square feet of
leasable space could increase parking demand by as much as 20-60 spaces
per peak hour. Old Capitol Center officials are aware of the increasing
utilization of the Capitol Street Ramp, and have expressed concern. It
is estimated that roughly 158-208 of the persons shopping at Old Capitol
a
VII.Sumnary
1. Utilization of the Capitol Street Ramp at midday is averaging 758 of
capacity. The Dubuque Street Ramp is averaging over 508. on
selected peak usage days the ramps are presently operating at 95-1008
of capacity. The surface lots are averaging between 758 and 1008 of
capacity. If the level of increased parking demand during the 1983
holiday season is similar to 1982, existing parking facilities will
be operating at near 1008 capacity.
2. Permit parking in all City facilities has been frozen at the present
number to accommodate the recent influx of short-term packers.
3. The cost of operating the Parking Division is running approximately
as budgeted. Revenue received by the Parking Division is currently
sufficient to cover operating costs and debt service costs. Revenue
received is not sufficient to maintain the 358 revenue bond coverage
factor; however, the fund balance in the Parking operations Fund is
more than sufficient for the required coverage.
4. Future CBD development will occur mainly in five specific areas: the
new downtown hotel, parcel 64-1a, the old library, the old library
parking lot, and Old Capitol Center.
5. Parking needs from the five areas of future development cannot be
precisely quantified. Estimates are as follows:
a. 9otel patrons: 50-200 spaces per night.
26 600
b. Hotel restaurant patrons: 70 spaces per night.
c. Hotel meeting attendees: 25-125 spaces needed sporadically;
ocasional peak demand of 350-400 spaces.
d. Hotel employees; 15-50 spaces per day.
e. Parcel 64-1a: 75-150 spaces.
f. Old library: slight increase over existing demand.
g. Old library parking lot: 79 existing spaces displaced; increased
demand depending on size and use of new development.
h. Old Capitol Center: increase of 20-60 spaces per peak hour if all
available space is leased.
Other minor fluctuations in demand will occur as existing CBD
facilities undergo changes in use.
6. Opportunities for shared parking arrangements will not be plentiful,
as peak parking demand times will for the most part coincide with
existing peak demand times. The only major exception is hotel
restaurant patrons who should be able to utilize existing facilities
during the evening low demand period.
27
r
VIII.Conclusions and Recommendations
1. Demand appears to be adequate to justify the construction of two
additional levels onto the Dubuque Street Ramp. This would create 185
additional parking spaces. Estimates indicate a minimum of 300
additional parking spaces will be needed to accommodate new develop-
ment during the next few years, with 700 needed during peak usage
periods, and as many as 1000 during large meetings at the new hotel.
2. If the decision is made by the City Council to proceed with the two
additional levels, City staff should act as quickly as possible to
facilitate design and construction of the addition. This should be
done to minimize disruption and assure completion of the project prior
to the completion of the new hotel.
3. The City's Parking Policy needs to be reviewed and updated. This
policy has not been revised since it was adopted in 1972. Specific
areas which should be given careful consideration are private parking
facilities in the CBD, on -street versus off-street parking, short-term
versus long-term parking, and permit parking.
4. The City should proceed as soon as possible with Phase II of the
Parking Study - a complete assessment of Iowa City CBD parking needs.
Phase II should include an exhaustive assessment of total CBD parking
demand, the on -street parking situation on Iowa Avenue, the current
and future impact of the University of Iowa, the need for a third City
parking rano, and the siting and financing of a third ramp if the need
is substantiated.
28
CIO
NEIGHBORHOOD PARTNERSHIPS IN ACTION
An Assessment of the Neighborhood Housing Services
Program and Other Selected Programs of
Neighborhood Reinvestment
by
Phillip L. Clay
with the assistance of
Robert Howard, Deborah W. Smith, and Joel R. Washington,
Staff; and Roger Ahlbrandt and Robert Dubinsky,
Consultants
Neighborhood Reinvestment Corporation
1700 G Street, N.W.
Washington, D.C. 20552
August 1981
i
ACKNOWLEDGMENTS
As with any endeavor, we owe much to the many individuals
who helped produce this report. We are especially indebted
to members of the Neighborhood Reinvestment staff, includ-
ing the Executive Director, William A. Whiteside, and other
officers who provided support and helped in numerous ways
to make this research possible. We are indebted to Tony
Blackburn and his staff at Urban Systems Research and
Engineering, Inc., who made available data from a survey
of neighborhood residents in their national study; and to
Howard Sumka at the Department of Housing and Urban De-
velopment. We are also indebted to Roger Ahlbrandt and
Robert Dubinsky, who served as consultants on the Apartment
Improvement Program and the Home Ownership Promotion Pro-
gram evaluations, respectively, and to Perry Peck; Ronald
Mitchell and numerous part-time and temporary research
staff hired in the study cities.
The staff is also grateful to the Technical Advisory Com-
mittee and the Partnership Advisory Committee, who provided
advice on the study design and who critiqued the final re-
port.
Of course, the opinions expressed here are those of the au-
thor and do not necessarily reflect the opinions of the
Neighborhood Reinvestment staff or its Board of Directors.
8
TABLE OF CONTENTS
PART I -- BACKGROUND
CHAPTER1 - Introduction .. .................................. 1
The Neighborhood Reinvestment Corporation .............. 1
The Partnership Model .................................. 2
The Role Of Neighborhood Reinvestment .................. 3
The Need for Reinvestment .............................. 4
Research on Neighborhood Reinvestment .................. 5
Conclusions ............................................ 8
CHAPTER 2 - The Neighborhood Reinvestment Approach.......... 13
The NHS Development Process ............................ 13
Discussion of the NHS Model ............................ 18
Other Neighborhood Reinvestment Initiatives............ 19
CHAPTER 3 - Profile of NHS Neighborhoods .................... 23
Characteristics of Housing and Neighborhoods........... 23
Demographic Characteristics of NHS Neighborhoods....... 25
Conclusions ............................................ 32
PART II -- AN EVALUATION OF THE NHS PROGRAM
CHAPTER 4 - The NHS Evaluation Methodology .................. 35
The NHS Evaluation ..................................... 37
Other Neighborhood Reinvestment Programs ............... 40
4"6 c.2
i
1
CHAPTER 5 - Analysis of Reinvestment in NHS Neighborhoods..., 45
I
Incidence of Reinvestment ............................... 46
Types and Costs of Improvements ......................... 47
Code Inspection, Enforcement, and Reinvestment.......... 55
Real Estate Trends...................................... 5$ j
The Difficult Cases ..................................... 63
Residential Lending Activity ............................ 64
The Revolving Loan Fund ................................. 68
City-State Loan Programs ............................
••• 73
Capital Improvements.................................... 74
Total Reinvestment...................................... 77
Conclusions ............................ ,,,
78
CHAPTER 6 - The Role of Residents in NHS Programs............ 81
The Outreach Process................... 82
Resident Counseling and Referral Services ............... 82
Residents as Clients.................... 85
Residents as Citizen Participants ....................... 86
NHS and Other Neighborhood Organizations................ 88
Resident Attitudes...................................... g0
Displacement............................................ 91
Conclusions ............................ 92
CHAPTER 7 - The Role of Financial Institutions in the NHS
Program .................................................... 95
Participation........................................... 97 '
Nonfinancial Contributions to the NHS Program ........... 101
Dropouts and New Recruits...............................102
Changes in Perceptions..................................103
Benefits of NHS Participation ...........................106
■
CHAPTER 7 - The Role of Financial Institutions in the NHS
Program (Continued)
Spillover..............................................108
Financial Institution Evaluation of the NHS Programs... 109
Conclusions............................................110
CHAPTER 8 - The Role of Local Governments in NHS Programs... 113
Participation by the City..............................114
The Issue of Substitution..............................118
Recent Changes in City Strategy ........................119
Expansion..............................................121
Role of Neighborhood Reinvestment ......................122
Conclusions............................................123
CHAPTER 9 - NHS in Small- and Medium -Size Cities ............ 127
Extent of Need and NHS Penetration .....................127
Small- and Medium -Size Cities in the Metropolitan
Context..............................................128
The Roles of Key Actors................................130
The Lending Environment................................133
Support Services and Technical Assistance..............134
Issues for Neighborhood Reinvestment ...................134
Conclusions............................................137
CHAPTER 10 - NHS as a Delivery Mechanism For
Contract Services.........................................141
Extent of Other Services...............................143
The Special Case of Section 8 ..........................145
Impact of Service Provision on NHS Budgets.............149
Evaluation of Interest Served by Contract and
Pass -Through Arrangements ............................149
Comparative Costs of Service Delivered by NHS and
Other Programs.......................................151
4/ oZ
CHAPTER 11 - NHS as an Initiator and Testing Ground
for New Ideas............................................155
NPP Selection and Monitoring Process..................157
NPPProject Descriptions..............................160
Conclusions...........................................167
CHAPTER 12 - Summary of NHS Impacts and Limitations ........ 169
Achievements of the NHS Program .......................169
Criticisms of the NHS Model ...........................171
Neighborhood Reinvestment Support Activities .......... 174
Neighborhood Housing Services of America, Inc......... 182
Conclusions...........................................183
PART.III -- THE APARTMENT IMPROVEMENT PROGRAM
CHAPTER 13 - Reinvestment in Multifamily Housing ..........187
The Multifamily Housing Market ........................187
Building Management...................................198
Tenants...............................................198
CityGovernment.......................................200
Conclusions...........................................203
CHAPTER 14 - AIP Activities and Impacts....................207
The Developmental Process.............................209
Operation of the Program..............................214
Program Results Through 1979 .......................... 223
Conclusions...........................................227
/-/ z
a
4-"�Cz-
CHAPTER 15 - An Assessment of the AIP Experience
........... 229
Adaptability of the Model..
••229
AIPand NHS in Combination
............................ 231
Preventing Decline....................................233
Suitable Buildings..
..••..•••234
Costs and Benefits..
........ .234
Tenants Served
........................................235
The Role of Neighborhood Reinvestment........
........ .236
Conclusions.....
"..................... • 236
t
PART IV -- THE HOME OWNERSHIP PROMOTION PROGRAM
t
CHAPTER 16 - An Overview: Central City Homeownership
and Revitalization Trends........
...................239
The Decline of Central Cities .........................240
°
Homeownership Trends in Central Cities......... ......,241
The Neighborhood Change Process .......................245
t
Central City Revitalization Trends.........
i
........ ,248
Government Revitalization Initiatives
.................252
The HOP Strategy .............
0................
........................ 253
The Scope of the HOP Study ................ .255
CHAPTER 17 - The Home Ownership Promotion Program Model....261
jPrerequisites
of HOP..................................262
iCharacteristics
of the HOP ............................263
The Role of Neighborhood Reinvestment .................266
The Baltimore HOP
.....................................266
The Philadelphia HOP
....................... ...........288
4-"�Cz-
CHAPTER 18 - The Home Ownership Promotion Program in 317
a National Context......................................
Applicability of the HOP Model ........................317
Relationship Between the HOP and NHS..................320
Program Beneficiaries and Impact on Structures ........ 321
Displacement..........................................323
Cost Effectiveness....................................324
The Role of Neighborhood Reinvestment .................325
Conclusions...........................................326
PART V -- REMAINING CHALLENGES FOR NEIGHBORHOOD REINVESTMENT
CHAPTER 19 - Neighborhood Reinvestment: The Job
Remaining............................0006.............!..329
Neighborhoods in Need of Reinvestment .................329
Expanding the Range of Neighborhoods ..................332
Information Dissemination and Technical Assistance.... 333
Coordination with Federal Programs and Private ,334
Sector Activities ..................................
The Future of Mature NHS Programs .....................334
CHAPTER 20 - Expanding and Strengthening the Base of
Support for Reinvestment.................................339
Expanding the Reinvestment Base.......................339
Strengthening the Reinvestment Partnership ............ 341
Conclusions...........................................345
//6 z
CHAPTER 21 — Emerging Issues for Neighborhood
Reinvestment.............................................347
Fund Raising..........................................347
Serving Small Cities and Rural Communities ............ 348
Displacement..........................................349
II
i
iOther Issues ..........................................
Linkages to Commercial Reinvestment ...................351
e
A Need for Reinvestment Professionals .................352
CHAPTER22 — Conclusion....................................355
APPENDIX A
INTRODUCTION
American cities entered the 1970s with a great deal of
gloom. Dire predictions of urban collapse wewere inre widespread,
continued,eand marketsdisarray
dcouldanot be dcontained fligget
spite these events, there was the realization that central
cities would remain home for one-third of the American
includiateuincome�familiesng Go ernmenty Of urban low- and moder-
but often underfunded and ill-designed, well intentioned
i these g were no match for
powerful social and economic trends. �
The emergence of the
ing
Program and other reinvest ment otoolsous as a a Services (NHS)
ment in the mid-1970s were welcomed bnational residents mode-
neighborhoods, by financial Institutions under of oldunderer
J invest, and by local governments forced b Pressure to j
ne
ism
to come up with tools to rehabilitate tolderwfederal—
neighbor- i
hoods. Under the leadership of the Urban Reinvestment
Task Force (renamed the Neighborhood Reinvestment Corpora-
; tion in 1978 by congressional charter), NHS and the other
Programs they developedgare significant for a number of
reasons. They suggested a commitment on the part of
local partners (residents, financial institutions, and lo-
cal government) to improve the quality of life for cur-
educational
rent residents in declining neighborhoods, the use of an
educational process (rather than bureaucratic fiat in regu-
lation) to build neighborhood institutions, and the devel-
opment of local partnerships to bring to bear the resources
Of local government and the business community on neighbor-
hoods, and to do all this without reliance on substantial
government subsidy. These actors independently, and some -
times simultaneously, developed a host of other reinvest-
meet tools which expanded even further the range
neighborhood development activity. of local
Although these programs were no panacea and were accom-
panied by other initiatives by local governments, founda-
tions, and HUD, they raised interesting questions about
the future of older urban neighborhoods and how urban
Policy would have to deal with hitherto unsolved problems.
This report assesses that experience and attempts to draw
lessons about public/private initiatives represented in
Neighborhood Reinvestment's programs. This report is not a
traditional quantitative evaluation of narrowly defined
outputs; rather, it attempts to assess a range of issues
and concerns faced by each partner going into neighborhood
revitalization. It looks at the activities carried out in
the neighborhoods, their effects, and the ability of the
participants to respond to changing needs and issues.
Although this report can be viewed as an evaluation, more
importantly it is documentation of a story about how public
and private actors have worked together to address urgent
neighborhood needs. Seen in that light, it is hoped this
report will help in the development of future reinvestment
activities.
'4zl0 Z
PART I --BACKGROUND
CHAPTER 1
INTRODUCTION
Recent neighborhood revitalization efforts have followed
nearly three decades of inner-city decline. Although
"neighborhood reinvestment" in all its manifestations has
not meant wholesale reversal of decline, at least in
selected locations there have been marked changes. Two
types of neighborhood revitalization have occurred: the
revitalization that takes place primarily by "outside!'
middle-class purchasers, commonly referred to as "gentri-
fication," and the reinvestment made by long-term residents
of urban neighborhoods. Gentrification involves middle-
class buyers making substantial investments in rehabilita-
tion and is generally associated with rapid increases in
prices and rents and some displacement. The mass media
have directed much attention toward this type of reinvest-
ment. Rehabilitation by long-term residents is more modest
r in scale and more generalized in a neighborhood; this type
of revitalization usually does not involve substantial
displacement.
This report assesses the reinvestment activity generated
by the Neighborhood Reinvestment Corporation. Neighbor-
hood Reinvestment is not responsible for all efforts to
rehabilitate housing in older neighborhoods by existing
residents, nor is it responsible for all reinvestment
activity generated locally by financial institutions, city
programs, or neighborhood organizations; however, its ac-
tivities do form a model that has been replicated in more
than 100 neighborhoods across the country. This model,
the Neighborhood Housing Services (NHS) program, has been
widely used and is a model for nongovernmental, locally
generated reinvestment activity in low- and moderate -income
areas.
THE NEIGHBORHOOD REINVESTMENT CORPORATION
The Neighborhood Reinvestment Corporation Act of 19781
established a congressionally chartered public corporation
to develop neighborhood rehabilitation programs and to
identify, test, and replicate local private partnerships
for neighborhood preservation. The Neighborhood Reinvest-
ment Corporation (hereafter referred to as Neighborhood
Reinvestment) succeeded the Urban Reinvestment Task Force,
which had been created by interagency agreement between
the Federal Home Loan Bank Board and the Department of
Housing and Urban Development (HUD). Other financial reg-
ulatory agencies (including the Federal Reserve Board,
the Comptroller of the Currency, the Federal Deposit In-
surance Corporation, and the National Credit Union Admin-
istration) joined the Task Force later. An interagency
agreement provided organization and funding for the Task
Force from 1974 to 1979, when Neighborhood Reinvestment
formally started its work.
Unlike other federally established bodies, Neighborhood
Reinvestment does not set up and manage neighborhood ac-
tivities, its primary role is in the developmental process
and in educational programs leading to the establishment
of local Neighborhood Housing Services (NHS) programs.
NHS programs are incorporated as private, nonprofit or-
ganizations, and each is responsible for raising funds,
establishing program priorities, and hiring staff members.
Neighborhood Reinvestment is available to provide program
support, training, and technical assistance on request.
Neighborhood Reinvestment also makes a $50,000 contribution
to the revolving loan fund. This is usually about one-
fifth of the fund's initial capitalization, the rest coming
from CDBG and private sources.
THE PARTNERSHIP MODEL
Local NHS partnerships, as established by Neighborhood Re-
investment, are designed to bring together the various in-
terests that directly affect neighborhood conditions and
that are essential for revitalization. Typically included
in this partnership are local residents (sometimes acting
through existing neighborhood organizations); local gov-
ernment officials; local financial institution executives;
and, in some cases, local corporations, foundations, and
other nonprofit or charitable organizations.
To establish these local organizations, Neighborhood Re-
investment provides organizational and educational ser-
vices through a workshop process, during which various
actors identify their interests in the neighborhood, un-
derstand the roles and interests of the other actors, and
identify activities in which they, out of self-interest,
can participate --activities that will have the effect of
generating private reinvestment. In addition, local public
interest is generated to complement this private activity.
The initiative for local action can come from a variety
of sources. In some cases, interest comes from local
government officials looking for ways to promote rein-
vestment and redevelopment in particular neighborhoods.
/-f (O,2__
In other cases, local financial institutions may be look-
ing for ways to take affirmative action to meet their
credit and lending responsibilities in the neighborhood,
or residents may be looking for an organizational medium
through which to organize their actions. Whatever the
source of initiative, local NHS programs typically at-
tempt to change the image of a neighborhood in the minds
of the key actors, to obtain commitments for specific
actions that would lead to reinvestment, and to identify
priorities for action --all in the context of a specifi-
cally defined set of boundaries referred to as "the NHS
neighborhood."
Although this partnership model has received much atten-
tion, "partnerships" are neither new nor original. Rede-
velopment activity in American cities has typically in-
volved the private sector; NHS, however, joins elements of
the private sector with individuals, neighborhood organi-
zations, and the city in a partnership which is qualita-
tively different from programs which are strictly resident
organizations or city agencies. The partnership represents
an effort to marry the interests of three groups.2
THE ROLE OF NEIGHBORHOOD REINVESTMENT
Neighborhood Reinvestment's purpose is not to manage ac-
tivities but to manage the process by which organizations
(NHSs) are established. Neighborhood Reinvestment pro-
vides initial resources for meeting lending needs and
offers organizational and developmental experience gained
from working with cities nationwide. This role contrasts
substantially with that of federal agencies, which custom-
arily make grants of categorical assistance, often speci-
fying in advance the organizational parameters as well as
specific areas in which a program must operate. Typical-
ly, federal programs have not required formal cooperation
with private industry, especially not to the point of
mandating that private organizations support operating and
program costs of local organizations.
Another contrasting feature of Neighborhood Reinvestment's
activities is the NHS requirement for simultaneous in-
volvement of several participants. This criterion re-
sponds to the "prisoner's dilemma," which occurs if the
actors determine that their best interests do not require
a commitment to reinvestment because they cannot be cer-
tain that other actors will make similar commitments. They
opt for private gain because no collective gain is obvious
(although it may be present). By making a simultaneous
investment (based on a communication process by which
collective interests are identified), each actor incurs
some costs, but investors also have some assurance that the
costs will, in fact, generate a return.
The central output of Neighborhood Reinvestment participa-
tion is the creation of an organization through an educa-
tional process that represents the simultaneous
to resources for reinvestment commitment
on the part of the key
actors. It is against this standard that Neighborhood
Reinvestment's activities can be judged. The success of
individual programs depends largely on the local condi-
tions, the resources committed to the project, and the
degree of success in meeting locally identified needs.
This evaluation thus attempts to assess reinvestment activ-
ivity from two viewpoints: First, how effectively was the
partnership constructed? Second, how effective has the
partnership model been in changing the behavior of each
actor with respect to a commitment to improve and conserve
urban neighborhoods? This is not a typical evaluation of
the extent of physical change in NHS neighborhoods.
THE NEED FOR REINVESTMENT
The model, as developed and replicated by Neighborhood
Reinvestment, was designed to meet a fairly specific need
and to take advantage of existing opportunities. The need
identified sto increase
neighborhoodswhere deteriorat deterioration tion o
begun in housing
1960s
and early 1970s but had yet to reach a crisis stage --as
reflected by widespread abandonment, flight of resident
owners, and physical decay. Neighborhoods that were se-
lected had to meet several common criteria. First, struc-
tures had to be about 50 percent owner -occupied, primarily
one- to four -family buildings, a substantial number of
which showed clear evidence of deterioration. Second,
existing opportunities --a base on which NHS could build --
included resident interest and capacity to provide leader-
ship and support for reinvestment. Finally, a median in-
come of about 80 percent of the central city median income
was viewed as a reasonable indication that many of the
residents would be able to make some investment in their
own properties.3
In subsequent years, Neighborhood Reinvestment recognized
that many neighborhood situations reflected conditions not
addressed by the initial NHS model. Some neighborhoods
contained large apartment buildings or had a low owner -
occupancy (a dominance of absentee owners), or had deterio-
rating commercial strips. Other areas suffered from crime,
unemployment, or other serious problems that crippled the
ability of residents themselves to respond and also limited
the willingness of outsiders to help the neighborhood
)l" �122_
meet its needs. More recent activities of Neighborhood
Reinvestment have focused on exploring mechanisms to deal
with these types of communities.
RESEARCH ON NEIGHBORHOOD REINVESTMENT
There has yet to be a definitive study of Neighborhood
Reinvestment or of the NHS model, partly because much of
the activity is so recent. However, Urban Systems Re-
search and Engineering, Inc., under contract to HUD, is
currently studying the program.4
Even though studies have not yet been completed, some
related efforts have established several points that are
important in setting the context for this evaluation:
• There are two types of reinvestment --that gen-
erated by outsiders, mainly middle-income resi-
dents) and that generated by long-term
residents.5
• There has been a substantial increase in the pace
of reinvestment. Thomas Black of the Urban Land
Institute showed in a 1975 survey of cities with
at least 150,000 population that 48 percept had
experienced some private market renovation. bb When
the survey was repeated in 1979, the percentage
had increased to 86 percent of the cities, and
the extent (as measured by the number of units
renovated) had increased substantially as well --
from an average of 441 units per city in 1975
to 1,200 in 1979•
• During the 1960s and 19708, there was a substan-
tial amount of "redlining" (the systematic denial
of conventional credit to specific areas because
of perceived higher risks) by insurance companies
and financial institutions./ Although there is
disagreement in the literature as to whether this
practice was geographic or racial in nature, it
is clear that since the mid -60s the percentage of
conventional loans going to urban neighborhoods
has declined, that more and more of the financing
in some neighborhoods has been nonconventional
(by the owner or through land contracts) or insur-
ed financing through the Federal Housing Adminis-
tration (FHA) or the Veterans Administration (VA),
and that conventional homeowners' insurance and
other property and casualty insurance became dif-
ficult to obtain. One of the goals of Neighbor-
hood Reinvestment was to increase lending from
5
conventional sources since it was felt that this
type of lending was evidence of a real commitment
to the neighborhood. Conventional loans are of-
ten less expensive, and there was concern that
instances of FHA abuse would multiply.
Reinvestment activity, including the conversion
of rental units into condominiums, has generated
displacement in selected neighborhoods. Debate
continues as to whether such displacement is vol-
untary or involuntary, the extent to which it is
a national problem, and who is actually respon-
sible.i It is certain, however, that some low -
and moderate -income families have been forced to
leave certain neighborhoods because reinvestment
has changed the basic economics of owning or rent-
ing housing in the particular neighborhood. There
is evidence of substantial conversion of rental
units into condominiums, especially in large cit-
ies such as Chicago, Boston, San Francisco, Den-
ver, New York, and Washington, D.C. Again, data
are inadequate, but the conversion phenomena gen-
erally reflect the tight cost -revenue squeeze in
rental housing, which in turn causes the conver-
sion of units to condominiums in some areas and
disinvestment in rental housing in other areas.
The supply of rental housing is not increasing,
and the opportunities for low- and moderate -income
families to obtain decent rental housing are not
keeping pace with the demand. Vacancy rates,
which in the early 1970s ranged from 6 to 11
percent in urban areas, now typically run under
5 percent. In some cities the vacancy rate is
effectively zero.9
The media have called a great deal of attention
to the "back -to -the -city" phenomenon, but there
is no evidence that this movement is significant.
There is evidence, however, of a rediscovery of
certain neighborhoods that offer attractive hous-
ing bargains. This demand, when combined with
home buying by the "baby boom" generation and the
decline in rental housing, tightens the market
and increases the competition for scarce units in
older neighborhoods.10
Although reinvestment is a widespread phenomenon,
disinvestment still occurs, especially in rental
housing.11 During the 1970s, even as reinvest-
ment and the associated escalation in prices pro-
ceeded, an estimated 250,000 units per year were
abandoned in major cities.
�G-2-
• There has been a perceptible change in attitude
toward city living by some urban residents. Se-
lected urban neighborhoods are now viewed as at-
tractive places to live and worthy of substantial
social and financial investment. This attitude
has been promoted by developers of middle-income
housing and by organizations of long-term resi-
dents seeking to build a base for reinvestment
activity.
• Local governments are becoming more interested
in neighborhoods and are targeting their avail-
able resources, mainly Community Development Block
Grant funds, into commercial and physical rede-
velopment and public service improvements.l2
As research continues and new trends become evident, some
additional factors are important to an understanding of
the context within which reinvestment takes place. For
1 example, between 1975 and 1990 the postwar baby boom popu-
lation will reach household formation age and will gen-
erate a substantial increase in the demand for housing.
$ During the first five years of this period, new construe -
tion has failed to keep pace with the increased demand,
and costs of capital, land, and other construction factors
t have risen substantially. In 1970, the average new house
cost
$24,000 and could be purchased by half the popula-
tion .i3
In 1980, a new house (which has become increas-
ingly harder to find) cost an average of more than $70,000
and could be purchased by only 15 percent of the popula-
tion.lu The consequences of these increases both in de-
mand and in cost are greater competition for available
housing and a heightened search for neighborhoods, in -
eluding urban neighborhoods, with affordable housing.
One consequence of this housing demand as it relates to re-
investment is a growing interest by residents of low- and
moderate -income neighborhoods to preserve their own housing
resources against competition. Families that might have
moved to other residential areas to increase their housing
quality in the 1960s or early 1970s now look to rehabili-
tation and renovation. In terms of reinvestment, this
attitude represents both an opportunity and a problem.
The opportunity is the greater utilization of housing; the
problem is that a greater interest in rehabilitation has
meant that more people are willing to compete for housing
in older neighborhoods, therefore making it more difficult
to ensure that benefits of revitalization go to those
who most need them.
These trends, even where research debate continues, strongly
suggest that reinvestment is an important phenomenon for
y,/�
the 1980s. All levels of government and the private sector
will have an interest in what reinvestment activity has
taken place, how the process has been managed, what the
roles of key actors are in managing that process, and how
trends in other sectors of the economy will affect housing
reinvestment in the future. The assessment that follows
has been influenced by all of these trends.
CONCLUSIONS
The mandate of Neighborhood Reinvestment has been spelled
out in congressional legislation:15
• Establish Neighborhood Housing Services programs
in neighborhoods throughout the United States,
monitor their progress, and provide them with
grants and technical assistance.
• Identify, monitor, evaluate, and provide grants
and technical assistance to selected neighborhood
preservation projects which show promise as mecha-
nisms for reversing neighborhood decline and im-
proving the quality of neighborhood life.
• Experimentally replicate neighborhood preserva-
tion projects which have demonstrated success,
and after creating reliable developmental pro-
cesses, bring the new programs to neighborhoods
throughout the United States which in the judgment
of Neighborhood Reinvestment can benefit there-
from, by providing assistance in organizing pro-
grams, providing grants in partial support of
program costs, and providing technical assistance
to ongoing programs.
This report will assess how well Neighborhood Reinvest-
ment activities have been directed toward meeting these
goals, the impact of the program on attitudes and behav-
ior of key actors, and the extent to which the experi-
ence has been cumulative in affecting subsequent activi-
ties and generating new initiatives. Part 1 describes
the development process and profiles the programs started
by Neighborhood Reinvestment. The NHS program is dis-
cussed, along with the programs developed later to deal
with additional neighborhood problems. Part II assesses
the impact of the NHS program on various actors and eval-
uates the program, both as a delivery system and as a
medium for testing new ideas on reinvestment. Data for
this section comes from extensive case studies of twelve
NHS programs, plus survey and secondary data. Part III
1/' G'
Notes
1.Housing and Community Development Amendments of 1978,
uctooer 197 is, y2 USC 101.
2. Typical renewal programs focused on the central busi-
ness district and large-scale clearance programs.
Partnerships typically involved an independent munici-
pal authority and developers; citizens had only review
power. Few renewal projects were directed toward im-
proving existing housing for long-term residents in
urban neighborhoods.
3• Although the criteria appear to be fixed, they are,
in fact, flexible and the result of changes over
time. For example, the criteria have come to in-
clude neighborhoods that have more severe conditions
than the neighborhoods originally selected in 1974
and 1975. Severe conditions here reflect both the
condition of the housing and the limited resources
of residents. There is also some flexibility that
takes account of local conditions, such as a lower
homeowner rate citywide that would, for example, con-
trast northeastern cities with many midwestern cities.
4. The Urban Systems Research and Engineering, Inc.,
study was begun in 1978 and is expected to be com-
pleted in the spring of 1981. It is analyzing the
NHS program in more than three dozen cities, the
development of the Urban Reinvestment Task Force, and
the emergence of Neighborhood Reinvestment. Prelim-
inary reports from the study are referred to in this
report, and the data tapes for the residents' survey
in 1979 and the windshield survey in 1978 are used and
referred to here.
5. See Phillip L. Clay, Nei hborhood Renewal (Lexington,
Mass.: D. C. Heath Books, 1979
6. See J. Thomas Black, "Private Market Housing Reno-
vation in Central Cities and Urban Land Institute
Survey," in Back to the City: Issues in Nei hborhood
Renovation, eds. Shirley Laska and Daphne Spain New
York: Pergamon, 1980), pp. 3-12.
T. See Robert Schafer and Helen Ladd, E uaI Credit 0 -
portunity in Mortgage Lending (Cambridge, Mass.: MIT
Harvard Joint Center for Urban Studies, 1980).
10
.�/ 407,
8. See National Urban Coalition, Displacement: Cit
Nei hhorhoods in Transition (Washington, D.C.: National
Urban Coalition) July 197 . See also U.S. Department
of Housing and Urban Development, Displacement Report
(Washington, D.C.: HUD, Office of Policy Development
and Research, 1979), and George Grier and Eunice Grier,
"Urban Displacement: A Reconnaissance," in Back to
the City: Issues in Nei hborhood Renovation, eds.
Shirley Laska and Daphne Spain New York: Pergamon,
1980), PP. 52-58.
9. U.S. General Accounting Office, Rental Housin A
National Problem that Needs Attention Washington, D.C.
U.S. Government Accounting Office, 1979).
10. For a discussion of the problem and its meaning for
urban housing markets, see Department of Housing and
Urban Development, The President's National Urban Pol-
icy Report (Washington, D.C.: Department of Housing
and Urban Development, 1980).
11. See Franklin James, Back to the Cit An Appraisal of
Housin Investment and Po ulation Chane in Urban
America, Urban Institute Working Paper 0241-01 Wash-
ington, D.C.: Urban Institute, June 1977).
12. See Neighborhood Development Agency, City of Boston,
"Dividing the Pie: Resource Allocation to Urban Neigh-
borhoods," (Report prepared for the Department of Hous-
ing and Urban Development, November 1980), chaps. 2, 5.
13. See John Pitkin and George Masnick, Projections on
Housin Consum tion in the United States: 19 0 to
the Year 2000 Cambridge, Mass.: MIT Harvard Joint Cen-
ter for Urban Studies, 1980), pp. 71-72.
14. For a general discussion, see Arthur Solomon and
Bernard Frieden, America's Housin Nee: 1975-1985
(Cambridge, Mass.: MIT Harvard Joint Centedsr for Urban
Studies, 1978).
15. Housing and Community Development Amendments of 1978.
11
y6�
CHAPTER 2
THE NEIGHBORHOOD REINVESTMENT APPROACH
Neighborhood Reinvestment develops local neighborhood re-
vitalization partnerships among community residents, local
financial institution executives, and local government of-
ficials. This development process is fundamentally an
educational and communications program in which key local
actors instrumental to the goal of improving neighborhoods
are brought together to form a local, self-governing, non-
governmental, community-based organization.
In a traditional community -organizing program, specific
resident interests (and sometimes the interests of pro-
fessionals) combine to arouse, force, and inspire gov-
ernment or institutions to provide assistance or to make
what is often a marginal change in policy or processes
related to the community. In this approach, the methods
are typically confrontational, and the exercise of moral
persuasion rather than self-interest prevails. A redis-
tribution of resources and/or power is sought.
The Neighborhood Reinvestment approach contrasts sharply
i with the traditional approach to urban assistance; its
goal is to change attitudes and to create working partner-
ships for neighborhood improvement among people who are
not asked to compromise self-interest. Government trans-
fer is minimized, as is bureaucratic limitation. The
organizing process seeks to break down barriers rather
than highlight them, and residents (not professionals)
k direct program priorities. Regulatory power (mainly in
j the form of code enforcement) is available for selective
use, and moral or ideological positions are muted.
THE NHS DEVELOPMENT PROCESS
The Neighborhood Housing Services (NHS) development pro-
cess can be summarized by listing the commitments the
program is designed to elicit from each of the three
partners --residents, financial institution executives, and
local government officials:
Community resident involvement. Resident in-
volvement is the most important commitment of
the NHS partnership; the residents must want,
13
and be willing to work for, the improvement of
the neighborhood. Resident members of the board
of directors and committees work with local gov-
ernment officials in the neighborhood, explain-
ing the purpose of housing inspections and how
the NHS staff can help. A major part of the
residents' role in the NHS partnership is to help
create a positive climate for improvement in the
neighborhood and to gain acceptance of the NHS
program and its goals by the entire neighborhood.
Residents actively serve on all NHS boards and
committees. And, although no one of the three
partners controls NHS, residents constitute a ma-
jority on the NHS board of directors.
Financial institution involvement. Financial in-
stitution executives invest in the neighborhood by
making loans at market rates to all homeowners who
meet normal underwriting criteria. Although fi-
nancial institutions are not asked to make loans
that would be poor credit risks, in their apprais-
al process they are asked to consider that through
NHS there is now a coordinated reinvestment effort
to improve the neighborhood. Financial institu-
tions also support the NHS operating budget
through tax-deductible contributions. Active
service on the NHS board of directors is also an
essential part of their role.
Local government involvement. The local govern-
ment must be committed to the NHS program. This
commitment usually takes the form of assistance
in developing and implementing the program; in-
creased capital improvements and cityservices in
the selected NHS neighborhoods; and• the estab-
lishment of a sensitive and systematic housing in-
spection program to enhance and maintain property
values.l Local government representatives serve
on the boards of directors of several NHS pro-
grams.
The development process evolved over several years as ex-
perience was gained in creating NHS programs. As part of
this study, the process was studied in a number of programs
going through development in 1979 to determine how it was
structured and what each piece was designed to do. The
twelve sample cities reviewed in this study used several
developmental processes as they emerged at different points
in time.
14
W ,2'
The workshop process began to crystalize during the devel-
opment of the Oakland, Calif., program, the third city in
which an NHS was developed. It was refined during program
development in Cincinnati and Dallas. In Jamaica, N.Y., a
variant was experimented with
whichdid not worked with utilize
Neighbora
local coordinator; a city Official
hood Reinvestment staff to develop the program. The other
programs in the sample were developed using the workshop
process outlined here.
within
city by
pro
en
pplica
ti nxto Neighborhoodram isiReinvestment. tiated aThevapplicationausually
comes from the city but occasionally comes
mes from
financial
and, less frequently,
istconductedntotions, or determine therpotential for othelpublicsprit
vate partnership in the city (as reflected in the willing-
ness of key representatives of the actors to consider
working together), the availability olocal
neighborhoods
resources, and the existence
ofou appropriate family, owner -occupied
(which have mainly
structures). If these elements are present, Neighborhood
Reinvestment and an appropriate local government unit enter
into a developmental agreement, marking the beginning of
active program development. The local government's first
role is to defray the costsof The processdevelopment
press,
i currently $35,000 to $50,000.
the
following steps:
1, Hire a local coordinator.2 An important first
step in the development process is to hire a
local person as y Neigcoo Ihborhood od rdinator. This Reinvestmentper-
son is trained by g
both programmatic and housing issues. For most
i local coordinators, this approach to community
organizing activity is new and requires exten-
sive training and supervision by senior Neigh -
particularly necessary staff inthe beareas Training
i housing
and finance.
2.
coordinatorsLocal re expected
day-to-dayactivitiesto o perform
organize the program.
coordinatorThe
fieldrepresentative meets with Reinvestmenthborhood
ith variouscommunity,
governmental, and institutional leaders to enlist
their aid in the developmental process.
a luncheon for financial insc]
s, A luncheon is held for sena
oral financial institutions to
15
ztion execu-
executives
discuss the
y6 2-
NHS concept. This luncheon provides an oppor-
tunity to introduce banks, savings and loan as-
sociations, and federally chartered credit unions
to NHS. Invitations to the luncheon are arranged
through the district offices of the financial
regulatory agencies. Representatives from these
agencies attend the luncheon and take an active
role in encouraging adequate representation from
local financial institutions.
The only support solicited at this luncheon is for
financial institution executives to be willing to
participate in a workshop (Workshop I) to deter-
mine whether or not the NHS can work successfully
in their city. As a follow-up to the luncheon,
the local coordinator calls each financial insti-
tution executive to ask attendance by that person
or a representative at Workshop I.
3• Conduct Workshop I. After the initial efforts are
completed and 100 to 300 key persons have been
contacted, the intensive aspect of the process
begins, in the form of a series of workshops.
Staff and board members representing all three
partners from an operating NHS act as resource
persons at Workshop I. These leaders present
the NHS concept, explain the partnership roles,
and discuss potential problem areas. A key ele-
ment pervading the workshop is a communications
process that seeks to break down prejudices (from
caricatured conceptions of other actors or of the
neighborhood). The presence of NHS people from
an operating program in another city helps work-
shop participants look at the experience in an-
other neighborhood and lets them talk about their
own goals relative to how the NHS program could
work. Discussions in the workshop seek the common
ground on which each partnership group can bene-
fit, and none are required to sacrifice basic
self-interest. Finally, the communications pro-
cess helps leadership capabilities surface and
creates the personal and group dynamics essential
to the success of an organization composed of
such disparate interests. Normally, Workshop I
ends with a group decision to proceed with NHS
development. Several committees (e.g., personnel,
fund raising, site selection, community relations)
are formed.
Perform committee work. All committees formed at
Workshop I have specific goals; these are related
16
to selecting neighborhoods, identifying financial
resources, involving community residents and iden—
tifying public or capital improvement needs.
Each committee has its own timetable, and the
local coordinator will help them perform their
functions.
Conduct Workshop II. The objective of the second
workshop is for the site selection committee to
recommend the most appropriate site to demonstrate
the NHS concept. (Occasionally in the development
process, a neighborhood may have been preselected,
especially if a neighborhood group was active in
initiating the NHS program or where some locally
defined strategy preidentified a neighborhood as
appropriate for NHS.) After the neighborhood is
selected by the workshop participants, the other
committees can be more specific in their tasks,
and residents from the selected neighborhood(s)
can be drawn into the process. Depending on the
amount of material to be covered and the amount
of controversy anticipated, this workshop may last
from a couple of hours to a full day.
6. Conduct Workshop III. This workshop follows sev—
eral weeks of contact work in the selected neigh—
borhood. At this workshop, potential resident
leaders from the target areas are invited to
visit an operating NHS program to see firsthand
the impact of NHS in another neighborhood. This
workshop introduces residents of the prospective
NHS neighborhood to the NHS concept, gets their
reactions to the feasibility of such a program in
their neighborhood, and allows resident leadership
in the community to surface. Normally, at this
time, there is an effort to shift the role of
identifying neighborhood leadership to residents
who are usually ready to participate on all commit—
tees and to proceed toward incorporation.
%. Conduct Workshop IV. At this workshop, partici—
pants discuss and agree on the articles and by—
laws of the proposed corporation and bring all
members up to date on the progress of the on—
going work. By this time, potential staff mem—
bers may have been identified and may be at the
interview stage. The operating budget should have
been raised, and progress should have been made
in securing commitments to a revolving loan fund.
At this meeting, the nominating committee can be
1%
411Z12__
established to develop slates for a board of
directors.
8. Conduct first meeting of the corporation. The
board of directors is elected. Committees of the
board may be selected to provide essential func-
tions to the board. Then the local program moves
toward operation. The role of the local coordi-
nator ends and technical staff from Neighborhood
Reinvestment help the new staff members organize,
and the new executive director and the new board
members establish operating procedures and learn
their responsibilities. Although it provides no
continuing direct assistance after this point,
Neighborhood Reinvestment support personnel remain
available to help program leaders.
DISCUSSION OF THE NHS MODEL
The model described here is the "normal" or "ideal" way
the development process works in a community and, as men-
tioned earlier, represents several years of institutional
learning and refinement on the part of Neighborhood Rein-
vestment. Several points should be made, however, regard-
ing the model's implementation. First, the process is
time consuming. It ordinarily takes from nine to twelve
months, but in any particular city it can take even longer,
especially if the initial organizational activities develop
slowly.
Second, the model is flexible. In most cases, a neighbor-
hood is not preselected, but in others it is. There are
also cases where residents are represented by existing
neighborhood organizations rather than by individuals. In
some cases the city is an active partner in the organiza-
tion, and in others the city is a more limited partner --it
makes some commitments but is not actively involved in the
program's day-to-day goal setting or management.
Third, the development efforts amount to $35,000 to $50,000
in direct local costs, but they can cost at least twice
that in supervisory time and direct costs for Neighborhood
Reinvestment staff. Neighborhood Reinvestment also pro-
vides a training program for local program staff and may
provide other support services after the program begins
operation.
Finally, the developmental process responds to local is-
sues. For example, the process may take longer in small
cities because of the difficulty in fund raising or be-
cause of the lack of availability of local personnel for
gla z
organizing activities. In other cities, issues such as
code enforcement procedures, insurance availability, and
different program priorities among the actors must be
resolved.
OTHER NEIGHBORHOOD REINVESTMENT INITIATIVES
As noted in chapter 1, there are other problems in urban
neighborhoods than those addressed by the original NHS
model. These problems include those arising from the
presenceof large apartment buildings, low rates of resi-
dent homeownership, abuse of property by absentee owners,
abandonment, and decline in the neighborhood's commercial
i area as evidenced by increased rates of crime and arson,
i and so forth.
Neighborhood Reinvestment has developed program initiatives
in these areas. In the cases of the Apartment Improvement
Program (AIP) and the Home Ownership Promotion Program
(HOP), the initiatives have been tested and replicated to
the extent that they can be assessed. This is done later
in this report. Table 2-1 shows some of the problems urban
neighborhoods face and the programs designed by Neighbor-
hood Reinvestment to resolve them.
The development process for the AIP and the HOP is sub-
stantially different in substance from that associated with
NHS, but it does have several parallels. Generally, the
AIP and the HOP development processes bring the appropriate
actors together in a workshop setting, where the concept
t
for problem solving is described and a general outline of
necessary commitments and development steps is presented.
This meeting is followed by committee work (the traditional
second step in the NHS development process), in which addi-
tional details and program ideas are developed. Finally,
the program begins operation.
i?
19
ur
Z
7
20
Z/6 eZ
'I
TABLE 2-1
Neighborhood Problems and Neighborhood Reinvestment
Programmatic Responses
Neighborhood
i
Number of
Neighborhood
Reinvestment
Programs,
Problem
Programmatic Response
1979
Disinvestment in low-
Neighborhood Housing
103
density (1-4 unit)
Services (NHS)
neighborhoods
Decline in multifamily
Apartment Improvement
3
housing
Program (AIP)
i,
Low homeownership;
Home Ownership Promo-
3
soft real estate
tion Program (HOP)
markets; absentee
ownership',
Vacant and abandoned
Rehabilitation and
2
property
Sale Program
Home maintenance
Home Maintenance
2
conservation
Training
Decline in the avail-
Insurance Industry
1
ability of conven-
Full Partnership
tional insurance
coverage
Source: Neighborhood Reinvestment
20
Z/6 eZ
Notes
A typical relationship is with the housing inspection
department or a similar department. In recent times
this relationship -has expanded to include community
development and planning staffs as well.
t
2. The local coordinator does community contact work,
which is in a broader context than is typical for advo-
cacy -oriented community organizing in urban neighbor-
hoods. The local coordinator contacts key people in
all the different partnership sectors --often more than
100 persons for each program deleveloped. The local
coordinator is a Neighborhood Reinvestment staff mem-
ber, though not a permanent one. The local coordinator
is supervised by a field representative who is a perma-
nent Neighborhood Reinvestment staff member.
21
i
CHAPTER 3
PROFILE OF NHS NEIGHBORHOODS
This chapter provides a profile of demographic character-
istics of Neighborhood Housing Services (NHS) neighbor-
hoods, housing, and residents. The first part addresses
housing and neighborhoods; the second part discusses demo-
graphic characteristics of residents. Information for this
chapter comes from 1970 census and demographic data and
from survey data provided by Urban Systems Research and
Engineering, Inc.
All neighborhoods with NHS programs are in central cities
or are in older suburban communities or cities (such as
those in Aurora, Ill., and Menlo Park and Oakland, Calif.)
that share similar physical and social features with cen-
tral city communities.
For the most part, the background data on both the hous-
ing and social characteristics come from the 1970 census.
Because of the substantial transition that occurred in
some neighborhoods, the characteristics listed may vary
somewhat from those present when programs were developed
(between 1973 and 1977). To some extent, this discrepancy
is mitigated by the availability of data from surveys
completed by Urban Systems, which suggest that neither the
population nor the basic parameters of the sample neighbor-
hoods' physical environment have changed substantially.
CHARACTERISTICS OF HOUSING AND NEIGHBORHOODS
Type of Housing Structures
The typical structure in the NHS neighborhood is a single-
family house. The 1978 windshield survey conducted by
Urban Systems in a sample of 20 neighborhoods, showed that
75 percent of the structures were single-family units, 15
percent were two-family units, 4 percent were three-family
units, and 3 percent were four -family or five -plus -family
units. Only 3 percent were multifamily buildings as usual-
ly defined. The variation in the percentage of single-
family structures among programs was not substantial; most
of the cases having significantly less than 75 percent
single-family units occurred in the more recently developed
NHS programs.
23
y6�
General Housing Conditions
When housing in the neighborhood is considered in aggre-
gate, housing in NHS neighborhoods was not severely dete-
riorated; however, all neighborhoods had vacancies and
scattered areas of blight. Of all housing units in NHS
neighborhoods in the windshield survey, 95 percent were
occupied; 3 percent were vacant, for sale, or fo' rent;
and 2 percent were boarded up.
In terms of exterior conditions, 29 percent of the units
showed significant defects such as peeling paint, broken
porches or steps, weeds, or signs of rot or decay. Six-
teen percent of the units showed minor problems, and 1 per-
cent were dilapitated.
Looking more generally --at blocks --in the NHS neighbor-
hoods, only 7 percent contained retail facilities; 8 per-
cent of the blocks that had retail facilities had sig-
nificant vacancies in those structures. This observation
reflects, along with the earlier discussion of the high
percentage of single-family units, the general residen-
tial character of an NHS neighborhood. Again, where there
was variation, it tended to be that neighborhoods origi-
nally selected for the program had less commercial ac-
tivity and more single-family units; neighborhoods se-
lected later had more of these characteristics.
Twenty-one percent of the blocks had vacant lots; how-
ever, 51 percent of these blocks had only one vacant lot,
22 percent had two vacant lots, and only 8 percent had at
least six vacant lots.l
Location of Neighborhoods
Most NHS neighborhoods were located some distance from
downtown areas; that is, not only were they not downtown
neighborhoods, but they often were not fringe neighbor-
hoods. They represented what are popularly referred to as
working class neighborhoods, removed somewhat from factory
and commercial areas but clearly lacking the suburban
quality of fringe neighborhoods. They were typically older
neighborhoods, reflecting in most cases the general age of
the housing in the city. This observation contrasts sig-
nificantly with findings about the location of middle-class
private reinvestment (gentrification). Numerous studies
have indicated that middle-class reinvestment tends to take
place closer to downtown, in areas originally built as
middle-class areas and having architectural and other fea-
tures reflecting that fact.2 The NHS neighborhoods, how-
ever, have more modest designs.
24
Substantial variations also occurred in the ways that de-
cline took place in the neighborhoods. In some neighbor-
hoods, decline tended to be concentrated in one section
only; in others, decline tended not to be concentrated
at all, with evidence of deterioration scattered throughout
the community.
Residential Mobility
According to Urban Systems data for a sample of residents
in NHS neighborhoods, 23 percent of the homeowners have
moved in the past five years, whereas 70 percent of the
renters have moved in during the same period. This rate
of movement is about normal for homeowners, whose turn-
over rate is about 5 percent a year. Only 15 percent of
the homeowners moved into NHS neighborhoods between 1977
and 1979, whereas 58 percent of the renters moved in dur-
ing the same period. These data seem to confirm the
relative stability of the NHS population. Moreover, new
residents typically had similar occupational characteris-
tics with other neighborhood residents. Although their
incomes were somewhat higher, this was largely due to
the fact that they were younger, and often had two incomes.
t City Size
t A final neighborhood characteristic is the size of the
city in which the neighborhood is located. Table 3-1
shows the number of programs developed by city size for
the years 1975 through 1979• In general, an increasing
proportion of new NITS programs are being developed in
small- and medium-size cities. This number has steadily
t increased and is partly obscured in the table by the fact
that in 1978 and 1979 40 percent or more of the program
starts in large cities were expansions of existing pro-
grams rather than new program cities. If these expan-
sions are excluded, the rate of new program starts in
small cities is substantially higher than the 39 to 44
percent shown in table 3-1.
DEMOGRAPHIC CHARACTERISTICS OF NITS 14EIGHBORH0ODS
Size and Population
Table 3-2 provides basic demographic data on the NHS
neighborhoods. In terms of their size, the typical NHS
neighborhood has a population of about 9,000. The ex-
ceptions to this are mainly older cities and earlier pro-
grams: Boston, Chicago, and Philadelphia --neighborhoods
where the original model included a larger area.
25
TABLE 3-1
Program Starts, by Calendar Year and City Size,a
1975-79
Program Large Medium Small Small
Year Starts City City City Cities
1975
1976
14
11
10
6
2
3
2
2
14
18
1977
1978b
18
24
5
8
5
6
8
10
44
42
1979b
31
7
12
12
39
Source: Neighborhood Aeinvestment, 1980.
a. Large = more than 250,000; medium = 100,000 to 249,999;
small = fewer than 100,000.
b. In 1978 four of eight and in 1979 two of seven program
starts in large cities were expansions of existing programs.
The typical NHS contains two census tracts; again, the
exceptions are in the neighborhoods selected earlier, in
which a significantly larger number of census tract por-
tions were included to form an NHS neighborhood. The
boundaries of the NHS neighborhoods reflect an attempt
to serve a socially meaningful aggregation, and in most
cases these neighborhoods are considerably smaller than
the official neighborhoods used in planning districts and
other formal designations of local government.
Most structures in NHS neighborhoods are occupied by their
owners; some neighborhoods are as much as 80 percent owner -
occupied. There are few exceptions to this generalization,
with no particular pattern to the exceptions.
In most of the cities studied, where the 1971 city popu-
lation has declined, the NHS neighborhood population has
also declined, usually by a larger percentage. In Balti-
more, for example, the population citywide declined by 3.5
percent, and the population in the Patterson Park neighbor-
hood declined by 11 percent. In other major cities, city
and neighborhood percentages of decline, respectively,
were: Chicago, 5.2 percent and 9.3 percent; Philadelphia,
2.6 percent and 9.6 percent; and Bridgeport, Conn., 0.1
percent and 0.16 percent. Decline did not always occur,
26
1{612-
N
V
TABLE 3-2
Demographic Profile of NHS Neighborhoods
Median
Value,
% Median % Owner- Single-
House- Income/ Number Occupied Family
Popula- hold Over City of Struc- House
City Neighborhood tion % Minority Age 65 Median Units tures ($)
Albuquerque, N. Max.
Atlanta, Ga.
Aurora, Ill.
Baltimore, Md.
Baltimore, Md.
Beloit, Wis.
Birmingham, Ala.
Boston, Mass.
Boston, Mass.
Bridgeport, Conn.
Buffalo, N.Y,
Buffalo, N.Y.
Buffalo, N.Y.
Buffalo, N.Y.
Buffalo, N.Y.
Buffalo, N.Y.
Charleston, S.C.
Charleston, W. Va.
Charlotte, N.C.
Chelsea, Mass.
Chicago, Ill.
Chicago, Ill.
Chicago, Ill.
Chicago, Ill.
Chicago, I11.
Downtown
Grant Park
Oak Park
Govans/Pen Lucy
Patterson Park
Merrill
Bush Hills
Columbia/Savin Hill
Mission Hill
Upper East Side
Black Rock/Riverside
Broadway/Fillmore
Ken-Bailey/Delavan
Masten
South Buffalo
West Side
Gadsen Green
Lower West Side
Plaza/Midwood
Addison
Ht. of Chicago
Central Austin
Near Northwest
IV. Englewood
Little Village
6,000
72
B,H
21
59
1,947
50
10,545
8,500
45
B4O
21
80
4,088
53
10,545
13,576
35
B,H
11
93
3,215
66
16,350
12,547
83
B
20
86
2,562
60
7,000
18,000
10
B
20
91
5,000
50
7,000
2,900
55
B
25
80
725
63
--
3,000
52
B
5
93
2,511
39
25,000
26,363
13
B
20
94
8,620
87
14,285
16,820
15
B
15
81
4,995
33
15,370
13,381
33
B,H2O
13
94
5,258
67
18,400
19,700
1
B
13
106
6,900
78
18,250
6,275
25
B
36
86
2,735
74
8,050
7,110
33
B
13
100
6,816
60
13,335
15,673
99
B
9
100
4,956
41
10,950
11,683
1
B
10
88
4,060
84
13,150
6,565
5
B
12
89
2,596
69
10,450
4,077
99
B
9
82
914
57
11,700
4,558
40
B
28
78
1,918
46
10,000
3,040
18
B
16
86
1,078
63
11,900
2,000
5
H
14
90
953
60
13,600
20,743
41
B,H
17
89
7,023
75
11,525
19,000
90
B
25
100
6,882
92
16,025
20,069
42
B,H
20
94
7,274
75
13,190
16,000
95
B
--
75
3,000
85
--
25,000
75
H
--
87
5,000
65
--
City
Cincinnati, Ohio
Cincinnati, Ohio
Clearwater, Fla.
Cleveland, Ohio
Cleveland, Ohio
Columbus, Ohio
Dallas, Tex.
Dallas, Tex.
Dallas, Tex.
Denver, Colo.
Des Moines, Iowa
Detroit, Mich.
Ft, Worth; Tex.
Hartford,' Conn.
Indianapolis,. Ind.
Inglewood, Calif,
Ithaca, N.Y.
Jacksonville, Fla.
Jamaica, N.Y.
Kansas City, Mo.
Kansas City, Mo,
Knoxville, Tenn.
La Habra, Calif.
r Little Rock, Ark.
Louisville, Ky.
Menlo Park, Calif.
Neighborhood
Evanston
Madisonville
South Greenwood
Buckeye
Near West Side
Linden
Love Field
Mt. Auburn/Santa Fe/
Owenwood
Trinity Heights
Highland
Harding
Highland Park
Polytechnic
Blue Hills
Butler-Tarkington
Lockhaven
Southside
Springfield
Baisley Park
49-63
Center City/South
Hyde Park
Park City
Central La Habra
Central Little Rock
Shawnee
Bellehaven
TABLE 3 -2 --Continued
Popula-
tion
% Minoritya
% House-
hold Over
Age 65
% Median
Income/
City
Median
Number
of
Units
% Owner-
Occupied
Struc-
tures
Median
Value,
Single-
Family i
House
($)
13,327
13,734
89
45
B
B
28
92
5,104
58
14,075
3,000
14
B
24
30
99
94
5,082
1,849
61
68
13,810
12,350
12,000
70
B
is
99
4,532
45
18,000
9,896
15,000
35
60
H2O
B
15
92
3,080
64
11,530
7,662
77
B
15
9
89
79
2,545
7016,000
2,574
57
36,500 i
7,000
7,597
14
97
B,H
B
21
85
2,364
44
,t
10,767
6,721
70
B,H
6
75
64
71
2,132
2,708
47
63
10,400
25,500
3,500
4,800
5
98
B
B
35
60
1,825
65
28,000
3,987
65
B,H
5
17
80
81
1,024
2,500
49
84
14,300
15,000
4,200
5,080
83
80
B,H
B
9
94
1,200
SO
20,750
7,712
80
B,H
--
8
98
80
2,827
2,300
53
S6
21,900
22,600
5,350
2,766
30
40
B
B
--
12
80
2,300
S6
20,000
7,163
95
B
22
56
86
1,019
3,305
48
67
7,000
29,300
4,400
2S
B
30
93
1,650
60
12,200
9,886
3,247
24
49
B
B
21
100
4,469
38
12,000
5,183
40
H
19
13
74
69
1,445
2,042
45
44
8,500
19,600
8,000
4,000
Ss
80
B
B
17
80
2,000
50
12,700 j
4,656
98
B,H
9
--
81
57
2,300
1,348
68
54
12,100
__
N
to
TABLE 3 -2 --Continued
Median
Value,
% Median % Owner- Single-
% House- Income/ Number Occupied Family
Popula- hold Over City of Struc- House
City Neighborhood tion % Minority Age 65 Median Units tures ($)
Miami (Dade County),
Fla.
Milwaukee, Wis.
Milwaukee, Wis.
Minneapolis, Minn.
Nashville, Tenn.
Newark, N.J.
New Britain, Conn.
New Haven, Conn.
New Orleans, La.
Niagara Falls, N.Y.
Norwalk, Conn.
Oakland, Calif.
Pasadena, Calif.
Peoria, Ill.
Philadelphia, Pa.
Philadelphia, Pa.
Phoenix, Ariz.
Pittsburgh, Pa.
Plainfield, N.J.
Providence, R.I.
Pueblo, Colo.
Racine, Wis.
Reading, Pa.
Saginaw, Mich.
St. Louis, Mo.
St. Paul, Minn.
West Little River
North Side
South Side
Southside
Waverly -Belmont -
Hillsboro
Weequahic Park
Newbrite/Broad Street
Upper State -Dwight/
Edgewood
Broadmoor
Area 4
1
Elmhurst
N.W. Pasadena
West Bluff
Allegheny West
E. Frankford
Central Northside
Elmwood
Minnequa Heights
Northside
Ward 6
Central East
Soulard
Merriam Park
7,955
95
B
6
77
2,096
57
15,523
12,226
90
B
10
70
3,624
54
10,067
10,407
35
H
11
79
3,514
45
10,075
6,386
52
B4O
14
92
3,625
72
30,000
3,485
65
B
27
87
1,190
37
14,300
17,929
93
B
14
84
6,499
51
20,075
12,209
55
B,H
8
82
4,181
83
33,000
13,993
12
B,H
21
93
5,380
57
50,000
7,487
60
B
15
82
1,471
34
35,000
8,000
12
B
30
90
2,557
61
13,250
8,812
50
B,H
--
57
1,904
54
--
16,329
85
B
17
85
5,502
55
18,125
5,838
98
B4O
8
73
2,300
66
17,034
8,855
3
B
10
98
3,319
66
16,700
13,130
85
B
13
83
3,520
71
6,748
12,016
21
B
27
91
5,510
56
7,858
5,000
13
B
33
75
1,697
57
12,200
7,303
50
B
32
60
3,566
27
7,010
6,357
81
B
11
84
252
91
17,700
14,456
40
B,H
20
80
3,500
24
12,000
4,213
35
H
8
74
1,657
79
18,000
5,850
20
B,H
14
75
1,917
50
12,800
2,603
90
B,H
10
79
945
63
6,400
11,589
50
B
11
78
4,003
49
11,100
11,865
1
B
24
82
5,121
19
7,210
13,000
2
B4O
15
99
4,921
78
30,000
N
City
Salt Lake City, Utah
San Antonio, Tex.
Santa Ana, Calif.
Savannah, Ga.
Shreveport, La.
South Bend, Ind.
South Portland, Maine
Springfield, Mass.
c Springfield, Ohio
Syracuse, N.Y.
Tacoma, Wash.
Tampa, Fla.
Toledo, Ohio
Toledo, Ohio
Trenton, N.J.
Tucson, Ariz.
Tulsa, Okla.
Union County, N.J.
Union County, N.J.
Union County, N.J.
Utica, N.Y.
Washington, D.C.
Waterloo, Iowa
Wilmington, N.C.
Neighborhood
Central East
West Side
Artesia/Pilar
Baldwin Park
Queensborough
Near Northwest
Ferry Village
Upper Hills
South Central
Brighton
S. Tacomaway
Hyde Park
Historic South Side
Old West End
Wilbur
Pueblo Gardens
N.W. Crossroads
Linden
Rahway
Roselle
Cornhill
Anacostia
Modified Three
The Bottoms
TABLE 3 -2 --Continued
Source: Neighborhood Reinvestment files and NHS program reports. Demographic data were collected during the develop-
mental process and represent the best available data at that time.
a. B = Black; H = Hispanic; 0 = Other.
NSouth Norwalk, Springwood Ely, and Golden Hill neighborhoods make up
b. West Main Street, Leonard/Chapel Streets,
the Norwalk NHS.
Median
Value,
Median
% Owner-
Single-
% House-
Income/
Number
Occupied
Family
Popula-
hold Over
City
of
Struc-
House
($)
tion
% Minority
Age 65
Median
Units
tures
3,700
1
B
15
99
57
3,268
2,914
66
41
14,900
7,100
10,700
98
74
H
H,0
17
5
68
1,259
72
18,900
3,973
2,349
60
B
19
93
1,041
57
63
10,000
28,800
3,000
90
20
B
B,H,0
--
22
--
98
1,000
2,856
55
10,500
5,980
9
70
769
66
11,200
2,500
10,000
0
70
-
B
15
92
2,525
60
58
22,000
10,500
3,880
55
B
14
13
84
90
2,034
3,462
55
12,867
12,576
35
H
B
7
94
1,490
64
13,500
3,000
8,000
5
17
B
40
83
3,000
67
51
12,200
9,450
9,531
14
H
13
12
77
88
3,333
7,463
65
12,200
19,528
60
B
B
16
94
2,046
71
10,319
6,282
2,428
50
72
B,H
11
60
786
56
70
10,900
8,000
6,496
60
B
13
5
85
81
2,512
1,330
55
21,300
4,435
6,576
76
30
B
B
11
91
2,200
54
61
20,500
20,800
5,308
66
B
8
17
83
89
1,596
2,322
65
13,200
13,214
16,138
60
96
B
B,H
8
80
4,960
61
16,285
9,931
5,345
68
B
11
89
75
1,525
891
75
60
7,000
3,385
99
B
14
Source: Neighborhood Reinvestment files and NHS program reports. Demographic data were collected during the develop-
mental process and represent the best available data at that time.
a. B = Black; H = Hispanic; 0 = Other.
NSouth Norwalk, Springwood Ely, and Golden Hill neighborhoods make up
b. West Main Street, Leonard/Chapel Streets,
the Norwalk NHS.
however. In Dallas, for example, the city population
increased by 24 percent between 1960 and 1970, but the NHS
neighborhood, an older area, grew by only 12 percent. A
few neighborhoods experienced subtantial growth when the
city population remained stable or declined. In Jamaica,
N.Y., the population increased by 9 percent, but the NHS
neighborhood population increased by 80 percent, a reflec-
tion in part of a substantial decrease in vacancies as
well as an influx of families into the area.
Racial Composition
Most NHS neighborhoods have significant concentrations of
minority group members; most of these residents are blacks
and Hispanics, as shown in table 3-2. Only 10 percent of
the neighborhoods have populations of less than 10 percent
minority composition; in at least half of the neighborhoods
minority group members make up at least 50 percent of the
population. Table 3-2 also shows that many neighborhoods
have minority group percentages of between 10 percent and
50 percent.
The Elderly Population
A significant portion of the population in the NHS neigh-
borhoods consists of elderly persons. Nationally, about
11 percent of the population in urban communities is el-
derly. In the typical NHS neighborhood, the percentage is
substantially higher than the national rate, with some
neighborhoods having as much as one-quarter of their popu-
lation persons who are 65 years or older. No systematic
relationship appears to exist between the percentage of
elderly in population and the percentage of minority groups.
Median Income
The original design of the NHS program anticipated that
residents of an NHS neighborhood would have median in-
comes of about 80 percent of the citywide median. As
shown in table 3-2, the average median income of residents
in the NHS program is about 85 percent of the citywide
median, suggesting that residents of NHS neighborhoods are
by definition poorer than those in city neighborhoods in
general and are by no means middle income, although there
are certainly some residents with incomes above the city
median. In neighborhoods that deviate substantially from
this tendency, two explanations appear to be supported by
the data. The first is that in some NHS neighborhoods,
such as the one in St. Paul, Minn., there is a substantial
variation in income within the neighborhood (as well as a
31
46.z
high percentage of elderly residents) producing a situation
where the median income is close to the citywide median
but where there is a great deal of variation, especially
below the median. Some cities have generally low median
incomes compared with those of other cities --Boston, Phila-
delphia, Newark, N.J., for example. Residents of NHS
neighborhoods in these cities have income levels closer to
the median, though median housing prices and other 'factors
show that these neighborhoods are not well off. Neighbor-
hoods with residents whose median incomes are substantially
less than the 80 percent citywide figure are mostly neigh-
borhoods selected later and not located in the East and
North Central states.
Substantial income segregation exists in many of the NHS
neighborhoods; in Atlanta, for example, one part of the
neighborhood contains houses built for the middle class
and occupied by moderate- or middle-income owners; another
section with less substantial housing has a concentration
of low-income, mainly renter, households.
Neighborhood Conditions
In addition to problems associated with housing stock de-
scribed above, NHS neighborhoods also suffered from a
variety of other problems that affected the image of the
neighborhood. These problems included a declining real
estate market, reduced public investment, arson, racial
turnover, and a declining number of conventional loans or
home financing, to name a few. Chapter 5 discusses these
problems in more detail.
CONCLUSIONS
Overall, NHS programs are not concentrated •in the most
severely deteriorated neighborhoods of a city or among the
lowest income groups. NHS programs do not have the re-
sources to deal with the needs of these types of neigh-
borhoods. However, NHS neighborhoods have had some serious
problems, problems that if not solved or ameliorated would
have become more serious in time and would have resulted
in increases in abandonment or deterioration.
This report will explain how over the years more deterior-
ated neighborhoods were gradually included in the NHS pro-
gram group, and how NHS programs gradually developed tools
to deal with some of the more serious aspects of decline
that could not be addressed initially, such as deteriorated
apartment buildings, low homeownership, declining commer-
cial strips, and insurance redlining. Indeed, the challenge
of the congressional mandate in 1978 was that NHS should
32
develop such tools so that the reinvestment program could
be applied to more deteriorated neighborhoods.
Even though the NHS programs were not carried out in the
more seriously deteriorated sections of cities, the data
do not suggest that these programs were developed in neigh-
borhoods where there were not significant needs. For the
most part, the programs were developed in neighborhoods
where other urban development intervention programs cur-
rently or previously existed.3
The NHS program emerged as a response to problems in neigh-
borhoods that have shown some signs of deterioration but
still have some strengths that are viewed as critical for
the success of a privately funded and neighborhood -based
effort. As the model developed and confidence in it in-
creased, the program has expanded into slightly more dete-
riorated neighborhoods.
33
Notes
1. Data on housing conditions are taken from unpublished
data from a windshield survey of NHS neighborhoods
conducted by Urban Systems Research and Engineering,
Inc., in 1978•
2. See Phillip L. Clay, Nei hborhood Renewal (Lexington,
Mass.: D. C. Heath Books, 1979 chap. 3•
3. Most of the neighborhoods had one or more of the fol-
lowing programs at some point in the last two decades:
war on poverty, model cities, federally assisted code
enforcement, urban renewal, Community Development Block
Grants, Neighborhood Strategy Area programs, and others.
The Community Development Block Grant program, includ-
ing the Neighborhood Strategy Areas, is operational in
most NHS neighborhoods, as are special social service
programs sponsored by state and federal agencies. To
varying degrees cities have made expenditures of non-
federal capital improvement dollars. This is discussed
extensively in chapter 5.
34
0
I
CHAPTER 4
THE NHS EVALUATION METHODOLOGY
Assessing the impact of the Neighborhood Housing Services
(NHS) program and other programs of the Neighborhood Re-
investment Corporation is a difficult task because these
programs have multiple goals; this makes it hard to iden-
tify appropriate measures of output, assess relative costs
and benefits, and attribute impacts to specific program
activities.
The program inputs (e.g., number of dollars, staff and
volunteer activities, and specific tools and strategies)
are easy to identify and there are conventions, although
imperfect, for determining which outputs to look at (e.g.,
number of loans, number of rehabilitated houses, and number
of clients counseled). Another output is the educational
process that leads to the creation of local partnerships.)
These partnerships do 'the work that results in loans or
investments. Therefore, these partnerships, as well as
the activities they generate, also must be assessed. One
focus of this study was to determine whether the part-
ners' perceptions of each other have changed sufficiently
and whether their behavior is such that reinvestment occurs
at a higher level and for different people than might
have been possible without the program. Crucial to Neigh-
borhood Reinvestment's concept of a reinvestment partner-
ship is the idea that partners would be willing to pursue
in unison activities they would not undertake alone. Fur-
ther, it was assumed that once a partner has a successful
experience, he would be more willing to work on other pro-
jects and to draw his peers into similar activity.
Specific evidence of reinvestment must be sought, as well
as a determination of which changes are the result of NHS
and which can be attributed to other events (including
demographic changes, changes in the home finance credit
market, increased prices of suburban housing, the general
tightness of the housing market, and increased attractive-
ness of urban neighborhoods).
This ideal assessment strategy, however, proved impossi-
ble to implement. For example, the best way to get the
opinion of actors is to directly ask them how they feel.
But in an environment where legal issues (e.g., redlin-
ing, blockbusting, "meeting the needs of low- and moderate -
35
y6 �
income persons") are more prominent than research or con-
ceptual issues, even carefully worded or neutral questions
from third parties more often than not elicit responses
that do not fully reveal true feelings. Therefore, such
questions must be restricted to those that will allow
the responses to be verified by other data.
Another problem that causes a departure from the ideal
assessment strategy is the lack of adequate data from the
actual start date of the program and an unwillingness or
inability of subjects to "leave a trail of paper" to docu-
ment their work. The most consistently available source
of data for research in this area is the 1970 census. Yet
many neighborhoods started the NHS developmental process
in the mid-1970s in areas where often extensive transition
(racial, income, or ethnic) had taken place; therefore, the
1970 data may not accurately reflect actual neighborhood
characteristics when the program started. Even when pro-
grams gathered new or updated information to provide more
accurate descriptions of neighborhood conditions in spe-
cific areas of interest (often two or more census tracts),
they did not keep program data that would be helpful in
charting program activities and impact. In addition, re- i
cords kept by local government and other groups inter-
ested in housing were incomplete.?
The larger issue here was how to make an assessment that,
despite the difficulties listed above, would accomplish
the following:
• Describe the types of neighborhoods (in both so-
cial and physical terms) where the programs have
been carried out.
• Describe program treatments, including a conceptual
discussion of specific program elements.
• Analyze participation level, contributions to,
and benefits from the program by each actor --
residents, financial institution executives, and
local government officials.
• Analyze the changes in reinvestment level, lend-
ing, real estate activity, and other proxies for
urban reinvestment.
• Assess the extent to which NHS is capable of de-
livering the range of services mandated by the
model and its ability to deliver related services
36
and to generate new tools or variations of tools
to deal with problems in specific neighborhoods.
• Assess the extent to which the program is trans-
ferable to a range of neighborhoods.
• Summarize both strengths and shortcomings in a
way that relates to future program planning and
development.
THE NHS EVALUATION
To do the NHS evaluation, twelve NHS programs from the 103
programs in operation in 1979 were chosen as a sample
(see table 4-1). Here, NHS programs will be referred to
by city location rather than by their formal or neigh-
borhood name to assist the reader. Thus, the East Frank -
ford NHS, one of the sample neighborhoods, will be called
Philadelphia. The programs were selected at random within
the constraints of age (at least three years old), re-
gional variation, and city size. These criteria resulted
in the selection (from a group of 42 NHS programs) of
mainly older programs where multiple reinvestment tools
had been applied, thus facilitating the inclusion of an
evaluation of the other Neighborhood Reinvestment programs
discussed below. This study (along with the HUE -sponsored
evaluation by Urban Systems Research and Engineering, Inc.)
is the first national evaluation of the NHS program. Be-
cause of the absence of adequate baseline data, a variety
of sources had to be used to do the assessment. The fol-
lowing list provides an idea of the scope of the data used
in the study.
Mortgage lending data were gathered from sample
cities. Because the programs were incorporated
at different times (some before these data were
reported for collected) and because local conven-
tions for keeping information were not standard,
the quality and completeness of the data vary
from city to city. Home Mortgage Cisclosure Act
(HMCA) data were helpful in only one city.3
Code enforcement and related data (such as num-
ber of permits issued) from each city in the
sample were collected.
• One -hundred -fifty-six interviews were conducted
with key actors associated with the NHS program in
each study city. These actors included financial
institution executives, resident leaders (current
and former board members), executive directors,
37
44�L
and local government officials. About equal num-
bers of representatives from each group in each
program were interviewed. The interviews were
conducted by Neighborhood Reinvestment research
staff, and twenty additional interviews were held
with present and former Neighborhood Reinvestment
staff members. The open-ended interview guides
are attached as Appendix A.
TABLE 4-1
Neighborhood Housing Services Programs
Selected for Study
Incorporation
Program City Date Neighborhood Served
Atlanta, Ga.
1975
Grant Park
Baltimore, Md.
1974
Patterson Park
Bridgeport, Conn.
1975
Upper East Side
Chicago, Ill.
1975
Near Northwest
Cleveland, Ohio
1975
Near West Side
Dallas, Tex.
1973
Love Field
Jamaica, N.Y.
1974
Baisley Park
La Habra, Calif.
1977
Central La Habra
Nashville, Tenn.
1975
Waverly -Belmont -Hillsboro
Oakland, Calif.
1972
Elmhurst
Philadelphia, Pa.
1975
East Frankford
Racine, Wis.
1976
Northside
• Special group sessions were conducted by Neighbor-
hood Reinvestment research staff involving NHS
participants, including executive directors and
resident leaders. The executive directors' con-
ference session was held in February 1980, and
three group sessions were held with resident
leaders in March, April, and May 1980.
A separate analysis of the 1979 survey of resi-
dents of NHS neighborhoods (conducted by Urban
Systems) was performed. Residents in seven of
the twelve cities were included for a total popu-
lation sample size of 637. The survey included
demographic data as well as data on the housing
and investment experience.
• An analysis was performed by the research staff
of recent evaluations and government documents on
RN
urban homesteading, Community Development Block
Grants, and home improvement financing. Also ex-
amined were various documents provided by local
communities, such as housing assistance plans and
first-year Community Development Block Grant ap-
plications.
• Documents and reports on file at Neighborhood Re-
investment offices relating to staff support and
technical assistance were reviewed in connection
with its support activities for local programs.
Support staff were surveyed regarding their ac-
tivities and programs during calendar year 1979•
• The research staff did an analysis of 876 revolv-
ing loan fund loan cases from the 12 sample programs
to determine client characteristics and loan terms.
The cases represented a 100% sample of loans
i
granted by these programs.
An attempt was made to assess the program's general impact
on neighborhood revitalization, ---specifically to measure
changes in attitude and behavior of key actors as re-
flected in working relationships as partners and in normal
activities in the NHS neighborhoods. For residents, the
assessment tried to determine (1) if there were attitude
changes toward the neighborhood, the program, their own
housing, and their investment in that housing; (2) if
there was an increase in the availability of capital and
if the needy were helped by the special revolving loan
fund; and (3) their level of participation in the program
and if the concept that "residents are first among equal
partners" in program governance was reflected in the pro-
gram.
For city officials, the assessment looked at (1) the ex-
tent to which their activities were consistent with their
early commitments to the program and the requirements of
the model; and (2) if their participation in NHS had been
reflected in their local community development strategies
and resource allocations and in their willingness to work
with the private sector in neighborhood development activ-
ities.
The assessment also examined the extent to which cities
used IIHS as a vehicle for their own assistance to neigh-
borhoods, and whether cities were active in the expansion
of community -directed development activity directly through
the 1IHS programs or indirectly through their own programs
to other neighborhoods.
39
Lz6 ,
For financial institutions, the basic question of the
assssment the
NHSeprogram whad wchanged hether otheir per eptionsr not their icoration n
merely made
them assess their risks in urban lending more carefully.
One area of interest was to determine the level of par-
ticipation within the lending community in these cities.
Participation by financial institutions in actual pro-
gram activity (through board and committee work) was also
of interest, as were the benefits that such institutions
felt they did or did not derive from participation in the
program.
The comments and data gathered on all of these dimensions
were analyzed and comparisons made among cities. The
data do not allow the kind of neat quantitative measure-
ments that in some cases would be desirable; however,
they do allow an in-depth analysis of behaviors along
dimensions that can provide a basis for answering ques-
tions raised in this assessment.
OTHER NEIGHBORHOOD REINVESTMENT PROGRAMS
As mentioned earlier, NHS is not the only program spon-
sored by Neighborhood Reinvestment. To respond to other
neighborhood problems (other than the nonavativesl in imf
credit that prompted NHS development),
proving apartment buildings and promoting homeownership
have been developed and replicated. Case studies were
prepared in which more than 150 people were interviewed,
and financial and client analyses were made to provide
detailed assessments of program achievements in the short
time (not more than two years in replication) in which
they had been operating.
The Apartment Improvement Program
The Apartment Improvement Program (AIP) is directed toward
reversing decline and restructuring the financial situation
in investor-owned properties. Unlike the NHS program,
where the analysis is focused on the resident and the
housing unit, the analysis in the AIP focuses on the apart-
ment building and the investment decisions. The following
tasks were identified for the AIP evaluation:4
• A conceptual look at inner-city multifamily hous-
ing --in particular, the decision-making process,
the market, and the social and institutional is-
sues involved in multifamily investment;
in
tiof
the DRIP eination of the Yonkers, N.Y., or sgince a
that city hason
the
40
• oldest program and the largest number of build-
ings in treatment;
• An assessment of the extent of spillover, if any,
from the reinvestment in multifamily apartment
buildings; and
• An evaluation of the experience in Hartford, Conn.,
and Mount Vernon, N.Y.--the two cities where rep-
lications were at least one year old.
The tasks above were designed to provide answers to the
following questions about reinvestment in apartment build-
ings:
• Is the model thus far a useful one for reversing
i' decline in marginal multifamily structures?
r
r'.
• Are elements for the model sufficiently flexible
t and transferable to be widely replicated (as in
the case of the original NHS model)?
r• Is the model a reasonable adjunct to NHS such that
NHS and AIP, in combination, might expand the range
of neighborhood types to which the reinvestment
partnership model could apply?
r
• What has been the experience to date for each
partner in terms of costs and benefits associated
with AIP participation? Specifically, what has
been the experience of tenantsapartment build-
ing owners, lenders, and the c
ity? In addition,
p what evidence exists for whether the benefits or
lessons learned can be sustained to prevent the
return of blight?
• Given the different model for reinvestment pre-
sented by the AIP, what is the unique contribu-
tion of Neighborhood Reinvestment to the devel-
opment of the AIP, and is Neighborhood Reinvest-
ment activity required for the AIP to be repli-
cated?
• How does the AIP model relate to the present or
prospective realities (i.e., real estate as an
investment, interest rates, and so on) associated
with investing in or rehabilitating unsubsidized
multifamily housing?
i
The Home Ownership Promotion Program Evaluation
In the Home Ownership Promotion (HOP) Program, Neighbor-
hood Reinvestment has attempted to help the NHS develop
41
44,
tools to deal with issues in low-density neighborhoods
that cannot be handled using the traditional NHS approach.
Specifically, this means helping tenants become homeowners
and strengthening a real estate market made weak byex-
tensive disinvestment.
The analysis looks at the clients who participate in the
program by purchasing property, specifically, tenants who
become owners and new buyers who are attracted to the
neighborhood. Neighborhood promotion and marketing strate-
gies, tenant conversion, and home purchase are the princi-
pal aims of this program element, which was added to a
limited number of NHS programs where vacant property and
slow activity had undermined more general reinvestment
efforts.
To achieve these evaluative objectives for the HOP, the
following tasks were identified:
Examine conceptual issues associated with home-
ownership and home purchase in low- and moderate -
income neighborhoods, particularly past problems
of soft markets, abandonment, low rates of home-
ownership, access to homeownership, and economic
and capital problems associated with the homeown-
ership decision. A subtask was to analyze vacant
housing and absentee ownership as they related to
efforts to promote reinvestment.
Examine the Baltimore program, the first NHS pro-
gram to develop an HOP program. A major subtask
included assessing and documenting Baltimore's ex-
perience, understanding the program's dynamics,
and understanding. the roles and activities of
the actors and the program benefits that accrued
to neighborhood residents. Also of interest was
the spillover that may have occurred and the ex-
tent to which the presence of the HOP helped
strengthen the local real estate market, increase
homeownership, and reverse decline associated with
absentee -owned or vacant properties.
Assess the Philadelphia HOP, one of the first
replications of the model. The evaluation here,
however, has been limited because the program
had been operating for less than 18 months when
this study began.
The tasks listed above were designed to provide answers
to the following questions about promoting homeownership
as an element of reinvestment:
42
02,
• Is the model thus far useful in promoting owner-
ship among long-term tenants in the neighborhood,
and has it strengthened the real estate market,
reversed decline associated with absentee -owned
or vacant property, and improved neighborhood con-
fidence?
• Are the program elements sufficiently transfer-
able so that they can be widely replicated '(as
in the case of the original NHS model)?
• Is the model, with its various elements, a reason-
able adjunct to the NHS program, such that the
HOP and NHS in conjunction might expand the types
of neighborhoods to which the basic partnership
model could apply?
• Who have been the direct beneficiaries of the
HOP, and have their housing conditions improved
as a result of the program?
• Has the program made any contribution to the so-
lution of the displacement problem, if such a
Problem exists in the cities under study?
• Are other cost-effective programs available to
achieve the same goals; that is, what are the
costs of providing services under the HOP com-
pared with the costs of other community develop-
ment programs?
• Has Neighborhood Reinvestment made a unique con-
tribution to the program, and would homeownership
promotion be likely to develop spontaneously with-
out.the developmental and technical assistance
that Neighborhood Reinvestment provides?
43
14/�;.2-
l
F
3.
4.
5
Notes
Neighborhood Reinvestment views itself as building
neighborhood institutions using the approach Robert
Greenleaf has called "servant as leader." In Green -
leaf's words, this means "a gathering of persons who
have accepted a common purpose, a common discipline
to .guide the pursuit of that purpose to the end that
each involved person reaches higher fulfillment as
a person through serving and being served by the com-
mon venture than she or he would achieve alone or in
a less committed relationship." For a discussion, see
the essay "Servant as Leader" by Robert K. Greenleaf
(The Center for Applied Studies, Windy Row Press,
Petersborough, N.H.).
Despite inadequate data, the research team had excel-
lent cooperation from NHS staff, local officials, and
former Neighborhood Reinvestment staff members. The
local NHS programs were not required previously to
gather or pass on the kinds of data requested.
Despite great hopes for analyzing the 1975 Home Mort-
gage Disclosure Act data, they proved to be inadequate
sources of institutional lending data in part because
information is not reported in a standard format, the
items and categories are not reported in a standard
way, and the disaggregation and time frames vary wide-
ly.
This study was performed by Roger Ahlbrandt of the
University of Pittsburgh.
This study was done by Robert Dubinsky, consultant,
Washington, D.C.
44
� oL
CHAPTER 5
ANALYSIS OF REINVESTMENT IN NHS NEIGHBORHOODS
This chapter assesses the impact of the Neighborhood Hous-
ing Services (NHS) program on the NHS neighborhood. Spe-
cifically, it notes the typical physical 'conditions ob-
served at the beginning of the NHS program and looks at
how various program measures have affected the neighbor-
hood. To do this, several indicators were examined, in-
cluding the incidence of reinvestment; the types and costs
of improvements; real estate trends, including transac-
tions, sales prices, and rents; experiences with difficult
buildings or areas; lending activity; and capital improve-
ments. Because increased lending activity is a critical
aspect of the NHS program, this chapter pays particular
attention to institutional lending activity. Finally, the
chapter attempts to estimate total reinvestment for 1979.
This estimate can then be compared with NHS program budgets
in 1979 and the budget of the Neighborbood Reinvestment
Corporation.
The typical NHS neighborhood had several problems. Not all
neighborhoods had all of the problems, but the key problems
that neighborhoods had in common included declining real
estate activity, a declining number of conventional loans
for home financing, and a declining number of home improve-
ment loans. Some neighborhoods had begun to experience
the outmovement of their middle-income population. Others
experienced substantial racial turnover and a rise in
absentee -owned property. Perceptions of private and public
unwillingness to invest were often on the increase. These
problems were exacerbated in many cases by arson and other
criminal activity, insensitive renewal or other public act-
ivity that destroyed the fabric of the neighborhood, racial
exploitation (blockbusting), and the presence of blighted
properties. Some neighborhoods faced a decline in the
number and quality of their commercial services and, in
many cases, of their schools, institutions, and other
public services. The neighborhood's ability to deal with
these problems was often considered weak, and the strategic
presence of city development programs in the neighborhood
was often minimal. (At this period in the mid -19708,
cities were directing much of their activity toward down-
town or other areas where problems were seen to be even
more severe. In some cases, cities had no effective
neighborhood revitalization programs at all.) A key factor
LR
.Z
in the selection process which distinguished NHS neighbor-
hoods from others like them was the presence of some active
interest to address the problem. While this interest
could be reflected in a request for an NHS by any group,
final selection hinged on the interest of neighborhoods
or organization of neighborhood leaders. Neighborhood se-
lection is made by the workshop participants after a com-
mittee on site selection reviews the alternatives.
Because NHS neighborhoods still had a high degree of owner
occupancy, these owners were a built-in resource for re-
investment activity. In these neighborhoods, financial
institutions had portfolios to protect, and citizen activ-
ity could be used effectively to generate political respon-
se. For these reasons and others, the NHS program was
begun.
INCIDENCE OF REINVESTMENT
The residents' survey conducted by the Urban Systems Re-
search and Engineering Corporation, Inc., in 1979 provides
extensive information on the incidence of reinvestment
and the characteristics of the investors. The survey
indicated an overall.frequency of investment of 56 percent.
That is, 56 percent of those surveyed had made some im-
provement to their homes in the past year. When only
owner -occupied properties were considered, however, the
investment frequency was 65 percent. The higher frequency
indicates the tendency by owner -occupants to invest more
in their homes than investor -owners. Among the cities
looked at in this evaluation, there was a substantial
variation in the incidence of reinvestment by owner -occu-
pants, ranging from a low of 54 percent in Jamaica, N.Y.,
to highs of 83 percent in Oakland, Calif., and Atlanta.
The average expenditure on improvements made by these
owner -occupants also varied significantly --from a low of
$449 in Jamaica to a high of $2,039 in Oakland. The mean
for all of the cities in the Urban Systems sample is
$1,058. These figures and the variation within programs
reveal some interesting contrasts. The pattern in Jamaica,
which confirms the assessments made by the various part-
ners, suggests not only that reinvestment is less frequent,
but also that when it occurs it is rarely extensive. At-
lanta, however, shows a much more mixed picture. There
was widespread reinvestment, but it was somewhat below
average, with spots of extensive reinvestment. Oakland
represents the most pervasive reinvestment; it showed a
high average reinvestment per property. The sample indi-
cates that there is not only a good deal of extensive
reinvestment, but that there is also a significant amount
46
46-Z
of modest reinvestment. The Urban Systems analysis points
out several differences in neighborhood characteristics
that indicate some variation in the incidence of reinvest-
ment.) Reinvestors are more likely to live in neighborhoods
that have a higher percentage of white residents, a lower
percentage of welfare recipients, more recent resident
turnover, and a generally higher neighborhood rating by
residents. The higher percentage of recent residents,
especially buyers, is consistent with the fact that new
residents tend to invest more than do long-term residents,
partly because they tend to be younger and because purchase
and turnover are occasions for catching up on deferred
maintenance as well as adapting the structure to the new
family unit.
Table 5-1 shows investment and neighborhood characteris-
tics for owners and investors from the Urban Systems re-
port. Comparing the characteristics of individual home-
owners who invested with those who did not, significant
differences emerge with respect to the following variables:
Investors had incomes that were 15 percent higher, they
were five years younger, they had slightly larger families
(perhaps due to the age variable, since younger households
are likely to have more dependent children), and they were
likely to have been in the neighborhood less than three
years. (It should be noted, however, that among owners
only 15 percent were recent movers to the neighborhood
compared with more than 50 percent of the. renters who were
new residents. Fully 78 percent of the owners and 50
percent of the renters had not moved in the past five
years, reflecting a very stable population in the NHS
neighborhoods.)
TYPES AND COSTS OF IMPROVEMENTS
Table 5-2 shows the kinds of improvements made in the
sample NHS neighborhoods in the Urban Systems survey and
the average costs associated with these improvements. In-
vestors and renters spent significantly less to improve
their housing in each category than did owner -occupants.
Overall, however, significant investment was made over a
wide range of internal and external housing components.
Building permit data can also indicate the extent of re-
investment. Adequate building permit data were available
for only five of the twelve cities. (In the other cities,
data were inadequate and incomplete or were not available
in a form appropriate for the research project.) Figures
5-1 through 5-5 provide building permit data for La Habra,
Calif., Dallas, Tex., Cleveland, Ohio, Racine, Wis., and
Nashville, Tenn. (Comparable figures for other cities in
47
TABLE 5-1
Selected Socio -Economic Characteristics of Homeowners
Investors versus Non -Investors, 1978
Characteristics
All Owners
(n=925)
Mean
Investors
(n=598)
Mean
Non -Investors
(n=327)
Mean
b
Sign.
Income
$13,257
$13,888
$11,987
.0017
Savings
$ 2,080
$ 2,188
$ 1,865
N.S.
Age
50.8
49.8
54.2
.0000 •
Household Size
3.21
3.35
2.96
.0033
Percent Minoritya
53.4%
51.0%
57.7%
.0625 j
c
Years of Residence
14.5
13.4
16.5
.0007
Source: Urban Systems Research and
Engineering,
Inc., Evaluation of
the Urban i
Reinvestment Task Force (Unpublished
working paper).
a. Minority includes
all non -whites
as well as white Hispanics.
b. Figures indicate
probability that
mean values
for investors equal
those of
non -investors.
48 %f rood
I
r
TABLE 5-2
Frequency and Cost of Investments by Investment Type, 1978
Source: Urban Systems Research and Engineering, Inc., Evaluation of
the Urban Reinvestment Task Force (Unpublished working paper .
49
�6-2-
Average Dollar
% Reporting
Cost of
Investment Type
Investment,
Owners
Renters
All
Owner -Investors
Investment Type (n
= 925)
(n = 827) (n
= 1,752)
(n = 585)
Plumbing system
or fixtures
22.3
17.3
20.1
488
Electrical system
12.5
9.6
11.1
620
Heating system or
insulation
12.0
8.7
10.5
961
Roof, gutters, or
downspouts
19.6
10.4
15.2
867
Exterior paint or
siding
21.0
12.3
16.9
751
Screens, windows,
storm windows
16.1
10.1
13.3
354
Porch, deck, ga-
rage, basement
15.5
7.9
11.9
699
Stairs, handrails,
sidewalks, fences,
driveways, land-
scaping
15.2
9.1
12.3
297
Cabinets, major
appliances
11.3
5.9
8.8
653
Paint, plaster,
paneling, wall-
paper, and
ceilings
33.0
22.0
27.8
298
Other remodeling
in bathroom or
kitchen
13.2
6.4
10.0
666
Floor coverings
(tile, linoleum,
carpeting)
19.5
10.6
15.3
466
Security system
7.5
3.5
5.6
226
Percentage report-
ing any
investment
64.6
46.8
56.2
Source: Urban Systems Research and Engineering, Inc., Evaluation of
the Urban Reinvestment Task Force (Unpublished working paper .
49
�6-2-
8c
70
60
50
40
30
20
10
0
$800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0•
1977 1978 1979
Number of Permits
1977 1978 1979
Value of Permits
FIGURE 5-1. Building permits issued in La Habra, Calif.,
NHS neighborhood, 1977-79.
50 41yez
■
17
15
12
10
7
5
2
$350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1973 1974 1975 1976 1977 1978 1979
Number of Permits
1973 1974 1975 1976 1977 1978 1979
Value of Permits
FIGURE 5-2. Building permits issued in Dallas, Tex., NHS
. neighborhood, 1973-79.
51
T(l --2—
17
15
12
101
7!
SC
25
0
1977. 1978 1979
Number of Permits i
t
J
$250,000-
200,000-
150,000-
100,000-
50,000-
0-
1975
250,000-
200,000-
150,000-
100,000-50,000-0-
1975 1976 1977 1978 1979
Value of Permits
FIGURE 5-3. Building permits issued in Cleveland, 011io,
NHS neighborhood, 1975-79.
52 //4
1978 1979
Number of Permits
$700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
1977 1978 1979
Value of Permits
FIGURE 5-4. Building permits issued in Racine, Wis., NHS
neighborhood, 1977-79.
53
Z'4' z
60-
50-
40-
30-
t'. 20 -
10-
r 0 -
1978 1979
Number of Permits
$700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
1977 1978 1979
Value of Permits
FIGURE 5-4. Building permits issued in Racine, Wis., NHS
neighborhood, 1977-79.
53
Z'4' z
120
105
90
75
60
45
30
15
0
$800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
1976 1977 1978 1979
Number of Permits
1976 1977 1978 1979
Value of Permits
FIGURE 5-5. Building permits issued in Nashville, Tenn.,
NITS neighborhood, 1976-79.
54
our sample were not available.) The figures show a consist-
ent pattern of improvement during most of the years of NHS
Program operation, although typically there was a level-
ing off in the number, if not in the value, of permits
during 1979. NHS neighborhoods in Cleveland, Nashville,
and Dallas are older programs, and their activities have
begun to level off, which may account for this phenomenon.2
As deferred improvements are made the volume of worX would
also be expected to drop. Especially significant, however,
is the substantial increase in the level of activity after
the program became operational which suggests the stimula-
tive effect of the program.
CODE INSPECTION, ENFORCEMENT, AND REINVESTMENT
Virtually all of the persons interviewed for this study
agreed that an active code inspection program is a necessary
element in an effective neighborhood development strategy.
A code program articulates the community's health and
safety standards. The following points are often cited
in support of an active code inspection program:
• Rehabilitation is more widespread with a strong
and effective code program.
• A code program provides an incentive that may not
otherwise be present for residents to reinvest as
their neighbors reinvest.
• Code enforcement encourages absentee -owners to re-
habilitate their properties and becomes the means
of articulating community goals outside the neigh-
borhood.
• The code inspection process assures financial in-
stitutions that minimum property standards in the
neighborhood will be maintained and, therefore, that
their investments will be protected.
• Code enforcement helps eliminate "eyesores," prefer-
ably through rehabilitation rather than by demoli-
tion.
The primary commitment to the code inspection process
rests with the city. A commitment is also sought from
residents because their cooperation is essential for the
code program's effective utilization. It is important
to distinguish the code inspection program proposed by
NHS and the more traditional approach. In the traditional
approach, the city uses punitive, legalistic, or stringent
enforcement methods if it is active at all. The NHS
55
44,�
approach is defined generally as a sensitive housing in-
spection program, which implies that the needs and re-
sources of the individual homeowner will be considered by
the inspector, although major structural flaws or hazardous
conditions will not be overlooked. For example, an elderly
couple whose home's wiring system only has one outlet per
room --a number inadequate by current standards --may not
be required to include additional outlets if their standard
of living and lifestyle do not require additional outlets.
A stipulation can be made, however, that code standards be
met when the property changes hands. Standards may also
be applied more vigorously toward rental property than to-
ward property occupied by owners.
The general goals of the inspection program are that the
homeowner is made aware of serious violations and defects,
that this process is coordinated with the NHS program, and
that NHS staff members help homeowners develop a rehabili-
tation plan for their properties that considers these
violations. This assistance, as well as the financial
assistance provided by NHS, serves as an incentive for re-
investment.
There are three general categories of enforcement meth-
ods: stringent, sensitive, and no enforcement. Stringent
enforcement occurs when a city forces the owner to make
improvements on all violations according to the letter
of the law. Stringent enforcement does not, however, mean
that all properties are inspected. In sensitive enforce-
ment, the inspector may identify violations of health and
safety codes but selectively enforces these codes, taking
into account the resources and lifestyle of the resident
and whether the property is owner -occupied or absentee -
owned. Again, not all properties are inspected. In some
cities, there is no substantial or systematic. enforcement
of codes, resulting in widespread evasion of the law by
homeowners and investors. Lack of systematic enforcement
does not imply that codes are always unenforced; it means
that codes are enforced only when there is a substantial
threat to health and safety or when requested by a com-
plainant.
Table 5-3 shows the code inspection and enforcement pro-
cess in the cities in our NHS sample. In four of the
twelve neighborhoods, the city formerly operated either
federally assisted code enforcement program or an urban
renewal program. This fact is significant because it
means that the remnant of a code enforcement program ex-
ists in the community (although this is not always as-
sociated with success in the current code effort because
many of those programs left residents with negative feel-
ings about code enforcement).
56
TABLE 5-3
Code Inspection and Enforcement Process,a 1979
a. The categories are based on local practices in the three most recent years, or if there has been change, the most
recent practice.
b. Systematic means block -by -block inspection.
Source: NHS Impact Study field data and interviews with code officials.
Inspection
Process
Enforcement Procedure
City
NHS Neighbor -
By
Inspector
Violation
hood Has Been
Complaint
Assigned
Notice Sent
under Another
and
to NHS
with NHS
Federally
No
Request
Neighbor-
Letterhead/
Funded Code
Systematic
City
Systematicb
Only
hood
Information
Program
Stringent
Sensitive
Enforcement
Atlanta, Ga.
X
X
X
Baltimore, Md.
X
X
X
X
X
Bridgeport, Conn.
X
X
X
X
Chicago, Ill.
X
X
X
X
Cleveland, Ohio
X
X
X
X
Dallas, Tex.
X
X
X
X
Jamaica, N.Y.
X
X
La Habra, Calif.
X
X
Nashville, Tenn.
X
X
X
X
Oakland, Calif.
X
X
X
X
X
Philadelphia, Pa.
X
X
X
X
X
Racine, Wis.
X
X
X
a. The categories are based on local practices in the three most recent years, or if there has been change, the most
recent practice.
b. Systematic means block -by -block inspection.
Source: NHS Impact Study field data and interviews with code officials.
Table 5-4 provides data on code activity in the cities in
the NHS sample. For some cities, adequate information
was not available in a form appropriate for this study or
at this level of aggregation. For cities where the data
are more or less complete, a wide variation is seen in the
percentage of compliance with the program. Although Dallas
and Atlanta both show a high degree of compliance, in
Atlanta the inspection is by request only; in Dallas the
code inspection program is systematic. Chicago shows a
limited level of compliance. Although Chicago's inspection
program does not conform to the systematic model described
above, more inspections were conducted than would be typi-
cal under a request or complaint system. As indicated in
table 5-4, a number of cases are still awaiting decisions
by the Compliance Board. Bridgeport, Conn., has a fairly
high rate of compliance and uses a systematic approach.
Another way to judge the general effectiveness of code
enforcement programs in NHS programs is to look at the
Urban Systems data relating investment behavior to hous-
ing inspection and code enforcement. Those data show that
the probability of investment for owners whose housing
was inspectedwas significantly higher (77 percent) than
for those whose housing was not inspected (59 percent).
This finding held true even when inspections occurred
without finding violations and when inspections were en-
tirely voluntary. Ninety-one percent of the persons who
received violation notices reported making some improve-
ments to their housing. These data and the more general
findings from the field work in this study suggest that
code enforcement is an important part of the NHS program.
Results have been better where enforcement has been system-
atically applied than where it has been applied unevenly.
Code enforcement not only represents an excellent tool for
outreach and a way to deal with absentee -owned property,
but it also sets a tone and a standard that can be widely
understood.
REAL ESTATE TRENDS
This section examines real estate trends in the study
sample NHS neighborhoods, in terms of the number of real
estate transactions and housing sale and rental prices.
It is expected that (1) a modest increase (5-10 percent
would be normal for urban owner -occupied stock) in real
estate transactions will occur as confidence in the market
generates a number of sales, and (2) there will be a
strengthening of prices and rents, not so much a substantial
Increase or a speculative increase associated with gentrifi-
cation --that is, reinvestment by the middle class --but a
more modest increase that will at least keep up with hous-
ing inflation.
58
,L6 �2
TABLE 5-4
Code Data, Program Inception through 1979
I
City
Number of
Dwelling
Units
Number of Units
Inspected
Number of Units
in Violation
Number of Units
Brought into
Compliance
%
Brought into
Compliance_
Atlanta, Ga.
3,204
831
755
716
94.8
Baltimore, Md.
5,043
2,498
--
411
1,000
201
--
48.9
Bridgeport, Conn.
Chicago, Ill.
1,881
4,742
1,393
3,204
2,869
455a
15.8
Cleveland, Ohio
1,351
1,231
799
190
1,666
23.7
98.0
Dallas, Tex.
2,400
2,300
1,700
Jamaica, N.Y.
3,305
23
--
La Habra,.Calif.
2,000
50
691
--
484
334
69.0
Nashville, Tenn.
6,291
Oakland, Calif.
5,194
289
--
--
--
Philadelphia, Pa.
3,510
1,500
--
--
-_
Racine, Wis.
1,500
368
--
144
-
a. In addition, 1,889 inspections were awaiting compliance board decisions.
Source: NHS Impact Study field data and interviews with code officials.
Table 5-5 presents statistics on the number of housing
transactions in the cities for which commercial real es-
tate transaction data are available. Only in Atlanta
(1979), Bridgeport (1979), and Baltimore (with the imple-
mentation of HOP --discussed later) do sales exceed an ex-
pected 5-10 percent. No city, except where HOP was imple-
mented, consistently exceeded the range. This table shows
generally that there has been an increase, often large, in
the number of real estate transactions since 1975. For
most programs, 1975 was the first year before NHS was
fully operational (exceptions are Oakland and Jamaica).
In some cases (Atlanta, Bridgeport, and Chicago), the
increase in transactions was dramatic. In Baltimore, the
number of transactions reached a peak during the year the
HOP began but has leveled off since. Substantial increases
due to the Bridgeport HOP are reflected in 1979. Jamaica,
Oakland, Philadelphia, and Racine did not show large in-
creases; stability seemed to be the pattern in those cities.
Because in all cases the number of transactions was sub-
stantially less than 10 percent of the total units in the
neighborhood, in no case did the number of transactions
seem out of line, that is, to point to a substantial in-
stability or turnover in the neighborhood. Except for
the relatively low number of transactions in Jamaica,
turnover represents a return to normal housing market
activity after 1975, when the number clearly represented a
low level of activity.
Nationally, between 1975 and 1980, the median price of an
existing house increased from $36,000 to $57,000. Table
5-6 gives information on prices of housing sold in NHS
neighborhoods. As the table shows, house prices in NHS
neighborhoods have been fairly low generally and for their
metropolitan area, and, with two exceptions (Nashville and
Oakland), low prices have remained through 197.9. Even the
most dramatic increases still leave housing prices at moder-
ate levels. In Chicago, for example, housing prices almost
doubled --but they started at $13,000 and increased to only
$25,000. Similar increases in Baltimore and Atlanta have
still left average housing prices in the moderate range.
This report does not include rental prices because ade-
quate commercial data on rents are not available for most
of the cities. Persons interviewed, however, felt that
rent increases have followed a pattern similar to sales
price increases or lagged slightly. That is, for the most
part rents have remained below the metropolitan and city
averages and have not increased out of proportion to in-
creases in rents in other areas. Further, respondents in
some study cities reported that from an investment point
of view the rents are low. In at least a few cities
M
y6 �2
TABLE 5-5
Number of Real Estate Transactions in Sample NHS Neighborhoods, 1974-79
City
1974
1975
1976
1977
1978
1979
Atlanta, Ga.
n.a.
23
27
29
41
281
Baltimore, Md.
292
275
394
369
470
138
Bridgeport, Conn.
n.a.
n.a.
85
79
130
185
Chicago, Ill.
n.a.
49
66
99
138
121
Cleveland, Ohio
n.a.
35
n.a.
n.a.
107
n.a.
Dallas, Tex.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Jamaica, N.Y.
41
35
28
27
34
38
La Habra, Calif.
n.a.
n.a.
n.a,
n.a.
n.a.
n.a.
Nashville, Tenn.
n.a.
n.a,
n.a.
n.a.
n.a.
n.a.
Oakland, Calif.
26
46
38
55
23
48
Philadelphia, Pa.
106
98
132
132
103
.112
Racine, Wis.
n.a.
n.a.
n.a.
59
76
50
n.a. not available.
Source: NHS Impact Study fieldwork. (Most of the data comes from official real estate records; other
sources include commercial reports and NHS files.)
M.
TABLE 5-6
Average Sale Prices in Sample NHS Neighborhoods, 1974-79
City
1974
1975
1976
1977
1978
1979
Atlanta, Ga.
n.a.
14,346
15,960
16,079
18,811
25,996
Baltimore, Md.
6,926
7,477
8,020
9,868
9,794
13,449
Bridgeport, Conn.
n.a.
n.a.
32,931
35,091
36,792
33,511
Chicago, Ill.
n.a.
13,500
14,000
15,500
18,500
25,000
Cleveland, Ohio
n.a.
13,277
n.a.
n.a.
14,635
n.a.
Dallas, Tex.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Jamaica; N.Y.
24,958
25,257
27,443
29,315
30,435
33,158
La Habra, Calif.
n.a.
n.a.
n.a.
n.a,
n.a.
n.a.
Nashville, Tenn.
n.a.
15-20,000a
n.a.
25-30,000a
n.a.
35-40,000a
Oakland,Calif.
22,373
25,493
23,347
24,289
30,826
40,908
Philadelphia, Pa.
7,900
8,925
10,943
11,379
10,847
n.a.
Racine, Wis.
n.a.
n.a,
n.a.
19,350
21,800
23,560
Source: NHS Impact Study fieldwork. (Most of the data comes from official real estate records; other
sources include commercial reports and NHS files.)
n.a; not available.
a. Estimated by NHS director.
(Baltimore, Philadelphia, and to some
rent levels have encouraged a certain
The owners of the properties were not
venue to justify continuing to rent
were therefore willing to sell.
THE DIFFICULT CASES
extent Bridgeport),
amount of conversion.
receiving enough re -
their properties and
NHSs have used different approaches to difficult cases,
such as vacant and abandoned properties, vacant lots,
large multifamily structures, burned -out buildings, and
buildings requiring extensive rehabilitation.
In Atlanta, the code enforcement program in the 1960s
generated a great deal of demolition, and in the NHS neigh-
borhood there are vacant lots scattered throughout as a
result. The NHS program has attempted to promote in -fill
development3 and reconstruction, and a few homes have
been moved onto the vacant lots. In Chicago, .where prob-
lem buildings are scattered throughout NHS neighborhoods,
the NHS Redevelopment Corporation was created as a pri-
vate, nonprofit investor to purchase, rehabilitate, and
sell or rent small, multifamily apartment buildings -build-
ings too small to attract large investors and too large to
be managed by individual owners.
Jamaica has a continuing problem with vacant and aban-
doned property, compounded by vandalism and extensive fore-
closures on FHA -insured housing. The NHS has recently
developed a program to rehabilitate the properties to try
to control this situation. .
Philadelphia has been plagued with several houses left
vacant for some time, and its approach has been to use the
HOP to gain control of those properties. Arson has also
been a problem in the NHS neighborhood. Because the lots
are so narrow by current standards, little construction
will occur to fill the gaps that presently blight the
neighborhood.
The Upper East Side NHS neighborhood in Bridgeport had a
serious arson problem. The HOP is expected to provide
some relief by promoting the rehabilitation of some prop-
erties in that section of the neighborhood. This neigh-
borhood has also used vacant lots for urban garden plots.
A serious problem in the Baltimore N14S neighborhood has
been the number of absentee landlords. The NHS approach
has been to stringently enforce the code and, thus, to
encourage many of these landlords to sell. NHS then gen-
erates interest among residents and outsiders to buy the
properties.
63
41��2_
As in Bridgeport, Cleveland has had a persistent arson
problem, which has been made worse by the inability of the
city to, keep vacant houses properly boarded up. NHS has
been actively promoting the sale and rehabilitation of
vacant buildings.
In Dallas, where there are pockets of deteriorated hous-
ing and vacant properties, the residents are currently
debating whether to demolish sections of housing to cre-
ate a neighborhood park. For certain buildings that need
improvement, NHS plans to use Section 8 rental subsidies
to support tenants after the buildings are rehabilitated
by private owners.
In terms of activity by program age, no consistent pattern
has emerged for how the NHS programs approach specific
neighborhood problems. During a program's first year,
however, outreach to establish its presence in the program
activities, and to establish core services --housing in-
spection, rehabilitation assistance, and the revolving loan
fund --are priorities. The neighborhoods vary in whether
their approach concentrates on model blocks, on scattering
rehabilitation throughout the neighborhood, on working on
the most serious problems first, or on working on the
least serious problems first.
After two to three years, programs tend to identify ad-
ditional tools or programmatic elements to address spe-
cific and persistent problems. These can be other Neigh-
borhood Reinvestment tools, local program elements, con-
tracts, or grants.
RESIDENTIAL LENDING ACTIVITY
This section notes trends in the types of mortgages and
home improvement loans made and changes in these trends
over time.
Since the mid-1960s there has been a steady decline in the
number of conventional loans in urban neighborhoods such
as those where NHS programs are established. Similarly, a
decline has occurred in the total number of loans made by
savings and loan associations and commercial banks as
opposed to other types of financing by finance mortgage
companies, land contracts, and by owners. Figure 5-6
indicates this trend in Oakland. The dramatic decrease in
conventional lending followed the recession in 1966 and
has not dramatically increased since. A major goal of the
NHS program is to reverse that trend by making conventional
loans available to residents of NHS neighborhoods. Experi-
ence has shown that the type of loans made in the neighbor -
64
s�6 �
Number of Loans
100
PHA -VA
50 ---
Conventional
1963 1965 1967 1969 1971 1973 1975
Year
109 —�
Savings $ Loans
Mortgage Co.
50 i
/ Commercial Bank
1963 1965 1967 1969 1971 1973 1975
Source: Martin G. Gellen, "Institutional Mortgage Disin-
vestment in the Central City: A Time Series Analysis of
Mortgage Lending in Oakland, California, 1963-1975" (Un-
published paper, 1980).
PIGURB 5-6. Mortgage plows by Lender Type and Loan Type,
Oakland, Calif., 1963-75.
65
hood and the number and types of institutions from which
these loans were made are good indicators of the ability of
the real estate market to perform normally and thus affects
prospective and long-term residents. Depressed prices and
limited rehabilitation are likely results of institutional
lender absence from financing in these areas.
Detailed data by year for type of loan in a given city are
difficult to obtain and in fact not available before 1975.
Further such data as is available includes only institutional
lending which in some neighborhood is only a fraction of
total activity. The larger problem for research is that
even limited data for lending in given neighborhoods is
hard to come by. However, information is available on two
cities, Cleveland and Bridgeport. For Cleveland, data
are available for 1975, 1977, and 1978 on the type of
first mortgages. In 1975, conventional mortgages accounted
for 57 percent of institutional first mortgages looked at
in the Near West Side Cleveland NHS neighborhood; FHA and
VA mortgages accounted for 43 percent. (These totals do
not include owner -financed, land contracts, or other non -
institutional arrangements --the total of which did not
increase proportionately.) In 1978, conventional mort-
gages accounted for 90 percent of home mortgages, and FHA
and VA accounted for 10 percent of the institutional first
mortgages. Other data on Cleveland are summarized in
table 5-7. In 1975, there were twenty-one second mortgages,
with an average term of four years; in 1978 there were
sixty-two second mortgages, with an average term of seven
years.
Home Mortgage Disclosure Act data from the Bridgeport NHS
neighborhood show that in 1977 there were 66 first mort-
gages in the neighborhood; 7 (10.6 percent) were FHA or
VA. There were 49 home improvement loans averaging $2,800
each. In 1978 the number of mortgages increased dramatical-
ly, to 128. The number of FHA and VA loans remained the
same, 7. The number of home improvement loans increased
modestly to 57, and the average loan amount increased to
$3,100.
The limited data from Cleveland and Bridgeport must be read
with great caution as they are notoriously incomplete,
leaving out, for example, mortgage banker activity. Data
from the Urban Systems survey do not show as clear a trend
as the data from these two cities. The data do show,
however, more favorable terms and an increased use of
mortgages. Data for Bridgeport and Cleveland suggest that
there has been somewhat more availability of conventional
credit in the NHS neighborhoods -- mortgages which general-
ly offer more favorable terms than other types of financing.
42;p '2-
it iC rip
l
1975
1977
(lst 2
quarters)
1978
a
TABLE 5-7
First Mortgages, Near West Side NNS, Cleveland
Number
(%,) of Number
First (o) of
Mortgages First
Number (o) Number Issued by Mortgages
of (o) Banks and Issued by
onventional FHA/VA S$L's NHS
20 (57) 15 (43) 22 (63) 0
29 (88) 4 (12) 26 (79) 0
96 (90) 11 (10) 84 (79) 3 (2.8)
Source: Official listings and Cleveland NHS records, by Carol Franklin and Ted Hiser.
a. Excludes FHA/VA mortgages.
Total
Average
Dollar
Dollar
Highest
Value of
Value
(Lowest)
First
of First
Value
Number of
Mortgages
Mortgage
Mortgage
Average
First
(Loan
(Loan
(Loan
Average
o of
Mortgages
Principal
Principal
Principal)
Term
Down
Filed
Amount)
Amount)
($)
(Years)
Payment
35
464,700
13,277
25,000
25.5
24.5
(1,500)
33
498,350
15,101
27,000
16.9
17.0
(6,700)
107
1,566,000
14,635
46,400
17.2
20.7
(2,700)
Number
(%,) of Number
First (o) of
Mortgages First
Number (o) Number Issued by Mortgages
of (o) Banks and Issued by
onventional FHA/VA S$L's NHS
20 (57) 15 (43) 22 (63) 0
29 (88) 4 (12) 26 (79) 0
96 (90) 11 (10) 84 (79) 3 (2.8)
Source: Official listings and Cleveland NHS records, by Carol Franklin and Ted Hiser.
a. Excludes FHA/VA mortgages.
THE REVOLVING LOAN FUND
The revolving loan fund makes loans available to clients
considered uncreditworthy by normal standards. These in-
clude persons whose incomes are too low or whose credit
obligations are too large to meet the normal underwriting
requirements for loans as established by local institu-
tions. These criteria, of course, vary over time and
among locations, depending on the availability of credit,
interest rates, and other factors. This section looks at
revolving loan fund clients and loan characteristics.
The typical NHS has a revolving loan fund capitalized at
between $300,000 and $500,000, although several older,
larger programs and multiprogram cities have loan funds
of as much as $2 million. An estimated $3.1 million is
available nationally, further leveraged by the NHS sec-
ondary market administered by Neighborhood Housing Ser-
vices of America, Inc. (NHSA).5
Tables 5-8 and 5-9 show the characteristics of NHS loans
based on an analysis of 876 loan cases from the twelve
sample programs. The mean loan amount was $5,606, with
a mean monthly payment of $52. Less than 30 percent of
the loans were for less than $2,000. Only 2.5 percent
of the loans were for more than $20,000. Slightly more
than half (51 percent) carried interest rates of at least
6 percent. The number of loans has increased steadily
since 1975, as shown in table 5-9. More than 2,500 loans
were made in all NHS programs by 1979, totaling more than
$12 million. Although some clients are able to get very
low interest rates, revolving fund loan rates in general,
especially in recent years, have been moving upward. Rates
of 3 to 5 percent were more common in the mid-1970s, where-
as rates of 6 to 8 percent (and sometimes more.) are common
now.
Table 5-10 shows the status of loans made in the NHS pro-
grams in the sample. Fifty-six percent of the loans have
been paid back or are current. -Insufficient data were
available on 28 percent of the loans, but the delinquency
rate of 6.5 percent and the default rate of 1.8 percent
do not seem out of line with expectations, although these
rates are significantly higher than the loan experience
of commercial lending institutions.6 This situation is
to be expected because the revolving loan fund was estab-
lished to help persons who do not meet the minimum cri-
teria set by conventional lending institutions. Although
the default rate represents some loss of funds to the pro-
gram, it does not necessarily mean a failure in the pro-
gram; housing improvements have been made with these funds,
�/_6 L
TABLE 5-8
Revolving Loan Fund Loan Characteristics
in Sample Cities, 1972-79
i
Mean loan amount ($)
5,606.
Mean loan payment (monthly) ($)
52.
i
Loan used for purchase (%)
16.8
% loans for less than 3 years
18.0
% loans for 20 years or more
58.0
a
°4
Size of loan ($) (n = 876)
Less than 500
5.3
'
500-749
4.6
750-999
3.7
1,000-1,499
8.1
1,500-1,999
8.2
2,000-2,999
10.6
t
3,000-3,999
11.6
4,000-4,999
6.2
5,000-7,499
14.7
k
7,500-9,999
10.8
10,000-14,999
10.0
'
15,000-19,999
3.7
20,000+
2.5
Interest rate ($) (n = 876)
0
4.8
Less than 3
5.4
3
24.5
4
4.5
5
6.6
6
20.0
°
r:
More than 6
31.3
4
Source: Files from NHS programs in
sample cities by
Neighborhood Reinvestment, 1980.
t
Note: The 876 loans analyzed here
are a 100% sample of
i.
the loans made by the twelve cities
in our sample.
69
i
TABLE 5-9
Number of Revolving Loans in Sample Cities,
by Year of Loan Closing
Year Number
Pre -1975 19
1975 91
1976 96
1977 178
1978 198
1979 220
1980 69a
Source: Files from NHS programs in sample
cities, by Neighborhood Reinvestment, 1980.
a. Includes only loans closed through May
1980.
TABLE 5-10
Revolving Loan Fund Loan Status in Sample
Cities, 1979
(n = 876)
Status %
Repaid 12.6
Current 43.8
Delinquenta 6.5
Default 1.8
Otherb 7.1
Missing information or status unclear 28.2
a. Payment overdue by 60 days or more.
b. Includes mainly funds held in escrow un-
til work is completed.
70
and credit collection efforts and lien takings are pursued
to protect the viability of the NHS loan program.
Table 5-11 presents a profile of revolving loan fund cli-
ents. Most borrowers typically have families, about 14
percent are elderly, more than 50 percent are minority
group members, and almost 25 percent have incomes below
the poverty level. Only 4 percent of the clients have
incomes that exceed $20,000 a year, and 15 percent are
unemployed. As expected, fully 25 percent of them have
lived in the same house for fifteen years or more, but 21
percent have lived in their homes for less than three
years, supporting the belief that increased real estate
activity is generating buyers who not only buy into the
neighborhood, but who also use the NHS program to assist
in financing improvements. Forty-nine Y- percent of these
new owners were residents of the neighborhood before buying
homes there.
Further analysis of data from the revolving loan portfolio
shows
I
the following:
•
The larger loan amounts ($10,000 or more) have
been made primarily since 1977• Only 9 loans of
more than $10,000 were made before 1977; more than
i
100 have been made since.
•
A majority of loans for more than $15,000 were
for home purchase (twenty-two of the thirty-seven
4
in this category).
I •
Of the sixteen loans in default, eight were for
less than $1,500; only two were for more than
$10,000. There
is no pattern for the size of
j
loans associated with delinquency.
•
Fifty-one of the 120 loans to elderly persons were
for less than $1,000.
•
The single largest group of borrowers were per-
sons in the $5,000 to $10,000 income category, who
f
received 355 of the 876 loans. The second largest
group, with 207 loans, was households earning less
than $5,000 a year.
•
Sixty-four percent of the loans made to families
earning less than $5,000 yearly had six years or
more to repay. Their loan amounts were also smal-
ler than average.
i
71
y6.z
TABLE 5-11
Revolving Loan Fund Clients in Sample Cities, 1972-79
(n = 876)
Client %
Female heads of households 41.7
65 years or over 13.7
Minority group member 55.5
Family income less than $5,000 a year 23.6
Family income more than $20,000 a year 4.2
Unemployed 15.4
Retired or disabled 13.1
Lived in house 15 years or longer 25.0
Lived in house less than 3 years 21.0
New owners who lived in the neighborhood
prior to buying present houses,49.0
a. Based on only forty-three (43) cases for whom complete
prior address data were available.
• There is no difference between new 4nd existing
residents as characterized by loan amount, loan
terms, or income category, except to the extent
that rates related to age. Younger borrowers were
usually charged higher rates than were older bor-
rowers.
• The largest loans were at the lowest rates. Sixty-
four percent of the loans of $20,000 or more had
interest rates of 3 percent; 72 percent of the
loans for less than $2,000 had interest rates of 8
percent or more. Most of the remainder went to
elderly residents at lower rates.
Based on the data available, the revolving loan fund ap-
pears to be meeting its goals: It primarily serves resi-
dents who earn less than $10,000 annually; it helps the
72
a
elderly to a substantial degree; it provides funds at an
affordable rate and at terms more flexible than those at
lending institutions; and it is flexible in the loan
amount --money is available to meet emergency repairs as
well as moderate rehabilitation and temporary or perma-
nent home purchase financing. Although the program's de-
linquency and default experience is somewhat high, it is
not dangerously so.
The recent credit crisis of scarce money and high inter-
est rates is not reflected in the present data. Conver-
sations with NHS and Neighborhood Reinvestment staff sug-
gest that the influence of these trends is likely to show
up in figures for 1980 and 1981, which may show a substan-
tial increase in the number of loans for home purchase and
perhaps a more substantial number of large home improvement
loans. If credit continues to be 'tight and expensive, the
revolving loan fund will be under more severe pressure,
and additional funds will be needed to meet the demand.
CITY-STATE LOAN PROGRAMS
Several cities have local programs that provide loans for
rehabilitation. Although some data are available on the
volume of such loans, these figures may not be accurate.
The main reason for this qualification is that how resi-
dents use programs over which NHS has no direct adminis-
trative involvement is unknown and, also, some of the
figures are estimates, others represent actual experience,
and others are clearly inconsistent as reflected in the
reports. However, several points can be made about the
city-state loan progams in NHS cities:
In some cases, the home purchase and rehabilita-
tion loan programs are administered by the state
and are long standing programs, especially in Minne-
sota, California, Maryland, and Connecticut, where
state loan programs have a long history; a total of
nineteen states have some kind of financing assist-
ance activity. The larger programs provide home
purchase loans, but in Maryland the program also
allows rehabilitation to be combined with the pur-
chase to generate 11100 percent -plus" loans. These
loans have been widely used in the Baltimore NHS
neighborhoods.
• Local programs typically are funded through Commun-
ity Development Block Grant funds and are character-
ized by modest loan amounts (up to $5,000 to $7,000
and with low or sliding -scale interest rates). The
loans are directed toward homeowners, not investors;
73
preference is given to improvements to correct health
and safety violations over aesthetic or lifestyle
improvements. The income limits are typically less
than $20,000 elderly and low-income persons who
would not normally qualify by credit standards for
loans may get grants, often up to $5,000, to correct
serious housing violations.
The cities typically run the loan programs them-
selves, although several cities contract loan pro-
grams to other groups, or have banks service them.
The Urban Homesteading Program has not been used
extensively in NHS neighborhoods; Oakland is one
exception, however.
• The rehabilitation loans referred to in this sec-
tion are different from the mortgage revenue bond
Programs that have recently become popular in a
number of cities. In the latter programs, the
cities sell bonds to raise capital, which is then
lent to city residents at a reduced rate for the
purchase or rehabilitation of homes. Maryland was
a pioneer in this regard, and its program has been
used in both Baltimore NHS neighborhoods. Mary-
land's program has an income limit of $203000 for
families; the Chicago program lent its first bond
proceeds with an adjusted income limit of $40,000.
Less than 5 percent of these loans went to Chicago
NHS neighborhoods.
The city-state loan programs have become an important ad-
ditional resource for many NHS neighborhoods. The pro-
grams provide residents with alternative sources of funds;
they have allowed some NHS programs to concentrate on se-
vere cases; they have provided NHS with an opportunity
for contracting; and they show that the city recognizes
that lending to residents for rehabilitation is an eff-
cient way to generate a substantial amount of reinvestment
activity with relatively small amounts of direct subsidy
money.
CAPITAL IMPROVEMENTS
This section describes the type and value of the capital
improvements made in the sample of NHS neighborhoods (see
table 5-12). Note that the figures in the table reflect
only expenditures on nonroutine, capital improvement proj-
ects in the neighborhood; they do not reflect the value
of routine services or maintenance or normal repair on
infrastructure or facilities. In many cities, it was
74
1144oZ
TABLE 5-12
Capital Improvements in NHS Neighborhoods, 1972-79
75 �6aZ
Total
City
Description
Dollars
Atlanta, Ga.
Sewer, sidewalks, CD pro-
1,277,729
gram, park improvements,
community center, open
space
Baltimore, Md.
Major drainage project (dol-
15,000,000
lar figure includes a larger
area)
Streets and alleys
200,000
Bridgeport,
Streets and library
365,000
Conn.
renovation
Chicago, Ill.
Sidewalks, street resur-
facing, parks, and equipment
7,628,000
Cleveland, Ohio
Curbs, streets, drainage,
1,460,000
sidewalks, trees, sodding,
driveways, smokestack
removal
Dallas, Tex.
Streets, parks, lighting,
2,270,000
landscaping ($600,000 went
to repair and landscape a
major road that had long
been a problem)
Jamaica, N.Y.
Lake dredging, sewer
1,800,000
(storm) --both in progress
La Habra,
Streets, sewers, curbs,
634,000
Calif.
gutters, sidewalks
Nashville,
Streets, curbs, bulky waste
213,700
Tenn.
collection
Oakland, Calif.
Street improvements, parks,
10,000,000
lighting, tree planting,
community center, trash col-
lection, and weed clearance
75 �6aZ
76
TABLE 5-12--Continued
City
Description
Total
Dollars
Philadelphia,
Sidewalks, curbs, trees,
832,000
Pa•
paint, playground
Racine, lois.
Community center, curb and
1,080,000
gutter, streets, bathhouse,
I
lighting ($900,000 was
;
spent on community center)
I
i
Source: Neighborhood Reinvestment staff interviews with
city officials
and NHS files, 1980.
4
i
I
I
I
}
76
difficult for city officials we interviewed to break out
expenditures for the NHS neighborhood from those of other
neighborhoods because funds were not budgeted by neighborhood
and because data from past years were requested. If any-
thing, the numbers represent underestimates, not overesti-
mates, of the amounts spent. Unlike other types of invest-
ment, where average numbers can be used to generate a
total estimate, per program expenditures cannot be estima-
ted because of wide variations in the type or extent of
improvements and the lack of association between size of
the city and types of improvements. In addition, projects
typically are done over multi-year periods and often serve
a wider area than the NHS neighborhood. On the other
hand, the Neighborhood Reinvestment staff has previously
estimated (1979) that $32 million in capital improvements
were made to NHS neighborhoods by local communities since
1975; the true figure, however, is probably much higher.7
Most improvements made by cities are for sewer and drain-
age facilities, sidewalks, parks, and waste removal; cities
spent a modest amount for park and community facility im-
provement. As indicated above, the improvement patterns
are not related to the size of the neighborhood or to the
number of problems a city has. Capital improvements are
often made according to a schedule that runs several years;
table 5-12 includes only completed projects.
TOTAL REINVESTMENT
Based on available data, in 1979 the total reinvestment by
owner -occupants was as much as $100 million. This figure
is based on the following assumptions: an average of
2,600 households per neighborhood, 56 percent of which are
occupied by homeowners, 65 percent of whom improve their
properties; and an average yearly expenditure for improve-
ments of $1,058. This total does not include investments
made by investors; institutions or the city. Estimates
for these sources are not included in the total because
there is insufficient information to make an estimate.
Renters, for example, often do not know how much has been
spent to improve the properties they occupy. However,
there has been reinvestment in these areas, and as more
substantial data become available, estimates of total re-
investment will undoubtebly be much higher than those re-
ported here.
Curing 1979, the ave Cage operating budget for a basic NHS
program was $65,000. For the 103 programs in operation
during 1979, this means NHSs spent $6.7 million in neigh-
borhoods where as much as $100 million in improvements
were made. Neighborhood Reinvestment had a budget of $8.5
million for 1979.
77
441�Z
I
Based on the survey data, it is estimated that only 18
percent of the $100 million was borrowed. Only 16 percent
of the loans were for more than $2,000, and more than 50
percent were for less than $1,000. This suggests that
there were a lot of relatively small projects financed by
commercial loans, but most of the capital came from in-
dividual owners.
All $100 million should not be attributed to NHS. Some
reinvestment --about half ($567) might have occurred anyway
since that is the amount the average urban homeowner spent
for repairs and rehabilitation in 1979.9 The proportion
of credit for these investments that NHS should share is
difficult to identify and we have no data on which to base
an estimate. Nor can we place a value on the improved
sense of satisfaction residents expressed or the spillover
reported by NHS staff.
CONCLUSIONS
Extensive changes have occurred in a sample of NHS neigh-
borhoods in terms of lending activity, code inspections,
and reinvestment activities for physical improvements. This
does not mean that no problems remain after as many as
seven years of reinvestment activity, but they do suggest
that for a minimal investment (between 1974 and 1979 Neigh-
borhood Reinvestment spent $23.6 million in'federal funds),
the federal government has helped local neighborhoods be-
gin a process that has given neighborhoods new confidence
in their resources. Their confidence has been reflected
in the amount of growth of private investment by individual
residents, by capital provided through lending institu-
tions, and by improvements made by local government. The
exact dimensions of the total reinvestment activity will
remain unknown until more complete data are available for
making such estimates. In addition, more improvements
have been made in these neighborhoods than might have been
expected without a program such as NHS; these improvements
cannot be accounted for by any other collateral activity
by the public or private sector. Thus, a program that is
locally defined, locally run, inexpensive, and nonbureau-
cratic in nature has made significant progress toward
generating neighborhood reinvestment.
78 �/_6a--
5. NHSA is a private non-profit corporation serving NHS
J programs, whose staff provides technical assistance
and program assessments for NHS programs. One of its
major activities is the development and management of
a secondary market for NHS revolving loan funds. NHSA
purchases revolving loan fund loans at par and sells
securities collateralized 125% by these loans to insti-
tutional lenders. The Equitable Life Assurance Company
y of America has purchased $1 million and committed to
purchase a further $2 million in these securities at a
rate below the going rate for commercial loans but
higher than the average return on the loan originated
in a local NHS, the difference being made up by a
subsidy from Neighborhood Reinvestment.
6. The delinquency rate for conventional institutional
loans such as those from S&L's is 0.2 percent; for FHA
loans, 0.4 percent; and for HUD's Section 312 Rehabili-
tation loans, 8.4 percent.
7. For example, if the figures in table 5-12 are indica-
tive and the numbers are adjusted on a per year basis,
they would suggest approximately $14 million in capi-
tal improvements in 1979 for the 103 programs opera-
tional during that year and proportionately smaller
amounts for 1975 through 1978. However, any estimate
based on these limited data must be viewed cautiously.
79
Notes
1.
See Urban Systems Research and Engineering, Inc., De-
scribin Tar et Nei hborhoods: Nei hborhood Housing
Services, 197 Cambridge, Mass.: Urban Systems, 19 0 .
2.
In Dallas and Nashville, the partners have developed
NHS programs in other neighborhoods and have decreased
activities in the original NHS neighborhoods.
3.
Infill development, involves returning a vacant lot
to housing use through new construction or moving an
existing house to the land. This practice is es-
pecially important in older urban neighborhoods where
the demand for housing in the neighborhood is high,
yet structures removed from the stock due to past
disasters or neglect have not been replaced and the
vacant land is a blight on the community.
4.
Data on this have been gathered from official listings
and Neighborhood Housing Services files by Neighborhood
Reinvestment's staff or consultants.
5. NHSA is a private non-profit corporation serving NHS
J programs, whose staff provides technical assistance
and program assessments for NHS programs. One of its
major activities is the development and management of
a secondary market for NHS revolving loan funds. NHSA
purchases revolving loan fund loans at par and sells
securities collateralized 125% by these loans to insti-
tutional lenders. The Equitable Life Assurance Company
y of America has purchased $1 million and committed to
purchase a further $2 million in these securities at a
rate below the going rate for commercial loans but
higher than the average return on the loan originated
in a local NHS, the difference being made up by a
subsidy from Neighborhood Reinvestment.
6. The delinquency rate for conventional institutional
loans such as those from S&L's is 0.2 percent; for FHA
loans, 0.4 percent; and for HUD's Section 312 Rehabili-
tation loans, 8.4 percent.
7. For example, if the figures in table 5-12 are indica-
tive and the numbers are adjusted on a per year basis,
they would suggest approximately $14 million in capi-
tal improvements in 1979 for the 103 programs opera-
tional during that year and proportionately smaller
amounts for 1975 through 1978. However, any estimate
based on these limited data must be viewed cautiously.
79
be the
8. Th
basirogram
office defined here In
fact, most of staff
ofthe
programs reviewed had much larger budgets and staffs.
Average total budgets exceed $100,000 and the staff
averaged 6. The
extra budget
were for
tional servicesorprograms. This is discussedddin
chapter 10.
9. This estimate assumes equal investment
tyin allpatterams.
Patterns of investment vary, but the
is
for the largest investment to take place in years 1, 2
and 3• Two-thirds of NHSprograms
rograms we e n t includis e
category in June 1979•
amortized development cost--federal or local--or sup-
lied to o
port
notcosts
supportingthey
staff in or organizing esidents,anizinactors
i
r
CHAPTER 6
THE ROLE OF RESIDENTS IN NHS PROGRAMS
As marketed, the success of the Neighborhood Housing Serv-
ices (NHS) model depends to a significant degree on the
participation of neighborhood residents in developing and
managing the program, and in encouraging their neighbors
to invest in their property. Residents in the NHS partner
N -
eighborhood Reinvestment as being
ship are perceived by
t "first" among equal partners since they have a majority of
board seats.
Residents participate in the following ways:
e Build neighborhood commitment by actively organiz-
ing and informing their neighbors:
0 Help identify improvements needed in the nernment-
hood and make recommendations to local government;
1 and
r 0 Draw on personal savings or are willing to secure
loans from financial institutions to make needed
home improvements.
Although other partners play significant roles, resident
1 participation is the most important; the input of other
partners is secondary to the fundamental commitment of
residents
improve eir own neihorhoodto
theirresources to make these impgovements, and to use
f
Residents participate not through groups that require a
substantial organizational effort but by identifying com-
munity leaders and by developing, in some cases, a member-
ship from which individuals can be selected to
serve on
committees. Typically, meetings or
NHS boards and
other functions are held to inform members and other
residents of program activities and to provide program
updates for the neighborhood. Some programs also have
local newsletters or other outlets to provide this infor-
mation.
The residents of an NHS neighborhood make up a majority
of the pro-
gram eNHS define board. p program needs and they can priorities, atdthmanage
resources --including staff and funds secured from private
M
�2-'
institutions, public agencies, and other fund-raising ef-
forts.
This chapter assesses the effect of NHS programs on resi-
dents and 'analyzes program participation by residents in
the study cities. Effects are evaluated in terms of the
resident as client, as citizen -participant, and as partner.
In addition, the perceptions of residents are compared
with regard to their neighborhoods, their investments, and
their participation in NHS versus participation in other
programs. This chapter also discusses the role and contin-
ued support of other neighborhood organizations in the
development of NHS and the issue of displacement (the in-
voluntary relocation of households due to price increases
or other factors).
THE OUTREACH PROCESS
Community outreach in an NHS program starts during the
developmental process. . When program development begins,
Neighborhood Reinvestment staff contact various neighbor-
hood organizations and, neighborhood programs to identify
individuals who can help develop the NHS program. Of
course, some programs focus on organizing by involving
other organizations, and some seek to involve particular
individuals, regardless of their group or affiliation.
In general, however, outreach involves door-to-door solici-
tation, leaflets, workshops, neighborhood fairs, and clean-
up projects, as well as contacts with churches, social or-
ganizations, and other neighborhood institutions to tell
their members and leaders about the program.
A survey of NHS residents by Urban Systems Research and
Engineering, Inc., showed that NHS outreach efforts had
been successful in making 37 percent of neighborhood home-
owners and 16 percent of neighborhood renters aware of
the program (see table 6-1). The same survey showed that
of those who knew about the program, approximately 35 per-
cent had inquired about available services, 28 percent
had attended an NHS orientation, 20 percent had received
advice or services, and 15 percent had been involved with
NHS in more peripheral ways. Most residents (64 percent)
who were aware of the program felt that NHS had done a
good or very good job; 25 percent felt that it had done
a "so-so" job; and 11 percent rated NHS effectiveness as
poor.
RESIDENT COUNSELING AND REFERRAL SERVICES
Another NHS role is to provide counseling and referral
services; hard data in this area are sketchy. In our field -
GF
TABLE 6-1
Awareness and Utilization of the NHS Program
Respondents Owners Renters
Aware of local NHS program
(n = 636) 37.0 16.8
1 Those aware who (n = 172):
Attended an NHS orientation 27.7 15.4
Inquired about the program or
services of the NHS 35.3 1.9
Received advice or other
services 20.2 1.8
Participated in the NHS pro-
gram in any other way 15.3 3.8
( Those aware who rated NHS:
Very good 25.0 10.9
( Good 38.9 54.3
So-so 25.0 30.4
Poor 11.1 4.3
Source: Analysis of NHS resident survey conducted by
Urban Systems Research and Engineering, Inc., 1979•
Note: This analysis is based on USRE data for seven cities
in our sample that are also in the USRE sample N=636.
work we found that many programs in this study did not
keep adequate or systematic data on the number of clients
counseled or provided referral services in terms of number,
case disposition, and so on. Programs generally, however,
carried out several counseling and referral activities, as
shown in table 6-2.1 We did find that NHS programs provide
a wide range of activities and vary to some degree in the
total number of services provided. Table 6-2 shows a
cumulative provision of services; it does not necessarily
indicate all of the services performed by each program
all of the time. In some cases, the services are formal --
actual records or other evidence of services are retained.
In other cases, services provided by an NHS program are
informal and based on demand.
83
I
00
A
TABLE 6-2
Resident Counseling and Referral Services for Sample NHS Programs, 1980
Resident Counselin and Referral Services
City and Advucecy Loan Formal
State Budgeting Social Neighborhood and Inspections and Home Home Loan i
Contractor Program and Credit Realtor Services Resource Community and Spec. Improvement Insurance Purchase Referral
City Referral Referral Counseling Lists Programs Center Organizing Writing Counseling Counseling Counseling System I
I
Atlanta, Ca. X X X X X X X X x x X
Baltimore, Md. X - X X x X X x X X X X x
Bridgeport, Conn. X X X X X X X X X. X X X
Chicago, II1. X X x X X X X X X X X X
Cleveland,. Ohio x x x x x x x x x x x x
Dallas, Tex. X X X X X X X X x X X X
Jamaica, N.Y. X X X X X X X X X X
La Nabra, Calif. X X X X X X X X X X X
Nashville, Tenn. X x X X X X X X X X
Oakland, Calif. X X X X X X X X X
Philadelphia, Pa. X X X X X X X X X X
Racine, Nis. X X X X X X X X x
Source: Field interviews conducted by Neighborhood Reinvestment staff, 1980.
RESIDENTS AS CLIENTS
A major role of the resident, no doubt viewed as most sig-
nificant by outside observers, is as a client of the NHS
program. In most cases, the client relationship with the
program is reflected through the revolving loan fund and
the provision of services related to writing work speci-
fications and selecting contractors.2
The purpose of the revolving loan fund is to provide loans
to persons who are not otherwise creditworthy and, there-
fore, to persons who otherwise would not have access to
capital to improve their housing; improvement to privately
owned housing is at the heart of the development strategy.
Initially, the fund was called the "high-risk revolving
loan fund"; supposedly, clients who used the fund were
systematically more at risk in terms of their ability to
meet the underwriting criteria of lending institutions.
Reference to "high risk" was dropped because of the stigma
attached to the term and because of the recognition that
many of the clients for the revolving loan fund were in
fact not high risk at all, but who had incomes too limited
to take advantage of conventional loan terms involving
relative short payback periods and high rates. Their
inability to borrow resulted from a lack of income, poor
credit history, a substantial debt burden, or, in some
cases, age. The revolving loan fund provides resources
at rates and terms that individuals can manage while assur-
ing a high level of payment by clients. For example, if a
low income precludes a client's ability to meet a high
monthly loan payment, then the revolving loan fund might
lend money at a substantially lower rate or with longer
terms than would be usual for a traditional lending insti-
tution. If the problem is employment instability, the
revolving loan fund might arrange periodic deferrals of
payment of principal or other mechanisms to ease the bur-
den.
The revolving loan fund was not initially perceived as
an additional source of funds for (1) persons who could
borrow from traditional lending institutions or credit
unions, (2) use in home purchase, (3) debt consolidation,
or (4) purposes other than rehabilitation financing.3 Sur-
vey data show that loan clients have in fact been those
for whom the fund was established, but those were not the
only clients. The loan fund is used to serve other types
of clients, mainly those who are otherwise creditworthy
except for special circumstances or economic conditions
such as high interest rates. Some clients normally eli-
gible were referred to other city or state programs; others
85
,�K6 Z.
were counseled to borrow money only after they had satis-
fied other financial obligations.
RESIDENTS AS CITIZEN PARTICIPANTS
The level of resident participation in the NHS organiza-
tion varies from substantial to limited --limited, that is,
to a few individuals who serve on the board and,, often,
have served on the board since the development of the
program. For example, in Jamaica, N.Y., and in Baltimore,
residents play a substantial role in running their pro-
grams. In Baltimore, election to the board and partici-
pation in leadership activities are frequently contested.
On the other hand, in Racine, Wis., resident participation
is limited to several residents from other neighborhoods;
only a few residents from the NHS neighborhood have shown
interest in managing the organization.
NHS was designed for residents to play a major role in
organizing the neighborhood, selling their neighbors on
code enforcement and other activities, participating in
decision making on key issues such as lending activity
and capital improvements, and working closely with other
partners in directing the staff on major issues. This
study of twelve programs showed such participation to
be the case, although as noted above, the number of resi-
dents who participate extensively varies. Few programs
have the resources to hire an adequate community organizing
staff, and other partners do not wish to become involved
in community organizing and day-to-day activities at the
neighborhood level. Therefore, where the resident partici-
pation is not deep or broad-based, the program suffers.
To a substantial degree, residents have learned how to
delegate responsibility within boards. There are clear
differences between what residents can contribute to the
NHS program and what local government and financial in-
stitution officials can provide; they all recognize that
theyrAust play their own roles well for the program to
work.
In the sample of programs reviewed, there seemed to be
two stages of NHSs (based on the age of the program) in
terms of resident roles and participation. In the early
years (the first stage), the lenders are the most sophis-
ticated and most dominant members of the NHS board. This
situation is not necessarily negative; lenders set a busi-
ness tone for the organization and management of the
program, especially for the revolving loan fund, adminis-
trative systems, and fund raising. Generating private
M
Z16 z
funds, recruiting partners, and developing lending proce-
dures for the loan fund are key activities for establishing
the program. Typically, lenders serve as board presidents
or chairpersons or as chairpersons of key committees, where
they can provide guidance, often with a business -oriented
approach. At this point, the board members who are resi-
dents (a fairly homogeneous group) represent long-term
neighborhood activists and "pillars of the community" who
can help give legitimacy to the program. This phase typi-
cally lasts one or two years.
As the program matures, it usually moves into a second
developmental stage; resilient board members assume lead-
ership and begin to direct the program. Residents more
often become presidents of the board and chairpersons of
the major committees. The exception is usually the loan
committee, which often retains a financial institution
executive as chairperson. The residents have progressed
to the point where they are positive and confident about
their abilities to define goals and direct programs. Resi-
dent participation on the board sometimes becomes more
heterogeneous; different people, who sometimes challenge
fundamental aspects of the program, become involved.
The two stages do not always occur, nor are they required
for NITS development. Resident and lender involvement dif-
fers within programs and varies to some degree because of
the size of the city.
There is not a great deal of turnover in membership of the
boards studied. Although it is assumed by some NHS staff
that longevity leads to stagnation, no specific evidence
was found to address this question. Indeed, to some degree,
stability assures the working out of program priorities,
fund raising, and other activities in the least dysfunctional
and the most timely way. The tenure issue does become
important, however, when the neighborhood program has to
move into new areas, for example, when dealing with issues
raised by tenants or when the program is being expanded to
additional neighborhoods. These problems may require some
change in board governance and some broadening of resident
representation. However, there is too little experience
with alternative scenarios for us to be conclusive in this
regard.
The 14HS residents interviewed were asked to compare their
involvement in NHS with their involvement in other commun-
ity development programs, which they typically listed as
model cities programs, war on poverty programs, and various
local projects. They tended to prefer their involvement
in NHS over involvement in other programs --they felt that
M
the NHS program had more structured goals, that resident
participation in the program was more substantial, that
the professional and administrative staff was more account-
able to them, that the NHS program was nonconfrontive and
nonpolitical, that they had little if any conflict with
city hall, and that they had more control over resources
(even though they indicated in several cases that the
resources were inadequate). They also pointed with pride
to the track record of their local programs, which no
doubt accounts partly for their positive view of NHS.
Many residents voiced satisfaction at their opportunity to
work directly with city officials and lenders, whom they
believe to have genuine concern for their neighborhood.
They also pointed out that the 14HS program has outlasted
many other programs. (In some cases this was not true,
however; for example, only half of the NHS programs studied
have been in existence for more than five years, whereas
some of the programs residents used for comparison lasted
longer.)
In summary, resident involvement in the NHS program has
provided low- and moderate -income residents with access to
and some control over services and resources they otherwise
would not have had. Resident leaders reported that the
program gave them a sense of hope. The resident leaders
expressed a great deal of pride in what they view as their
program. They tended to feel a great deal of independence
--independence from Neighborhood Reinvestment, from the
city and from a range of other programs that they felt
either failed to help them or at least failed to take
their specific priorities into account. The NHS program
has taken a segment of the population, provided it with
some organizational skills and support, and made it a sub-
stantial partner in a long-term effort to reverse neighbor-
hood decline.5
NHS AND OTHER NEIGHBORHOOD ORGANIZATIONS
The NHS program does not exist in a vacuum. In most
neighborhoods, other organizations have preceded NITS and
additional organizations are formed from time to time.
The Neighborhood Reinvestment staff looked at whether ex-
isting organizations were involved in the initial develop-
ment of the NHS program and the roles these organizations
have played since NHS was established. Two patterns were
found. In most cases, the NHS did not involve other organ-
izations per se, although individuals who were part of the
existing organizations did provide leadership to the NHS.
Often it was felt that possible conflicting agendas would
hinder NHS development, and that NHS should "go it alone,"
116 z
involving other organizations as appropriate after it was
itself established.
Another model is represented by Baltimore, where a very
strong and well -organized existing group --the Southeast
Community Organization --itself an umbrella organization --
played a major role in developing the NHS program. The
organization helped the program gain quick acceptance and
accelerated its development process. In Baltimore, the
two programs have worked together cordially, and numerous
spinoff groups have developed to meet particular neighbor-
hood problems. Most study neighborhoods, however, demon-
strated less active involvement with community organiza-
tions.
The major finding, however, was that the NHS program was
fundamentally different from many organizations in the
neighborhood. The major difference is that the NHS program
is primarily a developmental organization and therefore
attempts to avoid partisan political involvement, advocacy
confrontation, and direct action. There was no evidence
that an NHS neighborhood was heavily involved in a political
issue or in a confrontation with other organizations, the
city, or financial institutions.
NHS was instrumental in giving birth to new organizations
within most of the neighborhoods in the study sites. These
were mainly block organizations that emerged to deal with
specific issues, ranging from clean-up campaigns to neigh-
borhood efforts to stop thefts and vandalism. In no pro-
gram, however, did these block organizations represent a
substantial aspect of the NHS program, and, in many cases,
the organizations were quite shortlived. This is not a
negative result, since the groups were ad hoc responses to
specific problems.
Although the NHS program has been nonpolitical (in a parti-
san and elective sense), significant concern (although not
active exception) was expressed about this posture in the
Jamaica program. Observers felt that it was important for
residents to be involved in the political process to get
federal, state, and local money --not only access to Commun-
ity Development Block Grant dollars, but also funds for
capital improvements, social services, and ordinary public
services. One observer felt that the reason New York City
has failed to provide significant support to the Jamaica
NHS was the program's political invisibility.
The benefits of a low-key and nonpolitical approach have
been substantial for NHS programs. The approach has help-
ed programs maintain a good reputation among the financial
i•
Z16i
institutions in the various cities, many of whom include
individuals who at first were reluctant to work with neigh-
borhood -based organizations. This low-key approach means
the residents have easy access to local government offi-
cials, and, in some cases, that NHS residents have been
able to get a better response to demands than they might
have otherwise.
RESIDENT ATTITUDES
Based on interviews with resident board members, positive
attitudes toward the neighborhood appear to be generated
by participation in the NHS program. Urban Systems survey
data suggest that residents generally have a significantly
more positive attitude toward their neighborhoods than the
physical condition would suggest. There is also variation
in their attitudes on specific aspects. Residents are
more positive about housing and street conditions. They
do not appear, in general, to have more positive attitudes
toward local government and public services.
Attitude toward Financial Institution Involvement
Many resident leaders admitted that they were initially
distrustful of financial institution executives and felt
that they did not have their real interests at heart --that
they were participating in the program only because of
pressure from advocates on the redlining issue or pressure
from regulatory institutions. For the most part, however,
these negative attitudes toward financial institutions have
softened, and the residents we interviewed expressed the
following attitudes:
Financial institutions have become more aware and
more knowledgeable about the neighborhood and more
discriminating in their views of proposals for
their involvement in financing improvements.
• The residents feel that they have learned how the
lending business works and how particular institu-
tions make decisions. They believe that this
knowledge has been helpful in their participation
in th% loan committee and in other board activi-
ties.
Many residents now feel that financial institu-
tions have a genuine business interest in the
neighborhood, not simply an interest based solely
on regulatory pressure. They feel that in the
long run this interest will be increasingly re-
flected in lending and other financial services
in the neighborhood.
M
Other Attitudes
Resident leaders were asked about their attitudes toward
Neighborhood Reinvestment staff. Most gave the staff high
marks for their supportive role. Some residents did feel
that Neighborhood Reinvestment was asking for too much
information and making constant requests for data and
other input from staff. It was difficult for our staff to
determine whether residents were referring to the activi-
ties of this study, or to the activities of Urban Systems
or other studies; Neighborhood Reinvestment has actually
made few substantial data requests of local programs.!
Some residents said that Neighborhood Reinvestment's staff
were too intrusive and at times did not appear to respect
the fundamental independence of local programs. Again, it
could not be determined whether this attitude was simply
the result of interpersonal dynamics or other factors.
DISPLACEMENT
Reinvestment displacement has emerged as a significant
issue in the last couple of years. It refers to a funda-
mental change in the economic status of housing in which
middle- and upper-income households take housing units
occupied by low- and moderate -income households.
Both staff and partners involved with the NHS program view
the program as an antidisplacement tool, a means by which
existing residents improve their housing and maintain oc-
cupancy. For tenants, other tools, such as the special
Section 8 set-aside, are available to NHS neighborhoods
and provide ways for tenants to deal wi h the higher rents
that sometimes accompany rehabilitation.
There is also the issue of disinvestment displacement --in
which units are abandoned, vacancies are not filled, and
deterioration sets in. This problem still exists in many
neighborhoods in the study group. Atlanta, for example,
had experienced more than 200 demolitions yearly prior to
the incorporation of the NHS program. Although this num-
ber has been drastically reduced in the NITS neighborhood
(and in other neighborhoods as well), the NHS neighborhoods
are as concerned about past disinvestment (and its artifacts)
as they are about the displacement associated with rein-
vestment.
Furthermore, in two programs reinvestment displacement was
present to varying degrees, depending on who was interview-
ed and their particular perspective. In Atlanta's Grant
91
I
Park neighborhood, there was evidence of 11 t
tion," that is, areas or subareas within the neighborhood
where speculation was occurring and where renters were
being displaced to make room for the new buyers of housing
that was selling in the $100,000 range.
Although some displacement has occurred with spot gen-
trification, not all NHS observers in Atlanta agreed that
it was a problem. NHS staff admitted that some displace-
ment has taken place but argued that it is unavoidable if
reinvestment is to help the most seriously deteriorated
sections of a neighborhood where no loan (regardless of
terms) affordable by long-term residents would be suf-
ficient to do the necessary rehabilitation. They also
pointed out that Grant Park, the NHS neighborhood, is very
close to Inman Park, a major middle-class reinvestment area,
and that it would be impossible to prevent some middle-
class spillover from occurring. The PIHS staff argued that
the NHS program has prevented such displacement from becom-
ing even more widespread.
Another neighborhood with some evidence of displacement
was the Near Northwest NHS neighborhood in Chicago, where
a few houses were owned by speculators who were selling
at prices significantly higher than those in the rest of
the neighborhood. This practice was not widespread, how-
ever, and it cannot be said, based on available data or
interviews, that Near Northwest was experiencing any wide-
spread displacement. Nevertheless, it is the type of
neighborhood (based on location and housing stock) where
displacement could be a problem in the future and where
attention to the needs of tenants and low-income homeowners
would be an appropriate preventive activity.
CONCLUSIONS
While there is some variation in the extent and depth of
resident involvement, the basic expectations of the model
have been met. The remaining challenge is to incorporate
additional residents, especially renters.
92 '�49 'z
Notes
1. Data on the specific level and intensity of these ac-
tivities are not available. This was a shortcoming
in the research because these are the core services of
the program. However, the services shown in table 6-2
do convey the scope and mix, if not the different
emphases, of the programs.
2. The analysis is limited by the fact that only on re-
volving loan clients are data consistently kept.
Other clients who received the same services except
the revolving loan fund are not evenly reflected in
the files and are included by reference here in very
limited ways based on interviews with NHS staff.
3. A detailed analysis of loan clients is provided in
chapter 5, which also includes a more general analy-
sis of lending activity. These clients, however, do
not have higher incomes than the city median, and they
are long-term residents whose neighborhoods benefit by
the rehabilitation.
4. If any partner has an ambiguous role, it is the city
official. Even though they are asked to play spe-
cific roles (pay development costs, provide capital
improvements, and do code enforcements), their ac-
tivities on a day-to-day basis and on program govern-
ance are less clear. Some city officials even have
an ex officio role on the board, partly out of am-
biguity about what that role is and partly out of
some sense of fairness to other neighborhoods that
are not involved in NHS and who might feel slighted
by the city's direct and ongoing identification with
NHS.
5. In Chapter 12, we discuss the support and training
aspects of Neighborhood Reinvestment activities that
relate to that issue.
6. Some executive directors and financial institution
executives report that residents often become conser-
vative when given the fiduciary responsibility asso-
ciated with lending. Our analysis of lending associ-
ated with the revolving loan does not support this
contention.
7. Urban Systems fieldwork and surveys (1978 and 1979)
preceded Neighborhood Reinvestment fieldwork in six
of twelve cities in our study sample. Neighborhood
93
Reinvestment only requests a short (one page) quarter-
ly report on activities. Monitoring and evaluation
visits and support inquiries are made as needed.
8. Up to 2,000 Section 8 certificates have been set
aside for Neighborhood Reinvestment use by the central
office of the Department of Housing and Urban Develop-
ment (HUD). The formal contracts for their use are
between local NHSs and public housing authorities,
based upon allocation by Neighborhood Reinvestment to
the local NHS.
a
1
n
CHAPTER 7
THE ROLE OF FINANCIAL INSTITUTIONS
IN THE NHS PROGRAM
Housing is the major single expense and investment of most
American families, and few families have enough savings to
finance major housing rehabilitation projects out-of-pock-
et; thus, lending is an important factor in both home
purchase and home improvement. The shrinking availability
of credit and the demand for it in recent years has been
partly to blame for the decline in cities; therefore, a
major reason for introducing the NHS program was to in-
crease lending activity in declining urban areas and to
improve the attractiveness of the neighborhoods.
In looking at the role of financial institutions in any re-
investment activity, it is important to note the different
types of financial institutions and the roles they play in
housing. For purposes of this discussion, there are two
major types of financial institutions and several addition-
al sources of lending in urban neighborhoods. Clearly,
the major source of all residential lending is savings
and loan institutions and savings banks; these thrift
institutions were established to provide residential mort-
gages. The second major type of lending institution is
commercial banks, which typically service the suppliers of
housing rather than the consumers. Commercial bank con-
tacts are usually with developers, building owners, or in-
vestors who come with prepackaged or prearranged deals for
interim or permanent financing. Banks handle a relatively
small proportion of direct lending for residential first
mortgages, even though some maintain consumer loan programs
that are responsible for home rehabilitation activities.
The roles of credit unions, insurance companies, and other
sources of capital for first mortgages are relatively
small, although recent changes in the regulations and
practices of credit unions and insurance companies portend
a greater role for these institutions.
Mortgage companies, loan companies, home improvement com-
panies, and similar groups also play a role in housing
finance, often in intermediary or service roles, with
other major lending institutions. These groups are more
predominant in low-income neighborhoods, in part because
their underwriting criteria are less strict, they deal
with insured or guaranteed mortgages, or they have under-
writing terms that are sufficiently stringent or at rates
95
Vi00
high enough to cover the increased risks perceived in these
communities.
An aim of Neighborhood Housing Services (NHS) is to pro-
vide residents of low- and moderate -income neighborhoods
with more loans from mainstream institutions, including
savings and loans, commercial banks, and credit unions,
and to provide the loans under conventional terms. While
mortgage companies were active in some neighborhoods, NHS
programs made no systematic attempt to involve them in the
partnership. This assessment of NHS did not review their
activities, largely because mortgage companies are not re-
quired to report their activities as other institutions are.
The Urban Systems Research and Engineering, Inc., survey
data showed that a significant number of homeowners in
low- and moderate -income urban neighborhoods do not have
institutional mortgages. Twenty-three percent of the re-
spondents did not use a mortgage to buy their properties;
of those, 94 percent did not even apply for mortgages.
Many purchased their homes through some sort of owner -
financing, including land contracts. The impacts of this
noninstitutional lending are threefold. First, such finan-
cing tends to depress the prices of the housing because
the terms and interest rates associated with these. nonin-
stitutional lending sources are less advantageous to the
buyer. Second, it creates a soft market in which houses
sell slowly or not at all. Third, redlining discourages
home improvement because home improvement companies, con-
tractors, and finance companies tend to have consumer loan
rates that are higher than the mainstream financial insti-
tutions, thus making marginally good reinvestment uneconom-
ical.
The denial or restriction of credit resulted in a sub-
stantial campaign by housing advocacy groups in the 1960s
and 1970s against redlining. Numerous studies have docu-
mented the existence of this practice, including in some
NHS neighborhoods.) Laws passed by Congress --the Community
Reinvestment Act of 1977 and the Home Mortgage Disclosure
Act of 1975 --were designed to identify redlining and to
require regulatory agencies to urge financial institutions
to meet the credit needs of clients in their service areas.
The model essentially asks financial institutions to make
loans at conventional terms to all creditworthy clients in
an NHS area. It also asks that they participate in NHS --
either directly through participation on the board and
committees or indirectly through advice to the staff on
lending practices for the revolving loan fund. The finan-
cial institutions are also expected to contribute funds
M.
required for the operating budget --an amount that averaged
$65,000 per program in 1979• Connections typically are
made with senior executives of the financial institutions.2
This chapter will attempt to answer several questions.
First, what was the type and level of participation over
time for various institutions in the sample cities? Have
their perceptions of urban neighborhoods changed? What
are the benefits and costs associated with that partici-
pation and have new perceptions about inner-city lending
been transferred to other inner-city neighborhoods?
PARTICIPATION
As indicated above, different types of financial institu-
tions play different roles in the NHS program. Table 7-1
shows the types of institutions involved in the NHS pro-
gram in various sample cities. Although commercial banks
have significant roles in a few cities (such as Chicago
and Baltimore), in most cities savings and loan institu-
tions are the major contributors and the most active par-
ticipants in the NHS program. 'Credit unions play a mini-
mal role because of their size and constituency --of the
cities in our sample only Bridgeport, Conn., and Oakland,
Calif., have active credit union participation in the
program.3 To a lesser extent, associations of lenders,
mortgage bankers, and private mortgage insurance companies,
have been involved. In several states with branch bank-
ing, funds have been pooled to support several NHS programs.
Levels of Participation
There are two ways to measure the level of participation
in the program over and above the extent of contribution
to operating budgets reflected in table 7-1. Table 7-2
shows the total number of savings institutions nationwide,
by Federal Home Loan Bank district,as well as the number
of associations in each district that participated in NHS
programs. As of March 1979, 16 percent of approximately
4,250 savings and loan associations were actively involved
in the NHS program. This figure varies by district,
from a low of 9 percent in the Topeka bank district to a
high of 42 percent in the San Francisco bank district. The
data here do not distinguish the level or type of partici-
pation, only that a formal connection and some type of
participation exists.
A second way to examine the level of participation is to
look at the actual contributions financial institutions
make to the operating budgets of individual programs over
time. The average budget for a core NHS neighborhood
97
��z
TABLE 7-1
Contributors to NHS Operating Budget, 1979
T
Nonprofit
S$L's and
Savings
Commercial
Credit Other
Insurance
Groups and
City
Banks
Banks
Unions Lenders
Companies
Corporations
Foundations
Atlanta, Ga.
24
6
-- -gb
Baltimore, Md.
22
10
--
2
15
2
2
Bridgeport, Conn.
10
6
1 --
2
2
Chicago, I11.
47
14
-- --
_-
Cleveland, Ohio
22
la
7
-
13
__ 4
8
e
Dallas, ex. 0 l 1 1
Jamaica,:N.Y. oc 5 d
La Habra, Calif. 13 1 -- 1
Nashville, Tenn. 5 6 --
Oakland, Calif. 28 5 1 ld--
i Philadelphia, Pa. 38 -7
Racine, Wis. 7 j
a. Commercial bank clearinghouse.
b. Includes mortgage bankers, two statewide associations, and private mortgage insurance companies.
C. The New York State Savings Bank Association pooled contributions from New York City area savings banks.
d. California NHS Foundation, which is conduit for -contributions for 18 statewide lenders.
e. New York State Department of Housing.
I
TABLE 7-2
Savings and Loan Association Participation
in NHS, March 1979
Federal
Home Loan
Bank District
Number of
Associations
Number of NHS
Participants
% of
Partici-
pation
Boston, Mass.
227
47
21
New York, N.Y.
328
47
14
Pittsburgh, Pa.
320
50
16
Atlanta, Ga.
676
log
16
Cincinnati, Ohio
533
107
20
Indianapolis, Ind.
216
25
12
Chicago, Ill.
497
55
11
Des Moines, Iowa
269
52
19
Little Rock, Ark.
603
71
12
Topeka, Kans.
221
20
9
San Francisco, Calif.
203
86
42
Seattle, Wash.
157
20
13
Total
4,250
689
16
Source: Federal Home Loan Bank Board, 1979•
! program (i.e., three person staff and office expenses) is
i about $65,000 a year. Table 7-3 shows the percentage
contribution to operating budgets made by financial insti-
tutions as opposed to contributions from other sources.
Financial institution contributions range from a low of 23
percent in Racine to a high of 100 percent in six of the
twelve programs in the study sample.5 In cases where
the financial institution contribution was not sufficient
t to fund the operating budget, the differences were typically
made up by a contribution from the city (usually Community
Development Block Grant funds). Contributions from private
sources other than financial institutions tended to be
fairly insignificant (except in Bridgeport, where fifteen
industries made a 20 percent contribution, and in Jamaica,
N.Y., where the New York State Department of Housing con-
tributed 34 percent of the operating budget).
Although financial institutions are not asked to con-
tribute to the revolving loan funds, contributions have
been made to these funds in the form of a line of credit.
In at least one case, Baltimore, a consortium of commer-
cial banks has agreed to serve as a secondary market for
99
76 -Z
H
0
0
TABLE 7-3
NHS Operating Budgets, 1975-79
Annual
Average
Operating
% Financial
Institution
% City %
Other
Comments
Cit
Bud et
0
0
Operating budget has gradually decreased
Atlanta, Ga.
54,136
100
since 1976.
Baltimore, Md.
9 5,000
50
50
0
20
HOP started in 1978, 15 industries have
Bridgeport, Conn.
85,000
80
0
contributed to the program.
Chicago, Ill.
79,286a
0
0
0
Cleveland, Ohio
64,000
100
0
0
2
Before expansion, funded 100% by lenders.
Dallas, Tex.
65,000
48
50
34
Funded 34% by New York State Department
Jamaica, N.Y.
61033
,
66
0
of Housing.
0
0
City appropriated $12,000, available for
La Habra, Calif.
60,000
100
special operating expenses.
Nashville, Tenn.
52,220
100
0
0
Oakland, Calif.
54,254
100
0
0
0
City gave $28,000 for 1 year.
Philadelphia, Pa.
83,811
100
0
Racine, Wis.
65,000
23
77
.0
Source: Local NHS
program data and annual
reports.
contracts
for other programs or services than the
Note: These figures
do not include
grants,
fees, and
regular NHS program.
le by
source
of funds. It is clear that there was no
a. Separate neighborhood
budgets
are not availab
contribution from
the city.
all revolving loan funds. This arrangement contributes
substantially to the liquidity of Baltimore's program and
has helped the program to meet the extra demands of its
homeownership promotion component.
Through 1979, the level of financial support given by fi-
nancial institutions tended to be consistent --very few
made substantial increases or decreases in the amounts
they contributed. Concerns that financial institutions
may reduce their contributions in the future were not
supported by evidence through 1979.
NONFINANCIAL CONTRIBUTIONS TO THE NHS PROGRAM
In addition to the contributions to the operating budget
and the extension of credit to the neighborbood, financial
institutions were asked to provide services to the NHS
in terms of participation on the board and on board com-
mittees and in the provision of assistance to the NHS
staff. This is done in every program we reviewed. In
several programs, certain financial institutions have also
agreed to function as the servicing institution for loan
collection and processing for the NHS program. Whether
they view this primarily as a contribution or whether they
see this as a way to attract business was not determined.
Table 7-4 illustrates the level of participation by finan-
cial institution executives in board activities. It shows
the first board chairperson, the present board chairperson,
and the chairperson of, the citywide NHS or central NHS
board. A clear pattern has emerged; almost without excep-
tion, lenders were the chairpersons when the NHSs were
developed, thus providing critical leadership to programs
in their early stages. This expertise is essential both
to gain prestige (and funding) for the program and to
provide leadership in the establishment of organizational
stability.
As the boards matured, however, the pattern tended to re-
verse itself almost completely, with ten of the twelve
boards being headed by residents rather than by financial
institution executives.6 This maturation takes place three
or more years after the organization is established. Chair-
persons for central boards are, again without exception,
the lenders. This situation is viewed as critical because
central boards work primarily on fund raising and resource
development rather than on programmatic activities, and
lenders are viewed as extremely helpful in raising funds
and attracting additional financial institution support to
the programs. Another reason they may be more appropriate
to chair the central board is that this practice limits
101
4G�2_
TABLE 7-4
Pattern of Board Leadership, 1972-79
Note: F = financial institution.
R = resident.
n.a. = not applicable.
conflicts in leadership responsibility for fund raising
and for the allocation of funds among several neighborhoods
under a central board's responsibility.
DROPOUTS AND NEW RECRUITS
There was very little evidence in the twelve study sites
that financial institutions, once involved in the NHS
program, dropped out. The two exceptions were in Atlanta
and Philadelphia. In Atlanta, three institutions dropped
out --two savings and loan associations and one commercial
bank. Tight economic conditions was the reason given.
In one case, a small savings and loan association merged
itution
toth a contribute larger to one,and
program.mergnd Philadelphia, two continue
inst
sav-
ings and loan associations dropped he Several fir
reasons that could not be fully determined
nancial institutions interviewed indicated that they as-
sumed they were involved in a three-year commitment. Al-
though
ve
tributemtot thenancial programs the tissue sovear then number to con -
of years
102
.416,z
First
Present
Central
Board
Board
Board
Chairperson
Chairperson
Chairperson
City
Atlanta, Ga.
F
R
R
n.a.
F
Baltimore, Md.
F
F
F
Bridgeport, Conn.
R
R
F
Ill.
Chicago,
R
F
Cleveland, Ohio
F
F
F
Dallas, Tex.
R
n.a.
Jamaica, N.Y.
F
R
n.a.
La Habra, Calif.
F
R
n.a.
Nashville, Tenn.
R
R
n.a.
Oakland, Calif.
F
R
F
Philadelphia, Pa.
R
n.a.
Racine, Wis.
F
Source: NHS program annual
reports
i
Note: F = financial institution.
R = resident.
n.a. = not applicable.
conflicts in leadership responsibility for fund raising
and for the allocation of funds among several neighborhoods
under a central board's responsibility.
DROPOUTS AND NEW RECRUITS
There was very little evidence in the twelve study sites
that financial institutions, once involved in the NHS
program, dropped out. The two exceptions were in Atlanta
and Philadelphia. In Atlanta, three institutions dropped
out --two savings and loan associations and one commercial
bank. Tight economic conditions was the reason given.
In one case, a small savings and loan association merged
itution
toth a contribute larger to one,and
program.mergnd Philadelphia, two continue
inst
sav-
ings and loan associations dropped he Several fir
reasons that could not be fully determined
nancial institutions interviewed indicated that they as-
sumed they were involved in a three-year commitment. Al-
though
ve
tributemtot thenancial programs the tissue sovear then number to con -
of years
102
.416,z
they will support the budget will be a major one for lend-
ers. This may result in some dropping out in the future,
especially among smaller institutions, who view their serv-
ice areas as rather small or who experience financial dif-
ficulty in the current recession.
In terms of new recruits to participation from among finan-
cial institutions, Philadelphia has had the most substan-
tial increase in participation. Twenty suburban savings
and loan associations, which had no direct connection to
the NHS neighborhood and did very little lending in the
city, stated that they had begun to contribute to the
Program --mainly for social reasons and a concern for "the
future of the city." Baltimore recruited ten additional
commercial banks in recent years, largely as a result of
the persuasive efforts of a senior executive in one of the
savings and loan associations who has been instrumental in
assisting the program since its inception.
CHANGES IN PERCEPTIONS
t This section asks two questions: Have financial insti-
tutthesNHSPerceptions of low-income areas changed because
program. What types of activities have caused
these changes (if in fact there have been changes)? Dur-
ing interviews with financial institution executives, sev-
eral points emerged with respect to these questions:
• Most lenders said their experience with NHS has
Positively affected their attitudes toward low-
income homeowners and the difficulties some fami-
lies have in meeting traditional bank standards.
• Several said the NHS experience has changed their
perception of potential low-income. customers.
Some financial institutions have developed spe-
cific outreach programs and look to the NHS pro-
gram ect source stimulate
demand
de and for o their d services. aThey
insist, however, that their underwriting criteria
have not changed --although they did indicate a
greater understanding of how to read the finan-
cial and credit backgrounds of low-income families.
A few have appointed urban lending officers who
Provide specially targeted public relations and
outreach services in urban neighborhoods.
• Several indicated that their financial institution
had not been lending in the city or that they knew
redlining had been occurring in their cities; how-
ever, they felt that these situations were no
103
lilG oZ
longer the case, especially in NHS neighborhoods.
None admitted that their institutions had redlined,
although they did say that a lack of demand existed
or that some loan requests could not be approved
as presented.
Several praised NHS's counseling and referral
services and reported that they had received sev-
eral very sound loans through the NHS program, both
for first mortgages and rehabilitation loans.
They reported that they have had few or no prob-
lems with delinquencies for conventional home im-
provement loans and that their experience with
NHS residents has been comparable with that of
typical non -NITS borrowers.
Several mentioned the value of. the code enforce-
ment and rehabilitation and construction assist-
ance aspects of the NHS program. They reported
that these activities and services provided them
with greater confidence that their loans were
secure. Many admitted that they had few resources
for doing this work themselves, and the track
record of the NHS program was an additional re-
source for helping them judge the loan applica-
tions.
A second way to look at the changes in financial institu-
tion perception of the NHS neighborhood is to examine
actual institutional lending activity in several programs
during recent years. The data reported here are based on
information available from seven of the twelve programs.
We have no systematic way of estimating non -institutional
lending which in some neighborhoods may be quite substan-
tial. Data from the five other programs (Dallas, La Habra,
Racine, Oakland, and Cleveland) are not available for
various reasons.9 In Chicago (based on data from Chicago
Title and Trust Company), sixteen institutions made 98
loans in the NITS neighborhood in 1975• In 1979, twenty-
four institutions granted 197 loans in the NHS neighbor-
hood. The average loan amount in 1975 was just under
$18,000; it climbed to just over $24,000 by 1979• The
data make it difficult to determine the source of second
mortgages. In 1975, as best as can be determined, there
were 36 second mortgages from financial institutions; by
1979, the number had climbed to 56. A substantial number
of second mortgages still were obtained from noninstitu-
tional sources, but this figure is difficult to interpret
because some of these included mechanics' liens and liens
against property for loans unrelated to home improvements.
104
116.2.
NHS records in Nashville for the period 1975 to 1978 show
that the number of financial institutions active in the
neighborhood increased from eight to ten and the number of
loans from the institutions increased from twenty-eight
to fifty-five. The number of owner -financed sales in the
neighborhood for 1975 and 1978 were nineteen and twenty-one,
respectively. This suggests a declining role for owner
financing and an increasing role for the financial institu-
tions. Finance companies and credit unions maintained
their share of fewer, than twenty loans each for 1975 and
1978.
In Baltimore, NIIS reports show the number of institutional
loans increased from 72 in 1970 to 200 in 1978, and the
total annual loan amount increased from just under $400,000
in 1970 to almost $3.5 million by 1978. Figures for Balti-
more show not only a substantial increase in the number of
loans, but also an increase in the average loan amount,
from just under $5,500 to more than $17,000.
In Bridgeport between 1976 and 1979, the NIIS reports that
the number of institutional loans increased from 162 to
267, and total mortgage dollars increased from $4.4 million
to $12.5 million. The relatively larger number of trans-
actions in the Bridgeport neighborhood reflects a substan-
tial transition in the neighborhood in those years, during
which there was a substantial influx of Spanish-speaking
residents.
In Atlanta between 1974 and 1979, MIS reports show the
number of conventional loans increased from twenty-three
to sixty-three, the total loan amounts increased from
$332,000 to $1.6 million, and the price of an average home
in the NHS neighborhood increased from $14,000 to $26,000.
In Philadelphia, the number of conventional mortgages in-
creased from twenty-seven in 1974 to thirty-eight in 1979,
and the average loan amount increased from $7,400 to a
little more than $10,000. In Jamaica, there were thirty-
nine loans. in 1973 and thirty-eight loans in 1979, and the
total amount loaned increased from $769,000 to $1,151,000,
indicating an increase in the prices of these houses. The
numbers for both Philadelphia and Jamaica show that the
NHS program has been operating in relatively soft housing
markets --with limited turnover and depressed prices. The
one positive aspect to this situation, however, is that at
least in Philadelphia, for which more information is avail-
able, there has been an increase in the number of conven-
tional loans as compared to the number of loans guaranteed
by FHA or VA or loans financed privately. The HOP was
started in 1978 to strengthen the real estate market, and
105
��z
1980 figures will be the first to reflect the impact of
that effort.
Although the foregoing information on conventional mort-
gage lending in the various NHS neighborhoods is sketchy,
with the exceptions of Jamaica and Philadelphia, there has
been a significant increase in the number of conventional
institutional mortgages given to neighborhoods that previ-
ously
ly soft
marketsXpplOriThe eJamai ad is relatively either neighborhoolisolated
and was the site of numerous foreclosures and other housing
problems in the 1960x. The East Frankford neighborhood of
Philadelphia reflects the generally softer market (i.e.,
fewer sales, less institutional financing, etc.) in that
city as compared to other neighborhoods in the sample.
Given the often slim records kept on referral and the fact
that some programs don't keep records at all, the discus-
sion probably underestimates the incidence of conventional
lending.
Table 7-5 shows the level of participation in 1978 of
savings and loan associations in various types of com-
munity reinvestment activities, including NHS -11 The de-
gree of overlap among these various categories of par-
ticipation cannot be determined; thus, a cumulative rate
of participation cannot be extrapolated.
BENEFITS OF PARTICIPATION
It is difficult to distinguish benefits that were recog-
nized by participating financial institutions prior to
their involvement (and perhaps served as a basis for their
involvement), from those recognized as a result of their
participation. Generally, however, lenders cited benefits
relate and
ed to their motivation forginitialheir involvement.foBenefits t
y as
theirwere
described in more "universal" terms. However, more speci-
fic benefits were described when lenders were asked about
their own participation. These benefits were both "busi-
most"and common'scomment w s terms
that participation benefits,
the
NHS
program was helpful in protecting investments in the NHS
area and in nearby neighborhoods. Many saw this as an
important aspect because very little investment was requir-
ed on their part and they had the opportunity to actively
participate and shape activities they regarded as positive.
Another business benefit cited, although not as widely,
was the opportunity to attract additional clients or to
service NHS loans. Finally, in smaller cities such as
Bridgeport, the financial institutions did not view the
NHS neighborhood as totally separate and distinct from the
106 //(, Z
r-.• .
s
TABLE 7-5
lS
Neighborhood Reinvestment Activities of Savings and Loan Institutions, 1978-79
}
I
i
Number of Associations Participating by Program
■
Pass
Through
of
Indiv.
Total
Community
Community
HUD
Subsidized
state
Private
Partner-
Reduced
Interest
Assn.
Target
Number
Investment
Lending
Lenddinging
COAG/
(Section 8
Rural
Agency
Programs
MIS
ships
Rate
Area
District
of Assns.
Fund
Specialists
ODAG
and 235
Programs
Bank
19
28
2
32
47
0
3
26
Boston, Hass.
227
56
88
B8
23
58
0
33
47
28
20
4
0
12
New York, N.Y.
328
72
43
20
5
2
4
50
11
Pittsburgh, Pa.
320
676
140
I37
80
47
29
46
109
49
14
47
Atlanta, Ga.
533
83
88
62
57
12
19
IZS
4
0
22
Cincinnati, Ohio
216
36
37
28
12
9
24
9
22
N Indianapolis, Ind.
497
48
33
l7
12
5
10
55
0
2
38
Chicago, Ill.
269
74
37
8
60
7
20
0
52
7t
0
3
45
Des Moines, Iona
603
109
69
0
60
22
20
24
9
39
Little Rock, Ark.
221
71
30
12
27
Il
12
0
19
0
Topeka, Bans.
San Francisco, Calif.
203
79
64
7
6
17
29
22
18
IS
21
86
20
23
13
23
Seattle, Mash.
157
54
48
201
101
282
4,250
910
719
282
414
139
219
689
- Total
Source: Federal Homo Loan
Bank, December 14, 1979, and Neighborhood Reinvestment.
■
rest of the inner city; they saw the program as an opportu-
nity to offer some public relations and outreach activities.
Financial institution executives from virtually all of the
programs in the sample programs have been active in Neigh-
borhod onal and
iprograms in
otherocities. In n sense, tithey have used n th programs to
spread the word and to provide information about NHS to
financial institutions in other cities. Personal satisfac-
tion gained from these activities was cited as a social
benefit. Other lenders cited the opportunity to help
families whom they traditionally had not been able to
help. 14HS provided the opportunity to be ass ha
tthat
clients had financial and credit counselinthe g,
done,
the
rehabilitation assistance would help Be
and that clients met the appropriate banking criteria.
The presence of the revolving
then meant
normallythat
not ebe
re
was a means of helping people Y would
able to assist.
The opportunity for lenders to participate in reinvest-
ment activities and to work with the city was cited as one
of the major impacts of NHS programs. We were surprised
at how limited such contacts in fact were. At the time
NHS was established, in all but two cities, no such -collab-
oration had taken place.
SPILLOVER
The study tried to determine the extent to which activi-
ties associated with the NHS program or the activities
of NHS actors have spilled over into other neighborhoods
in the city. Any spillover that is identified means not
only that the reinvestment activity is multiplied at lit-
tle, if any, additional cost; it also reflects the degree
to which the commitment by the various actors is genuine
and the extent to which NHS might help them normalize
their business and institutional behavior in other neigh-
borhoods. Evidence of spillover in several sample cities
is listed below.12
• In Dallas, seving NHS -type and activities inneighbor
are developing . These ac-
tivities include hoods in other 5eloannsof the icounselingand referral,
set -asides for conventional housing loans, co-
ordination with the city on inspection services,
capital improvements, and public services.
In Atlanta, three savings and loans have pur-
chased, repaired, and sold houses (at cost) in
K.,
4(o Z
the NHS neighborhood, an activity that provided
their staffs with experience in various phases
of rehabilitation underwriting. These homes also
serve as models to illustrate improvements that
can be made.
• In Cleveland, the chairman of the NHS central
board, who is a lender, was on the advisory panel
for the development of a citywide low-interest
loan program, which he successfully expanded to
other neighborhoods and in which private insti-
tutions are active.
• In Chicago, several financial institutions spon-
sored an NHS Redevelopment Corporation that pur-
chases vacant houses for rehabilitation and sale
to neighborhood residents. Also, the Continental
Bank in Chicago, one of the largest banks in the
country, funds one NHS -type program totally and
has a mortgage set-aside program for low-income
neighborhoods in Chicago that do not have NHS
programs.
! • In Philadelphia, as an outgrowth of the develop-
ment of the NHS, a group of lenders pledged to
create programs to deal with other neighborhoods;
the result was the highly publicized Philadelphia
Mortgage Plan (PMP).
FINANCIAL INSTITUTION EVALUATION OF THE NHS PROGRAMS
Financial institution executives were overwhelmingly posi-
tive about the NHS program and its effectiveness. Many
superlatives were used to describe the program. They
praised NHS for its lack of bureaucracy, for its inclu-
sion of residents as decision-making partners, for its
business approach to neighborhood improvement (use of loans
versus grants), and for its accountability to the partners.
Despite widespread and substantial approval, criticisms
were made; some referred to the program in general, but
most referred to specific programs. A general comment was
that NHS should be able to complete its work and move on
to another neighborhood after a reasonable period of time
(3-5 years). Many felt that they were brought into the
project on the assumption that it would be a three- to
five-year commitment, after which the program would be
completed or move on; yet several programs are being funded
beyond a fifth year. Concerns were voiced that their activ-
ities will create the kind of dependency they deplore in
neighborhood programs. The few who were adamant on this
109 116 �?_
point were in favor of moving the program on to new neigh-
borhoods, even when they were reluctant to provide addition-
al support for the first neighborhood.13
Several criticisms noted problems in individual programs,
for example, shortcomings in resident participation or
leadership (3 programs), or with follow-through on commit-
ments by the city (2 programs). Other criticisms cited
the lack of substantial and effective public relations
activity and outreach and the need to expand the financial
base of contributors. In a couple of programs some con-
cern was voiced about the adequacy, competence, and size
of staff, and the extent to which they were willing to
develop work plans.
CONCLUSIONS
Many doubted that financial institutions, after years of
little or no involvement in inner-city lending, would take
on major responsibility for a neighborhood -based housing
rehabilitation program. Others doubted that they would
have a commitment that would go beyond symbolic gestures,
yet this chapter documents that those early fears were not
well founded. The number of financial institutions parti-
cipating has steadily increased from a handful in 1975 to
more than 1,200 in1979> in certain cities, they have
increased the number of programs and the size of the
local contributions. Individual lenders have taken on
leadership responsibilities with fellow lenders and with
other partners, and there has been a moderate increase in
the level of conventional lending in NHS communities.
Those are critical elements to the NHS program's success.
Notes
1. See note 7 in chapter 1. A number of local advocacy
groups have been active in documenting redlining in
urban NHS neighborhoods and leading local efforts to
reverse the practice. At the national level, groups
such as the National Association of Neighborhoods have
been active.'
2. The financial regulatory agencies that make up the
board of Neighborhood Reinvestment are required under
the Community Reinvestment Act of 1977 to encourage
lending institutions they regulate to help meet the
"credit needs of their service areas." These agen-
cies look to Neighborhood Reinvestment as one of the
avenues by which financial institutions can identify
and help meet these local needs. The agencies are
frequently involved in encouraging institutions to be-
come part of local partnerships. We do not mean to
i suggest that all or even most lenders are pressured
or involved for CRA credit. For all of the lenders in
i this study, their involvement pre -dates CRA.
Our interviews suggest that credit unions play a
larger role than we can document with available data.
Many credit unions are organized through major em-
ployers and therefore the data are beyond our review.
Many credit union loans, especially small loans, are
for home improvement but are not so stated because a
lien is not required or offered.
4. The 16 percent level of savings and loan association
participation may appear small. Actually it is large.
If we could limit the analysis to particular cities
where NHS programs are organized, this would be clear.
For example, about one-third of the savings and loan
institutions in Chicago are participating in the NHS
programs. The overall percentage is low because a
significant portion of savings and loan institutions
are small institutions outside cities in which most
NHS programs are established. This is especially true
in the south, midwest, and west. No comparable data
on overall participation are available for other types
of lenders (i.e., commercial banks, credit unions, etc.).
However, the savings and loan associations are the key
institutional source of funds for home improvements
and first mortgages.
5. The reader will note that these figures include only
the budgeted amounts for core NHS activities and do
not include grants, consulting fees, or reimbursements
for services provided. These additional sources of
funds are often equal to or greater, than the core NHS
budget.
6. Resident members of the board include not only low -
and moderate -income residents in the neighborhoods,
but often the heads of neighborhood organizations,
local ministers, or even outsiders in rare cases.
7. This discussion does not reflect add-ons or drop -outs
past December 1979.
8. Lenders report that the NHS counseling is effective
in educating borrowers and improving their loan ap-
plications; specifically, the applications counseled
by NHS are likely to include detailed drawings and
work plans that give the lender greater knowledge of
exactly what work is to be performed and how it will
affect the value of the structure. This kind of de-
tailed working with residential clients is not typi-
cally done by financial institutions, especially by
commercial bankers. As the NHS track record has im-
proved, confidence that lenders have in making loans
to those referred to it by the NHS has increased.
9. For Dallas, the case of home mortgage disclosure data
is not aggregated. For Racine and La Habra, the cities
are too small for commercial lending data to be aggre-
gated separately. For Cleveland, the data beyond that
reported here are not aggregated.
10. These data should not in any way be read as a comment
on the presence or absence of redlining. Adequate
data were not available to make such a determination.
11. The data in table 7-5 give some indication of the
level of 1978 participation by savings and loan insti-
tutions in various neighborhood activities, including
NHS. However, the degree of overlap on these various
types of activities could not be determined.
12. It is not suggested that all of these activities are
the sole consequence of NHS participation, nor are all
activities included that might reasonably be listed in
this category.
13. This issue is dramatically highlighted in the experi-
ence in Atlanta, Dallas, and Nashville. In Atlanta
and Nashville, in particular, there has been great
eagerness on the part of financial institutions and
city officials to expand the NHS to a second neighbor-
hood. Enthusiasm for further contributions to the
original neighborhood had declined.
112
7 � x--
CHAPTER 8
THE ROLE OF LOCAL GOVERNMENTS IN NHS PROGRAMS
Until the enactment of the Community Development Block
Grant program in 1974, local government activities in
community development in older neighborhoods included pri-
marily implementing categorical programs such as model
cities and urban renewal. These programs were designed in
Washington, D.C., and local communities did not set guide-
lines for target area selection, program design, outreach,
or other aspects of implementation.
Under Community Development Block Grants, however, local
communities themselves developed strategies for urban de-
velopment and allocated resources provided by the federal
government.) Except for Baltimore, none of the cities in
the sample had a comprehensive neighborhood development
strategy before the arrival of the Community Development
i Block Grant program.2 All the sample cities have since
developed strategies to some degree, though, as we shall
see, they vary widely.
Because the sites included in this study were among the
first Neighborhood Housing Services (NHS) programs, the NHS
program often preceded the development of local strategies
to deal with neighborhood problems. Therefore, initial
city participants in the NHS development were city govern-
ment staff members responsible for code inspection and
more traditional property -related government activities.
Since the mid-1970s, an increasing number of other local
agencies have become involved in the NHS program. This
chapter analyzes the role that cities have played in NHS
development and the changes in that role over the past
five years. It also tries to determine whether city policy
has been affected by the NHS program.
In the original NHS model, local governments performed
several activities, including assisting in program de-
velopment and making grants to support early organizing
activities. The cities were also asked to make specific
commitments to increase capital improvements and to co-
ordinate those improvements with the NHS program. They
were asked to establish a sensitive but systematic housing
inspection procedure that would not only help enforce
health and safety regulations but would also help resi-
dents identify rehabilitation needs. Cities could also
113
Z
serve on the NHS board and contribute to the revolving
loan fund.
In the smaller cities in our sample --Racine, Wis., and La
Habra, Calif. --NHS was the first operating housing program.
This is still true in La Habra; Racine instituted a city -
run housing program in 1979. In large cities (Chicago and
New York), the NHS program, even though prominent in the
neighborhoods, was only one of many initiatives in the
city.
PARTICIPATION BY THE CITY
Table 8-1 outlines NHS activities in which the sample
cities have participated. Only those activities a city
has been involved in during the three most recent years of
the program are shown in the table. The table does not
include initial activities that were not followed up or
intermittent, or minor activities.
Financial Contributions
Table8-1 shows three types of financial contributions
made by cities to help develop and operate their NHS pro-
grams. In the first type, program development, recent NHS
experience has shown that cities will make the initial
contribution toward the development of the program, an
amount ranging from $35,000 to $50,000. Because some of
the early programs in our sample were established before
1974, when this aspect of the model was not required,
seven of the twelve cities did not make this contribution.
Each city made a contribution to the revolving loan fund
except Chicago, Jamaica, N.Y., and Philadelphia. Con-
tributions ranged from $50,000 to $500,000. These funds
were a major source for the initial revolving loan fund
and were supplemented with foundation grants, corporate
gifts, and small grants (averaging $50,000) from the Neigh-
borhood Reinvestment Corporation.
Only three cities in the sample made ongoing contributions
to the NHS operating budget --Baltimore, Dallas, and Racine.
Dallas and Baltimore made contributions that amounted to 50
percent of their program budgets in the previous three
years that were used to help support neighborhood expansion.
Racine contributed 77 percent because the city's financial
institutions were too small to provide sufficient funding
to the operating budget. In the original model, it was
expected that financial institutions would be the major
contributors to the operating budget; therefore, it is not
surprising that in most cases cities contribute minimally.
114
/7z6
t
TABLE 8-1
Financial contributions
Program -development
Revolving loan fund
- Operating expenses
f, Code inspection
m Systematic
Flexible
inspectors) assigned to nel
Capital improvements
Ordinary construction and me
Special projects
Based on NHS program priori)
Neighborhood board particip�
Active
Voting nember(s)
dX officio
Other assistance
Coordination and referral w:
loan 8 grant programs and
rehab programs
In-kind assistance
Service contracts
City NHS Participation
Nash- Phils- j
Housing Inspection
The NHS model calls for a city to provide a sensitive but
systematic housing inspection program. The program should
be sensitive in that it is not a coercive effort that re-
quires more improvements, or improvements at a faster pace,
than families can afford to make; it should be systematic
in that the entire neighborhood is inspected within a
reasonable time.
Analysis of sample city data, however, showed that few pro-
grams had a system that combined both elements --a city had
either a systematic or a sensitive code program, rarely
both. Code programs in Atlanta, Jamaica, La Habra, Phila-
delphia, and Racine were sensitive but they made inspec-
tions only after receiving complaints; the cities took no
special initiatives to inspect other properties. The com-
plaints were often about vacant properties or the most se-
riously deteriorated properties occupied by tenants. There
was evidence of initial confusion, mixed signals, or resi-
dent resistence on code policy in several of the sample
cities.3 In these instances, the program relegated code
enforcement to lower status in terms of priorities (except
for investor-owned properties) and focused instead on edu-
cating residents to the benefits of home improvement.
Several other cities, however, did have systematic code
enforcement programs and assigned inspectors to the neigh-
borhoods at least part-time. Many inspectors work out of
the NHS office and in close conjunction with the NHS re-
habilitation staff.
Capital Improvements
The original NHS model for city participation called for
the coordinated provision of capital improvements to the
NHS neighborhood, including not only ordinary maintenance
and construction projects but also special activities to
improve the quality of life and physical amenities in the
neighborhood.
Table 8-1 shows that every city, except New York in the
case of the Jamaica NHS, met their commitments in terms
of ordinary construction and maintenance. Serious de-
terioration still exists in the Jamaica neighborhood. How-
ever, during the period covered by this analysis, both New
York City and Cleveland experienced serious fiscal crises,
and many capital improvements and public works activities
in these two cities were postponed.
116
In terms of special projects, only Cleveland, Jamaica, and
Nashville did not undertake major projects in the NHS
area. In Atlanta, Oakland, Calif., and Bridgeport, Conn.,
major improvements concerned parks and recreation facili-
ties. In Atlanta and La Habra, community centers were
built or rehabilitated; in Baltimore and Dallas, major
infrastructure improvements were made; and in La Habra,
where the central business district is within the NHS
neighborhood, major public improvements were made for the
entire area.
The final indicator of city capital improvement partici-
pation in NHS is whether the improvements made (both ordi-
nary maintenance and special projects) were based on prior-
ities established as part of the NHS program. In every
city where substantial improvements were made, this coordi-
nation existed. Atlanta, Jamaica, and Nashville specifi-
cally did not have this coordination with the NHS board.
Neighborhood Board Participation
The original model did not call for the city to be active-
ly involved in the NHS board. Participation by the code
inspector formed a city's initial involvement, but as
programs matured, the city role was carried out by several
agencies. Only in Atlanta and Jamaica were city officials
t not actively represented. In Atlanta, the city has a
limited ex officio role, but there is no city participation
in board activities in Jamaica. Although Philadelphia is
not represented on the NHS board, a key city official did
iwork closely with NHS and served as a liaison between NHS
and several city agencies. In Chicago, the city is not
active on the neighborhood board but is extremely active
on the central NHS board and plays a key role in site
selection and neighborhood expansion.
Other Assistance
In addition to the activities cited above, the cities
play other roles in the NHS program. In general, all
programs except those in Jamaica and Nashville reflected
coordination and referral between NHS and city loan and
grant programs. This coordination is important not only
because it allows resources to be used efficiently, but
it also makes available, through NHS's service delivery
mechanism, grant funds and other subsidy support that
were part of the cities' community development programs.
The cities also provided NHS with extensive in-kind as-
sistance, ranging from free office space in Atlanta and
Nashville and vacant homes or properties in Oakland and
117
yK,1_
Philadelphia to technical assistance in most of the other
programs. In Racine, the city provided critical support
to the program when it was experiencing internal diffi-
culties. In La Habra, the city provided the NHS program
with an acting director (the assistant city manager) while
the program looked for a new executive director.
Without exception, city officials reported that NHS com-
plements their activities well. NHS has provided a live
demonstration to help resolve certain community develop-
ment questions --what are appropriate local activities, what
roles can private organizations play, whether to spread or
target funds, how to involve citizens in a positive,
non-confrontive way, and how to create and assist public/
private partnerships.
Cities also reported that they found NHS to be an effec-
tive way to use federally allocated resources. Unlike
some local agencies doing community development, NHS was
able to spend most of the money allocated to it.
The relationship between the NHS and the city in our sample
has not always been smooth. Tension or disagreement over
goals and program focus sometimes led to limited and unen-
thusiastic support of the program in the early years. This
was especially true in Bridgeport, Atlanta, and New York.
The recent trend has been toward increased cooperation and
coordination. Cities such as Bridgeport that were origin-
ally lukewarm to the program have recently developed a
stronger relationship with NHS, especially as it relates
to capital improvements and setting priorities for such
improvements. Four of the twelve sample cities have desig-
nated the NHS area as a Neighborhood Strategy Area (NSA),
thus bringing additional city and federal resources to
bear on the neighborhood's problems.5
Atlanta and New York have recently expressed their new con-
fidence in the NHS program by offering increased participa-
tion in NHS expansion programs. This comes after only
limited involvement in the original neighborhood program.
Dallas wants to add one new NHS neighborhood each year,
completing major work in each neighborhood in three to
five years.
THE ISSUE OF SUBSTITUTION
One question raised at the beginning of this study was
substitution --whether city participation and funding of
NHS programs occurred at the expense of other neighbor-
hoods in the city. To the limited extent community
118
4ZIa '),
development and capital improvement budgets could be ana-
lyzed, there was no reliable evidence on this issue. Even
if data were available, it would be difficult to identify
the appropriate share of resources for given neighborhoods
because capital improvements and community development needs
are not easily disaggregated --for example, 5 percent of
the population may get and need more than 5 percent of
the funds, and capital improvements often affect a much
larger area than the immediate neighborhood in which they
are made. Needs with respect to neighborhood revitaliza-
tion vary greatly.
The NHS program is a way for cities to target a portion of
their community development resources. There are other
resources available that are not used in the NHS area. The
NHS share of community development dollars is so small
that substitution would likely be a moot issue. Most
cities in the early years of community development disper-
sed their resources to a wide range of neighborhoods.
The Department of Housing and Urban Development (HUD) has
recently reversed its policy, and regulations (such as
NSA, discussed above) now require cities to target their
funds. Therefore, NHS is consistent with current urban
policy --to allocate resources to areas of need.
RECENT CHANGES IN CITY STRATEGY
Another impact of the NHS program may be that it has be-
come a model for developing neighborhood strategies in
cities nationwide.6 Table 8-2 illustrates other neighbor-
hood programs in the study cities. Characteristics of
neighborhood programs instituted after NHS implementation
were compared with elements associated with the NHS ap-
proach --including neighborhood targeting, resident partici-
pation and outreach, capital improvement coordination, sys-
tematic and flexible code enforcement, specially assigned
inspectors or rehabilitation specialists, and direct par-
ticipation by representatives of private lending institu-
tions. The programs shown in the table do not include all
city housing or neighborhood programs, and the NHS program
cannot claim credit for all program design elements similar
to the NHS model that were incorporated in a program.
The extent to which city programs reflected in table 8-2
overlap the NHS model is evidence that the 14115 program
served as a model, at least partially, for local develop-
ment efforts. (The NHS program in each of the cities
precedes the local initiative that is cited, except in
Baltimore where the NHS program and the city's program
emerged concurrently.)
119
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TABLE 8-2
City -Sponsored Neighborhood Programs Developed after the Inception of NHS
Philadelphia, Pa. City Office of Neighborhood Preservation --Operates X X
city housing programs on a ne gni oG'i 'ad level
Racine, Wis. Cit De artment of Ilousin --Administers Section
1 312 programs Prov 0usly administered by MIS)
X
X
Specially
Neighbor-
Resident
Capital
Systematic
Assigned
Lender
hood
Partici-
Resident
Improvement
Code
inspector/
Partici-
City
Program Name and Description
Targeting
pation
Outreach
Coordination
Enforcement
Rehab Spec
pation
Atlanta, Ga.
City of Atlanta Dept. of (lousing and Physical
X
X
X
Develop.
Community Dev. (lousing Strategy using MIS -
style neighborhood offices
New sensitive housing codes
Baltimore, Md.
Previously used neighborhood housing strategies
X
X
X
X
X
X
but has increased funding of neighborhood -
based offices and organizations in NSAs
Bridgeport, Conn.
Rehab Assistance Pro ram --20t rebate grant
X
X
program admin stere y the city
Chicago, 111.
Model Block Program --takes targeted capital
X
X
X
X
improvements in residential areas
Cleveland, Ohio
Cloveland Action to Su ort Ilousin (CASII)--
X
X
X
X
X
X
C ty- n nonpro t corporation. The
city also has a 3% loan program in non -NSA
areas
Dallas, Tex.
Homeloan--flakes low-interest loans for senior
X
X
X
Tens, handicapped, and low-income residents
Jamaica, N.Y.
Small 112R2 Im rovement Pro ram (SIIIP)--Reim-
X
X
X
burse' nonprofit corporat ons for development
costs associated with housing rehabilitation
La Habra, Calif.
Low -Interest flousin Im rovement Loan Pro-
X
X
X
X
X
X
groin --mi a m n stars or of erly and low-
income residents
Nashville, Tenn.
No new programs since MIS
Oakland, Calif.
Oakland Better Ilousin Cor .--Nonprofit corpora-
X
t on un a y t m e ty to rehabilitate and
sell vacant houses
Multilander Mortgage Purchase and Rehabilita-
t on ro ram-- a es low-interest loans
SUFS-farzicy the city
Philadelphia, Pa. City Office of Neighborhood Preservation --Operates X X
city housing programs on a ne gni oG'i 'ad level
Racine, Wis. Cit De artment of Ilousin --Administers Section
1 312 programs Prov 0usly administered by MIS)
X
X
Baltimore is a special case in this regard. The Baltimore
program incorporates all elements of neighborhood programs
in the table, except for financial institution participa-
tion, but that aspect occurs in other areas of the city.
For example, lenders participate in the mortgage revenue
and the state housing finance programs, which provide a
substantial portion of the financing for rehabilitation in
the city's neighborhoods. The Cleveland program shows the
greatest concurrence with the neighborhood program elements.
Its CASH program, almost a mirror image of the NHS program,
is a city -funded, nonprofit corporation providing rehabili-
tation loans and assistance at variable interest rates.
La Habra's NHS serves as the city's only service delivery
mechanism for its housing programs.
EXPANSION
Neighborhood Reinvestment often develops additional pro-
grams in the same city. This expansion can take place in a
different neighborhood, in an adjacent neighborhood (bound-
' dary expansion), or as an increase in program services. Ex-
pansion can also take various administrative forms, ranging
from NHSs with separate boards to a central NHS board with
an affiliated board in each neighborhood.? Of the twelve
cities in the study, only the smaller cities of La Habra
and Racine did not have expansion neighborhoods.
Philadelphia and Cleveland developed two programs at about
' the same time; Chicago developed as a three neighborhood
program and then added 2 others later. In the other cities,
however, there have been one or more program expansions
? (including an additional seven planned for New York City).
Expansion reflects resident interest in another neighbor-
hood and confidence that the experience in the first neigh-
borhood is worth replicating. It also shows a commitment
by financial institutions to make even larger contributions
and to support a move into additional areas. Expansion
also reflects the city's willingness to expand its commit-
ment by investing resources to develop an NHS program in
other neighborhoods, even after the city has developed its
own neighborhood strategies or as a substitute for them.
Cities report that NHS can complement city activities and
serve as a conduit for delivery of city program services.
It means commitment by the city, by financial institutions,
by foundations, and by corporate members to raise additional
funds to capitalize the revolving loan fund. In short,
expansion shows that participants are willing to renew
their commitment to the partnership.
Neighborhood Reinvestment staff and some of the directors
in local programs suggest that expansion neighborhoods are
121 i/i
more severely deteriorated than the original neighborhoods
in the program; however, the data do not show any signifi-
cant differences among neighborhoods interms of general
housing conditions or income of residents. What is clear,
however, is that the expansion programs are being developed
at a time when rehabilitation and capital costs are sub-
stantially higher and resident incomes have not increased
nearly enough to offset the higher costs. Looked at this
way, private reinvestment is more difficult and affordable
by fewer people. This also means that the requirements
for achieving the same level of output in the expansion
neighborhoods are greater. A larger loan fund is required;
and the staff to do the rehabilitation is expected to get
off to a faster start. Problems regarding the allocation
of new funds and governance between the expansion neighbor-
hoods and the original one also have to be worked out. In
addition, cities are being asked to make commitments to
capital improvements when they are experiencing greater
budgetary constraints. Despite these difficulties, however,
cities have increased their support for more NHS neighbor-
hoods.
Because the expansions have occurred mainly in larger cities,
and because three-fourths of all large cities (cities with
populations of 250,000 or more) have NHS programs, expan-
sion is the major avenue for additional NHS development.
Neighborhood Reinvestment is assisting in most expansion
cities and is encouraging city governments to continue
their support of NHS through expansion activity.
ROLE OF NEIGHBORHOOD REINVESTMENT
If cities are making substantial strides toward develop-
ing their own targeted reinvestment programs, is there
still a need for Neighborhood Reinvestment activities in
these cities? For example, can the cities replace Neigh-
borhood Reinvestment's developmental activity? None of
the cities has established the capacity either to develop
(partnership building) or to provide the kind of support
services required. Cities have made progress only in
increasing their willingness to support rehabilitation,
not in their capacity to develop organizations that do it
or in delivering it themselves.9 Despite the extensive
progress some cities have made to foster rehabilitation,
they still rely on groups like NHS to do the delivery of
services, to perform outreach functions, and to create
mechanisms for resident articulation of priorities. It is
not surprising then that increased city support for the
program parallels the development of city programs to
promote neighborhood residential development, and that the
city programs contain, nominally at least, some of the
122
I
same elements as the NHS program. In addition, financial
institutions still have substantial reservations about con-
tributing to the city rather than to private organizations.
Many cities would prefer to have Neighborhood Reinvestment
take responsibility, including political responsibility,
for the kinds of decisions and activities that NHS develop-
ment involves. Thus, there is a continued role for Neigh-
borhood Reinvestment.
CONCLUSIONS
Neighborhood rehabilitation is only one of the community
development activities that cities are charged to sponsor,
and the NHS area is only one type of area. Cities have
other activities relating to subsidized housing, planning,
commercial development, industrial development --all activi-
ties for which their available resources are declining.
Cities appear content to support neighborhood -based groups
in residential rehabilitation. It relieves them of some
day-to-day service delivery. Cities have been enthusiastic
about the expansion of NHS programs and continue to request
that Neighborhood Reinvestment do the development. work in
their communities.
123
7-4-.Z
Notes
1. For a discussion of various resource allocation prac-
tices, see City of Boston, Neighborhood Development
amanrv. M icin¢ the Pie: Resource Allocation in Urban
and Urban Development, 1980).
2. In the early 1970s, Baltimore reorganized its housing
and development programs into one superagency, the
Department of Housing and Community Development, which
has administrative control over a range of programs,
activities, and regulations, from commercial develop-
ment to public housing, and over the use of federal and
state programs. The city devoted a great deal of pro-
grammatic attention to housing rehabilitation. Balti-
more won numerous awards for its activities in this
regard and still is held out as a model to other cities.
3. Prior to the establishment of the Atlanta NHS in 1975,
the city demolished more than 200 homes in the NITS
neighborhood and created a legacy of demolition and
insensitivity to neighborhood concerns. The city sub-
stantially reduced the demolition activity after the
NHS was developed, but it was slow to change the image
of its code enforcement program. There remained in
the NHS area a substantial amount of confusion and
distrust about the role of code enforcement in the
MIS program.
4. Several cities, including New York and Philadelphia,
have had difficulty spending their Community Devel-
opment Block Grant dollars allocated to housing re-
habilitation. Philadelphia was particularly notorious,
though not unique, in this regard. NHS has a reputa-
tion of being able to spend the money relatively fast.
5. At HUD's direction, cities have designated small areas
(often much larger than an NHS neighborhood) within
which a major portion of Community Development Block
Grant funds are targeted. Cities are also required
to develop a plan for how, within five years, substan-
tial improvement in Neighborhood Strategy Area con-
ditions can be achieved with the application of these
funds. Expedited processing for Section 8 rental sub-
sidy programs is also available in some of the NSAs.
6. This would apply, of course, only in cases where the
NHS program preceded the development of local com-
munity development strategies.
124
44ez
7. Other issues that have to be dealt with include fund-
ing (how multiple programs within a single city can
raise funds and how those funds are to be divided
among the programs), governance (whether the programs
within the city are to be governed by a single city-
wide board or by boards for each neighborhood program,
or some combination), and phase -down (whether the NHS
program in the original neighborhood is to receive in-
creasingly less emphasis as reinvestment in the neigh-
borhood is stimulated).
8. The data and the interviews indicate, however, that
there is a greater diversity of structure types (more
small apartment buildings or commercial structures)
and a lower rate of homeownership in expansion neigh-
borhoods than in the original neighborhoods.
9. Baltimore, as indicated in the discussion above, is an
exception to this rule. Philadelphia, however, is
more typical, and Boston has made numerous attempts
at delivering rehabilitation services, but these have
turned out to be more helpful to moderate- and even
middle-income homeowners who are already sophisticated
in the use of housing programs, not to low-income
homeowners or the elderly.
125
I
i
CHAPTER 9
NHS IN SMALL- AND MEDIUM-SIZE CITIES
Initially, development of Neighborhood Housing Services
(NHS) programs was concentrated in large cities. The
major growth since 1978, however, has been in small- and
medium-size cities. Small cities are those with popula-
tions less than 100,000; medium-size cities have popula-
tions greater than 100,000 but less than 250,000. Table
9-1 shows NHS programs in the study sample by city size.
Small cities remain a major developmental frontier; less
than 1 percent of small cities have NHS programs, compared
with 75 percent of all cities with populations of 250,000
or more. Three of the twelve cities in the study are in
the small- and medium-size category.
This chapter tries to identify and assess unique develop-
mental issues and NHS impacts in small- and medium-size
cities. There are two reasons for this interest: (1)
Fieldwork confirms an early hypothesis that fundamental
differences exist between larger cities and small- and
medium-size cities in terms of resources and developmental
requirements and perhaps impacts. (2) Now that NHS pro-
grams have been developed in most larger cities, there is
a need to understand the implications for developmental
activity in small- and medium-size cities and to assess
the experience of programs in that category. The follow-
ing sections discuss major issues in the study as they ap-
ply to small- and medium-size cities.
EXTENT OF NEED AND NHS PE14ETRATION
The twelve study cities contain a total of 2,860 census
tracts (in Jamaica, N.Y., only Queens County is included
in this count). Median incomes are less than 80 percent
of the citywide median in 810 (28 percent) of these tracts.
There are 571 census tracts within this category in which
at least 50 percent of the units are owner -occupied, one -
to four -family dwellings. Thus, 20 percent of these cities'
census tracts represent potential NHS program neighborhoods
when considered strictly on housing and demographic charac-
teristics. In the twelve sample cities, NHS programs
serve fewer than twenty neighborhoods, roughly equivalent
to fifty census tracts, or less than 10 percent of total
potential need.
127
TABLE 9-1
NHS Sample Cities by Population
City
Atlanta, Ga.
Baltimore, Md.
Bridgeport, Conn.
Chicago, Ill.
Cleveland, Ohio
Dallas, Tex.
Jamaica, N.Y.
La Habra, Calif.
Nashville, Tenn.
Oakland, Calif.
Philadelphia, Pa.
Racine, Wis.
a. 1977 census estimate, U.S
b. City of New York population.
Populationa
416,715
804,304
137,116
3,062,881
609,187
804,528
7,297,787b
41,350
428,957
332,385
1,778,345
95,162
Bureau of the census.
Small- and medium-size cities, however, have relatively small
areas of low-income, low-density housing per city. In La
Habra, Calif., Racine, Wis., and Bridgeport, Conn., there
are seventy-four census tracts, fifteen of which have less
than 80 percent of the city median income and all of which
are at least 50 percent owner -occupied, the eight tracts
covered by NHS programs in these three cities involve 53
percent of the needy areas --25 percent of the area in
Bridgeport and 100 percent in La Habra. Although NHS pro-
grams operate in 75 percent of all large cities, the NHS
neighborhoods typically cover only a tiny fraction of the
central city, and then only a tiny fraction of the central
city with low- and moderate -income, low-density communities.
This means that the NHS programs in smaller cities cover
more of the needy areas, are therefore more visible, and
represent a more substantial response to the city's residen-
tial rehabilitation needs.l
SMALL- AND MEDIUM-SIZE CITIES IN THE 14ETROPOLITAN CONTEXT
NHS neighborhoods in small- and medium-size cities cannot
be considered in isolation from their social, economic, and
physical contexts. They share some of the same problems, re-
sources, and opportunities as neighborhoods in much larger
128
HMO
cities. It seems important, then, to make three distinc-
tions among the types of neighborhoods where NHS programs
are located. First, the prototype NHS neighborhood is an
inner-city neighborhood of a large city. This neighborhood
represents a minuscule portion of the total central city
population and housing stock. In addition, it represents
only part of a larger neighborhood.
Second, another type of NHS neighborhood exists in older
suburban cities, such as those in La Habra, Menlo Park, and
Oakland, Calif.; Chelsea, Mass.; and Aurora, Ill.; all are
suburban cities close to major cities. All except Oakland
are small cities. Although neighborhoods in these cities
are not part of a central city, they are part of a built-up
urban area adjacent to or near a central city and, as
such, share with the central city the social features,
housing, and often physical characteristics, as well as the
common pool of human and financial resources. These juris-
dictions often are not significantly different from the
more typical central city neighborhood in issues related to
NHS development.
A third type of NHS is in freestanding small- or medium-
size cities. These cities are not part of major metropoli-
tan areas and often exist in the West or Midwest or a
less urban part of an eastern state. They do not share
the financial resources or population bases of metropolitan
neighborhoods. Cities such as Ithaca, N.Y., Racine, Wis.,
Springfield, Mass., Bridgeport, Conn., and Reading, Pa.,
are examples.
Study sample cities in the small- and medium-size category
should be considered as follows: La Habra is a suburb of
Los Angeles, only twenty minutes from downtown. Its hous-
ing is "new" by eastern standards (most units were con-
structed after World War II but suffer from 1960s -era de-
cline). Racine is an independent industrial city, not
tied directly to the Milwaukee or Chicago SMSA, each an hour
away. Racine has an old industrial base, founded primarily
on Johnson's Wax and other local industries. Bridgeport,
an industrial town with a separate economy, is part of the
New York -southern Connecticut megalopolis. These two cit-
ies are older, freestanding cities going through industrial
and economic dislocation. In these cities, the issue is
not only the future of the neighborhood, but also, despite
a diversified industrial base, the survival of the local
economy. This context by type of community is further
illuminated below in special issues related to NHS develop-
ment.
129 41912—
THE ROLES OF KEY ACTORS
The sections below outline study findings with respect to
the role of key actors in small- and medium-size cities.
The observations here can be compared generally with obser-
vations for the total sample, as discussed in chapters 5, 6,
7, and 8. Although there are no formal differences due to
city size between the structure of the program or the de-
velopmental process, the model has been modified over the
years to better match the experience and conditions in
these smaller communities.
Residents
Unlike the substantial resident support for and interest
in programs in larger cities, residents were significantly
less involved in Racine and La Habra. Although several
residents in each of the cities were associated with the
program, only a small number actively participated. In
Racine, the most active resident did not live in the NHS
neighborhood, and recruitment problems and turnover have
limited resident board participation. Bridgeport, however,
represented something of a contrast. More broad-based
resident participation was generated, though this resulted
mainly from activities of two existing neighborhood organi-
zations.
The exact reasons for limited resident participation in
small- and medium-size cities are not known, but three ob-
servations seem relevant. First, in these cities the pro-
grams performed only limited outreach (especially in Racine)
to residents, thus there were fewer opportunities for in-
volvement. There were few organizations or other sources
(i.e., advocacy programs, other community organizations)
from which to draw experienced resident leaders.
Second, in La Habra, there was substantial resident in-
volvement in a community center across the street from the
NHS program office. The community center preceded the NHS,
and it may be that residents simply did not shift their
involvement.
A final observation is that there has been substantial
city support for the program in both Racine and La Habra;
in Bridgeport, however, the city was viewed in the early
program years as a weak partner with limited involvement.
The implication is that Racine and La Habra residents had
less reason to become involved because of strong city sup-
port; in Bridgeport, low city support became a reason for
strong resident involvement.
130
44(o.2-
One additional point is that these small- and medium-size
cities did not have a substantial history of citizen par-
ticipation such as existed in the larger cities with war
on poverty and model cities programs. Because NHS was
founded to promote rehabilitation, residents perhaps did
not consider it important to be involved on a day-to-day
basis if, in fact, they felt that the program was being im-
plemented and managed in their best interest. However,
survey data on these three cities are not available to
determine if residents in NHS neighborhoods share this
view.
Financial Institutions
In terms of personal involvement, financial institution
participation was not significantly more limited than that
found in larger cities. Lenders were as likely to be the
first chairpersons of boards as they were in the large cit-
ies. Financial institutions in Bridgeport were instrumen-
tal in setting up the NHS. In La Habra, all thirteen
savings and loan associations, the one commercial bank,
and the California NHS Foundation are participating in
the program. In Bridgeport, ten savings and loan associa-
tions and six commercial banks provide most of the support
to the NHS neighborhood, with additional support from one
credit union, two insurance companies, fifteen corporations,
and two nonprofit foundations. In Racine, seven savings
and loan associations provide 23 percent of the support to
the program; the remainder comes from the city of Racine.
In all three cities, most local financial institutions
have made some contribution to the program. Financial
industry executives in small cities indicated the same
social and business reasons for participating in the pro-
gram as their colleagues in large cities, although they
were less likely to mention specific business reasons.
In terms of the amount of support to the operating budget,
the level in small- and medium-size cities did not vary
substantially from that of larger cities. In Bridgeport,
financial institutions provided 80 percent of the operat-
ing funds ($85,000); in La Habra, 100 percent of the
$60,000 operating budget; and in Racine, 23 percent of the
$65,000 operating budget.
It was initially thought that the asset base on which the
financial institutions operated would affect the degree to
which they supported the NHS program. In the three sample
cases, that does not appear to be the case; proportionally,
no fewer financial institutions contributed to NHS in small -
and medium-size cities than in larger ones. What is not
clear, however, is whether this trend would continue as
131 _�_
NHS programs in small- and medium-size cities began to
expand to serve additional cities and neighborhoods within
there
the financial institutions' service area. Presently,
are so few NH in small- and me, althoughthes tb t this
asset base
overlap has yet to occur. Thus, B
does not appear to have made a difference to this point, it
could be a serious problem in the future, especially in
are there few in—
small, freestanding cities where not yhave
nottheir central
stitutions, but the institutions may service area where
operations or, even most of their primaryice
sery
the NHS wilbe program originated ies in ruralAsset programbase (andevelopment rand
clearly ulations of less than
for freestanding cities with pop
25,000.
The City
In Racine, the city plays a strong role, and has provided
more than three-quarters of the opera ping n gram funds operated pro -
the
gram. For several years,
city's Section 312 program citywide in addition to providing
services for the NHS neighborhood.2 Until 1980, the NHS
program substituted for a city housing rehabilitation pro-
gram. According to interviews with NHS staff wasand intended partners,
gram.
Racine's code enforcement program, has turned
represent a sensitive response to detipiwastireorganized in
out not to have worked very well;
1980• The city capitalized the NHS revolving loan fund
from Community Development Block Grant funds.
La Habra has played a similarly strong role, and extensive
capital improvements have been made. A substantial start-
up contribution was made to NHS, which is La Habra' only
only
program and conduit for city
loan The city has made noespec
ofiatheodwishesrceriefforts,
oftheresidents.
ever, mostly
rt had a until
limited role in the NHS
re few
Until recently, Bridgepowhen
program. Capital improve
m ramsts wsubstantial discretion over
the city gave the NHS grog
the use of almost $100,000 in capital improvementfunds
efs
designated for the NHS neighborhood. The de
ac-
fort was inadequate in the beg hai been muchmoresupport-
counts, has improved. The city
ive of the expansion program than of the development of the
original NHS.
Summar
s review of the cityls role
inprogramsofall and medium-size
Vetsinersm- it cities. Code
//,o <Z
132
enforcement does not seem to play a substantial role in most
of the programs, perhaps because it is not needed or because
it is often viewed as the tool to deal with the problems
associated with soft markets and absentee owners. Further-
more, as the cityls contribution to operating costs in-
creases, some residents may express the fear that the city
will control the program and their own role will become
even more limited. This fear is not widely articulated,
however.
In small- and medium-size cities, NHS works more closely
with the total community development effort. This part-
nership is not only a relationship of convenience; such
coordination is often necessary because NHS may be the
only housing rehabilitation effort in the city. Thus, in
the development process, Neighborhood Reinvestment and lo-
cal staff have to generate interest among local govern-
ments to invest limited community development dollars in
housing rehabilitation, an activity that in two of the
three cases noted here had not previously been funded.
The increasing attention being directed by HUD to planning
in small cities as well as the growing effort to target
funds to low- and moderate -income families and to lever-
age neighborhood activities should ease the task of organ-
izing city participation in the future. Involving resi-
dents as more active partners remains a challenge.
THE LENDING ENVIRONMENT
Study interviews revealed that in small- and medium-size
cities, the availability of credit for NHS neighborhoods
has always been comparable to that of the city at large.
There were some reports of previous redlining in Bridge-
port, but there was no indication of widespread redlining
in La Habra or Racine. Bridgeport and La Habra have semi-
formal processes for referring residents to local financial
institutions. Data are too sketchy to determine separately
from interview comments whether redlining existed in the
past or whether even today there are remnants of credit
discrimination based on geography.
In Bridgeport, however, the comments were different. Even
financial institution executives said, in so many words,
that they had not been lending in the NHS neighborhood in
previous years. There was no direct admission, however,
that redlining had occurred, even though other respondents
suggested as much. Bridgeport, in contrast to Racine and
La Habra, has a good referral system to connect residents
to financial institutions, made necessary in part because
of substantial turnover (from white to Hispanic) in the
neighborhood in recent years.
133
41��-_2_
SUPPORT SERVICES AND TECHNICAL ASSISTANCE
In terms of program size, there was no statisticallN
nificant difference between the level of support byeigh-
borhood Reinvestment staff required by small- and medium-
size cities and that required by larger cities (see table
12-2). The study's survey of Neighborhood Reinvestment
Corporation support and technical assistance staff, how-
ever, showed that when a problem occurs in a small city,
it is likely to be more serious in that it lasts longer
and is more difficult to solve.3 For example, when there
is a need for a director or rehabilitation specialist in
persons there
(already otbe a raineduborantial suitable l
Of
for
training) who live in the city. In the case of a smaller,
freestanding community, however, such persons are less
like
lattractiveavailable,
forand
qualified peoplecommunities
often seem
to move
less The
result is that the services of Neighborhood Reinvestment
personnel assigned to support roles (including
intensive
support, where staff members are assigned on a temporary
full-time basis) may be required for longer periods.
In
addition, unless a problem is resolved decisively, it may
recur with more frequency than in larger cities, where
support resources other than Neighborhood Reinvestment are
more often available.
Among the small cities that required substantial support,
the Neighborhood Reinvestment survey show that a majority
of the programs were developed in 1977; these cities in-
cluded small, freestanding cities such as Wilmington, N.C.;
Charleston, S.C.; Springfield, Ohio; and Savanah, Ga. comparable
other small -city programs had levels of support
to those required in large_ city neighborhoods.
ISSUES FOR NEIGHBORHOOD REINVESTMENT
foregoingThe
cities suggests iseveral nof Smedium-sizes in small- and
points about Neighborhood
role in these communities. First, the developmental
difficulties and subsequent operational problems of some
programs require that Neighborhood Reinvestment increase
attention and resources to program development in juris-
dictions of this size. It would seem reasonable, based on
the experience reported by staff members, that the develop-
ment time will be longer and the cost greater. Cities will
have to be involved to a more substantial degree than in
larer each to
l be
required. Thees ' self-interest and special o ofrfinancial rinstituti nesidents s will
identifybe harder to
ts and
regulatory pressures are because
resident so greatas in olarge ncities.
y(o 2-
134
It will be more difficult to obtain commitments from local
communities to absorb the costs of initial development.
This problem will be critical because many small cities do
not have Community Development Block Grant entitlements,
nor do they have much experience with private and nonprofit
development organizations or with comprehensive housing
programs, technical assistance, and community organizing.
A second issue is whether NHS is always the appropriate
model in small- and medium-size cities or whether some
other program model is more suitable. In particular,
would the Neighborhood Conservation Service (NCS) model be
better? The NCS model is an adaptation of a comprehensive
program developed and operated by the city of Berkeley,
Calif., to encourage housing rehabilitation. Based on the
partnership approach, NCS offers the same services as the
NHS program. The key difference is that NCS is explicitly
a city -run program. The NCS program demonstration was
funded by Neighborhood Reinvestment as a Neighborhood Pre-
servation Project and has undergone trial replication in
several cities.
A third issue for Neighborhood Reinvestment concerns the
availability of qualified personnel for local programs.
As indicated earlier, it is hard to attract appropriately
trained and experienced persons to work in small and often
isolated communities. Many staff members who have become
involved in NHS have experience in Volunteers in Service
to America (VISTA), the Peace Corps, or in one of the
Great Society -era programs. Persons with this background
and experience and with skills needed to run NHS programs
are less likely to live in small- and medium-size cities
and less likely to want to move to those cities. There is
also the question of whether they would fit in small,
often conservative communities, whose residents and lead-
ers might be offended by the jargon of community action
even in the more muted tones of the NHS movement.
These issues suggest that Neighborhood Reinvestment has a
difficult task ahead in identifying persons who can take ad-
vantage of reinvestment training opportunities. Not only
does identifying talent slow program development, but when
an executive director or other staff person is hired and
does not work out for whatever reason, Neighborhood Rein-
vestment support staff must assist the program intensively
to make sure it survives until new staff can be hired.
One attempt to deal with this issue was made in a pilot in-
tern program sponsored by Neighborhood Reinvestment and
Neighborhood Housing Services of America, Inc. (a service
organization for NHS programs) to identify and train persons
135
�.2_
as NHS directors and then place them in local positions.
In the first effort, fewer than half of the interns took
NHS jobs. Neighborhood Reinvestment is making additional
efforts, including selecting interns in particular cities
and providing them with training through work in those cit-
ies. Tie-ins to university graduate programs are also be-
ing developed.4
The difficulties in obtaining executive directors are com-
pounded by the low pay associated with NHS positions in
small- and medium-sized cities --often as little as $14,000-
a -year for the executive director (a comparable job in local
government would pay at least $18,000 or more in small
cities and as much as $30,000 in large ones).
Another issue for Neighborhood Reinvestment concerns tap-
ping resources for NHS support statewide as opposed to
citywide.- Currently, three states --Florida, Vermont, and
Connecticut --have provided or are providing support to de-
velop the NHS..programs. The Florida program is typical and
will provide $500,000 to develop four NHS programs. Finan-
cial institutions in California and New Jersey have devel-
oped statewide NHS foundations to provide support for oper-
ating funds. Under the provisions of the NHS foundations,
funds are collected from lending institutions throughout
the state and are redistributed to NHS programs within
that state.5
These statewide efforts --both state support of development
and statewide financial institution support of operating
budgets --will be increasingly important for small- and
medium-size cities for reasons already mentioned: Local
government support may be absent; financial institutions
may be approached by too many local groups and would rather
contribute to a single source; and the efficiency of this
fund raising would substantially improve the visibility of
the program and increase the staff time and resources de-
voted to programs as opposed to fund raising. In fact, in
some states, where dozens of cities might be appropriate
for an NHS program, it is difficult to imagine how the
cities would be able to generate adequate support except
through statewide collection and distribution of funds.
A final issue for Neighborhood Reinvestment is the extent
to which its resources are adequate to meet the substantial
demands of small- and medium-size cities. Past experience
with field staff involved moving staff among clusters of
large cities, each with a local pool of talent to draw from
(and each with a major airport). Neighborhood Reinvestment
field staff members are effective, largely because they are
drawn from and have been able to draw experienced local
7w.Z
136
people from major cities. Increased program development in
smaller cities will make it physically impossible for field
staff to cover as many cities or for supervisors to have as
many states in their regions.6
The efforts by HUD to improve community development capac-
ities in small cities offer an opportunity to target Neigh-
borhbod Reinvestment development to areas where initiatives
with HUD are under way.7 The presence of these other ini-
tiatives does not conflict with NHS development in small
communities any more than other programs conflict in larger
cities. In fact, the role of the NHS as a delivery mecha-
nism is enhanced when other initiatives are under way.
Other ways to deal with these problems include concentrat-
ing development in state or substate regions instead of
making scattered, rWidom development efforts as requests
for programs emerge.
I CONCLUSIONS
jConclusions about the differences between large cities and
small- and medium-size cities should not obscure the fact
that achievements in NHS programs in smaller cities are
significant and enthusiasm among the actors is very high.
A great deal of reinvestment, with broad impact, is occur-
ring in these cities, as documented in earlier chapters.
The major point here is that an understanding is needed
of the specific circumstances under which programs in
t these areas exist and the special difficulties the programs
I
experience.
i
I
137 �6�
Notes
1. This is not to suggest that NHS has less meaning for
the residents of neighborhoods in large cities; rather,
this discussion addresses the percentage of need and
impact that an NHS has in cities of different sizes.
2. Section 312 is a federally supported and locally admin-
istered low-interest loan program for homeowners. In
operation since 1968, Section 312 provides loans up to
$27,000 with interest rates as low as 3 percent.
3. A survey was taken of the Neighborhood Reinvestment
support officers. They were asked to rank each NHS
program on a scale of one to four according to the
level of support services needed for the NHS during
the year 1979. They were also asked to indicate spe-
cific issues in the local program, such as executive
director or other staff turnover or other factors that
would account for the differences in support service
level required. Since support officers as well as
support supervisors and senior staff were included,
there were at least two observations for each program.
If there was a difference in opinion (in 90 percent of
the cases there was none), the observation of the more
senior staff member was taken. (About half of these
twelve support staff members included in the survey
had been with the Neighborhood Reinvestment for less
than one year.)
4. Neighborhood Housing Services of America (NHSA) has
collaborated in a curriculum in connection with the
University of San Francisco's Graduate School to pro-
vide graduate training in neighborhood planning. This
program offers a master's degree in the university's
urban planning program.
5. In 1980, the Massachusetts legislature passed legis-
lation to provide funds to develop six additional NHS
programs.
6. In 1980, Neighborhood Reinvestment was reorganized to
put more senior and supervisory staff members at sub -
regional (district) levels. The reorganization also
provided for greater coordination between the develop-
ment staff and the support and training staff. Addi-
tional support staff were put in the south, central,
and western regions to take account of the increasing
development activity in those sections of the country.
7. There are also important initiatives in the Farmers,
Home Administration and in various state agencies.
138 �f�z
8. State planning agencies would be critical to success
in this area, given that their responsibilities in-
clude substate, regional planning, and such community
A u.rcl....m enr4 n.,4 T.d 4T no .a. 4h.e .. nnnm.�ll.. nonP�nm �u4_
CHAPTER 10
NHS AS A DELIVERY MECHANISM
FOR CONTRACT SERVICES
In addition to being a partnership for neighborhood revi-
talization, Neighborhood Housing Services (NHS) is a mech-
anism to deliver services. It is a private, locally based,
nonprofit organization offering outreach and direct serv-
ices to residents in support of private rehabilitation
efforts. NHS is not an ad hoc task force, nor is it an ad-
visory group or blue-ribbon body organized to suggest ac-
tivities for other groups. It sets its own policies,
raises funds privately, and establishes and carries out
its own program activities.
Neil Mayer and others, in an Urban Institute report, Keys
to the Growth of Neighborhood Development Organizations,
identified common neighborhood organization processes.
These processes often take several years, and many new or-
ganizations somehow fail to go through the required steps
appropriately. This problem has been true not only of or-
ganizations conceived in the neighborhood, but also of
federally funded community development corporations and
model cities groups that provide programs and services sim-
ilar to those of NHS. The Urban Institute authors define
the steps in the process as follows:
1. Formalize the organization;
2. Decide to carry out programs and create an organi-
zation that itself survives as an institution;
3. Confront the difficulties of early neighborhood
revitalization projects;
4. Become competent in specific project areas;
5. Develop a network of relationships with outsiders;
and
6. Complete a diversified range of projects.
Organizations that go through these steps are more likely
to succeed as entities themselves and to be successful in
achieving their neighborhood goals. They are likely to be
141
able to deal with multiple issues and to change program
priorities as needs change. Such groups are generally able
to identify resources, to attract and hold competent staff
members, and to develop working relationships that will
sustain the organization over time. These organizations
are also likely to build strong reputations and to be
viewed as resources by other neighborhood groups and by
business and government leaders.
NHS programs in general are helped through this develop-
ment process by the Neighborhood Reinvestment Corporation.
NHS program development takes from nine to twelve months.
In addition, training is provided for staff members, and a
reasonable and successful model is provided as a basic
framework to establish an organization. In this way, in
fewer than ten years, more than 100 NHS programs have been
established across the country and to date are still oper-
ating.
All NHS programs deliver a basic core of services, includ-
ing the following:
• Coordinating housing inspections and writing spe-
cifications for neighborhood residents who want or
are required to make health, safety, and structural
improvements to their homes;
• Identifying neighborhood housing priorities and
other neighborhood concerns;
• Providing loan referral assistance;
• Establishing revolving loan funds for residents
who do not meet bank lending criteria or who need
emergency assistance;
• After loan approval, overseeing bid -letting and
award procedures; and
• During the construction phase, monitoring contrac-
tors' work for adherence to specifications and
overall quality.
The basic services are always provided, regardless of the
neighborhood in which an NHS operates. Other services may
involve credit or financial counseling, assistance in home
purchase, and major rehabilitation and sale projects. The
NHS experience in providing these core services was reviewed
extensively in chapters 5 through 9.
142
J16 �?_
In addition, several NHS programs also provide services
on a contract or pass-through basis. In the contract
approach, NHS enters into an agreement with another organi-
zation, usually a state or local agency, to provide specific
services to NHS residents. Occasionally, these services are
Provided to a larger area than the NHS neighborhood and, as
was the case in one smaller city in our sample, services may
be provided citywide.
In pass-through service delivery, NHS acts simply as a
conduit --it puts NHS residents in touch with programs
administered by state or local governments. NHS may serve
as a clearinghouse for information, provide assistance in
filling out forms or making applications, or serve as an
outreach component within a larger network of such units.
This chapter focuses on thes
services --types of services
and the implications, costs,
last section of this chapter
vi d
contractual and pass-through
offered; modes of delivery;
and benefits for NHS. The
ce elivery with that of other compares the cost of NHS RAP -
programs.
EXTENT OF OTHER SERVICES
Table 10-1 shows the extent of contract and pass-through
services provided by NHS programs in the study neighbor-
hoods. Except for the Dallas program, all programs have
received some contract or pass-through services. Four of
the twelve cities serve in a contract or pass-through
capacity for city housing programs. Although the housing
programs vary, they generally provide low-interest loans
or grants or other rehabilitation assistance to low- and
moderate -income owners. These arrangements range from a
strict pass-through effort in Atlanta to stronger contrac-
tual relationships in Baltimore and Chicago. In La Habra,
Calif., NHS administers the city housing program.
In the case of the Section 312 program, a federally sup-
ported but locally administered low-interest rehabilita-
tion loan program, Chicago has a contract with NHS to
provide rehabilitation services in the NHS neighborhood.
The Racine, Wis., NHS administered the city's entire Section
312 program until the end of 1979• In Jamaica, N.Y., the
NHS program was designated as a clearinghouse for receipt
of Section 312 applications, but because there has been
limited activity in the program in New York City, Section
312 loans are not an active component of the NHS program.
California and Maryland both have large, ongoing state loan
programs, and NHS programs in Baltimore, La Habra, and
Oakland, Calif., all have active pass-through relationships
143 1 6 7_
TABLE 10-1
Delivery of Contract and Pass -Through Services, 1979a
Contracted and Pass -Through Services
a. No such services provided in Dallas.
b. Section 312 and Section 8 administration resulted in no additional operating income.
c. VISTA.
d. Administered citywide.
e. The Racine NHS operated the city's Section 312 program for several years in return for operating support.
City or
City
State
Neighborhood
Home -
Housing
Section
Section
Loan
Strategy
steading
City
Program
312b
8b
Programs
Areas
CETA
Program Other
Atlanta, Ga.
X
Baltimore, M.
X
X
X
X
X c
Bridgeport, Conn.
X
X
X
X
Chicago, Ill.
X
X
a Cleveland, Ohio
X
X
a Jamaica, N.Y.
d
X
X
X
La Habra, Calif.
X
X
Nashville, Tenn.
X
Oakland, Calif.
X
X
X
Philadelphia, Pa.
X
Racine, Wis.
Xe
X
a. No such services provided in Dallas.
b. Section 312 and Section 8 administration resulted in no additional operating income.
c. VISTA.
d. Administered citywide.
e. The Racine NHS operated the city's Section 312 program for several years in return for operating support.
with these programs. In Baltimore, the state loan programs
have been extremely helpful in providing lowAnterest loans
for substantial amounts, enabling rehabilitation to occur
in connection with a home purchase using "piggyback" loans.2
In three of the twelve study programs, NHS has a contract
with a local or state government under the Comprehensive
Employment and Training Act (CETA) to hire CETA workers to
serve as NHS staff members or staff trainees. CETA workers
typically provide outreach and administrative services to
the NHS program, supplementing the budget and providing
public service in the NHS neighborhood. The NHS program
in Bridgeport, Conn., has used VISTA workers in this capa-
city.
Baltimore and Jamaica have contracts to participate in the
locally run but federally supported homesteading program.
This program allows NHS to recapture abandoned and fore-
closed housing for rehabilitation and sale at a writedown,
thus increasing home ownership opportunities and removing
the blighting influence of abandoned buildings.
Four of the twelve NHS areas are Neighborhood Strategy
Areas (NSAs) under the Section 8 Substantial Rehabilitation
Program. Under this HUD -supported program, a city devises
and implements a plan to use Section 8 subsidies, Community
Development Block Grants, and private funds to reverse de-
cline and improve the quality of housing in a target neigh-
borhood within a five-year period. The NSA designation
brings additional resources and capital improvements to
the neighborhood. Although the Atlanta and Jamaica NHS
neighborhoods are part of a much larger NSA, there are no
pass-through or other direct agreements between NHS and
these cities and, thus, the NSA designation is not reflected
in the table.
THE SPECIAL CASE OF SECTION 8
Five of the twelve cities have special Section 8 set -
asides from the Section 8 Existing program.3 These set -
asides are part of an agreement between HUD and Neighbor-
hood Reinvestment to provide assistance to renters in NHS
areas as a means of minimizing the displacement associated
with increased rents that accompany substantial rehabilita-
tion.
Before 1977 NHSs had no way to deal with tenant displacement
caused by increases in rent that often accompany rehabili-
tation. In 1977, Neighborhood Reinvestment entered into
the agreement with HUD to provide Section 8 certificates
145
for use in NHS neighborhoods. The set -asides to the com-
munities are in addition to any local allocations or other
special HUD set -asides. The program has two objectives:
(1) to maintain the social character of the neighborhood
over time by subsidizing low- and moderate -income tenants,
and (2) to encourage landlords to repair substandard rental
units by assuring that their tenants would be able to
afford any rehabilitation -generated rent increases.
Families are eligible for Section 8 if their income does
not exceed 80 percent of the median income of the area as
determined by HUD; adjustments are made for family size
and special needs. The rents paid, or the certificate
value, for each family cannot exceed the fair market rent
established by HUD. The building must also meet health
and safety standards. The length of the subsidy coincides
with the length of the lease, up to a maximum of five years.
Because the subsidy is given to the tenant, not to the unit,
the subsidy follows the family to any other eligible unit
if the family moves during the contract period.
Between 1977 and 1980, 2,000 subsidy certificates had been
set aside for NHS programs. These were distributed to
thirty-nine cities, including five in the study sample.
The formal contract and allocation of the units is -negoti-
ated by NHS and the local public housing authority,
which
is responsible for administering Section 8 locally. Neigh-
borhood Reinvestment's role is to inform NHSs of the avail-
ability of the set -asides, to help them arrange their own
Section 8 program activities, and, where necessary, to
mediate between NHS and the local housing authorities.
When the set -asides were made available, Neighborhood Re-
investment polled the NHS programs and found that 66 per-
cent had some rental housing need for which the Section 8
program might be helpful. It was estimated that 2,700
subsidies would be required for these programs. Some pro-
grams in the sample, including Atlanta, Dallas, Jamaica,
Chicago, and Nashville, did not indicate that they had
needs for which the Section 8 program might be helpful.
Atlanta and Dallas generally did not want to place a major
program priority on renters. In Jamaica, another neigh-
borhood organization sponsored 210 units of Section 8 New
Construction, which was seen as adequate to meet the
neighborhood's needs. In Chicago, court cases have pro-
hibited the city from providing additional assisted housing
in areas of minority concentration. Nashville indicated
that it did not want subsidized housing in the NHS neigh-
borhood, but this decision left tension between the staff
and within the board. Philadelphia indicated an interest
146
416.2-
in units, but no contract was ever negotiated. Table 10-2
shows Section 8 allocations for programs in the sample
cities.
TABLE 10-2
Section 8 Set -Aside Allocations, Fiscal Years 1978-79a
City
Units Allocated
Units Used
Atlanta, Ga.
0
0
Baltimore, Md.
100
100
Bridgeport, Conn.
50
50
Chicago, Ill.
0
0
Cleveland, Ohio
70
38
Dallas, Tex.
0
0
Jamaica, N.Y.
0
0
La Habra, Calif.
50
30
Nashville, Tenn.
15
0
Oakland, Calif.
50
3
Philadelphia, Pa.
0
0
Racine, Wis.
30
20
Total
365
241
Source: Neighborhood Reinvestment files, 1980.
a. Includes only units allocated to cities in the study
sample.
n Assessment of the Section 8 Experience
Although NHS Section 8 set -asides have been a useful source
of assistance to prevent displacement, there have been
some problems with the program. Section 8 subsidies are
not awarded to the NHS programs indefinitely. Of the
cities in the study sample, only 66 percent of the author-
ized certificates have actually been used. In all programs
combined, only 50 percent of the 2,000 certificates awarded
have been used. Most Section 8 sponsors experience some
delay; however, there are more fundamental reasons for the
moderate to low utilization of Section 8 programs. First
many NHS staff members did not understand the Section
process. It was a new program with many intricate details.
In addition, they did not understand the marketing and
outreach required with tenants and landlords, or they did
147
Firm
not have the resources to apply toward the outreach activ-
ity. Many local programs were unable to provide outreach
services to landlords who might be willing to improve
their properties if they could be certain that tenants
could pay the higher rents. And, finally, in many cases
the local programs were unable or unwilling to work with
the local public housing authorities with whom they had to
negotiate a contract.
Difficulties were also encountered that were beyond the
control of Neighborhood Reinvestment and the NHS programs.
These included slow processing of units from HUD to the
regional offices to the local public housing authority,
fair market rents in some cities that were lower than the
current rents in the neighborhood, and a need expressed by
some programs to have access to the Section 8 Moderate Re-
habilitation program in addition to the Section 8 Existing
program.
i„ IJaivhhnnhnnli Reinvestment's Administration
To eliminate some of the problems, Neighborhood Reinvestment
initiated several changes in the administration of the
Section 8 set-aside program. A new monitoring arrangement
has been established to assist programs in identifying
areas where Section 8 set -asides might be appropriate.
Neighborhood Reinvestment will also develop educational
programs to provide local NHS staff with additional train-
ing on Section 8 procedures, rental housing, and outreach
to support local program actions. Neighborhood Reinvest-
ment will institute a more careful process for selecting
NHSs for allocation of units. This process will include
getting information on (1) the kinds of needs for which
the Section 8 program could be used; (2) the number of
units, categorized by bedroom size; (3) the average cost
of rehabilitation in the neighborhood; (4) the staff ca-
pacity for outreach: (5) the number of conventional and
revolving loans referred or made; and (6) the degree of
willingness to cooperate with the local housing authori-
ty. These improvements are designed not only to make a
more careful selection among programs but to ensure that
the programs selected are the ones most capable of using
the Section 8 allocations immediately. These additional
resources should help increase the rate of usage of allo-
cated units.
In study sample cities that have used the Section 8 pro-
gram, respondents (usually staff) reported that it has been
helpful in a number of ways. In Baltimore, Section 8 has
been used to provide housing to renters instead of allow-
ing speculators to buy the homes and displace renters.
il4:]
414,2—
Basically, the set -asides work through an NHS spinoff, Neigh-
borhood Rental Services, Inc., which helps purchase buildings
requiring rehabilitation. The units are rehabilitated with
Section 312 funds, and needy tenants are provided Section
8 subsidies to pay the higher rents. In other cases, the
program has encouraged the rehabilitation of small buildings
by landlords who might otherwise have been convinced that
tenants could not afford a rent increase.
Unfortunately, no systematic data are available for a spe-
cific assessment of the impact of Section 8 availability
on the level of reinvestment in the neighborhood.5 The
national Section 8 evaluation showed that the program is
helping tenants obtain improved housing at rents they can
afford, and the Urban Systems Research and Engineering,
Inc., data showed that in general, landlords have made
significant investments in the neighborhoods. However,
the correlation of Section 8 activity to increased inves-
tor reinvestment could not be proved.
IMPACT OF SERVICE PROVISION ON NHS BUDGETS
This chapter has pointed out the extensive nature of
arrangements by which NHS provides services beyond those
called for by the model. One final question on this activity
is what is the impact of these additional services on
NHS budgets. The study showed no consistent pattern of
financial impact. The NHSs in our sample received as much
as $127,000 a year to provide additional services, but
most programs received no additional remuneration. In
Chicago, for example, the city reimbursed its NHS $127,000
in expenses and fees in 1979; yet essentially the same
service was provided in Atlanta .without reimbursement. In
Baltimore, similar services netted the NHS neighborhood an
additional $44,000 in 1978 and 1979. NHS administered
Racine's Section 312 program, but the city paid only the
$50,000 contribution to the operating budget; NHS had to
provide the Section 312 services citywide. This added
burden clearly deflected attention from the provision of
core services in Racine (Section 312 responsibility has
since been shifted back to the city).
EVALUATION OF INTEREST SERVED BY CONTRACT AND PASS-THROUGH
ARRANGEMENTS
In general, there was a perceived mutual benefit to the ar-
rangements described in this chapter. Cities were able to
do the following:
Provide direct services, with less bureaucratic re-
strictions (i.e., on hiring, program design, con-
tracting, etc.);
149 ��oZ
• Respond to neighborhood demands for needed services
without creating a separate city program; and
• Test innovations for later adoption in city pro-
grams or for replication in other neighborhoods.
NNS also received several benefits:
The opportunity, where applicable, to receive ad-
ditional funds for operating expenses (allowing
the NHS program to hire additional staff);
• An opportunity to contract with public agencies,
allowing NHS to expand the tools available to
carry out its priorities; and
It ensured that NHS priorities would not be cir-
cumvented by goals of other agencies, and allowed
the NHS to be involved in additional development
activities in the neighborhood.
In addition to direct benefits, city officials expressed
the need for accountability; they preferred working with an
established program (NHS) that had experience in contract-
ing, rather than making grants to ad hoc groups and others
over whom they felt their control would be much less.
NHSs, on the other hand, often felt that increased account-
ability also meant increased dependence: They faced the
dilemma of wanting to receive benefits while needing to
maintain independence.
Nevertheless, there is a widespread feeling --perhaps the
major reason for continuing to perform these additional
services --that this work expands the tools and therefore
the number and types of needs the NHS program can serve.
It ultimately broadens NHS into a more comprehensive neigh-
borhood institution, able to take on increasingly more
difficult problems and to receive and utilize the addition-
al resources the contracts allow. The Jamaica and Atlanta
NHS programs, both of which have few contracting opportun-
ities and very small staffs, felt that they could do much
more if they had additional resources that would increase
their outreach capacity --a benefit often associated with
pass-through and contract services.
Dangers Associated with Contract and Pass -Through Services
Despite the general interest and opportunities associated
with contract and pass-through services, several dangers
were mentioned by staff and resident leaders:
150
-162-
• There are the dangers of NHS being viewed as a
government program, thus being politically con-
nected to the city in terms of image and prior-
ities and dependent on the city for operating
resources.
• There is a feeling that the program could become
burdened with contractual work and have to ne-
glect the activities of the NHS model, as il-
lustvated by Racine's experience.
• Many NHS directors felt that they might be judged
on their contract or pass-through work rather
than on their overall performance of core serv-
ices. Some NHSs feared this burden because they
have limited control over the design of programs
for which they contract or provide pass-through
services.
• Many NHS directors expressed concern that the
present contracts and pass_through services, es-
pecially those arrangements for which they are
reimbursed, might lead to decreasing interest and
support in participating in the program, especial-
ly by financial institutions.
Opportunities and problems aside, the trend is definitely
toward increased contracting and pass-through services.
Although table 10-1 does not provide dates, the increase
in activity is clearly a recent and strong phenomenon.
Even though NHSs appear to be aware of the associated
problems, there is no evidence of a tendency toward re-
versal of these activities.
COMPARATIVE COSTS
PROGRAMS OF SERVICE DELIVERED BY NHS AND OTHER
In 1979, the average NHS program stimulated more than
$1 million in reinvestment by neighborhood homeowners.
This figure is based on an average of 2,600 residents --56
percent of whom were homeowners, a frequency of reinvest-
ment of 65 percent, and an average level of reinvestment
of $1,058. The average budget of the NHS programs in the
study sample suggests that NHSs spend approximately $65,000
in operating costs associated with the basic program. Two
caveats should be noted in reference to these figures.
First, they do not include reinvestment generated by rent-
ers or absentee owners, and they do not include amortized
development costs, capital improvements or proceeds from
grants and contracts. Second, not all reinvestment can be
attributed to the NHS program, but the $1,058 reinvestment
151 /
figure compares favorably with the average annual level
of home repair in central cities in 1979 of $567. Although
these data cannot show the exact share of the reinvestment
directly attributable to NHS, it is substantial.
If $65,000 is the average operating budget for the core
program and $1 million is the average reinvestment per
year, the administrative cost associated with the program
is less than 7 percent. Giving NHS credit for only half
the reinvestment and raising the typical expenditure to
$100,000 raised the administrative percentage to 20 per-
cent which is comparable to local delivery mechanisms.
A comparison was attempted of the administrative costs of
NHS programs and those of locally administered rehabilita-
tion activities. However, no detailed cost information was
available for specific programs within large agencies re-
sponsible for housing and rehabilitation programs. Every
budget report studied contained some element that would S
have generated clearly misleading or incomparable results.
i
r
152
I
A
a
Notes
1. See Neil Mayer et al., Ke s to the Growth of Neighbor-
hood Development Or anizations Washington, D.C.: Urban
Institute, 1975).
2. In a piggyback loan, the borrower obtains funds for
house purchase as well as for rehabilitation. This is
sometimes referred to as 11100 percent plus loan." This
type of loan is important because many houses are .not
in habitable condition, and low- and moderate -income
families often have difficulty negotiating the purchase
of the house and negotiating a separate construction
loan.
3. In 1977, Neighborhood Reinvestment entered into an
agreement with HUD to set-aside 1,000 units in the
Section 8 Existing program (rental certificates) for
Neighborhood Reinvestment to allocate to local NHS pro-
grams. Local NHSs that are allocated units enter into
an agreement with the local public housing agency,
which then does the paperwork. The aim of this arrange-
ment is to reduce the displacement that might be gener-
ated from reinvestment where significant rent increases
are necessary. It is a critical element to NHS assist-
ance to renters. The Section 8 set-aside is over and
above any other Section 8 allocation made to local com-
munities. Through 1979, 2,000 units have been allocat-
ed under this agreement.
4. It is important to distinguish the Section 8 Existing
program, for which NHS already has access, from the
other Section 8 programs, including the experimental
Moderate Rehabilitation program.
5. See Margaret Drury et al.
ancePro ram (Section 8):
Section Existing Housit
Department of Housing and
1978).
:ion or the
;ton, D.C.:
November
153 7WW
CHAPTER 11
NHS AS AN INITIATOR AND TESTING GROUND
FOR NEW IDEAS
Experience with the Neighborhood Housing Services (NHS)
program has shown that deteriorating housing and lack of
lending are only two of many factors affecting residents'
confidence in their neighborhoods. Other factors limit
the work that a core NHS program can do. For example, a
neighborhood with a successful NHS partnership can be
hampereby
owners. These vacant properties
propertiespresent both puncooperative problems andsoppor-
tunities for a neighborhood.
To explore these opportunities and to seek new tools to
expand the effectiveness and the range of neighborhoods
that could be served is the
mandate
tedfor
numberNeighborhood
whicPre-
servation Projects (NPPs), a
are
funded by Neighborhood Reinvestment.) These projects are
locally based neighborhood preservation strategies, in-
volving neighborhood organizations (including but not governments, to NHSs) and representatives of local
mise
ofnimproving fiancial institutions,
tthe ti neighborhood d and businesses, in waythat show omenhanceand
expand the NHS concept. Although the site of an NPP de-
monstration
does
not
of being plicable in thegNHSr
hood, an
NPPmustshowsignsapplicablecontext.
As of December 31, 1979, thirty-four NPPs have been sup-
ported by Neighborhood Reinvestment. Of the twelve NHS
programs in the study sample, five programs have initiated
I seven NPPs. Four of these projects have undergone trial
replication in five neighborhoods evaluated in this study.
(Trial replication means that a model of the original
I project is transferred to several other neighborhoods to
determine whether the essential elements of the protect
are broadly applicable or can be adapted as tools for re-
investment in NHS contexts.) One other project has been
demonstrated its ca -
documented (that is, the project has
pabilities and its essential elements have been recorded
in a handbook or development guide for future use) and
is ready for trial replication. Thus, of the twelve sites
examined, eight have either initiated projects or have
been sites for trial replication (see table 11-1)-
155 �14�7-
Neighborhood Preservation Projects in Impact Study NHS Programs
Project Name
NHS
Neighborhood
Year(s)
Funded
Grant
Amount
Replication
in --
Home Maintenance
Jamaica, N.Y.
1977-79
$ 32,000
-
Training Program
Statewide NHS
Oakland, Calif.
1978
18,652
-
Foundation
La Habra, Calif.
Home Ownership
Baltimore, Md.
1977
81,000
Bridgeport
N Promotion Program
Philadelphia
Owner -Built
Oakland, Calif.
1979-80
750599
--
Housing Program
Insurance Industry
Chicago, I11.
1978-79
Cleveland
Full Partnership
Bridgeport
Baltimore 26(h)
Baltimore, Md.
1979-80
50,000
Jamaica
Program
Anti -Displacement.
Baltimore, Md.
1979-81
103,300
a
Program
a. Elements have been
widely incorporated
in NHS programs.
This chapter looks at a sample of NPPs generated by these
NHSs to assess the extent to which NHSs can identify a
problem (or a gap in tools), develop an idea for dealing
with it, turn the idea into a program or tool, generate
resources to support it, and test its adequacy. As such,
this chapter assesses NHS as a generator of and a testing
site for reinvestment ideas. The question is, can Neigh-
borhood Reinvestment use an NHS neighborhood to test, ddcu=
ment., and replicate innovation strategies? Moreover, does
the work in the field encourage NHS staff and partners to
generate and nurture ideas? Although this study does not
systematically assess the impact of these projects, it
i does describe them and put them in the context of neighbor-
hood revitalization issues -2
NPP SELECTION AND MONITORING PROCESS
Because NPPs are not separate programs but elements within
existing programs, they have no development process per se.
What exists is a procedure in which promising ideas are
selected, monitored, documented, and replicated. When this
path is successfully followed, the program element is made
available to operating NHS programs and the general public.
NPP selects about ten projects annually for monitoring and
evaluation. A fraction of these are determined to be
generally applicable and promising.
NPP Selection
NPP is not a general funding program. Neighborhood Rein-
vestment grants cover only those program parts that are of
specific interest to Neighborhood Reinvestment for evalua-
tion and other requirements.
NPPs must meet the following criteria: (1) address a sub-
stantial neighborhood need; (2) involve partnerships includ-
ing financial institutions, residents, and local govern-
ments, as appropriate; (3) provide meaningful information
for future replication in other neighborhoods; and (4) be
sponsored by organizations that demonstrate implementation
capacity. Table 11-2 lists the programmatic areas in which
the NPPs are included. This list is reviewed each year,
and specific programmatic areas are given priority.
Monitoring and Evaluation
After projects are selected, they are monitored and eval-
uated to determine if they achieved specific goals and if
they can be transferred in whole or in part to other neigh-
borhoods. To do this, NPP requires each project to develop
157 46 .7--
TABLE 11-2
Neighborhood Preservation Projects
Programmatic Areas, 1979-80
1. Mechanisms that address the displacement of current
residents in neighborhoods experiencing rapidly in-
creasing housing costs.
2. Neighborhood -controlled rental resources involving re-
habilitation, management, and ongoing maintenance of
properties to serve low- and moderate -income renters.
3. Property management services (nonprofit or subsidized)
that stabilize apartment buildings of five to fifty
units by bringing sophisticated management, financial
analysis, and maintenance services to residents and
owners.
4. Property management training programs for resident
owners of two- to six -unit properties.
5. Strategies for the revitalization of neighborhood com-
mercial areas, particularly relating to the needs of
surrounding residential communities.
6. Strategies to redesign and convert economically ob-
solete commercial or other buildings to uses that
will contribute to overall neighborhood revitalization.
7. Strategies to address residents' concerns about per-
sonal safety and property security in neighborhoods
or large apartment buildings.
8. Programs integrating energy conservation techniques
into neighborhood housing rehabilitation programs.
9. Strategies to deal with vacant lots and blighting
parcels of land in a neighborhood setting, including
creative approaches to land banking.
10. Cooperative or condominium conversion mechanisms ben-
efiting the present low- or moderate -income residents
of neighborhoods.
11. Strategies to improve local schools, using the partner-
ship concept in a neighborhood setting.
158 114.2-
TABLE 11 -2 --Continued
12. Other program areas that can be shown to be part of
a comprehensive revitalization strategy on a neigh-
borhood scale.
a work plan and to collect certain data on program perform-
ance. This work plan is the framework for observing and
monitoring the project. During the contract period, NPP
staff receive periodic reports on the following:
• Structure --how the project is organized to do busi-
ness;
• Operations --what activities are undertaken to reach
the goal and the relationship of specific programs
to other local efforts; and
• Outputs --what ,has been accomplished, such as units
rehabilitated, houses sold, tenants converted to
owners, and increases in merchant sales.
Certain determinations are also made about context, costs,
organizational requirements, and service delivery.3
NPP gives technical assistance to projects that need help
in meeting objectives. This assistance and the reporting
process provide answers to the following questions:
• Does the program work? The project must clearly
show that it effectively meets a neighborhood need
and does so in a way that draws on the original
Partnership or incorporates new partners.
• Can the urogram be transferred? Neighborhood Re-
investment must determine if the program's essen-
tial elements are broadly applicable in NHS neigh-
borhoods. That is, it must be agreed that a suc-
cessful project is not so unique that it works in
only a limited number or type of settings. To make
this judgment, staffs of other NHS programs help
analyze new program tools for Neighborhood Rein-
vestment.
159
-el6oz
Model Development and Replication
The final step is to collect all information into a format
that fully describes the model and becomes the basis for
pilot replication. This information includes the following:
• A history of the program's development;
• A description of the program's essential elements
and time requirements for implementation;
• A description of the partnership and the resource
commitment level;
• A description of the organizational form and staff-
ing patterns; and
• A description of the target neighborhood and pro-
gram impact.
This report becomes the blueprint and instructional guide
j for testing a new tool in other neighborhoods. During pilot
replication, a developmental process is crafted to facili-
tate replication in other cities. (In developing this guide,
technical assistance and support are provided to NHS programs
that apply for it.) Of the sixteen NPPs that have been com-
pleted, six are undergoing trial replication.
NPP PROJECT DESCRIPTIONS
Described below are the seven projects funded by NPP grants
that originated in the NHS neighborhoods in the study
sample.
Case 1: Homeownership Promotion
Neighborhood Housing Services of Baltimore, Inc., designed
the Homeownership Development and Marketing Program to deal
with the void caused by the absence of real estate activity
in southeast Baltimore and to deal with absentee landlords
who were unwilling or unable to rehabilitate properties.
Many of these landlords were willing to sell properties for
which income was low and code violations were extensive.
Tenants wanted to become homeowners and could afford the
modest housing costs with only a small subsidy.
Key elements of the program are to convert investor-owned
properties to owner -occupied homes and to expand opportuni-
ties for homeownership to tenants in the NHS neighborhood.
160
L/ 6 e2
This program is a major new development for two reasons:
It provides a systematic way of getting absentee owners who
would not improve their properties to "homeownership" stan-
dards to sell, and it offers a chance for tenants to buy
housing in their neighborhoods. Other benefits include a
strengthening of the real estate market as sales increase
and rehabilitation of formerly non -owner -occupied housing
takes place.
Homeownership promotion programs have also undergone trial
replication in the impact study neighborhoods of Bridge-
port, Conn., and Philadelphia, as well as in NHSs in Pitts-
burgh, Pa.; Charleston, S.C.; Rochester, N.Y.; Reading, Pa.;
and Denver, Colo.
Case 2: Home Maintenance Training
The Queens Home Maintenance Training Program, a joint effort
of York College, Queens Urban League, the Jamaica, N.Y. NHS,
the Chase Manhattan Bank, Citibank, and Neighborhood Rein-
vestment, was designed to teach local residents how to use
household tools and to perform minor repair jobs. The pro-
gram was created to provide low- and middle-income home-
owners with knowledge of and competency in home maintenance
repairs. The program encourages participants to develop
the initiative and positive attitudes necessary to keep
their homes in good condition, either by doing their own
repair work or by contracting for services that they can
supervise.
The home maintenance program features a tool library and
training curriculum that teaches participants about the
uses and limitations of specific tools, the origin of
household deterioration, construction techniques, construc-
tion materials, primary heating and plumbing systems and
their repair, and methods of dealing with tradespeople.
Participants are expected to acquire skills in handling
1 basic construction and repair tools and to learn how to
determine the extent of needed repairs and how to know
whether to make the repairs themselves or to seek a con-
tractor. The program has been fully documented for pilot
replication. Although it has not yet been formally trans-
ferred to other cities, several NHSs have independently
i established tool lending libraries and classroom training
i or have incorporated maintenance (and weatherization) ac-
tivities in their programs. This program is viewed as
significant because it offers mature NHSs a way to switch
to maintenance programs. In addition, the program helps
homeowners maintain their rehabilitated properties.
�z
161
Case 3: The California NHS Foundation
The California NHS Foundation was developed to secure the
participation of statewide financial institutions and to
ensure the financial support of NHS programs in California.
The foundation was created in response to a growing con-
cern by California lenders about the number of programs
they would be askedto fund." It was also viewed as a
mechanism to gain the support of top management in Califor-
nia''s statewide -based lending environment.
With funding from participating financial institutions,
the foundation has provided a $45,000 contribution annually,
which was derived as 75 percent of the then $60,000 per
year administrative costs of each program in California.
Eighteen lending institutions have made financial commit-
ments to the foundation; contributions and pledges cur-
rently total $970,000 annually, to be distributed among
the six NHS programs in California. A similar foundation
has been developed for programs in New Jersey. Statewide
funding organizations could be important for NHSs in small
cities that do not have a large enough base of local priv-
ate support.
Case 4: Owner -Built Housing
The Oakland, Calif., NHS has designed a program model that
can address two particular neighborhood needs: development
on vacant, blighting lots; and a way to meet the desire of
moderate -income residents for quality housing with modest
cash outlay. The Owner -Built Housing program enables mod-
erate -income families to build their own homes on vacant
lots, using "sweat equity" in lieu of cash down payments,
thus reducing the indebtedness that would accrue if houses
were bought on the open market.
NHS purchased fourteen vacant lots at a low cost from the
city. In two groups of seven each, new homeowners are
working together to build the houses. Conventional financ-
ing was made available from local financial institutions.
Because the program is still in an early developmental stage,
no analysis of its benefits as a program tool is yet avail-
able. The program offers promise, however, of supplying
Neighborhood Reinvestment with an innovative model for
providing low-cost new housing to NHS residents in urban
areas. It can simultaneously provide for the reuse of
vacant, blighting parcels of land, strengthen partnerships
in the community, and teach residents construction and
maintenance skills. The program is testing. the hypothesis
that the program can be viable in urban settings, as well
162
�G�
as in small and rural communities where self-help tradi-
tionally has been more customary.
Case 5: Anti -Displacement Program
Baltimore's Anti -Displacement Program has two parts: the
Home Maintenance Program and Neighborhood Rental Services.
The Home Maintenance Program is aimed at preventing decay
and providing emergency repairs; thus, it will have a posi-
tive future impact on the neighborhood through preventive
maintenance of structures. For a nominal fee, the program
offers routine maintenance and emergency repairs on homes
owned and occupied by elderly, single parent, or physically
handicapped heads of households. The program has an out-
reach component to attract clients. The program also deals
with serious health and safety problems that might force
such persons out of their housing and informs them of
other services and programs.
Neighborhood Rental Services (NRS) program is a community -
run, nonprofit organization that acquires and manages ren-
tal properties. NRS's strategy is to obtain blighted
buildings and then to upgrade them to code requirements
utilizing Section 312 loans and Section 8 rental subsidies.
This strategy attempts to prevent low-income tenants from
being displaced from the neighborhood by offering alterna-
tive rental housing to that available from private land-
lords. It is also a model for future housing management.
Case 6: Baltimore's 26(h) Program
This program bears the name of the city ordinance that
gives the housing commisioner authority to acquire and
rehabilitate buildings that have a severe blighting in-
fluence on the neighborhood. The commissioner is aided in
identifying the properties by the vacant housing advisory
committee, which is composed of city housing officials and
NHS members.
According to the city ordinance, after a property is ac-
quired, the commissioner has several choices: immediate
resale, homesteading, rehabilitation and sale, rehabilita-
tion and rent, or demolition. In the present use of 26(h),
the option of rehabilitation and sale is pursued most fre-
quently. After rehabilitation, properties are sold to an
owner -occupant at the fair market value. (The difference
between the cost of acquisition and rehabilitation and the
fair market value is absorbed by the city from Community
Development Block Grant funds.) Emphasis is put on owner -
occupancy in the hope of increasing neighborhood stability.
The program allows NHS to have greater control over the
163 ��
neighborhood properties without having to do all the work
itself.
Elements of this city program and those of a similar pri-
vately funded program (Urban Edge in Boston) have been
combined by Neighborhood Reinvestment to create a program
called Rehabilitation and Sale. The Rehabilitation and
Sale program is now in trial replication in the Jamaica,
N.Y., NHS.
Case 7: Insurance Full Partnership
One problem faced by many NHS residents is their inability
to obtain conventional homeowners' insurance coverage. In-
surance companies often consider inner-city residential
neighborhoods to be high risks and thus refuse to make
standard coverage available. Instead, residents must rely
on the Fair Access to Insurance Requirements (FAIR) plan
for coverage. Under the FAIR plan, all insurance companies
in a state contribute to a pool from which high-risk poli-
cies are written. These policies tend to be more expen-
sive and provide less coverage than do conventional insur-
ance arrangements.
Because the Insurance Full Partnership is a major program
initiative and is further along in development and repli-
cation than some other NPPs, a fuller discussion of its
emergence and development follows.
This lack of confidence in NHS neighborhoods, as implied
by the insurance industry's unwillingness to write stand-
ard policies, is felt to have had a strong detrimental
effect on NHS efforts in some cities. In response to
this problem, Neighborhood Reinvestment contacted insur-
ance industry leaders and told them about insurance needs
in NHS neighborhoods and the overall efforts of the NHS
partnerships nationally. The industry responded positive-
ly, agreeing to test the concept of coordinated reinvest-
ment.
In Chicago, after preliminary meetings with insurance com-
pany executives, a concentrated effort was made there to
directly involve the industry in the NHS program. In
October 1978, an insurance -NHS workshop was held at which
city officials, lenders, residents, independent agents,
and twenty of the state's largest property and casualty
writers were represented. The workshop provided an oppor-
tunity for industry officials to examine and understand
the NHS program and neighborhood needs. Out of this work-
shop arose a group commitment to work together --to include
the insurance industry as a full partner in the Chicago
164 -V6 �?_
NHS. The form of the partnership was to include a program
to assure resident access and service by the voluntary
(standard) insurance market, the availability of products
responsive to the needs of NHS residents, and industry
participation in the financial and managerial support of
the NHS.
After five months of intensive committee work to develop
specific recommendations, a second workshop was held in
February 1979. Participants from the original workshop
gathered to review, discuss, and adopt the committee rec-
ommendations. A significant recommendation was the cre-
ation of a "repair cost" policy designed to respond to the
difficult situation created for the insurer and the insured
when a substantial discrepancy exists between the market
and replacement values of a particular property. In most
cases, older urban properties have far greater replacement
than market values.
Companies have traditionally required an individual to pur-
chase insurance up to 80 percent of the replacement value
of a home. However, because of the fear of "arson for
profit," companies would not write a homeowner's policy
based on 80 percent of replacement value if the market
value of the house is substantially less. The repair cost
policy is designed for this situation: Rather than requir-
ing the homeowner to insure to the replacement value,. it
allows the homeowner to insure to the market value of the
home. If a loss occurs, the home will be repaired using
today's materials rather than the type of materials orig-
inally found in the home (e.g., plywood covered with car-
pet rather than hardwood floors).
Another significant workshop recommendation was that each
company identify two or three agents to service the NHS
neighborhoods as well as name a liaison from the company's
local personal lines department to work with NHS staff on
any difficulties concerning the placement of insurance in
the neighborhoods. Additional recommendations asked for
the following:
• An insurance representative on each local NHS
board and key operational committee;
Representatives to the central board and other
significant committees as needed;
An insurance outreach, counseling, and referral
service involving counselor training, client re-
ferral, and marketing efforts; and
165
• A monetary commitment to the NHS budget, deter-
mined by the volume of homeowner premiums each
company writes in Illinois, and increased con-
tributions by those companies domiciled in the
state.
These recommendations were adopted at the second workshop
and compose the main thrust of the Insurance Full Partner-
ship in Chicago.
With the Chicago partnership in operation, Neighborhood Re-
investment began to replicate the plan in other cities..
The developmental process began in 1979 in Milwaukee, Wis.,
Minneapolis and St. Paul, Minn., several cities in Connect-
icut, and in 1980 in Cleveland and Kansas City. The de-
velopmental process takes about nine months --four months
leading to the first workshop and five more months of com-
mittee work on the recommendations, which culminate in the
full partnership. The process includes the following:
1. Site selection process --The first step is to as-
sess the industry's potential for involvement;
the industry must recognize its own self-interest
and take positive steps to address the issue of
redlining. And the number of companies serving
the urban area must be addressed; the NHS staff
presently estimates that twelve insurance com-
panies are sufficient to reassure companies that
risks to any one company are minimized. The
second step is to assess the residents' potential
for involvement; homeowners, too, must recognize
and be concerned about the availability of volun-
tary insurance coverage.
2. Introductory are
potential insurance
participants are introduced to the NHS concept,
the problems caused by insurance redlining, and
NHS involvement as an affirmative urban strategy
for the insurance industry.
3. Workshop I --At Workshop I, all potential partners
are brought together to discuss the issues. After-
wards, there is usually a group decision to move
toward a full partnership. Participants then break
into working committees to explore suitable solu-
tions.
4. Developmental committee work.
I is
5. Workfullshop partnersnip. Atlthis tstep
workshop, committees
IrI6 z
166
present their recommendations for the partner-
ship --its structure, size, underwriting mechanism,
and finances. The full partnership is then ar-
ranged.
CONCLUSIONS
This chapter suggests that NHS programs are not static
organizations narrowly focused on their original mandate
to increase lending and owner rehabilitation. As programs
have gone about this task, they recognized that other prob-
lems affected the chances for revitalization. Slowly, NHS
(and many non -NHS neighborhoods) has experimented with
reinvestment strategies that expand the effectiveness of
the model and the range of neighborhoods it can serve.
Thus, NHS may be viewed as a generator and incubator of
innovative approaches to reinvestment as well as a deliv-
ery mechanism for services and a conduit for the produc-
tive energies of residents, financial institutions, and
city officials.
167
Notes
1. Neighborhood Preservation Projects are administered
in the Neighborhood Preservation Projects Division of
Neighborhood Reinvestment. Projects that successfully
complete this process and go on for development and
replication are handled through the Neighborhood Pres-
ervation Development Department in the Program Develop-
ment Division of Neighborhood Reinvestment.
2. The Home Ownership Promotion Program is evaluated in
part IV.
3. Of particular interest here are the costs of adminis-
tering the program, the staff and skills required of
them, and the specific cohditions under which success
might be expected. Only a fraction of NPPs are repli-
cated because even though some programs may be effec-
tive in a particular neighborhood, upon analysis their
applicability and transferability to a wide range of
neighborhoods are limited.
4. In California, many financial institutions are branches
of statewide institutions. To get over the hurdle of
dealing with branch banks, and to keep financial exec-
utives from being overwhelmed with requests for NHS
support, the California NHS Foundation was developed.
168 �11�,`2_
I
CHAPTER 12
SUMMARY OF NHS IMPACTS AND LIMITATIONS
This chapter summarizes the various impacts of Neighborhood
Housing Services (NHS) programs around the country. It
also reviews and summarizes some of the concerns and criti-
cisms raised by partners in interviews conducted during
the study. Finally, the chapter looks at the experience
of the NHS program and what this experience has required
in the way of support, training, and technical assistance
from Neighborhood Reinvestment. So far, this report has
concentrated on the activities of the partners and the
impact of the program on the neighborhood; it has not
examined how Neighborhood Reinvestment activities relate
to these achievements.
ACHIEVEMENTS OF THE NHS, PROGRAM
The previous chapters detailed the activities of the NHS
program from the points of view of the various actors.
This section reports some qualitative observations the
partners have made about program impacts. The conclusions
expressed here represent a consensus among the study re-
spondents, and include the following:
• The NHS program operates using a cooperative, not
a confrontational, approach. This was viewed as
especially important by city officials and offi-
cers of financial institutions who had previously
had bad experiences with neighborhood groups. This
is not to suggest, however, that conflicts did not
occur among the partners on the usual issues.
• The NHS program achieves reasonably quick (within
five years) rehabilitation. Its record of physi-
cal improvement contrasts with other efforts such
as long-term development, planning, or some pro-
cess or political activity that less frequently
results in physical improvements or benefits to
particular clients. While the rehabilitation is
in only a few cases extensive, the physical results
are in most cases significant and visible.
• NHS is a rehabilitation delivery model for the
city. In many older programs, the NHS program
169
/7.17_
preceded any city -initiated rehabilitation activ-
ity. As noted in chapter 8, many city programs
now are patterned on the NHS experience.
The NHS program has brought financial institutions
back into active participation in urban neighbor-
hoods --at least in NITS neighborhoods and in other
selected reinvestment neighborhoods. Some institu-
tions, as of 1976, were under pressure from regula-
tory agencies to be more affirmative in urban lend-
ing. Yet many had worked outside the inner-city
for so long that no easy conduit or outreach mecha-
nism was available to help them learn about the
lending needs in urban neighborhoods. The institu-
tions and NHS directors noted that NHS served this
purpose. They also found that NHS participation
became a convenient way to have "prescreened" loans
referred to their institutions.
NHS elected boards are actively involved in ad-
ministering the programs and do not represent ef-
forts by outside professionals or persons whose
interests are largely outside the neighborhood.
• NHS programs use the "carrot -and -stick" approach
to encourage reinvestment. Also, NHS's more sensi-
tive and flexible approach to code enforcement is
seen as an improvement over coercive code enforce-
ment activity.
Although some common elements of the NHS model are
applied nationwide, NHS is flexible enough in its
early developmental stages to incorporate the uni-
que characteristics and needs of a specific neigh-
borhood. However, there is enough commonality to
allow programs to share information and techniques
and to benefit from a national support staff.
The NHS program is flexible. That is, its activ-
ities do not derive from strict guidelines imposed
from afar, and Neighborhood Reinvestment's develop-
mental process is required only to the point of
incorporation. In response to community needs,
many innovations have been added to the model.
17Z4 Z
170
r
In conclusion, it is fair to say that there is widespread
satisfaction with the NHS program. Some respondents even
refer to NHS as a "movement" or see its participants as
part of the "NHS family."
CRITICISMS OF THE NHS MODEL
Although most comments from respondents were positive, some
were negative. These related to criticisms of program
implementation; others related to aspects of the model
that were viewed as inadequate. Still other comments
reflected frustration with current problems in the commu-
nity and were not fundamentally critical of the NHS model.
Typical comments from these various sources are reported
below because they reflect important conclusions about the
NHS experience.
• Several financial institution executives were
troubled by what they perceived to be an open-
ended commitment to a neighborhood after they
became involved. In only a few (Dallas, and to a
lesser extent, Chicago and Cleveland) of the
twelve neighborhoods in the study was a conscious
decision made to phase down operations in a neigh-
borhood and move on. Yet financial institutions
in other cities felt that they had initially made
a three -to five-year commitment and that once that
time had passed, they should move on to another
neighborhood. This issue has yet to be clarified.
• Executive directors reported problems in keeping
residents actively involved in the program. At-
tempts to involve residents in day-to-day activi-
ties of community outreach, lending assistance,
and other activities often produced minimal re-
sults. In that regard, the directors viewed the
resident role in the partnership fundamentally as
a reflection of the activity of a limited number
of people. Although NHS is not a mass membership
organization and large numbers are not expected
to participate, executive directors were concerned
about the number of people who actually do partici-
pate.
• In several programs, there was tension over the
focus of the program. This issue usually emerges
after a program is about three years old, when the
core activities are in place, and when staff or
board members come up with additional tools or
program elements that they want to direct toward
a particularly troublesome neighborhood problem.
Few of the programs had a significant planning
element, and, indeed, the program might be viewed
as somewhat opposed to the discipline of planning -1
Observers believed a plan would help to identify
when particular activities should be pursued. The
lack of such plann g and the
in their nthe early pyearsl,
created led many programs,
to take initiatives that then deprived their core
services of needed resources.2
There was a consensus on the part of directors and
others that the job of NHS director requires a
"Jack of all trades" and that many programs are
unable, on their own, to attract or retain such
individuals. The common model of a three-person
staff was viewed as too small. In fact,
several
study neighborhoods had much larger staffs. (In
at
half the neighborhoods, the staffum ered or
least six when persons contributed by
paid with contract funds were included.) However,
some financial institutions that contribute to
the operating fund still feel that a three-person
staff
core to unabletoprovide ices increase budget.
To get extra help, the program must depend on
outside contracts and other sources.
Residents expressed some rear that substantial
contracting with city agencies and tie-ins with city
grant programs give these activities the potential
to A fewcrease the executivecidirectorsrol over shared anNHS
concern.
0 Some programs are experiencing fund-raising dif-
ficulties or expect to in the near future. Budget
needs and residents' demands on the expanding, but private contributions from program financial
institutions are not increasing accordingly. Di-
rectors noted that other neighborhood initiatives
are emerging, and financial organizations are be-
ing besieged for contributions from several groups.
Some contributorssorave partners andbhavee had mixedisucl
cess.
0 Several NHS neighborhoods had problems with the
consistent use of a code enforcement program. In
some ca substantiales, the dimpact; in others, nt program has had
a very others, the program
l7Z6 �
172
began before appropriate outreach or marketing was
done and, as a result, code enforcement has had a
limited or even a negative impact.
• Many executive directors and residents reported
that the program is more responsive to homeowners
than to renters. This result, of course, is con-
sistent with the original conception of the pro-
gram --as one that helps homeowners expand reinvest-
ment in their neighborhoods. The concern for rent-
ers and their criticism of the program reflect
the recent tightening of the rental market and
substantial improvement activities in other neigh-
borhoods, both of which reduce the supply of af-
fordable rental housing, if not rental housing
generally. In addition, in several NHS programs
where homeownership is promoted, many of the ren-
ter -occupied units are viewed as resources for
sale to home buyers.
• Some residents in multi -program cities complained
that the central board was dominated by financial
institutions. It is true that in most cases
where there is a central board, the chairperson
or president of that board comes from a financial
organization. Although this stems from the concept
that the primary functions of the central board
are fund raising and resource allocation, many
residents felt they had less influence in these
important issues.3
Several residents indicated that their fellow re-
sidents paid insufficient attention to the politi-
cal meaning of reinvestment activity --not just in
their neighborhood, but in adjacent areas. These
residents felt that the NHS program should be more
political in opposing or influencing certain rein-
vestment or development activity in their neigh-
borhood or in other neighborhoods; in trying to
control development by outside developers; and in
more directly shaping activities relating to com-
mercial development, real estate taxation, Commu-
nity Development Block Grants, allocation, and
other issues that affect the neighborhood but that
are clearly outside the direct purview of the NHS
program.
This list of criticisms reflects frustrations about the way
programs are administered and frustrations of one actor
about the behavior of others. Space limitations do not al-
low a detailed account of the specific ways that each of
these controversies or criticism have been addressed.
173 4'��.2_
However, responding to these concerns and their consequen-
ces are a major part of the activity of the support staff
from Neighborhood Reinvestment.
NEIGHBORHOOD REI14VESTMENT SUPPORT ACTIVITIES
To this point, the report has looked at the program in
terms of the activities of its partners; this section ex-
th
amines the ortiand technicaliservicesactvities of dto to Reinvestment al programsat
provide supp
In the past, neighborhood programs, including those spon-
sored by federal agencies, were on their own after they
were established. Many survived, but others experienced
crippling problems that eventually undermined their effec-
tiveness or caused them to cease operations. Assistance
and support in implementation were missing. Technical as-
sistance was limited to periodic workshops, newsletters,
and short-term group assistance or direct assistance, us-
ually concerning a regulatory or administrative issue. No
assistance was provided in forming the organization or in
sponsoring intensive training for unique tasks its leaders
had to perform. As a result, many programs have been cri-
ticized for shortcomings in their implementation and also
for their inability to adapt and survive the almost inevit-
able crises when in fact the program design was on target.
Neighborhood Reinvestment, in contrast, has
pro ided a more
extensive range of technical and support
no
doubt, accounts in part for the fact that none of its pro-
grams has been disestablished. In fact, two (Oakland,
Calif., and Racine, Wis.) of the twelve programs in the
study sample experienced critical problems that ordinarily
might have caused them to cease operations. In both cases,
the programs survived. Oakland's program was halted tem-
porarily and then came back to beone of Neighborhood the
best-rReinve arded
NHS programs in the country.
stment
worked not only with the programs to keep them operational
and to provide core services but also conducted board
workshops with the partners to help sustain and reshape
their commitments to the initial goals of the program. In
Racine, the period of difficulty occurred too recently to
allow an evaluation, but the program has survived, with
the partnership intact.
174
History and Organization
Support as a formal function at Neighborhood Reinvestment
started in 1975• The NHS programs and the staff of the
Urban Reinvestment Task Force recognized that each local
program faced similar problems in dealing with the program
tasks of increasing neighborhood rehabilitation and urban
lending. They also realized that although there were
casual opportunities to share experiences, there was no
organized vehicle for gathering and sharing information
or for taking advantage of such knowledge by transmitting
it from one program to another.
The support activities initially involved developing hand-
books and training programs for new executive directors.
The Neighborhood Housing Services Director Training Pro-
gram was contracted to the NHS program in Chicago. There
was also some assistance in developing accounting proce-
dures and loan underwriting criteria. An annual conference
provided opportunities for formal information exchanges.
In 1976, the activities became more formalized with the ap-
pointment of two staff members to serve full time in the
support activity. The staff expanded slightly and continu-
ed to provide this service through 1978. By this time,
the number of NHSs had increased, Neighborhood Reinvestment
f resources were shifted significantly, and support and
training increased staff size again. An effort was also
made to identify the transition needs as programs moved
from the developmental stage into operation. In 1978,
three postdevelopment officers were appointed to help
boards and committees get programs started. After the six -
to nine-month developmental period concluded with post -
development officers aiding the transition to operational
status, the program was turned over to support staff. Ad-
ditionally, materials were developed explaining how to
set up offices and develop loan and rehabilitation programs,
administrative tracking systems, and other activities.
By 1980, the workload, in terms of the number of operation-
al programs, had doubled more than twice 'since 1970. Al-
though development was proceeding (more programs were de-
veloped in 1979 than existed in 1976), an increasing number
of older programs needed more substantial support than
that provided by the five support officers, three postde-
velopment officers, and a small training staff (plus con-
sultants). Thus, in 1980 support and training were re-
organized into four departments within the Support and
Training Division and given a regional structure. The
staffing and reorganization reflects a significant increase
in number of personnel as well as new regional structure,
71Z�1�2_
175
which provides close coordination between the development
and support staffs.
The Support Services department provides the core support
activities and consists of twelve support officers plus
supervisory staff in district offices. The second depart-
ment, Resources and Monitoring, arranges conferences and
workshops, assists programs in identifying sources of fi-
nancial assistance and grants, and monitors program opera-
tions. The third department is the Training Center in
Chicago, which provides training for executive directors
and rehabilitation specialists. The fourth department,
Technical Services, provides on-site technical services
for a variety of activities, ranging from rehabilitation
specifications writing to fund raising to administrative
systems. Technical services are provided either by Neigh-
borhood Reinvestment staff or by a consultant (who is
usually an experienced NHS executive director).
Evaluation of Support Activities
Part of this research included a survey of all field sup-
port staff and senior support staff.5 They were asked to
rank all programs operational in 1979 on a scale of l to 4
(1 indicates intensive support over an extended period --
six weeks or more where program survival was in jeopardy;
2, a level of intensive support over a shorter time or fre-
quent episodes of intensive support but where program sur-
vival was not in jeopardy; 3, a normal level of support with
extra support offered in connection with a routine change
in executive directors, fund-raising campaigns, new program
initiatives, or other features that did not fundamentally
threaten program survival but added to its effectiveness;
and 4, a program level that involved only routine communi-
cation, program assistance, and information exchange). Ta-
ble 12-1 shows the level of support by year of incorpora-
tion, and table 12-2 shows level of support by year of in-
corporation and city size.
There was a modest difference in the level of support by
city size. That effect, however, was negated when size
and year of incorporation were looked at together. Gen-
erally speaking, most programs clustered around the weight-
ed mean level of support, 2.83. The exceptions were several
programs developed in 1976 and 1977 (table 12-2).
176
TABLE 12-1
t
1979 Level of Support by Year of Incorporation
(n = 96)
i
P
f
Number of Average Amount
Year Programs of Support
1972 5 3.20
1 4.00
1973 3 3.66
1974 3.35
1975 17 1.75
1976 12 14 2.57
j 1977 28 2.75
1979 78
16 3.13
t Weighted mean 2'83
z
{ Source: Neighborhood Reinvestment support staff.
C Note: Total adds up to number of neighborhoods through
1979• Five Union County, N.J., neighborhoods counted as
one. This table reflects support for NHS programs only
and does not include support for other programs of Neigh-
borhood Reinvestment.
+ a. Ranked on a scale of 1 (intensive support) to 4 (rou-
tine support only); see text for complete explanation. The
mean is weighted to reflect the widely different number of
fprograms developed in each year.
t
177 �*112--
TABLE 12-2
Level of 1979 Supporta by Program Incorporation
Date and City Size
(n = 94)
Pn r
1972
3.67
(3)b
--
(0)
--
(0)
1973
4.00
(1)
--
(0)
--
(0)
1974
3.67
(3)
--
(0)
--
(0)
1975
3.31
(16)
4.00
(1)
--
(0)
1976
1.38
(8)
2.00
(2)
2.50
(2)
1977
3.33
(6)
2.33
(3)
1.80
(5)
1978
2.92
(12)
2.67
(6)
2.78
(9)
1979
3.56
(9)
3.00
(3)
2.60
(5)
Source: Neighborhood Reinvestment support staff.
Note: Union County, N.J., programs are not included.
a. Ranked on a scale of 1 (intensive support) to 4 (rou—
tine support only); see text for complete explanation.
b. Numbers in parentheses indicate number of programs.
�/ 4 ;?--
178
i
Difficulties in providing support were faced in large cities
as well as small and medium-size ones. In the latter case,
it was the first extensive experience Neighborhood Reinvest-
ment had in developing programs outside of large cities.
In the former case a mixture of problems, ranging from
funding, to staff turnover, to programs taking on tasks
for which they had limited resources, complicated support
services.
Table 12-3 presents actual expenditures, the number of pro-
grams supported, and the average support dollar per program
for 1978 through 1981. The table shows that a substantial
drop in the level of support occurred at the same time as
the number of programs was expanding. The level of sup-
port did not reach a substantial level until 1980, when
Neighborhood Reinvestment allocated a more than 40 percent
increase in support dollars.
i
TABLE 12-3
S
j Budget and Program Level, Support and Training
Division, 1978-81
Average
Number of Dollar
$ Programs Cost Per
Year Expended Supported Program
1978 $1,297,000 49 $26,469
1979 1,846,000 78 23,666
1980 3,468,000 95 36,505
1981 3,563,000 125 28,504
i
Source: Neighborhood Reinvestment budget summaries,
1978-81.
a. Figures in current dollars. 1981 is a budget figure;
the others represent actual expenditures. Includes program
support and training, conferences, program reviews, and
secondary market operations.
Cities were studied in terms of the level of support re-
quired during a staff change (table 12-4). These programs
require a substantially higher level of support, 2.15•
They also made a heavy demand on the training department,
a consideration not analyzed in this report.
'i�1, .7--
179
TABLE 12-4
NHS Programs with Selected Support Needs, 1979
Number of Average
Program Programs Su ort
New programs (incorporated dur-
ing 1979 excluding Buffalo
programs) 12 3.08
Programs with staff turnover
during 1979 27 2.15
Programs with developing expan-
sion neighborhoods not included
above 7 2.71
Programs without staff turnover
in 1979 41 2.66
Source: Neighborhood Reinvestment support staff and
files, 1979.
As indicated earlier, in at least half of the programs in
the sample, a change in executive director presented some
serious difficulties. In many cases, a change also re-
flected fundamental changes in either the needs or the
resources available to the program. Given a staff of
only three for providing core services, the trauma of
changing executive directors is often the source of demand
for increased support service. It is a level of support
that is not only intensive but may be long term (two to
three months), especially for programs in small- or medium-
size cities.
In neighborhoods undergoing expansion, the level of support
is not significantly higher (2.71), but Neighborhood Rein-
vestment staff reported that in addition to the normal
level of support, they also handle issues associated with
recruiting additional financial resources and partners,
sorting out governance issues, and others.
T� ;2 -
:E
Given the survey data (table 12-1) and interviews with
Neighborhood Reinvestment staff, there appears to be a
five-year cycle to the level of support required by a
typical program. During the first year or two, little in
the way of extra support is required, especially if the
work of the development staff has been carried out com-
pletely and successfully, and if the program has adequate
funding and staff. In years two or three, however, the
demand for support expands and, in many cases, expands
considerably because of a staff change, a change in focus,
or new problems that may emerge. In recent years, concerns
about tenants, vacant properties, and other problem build-
ings have made additional program demands on the staff,
especially for technical services. After three years (if
the problem was solved), the need for support services
seems to drop somewhat. When services are required for
mature and stable programs, they tend to be for serious
problems relating to fund raising, change in program focus,
or staff turnover.
The rationale for this particular survey was that support
responds to and deals with problems that threaten program
success. Several Neighborhood Reinvestment staff members
pointed out, however, that problem orientation is not al-
ways the case, and that support is often directed as much
to helping programs as to protecting them. Indeed, the
1980 reorganization reflects this conclusion. Two points
can be made in this regard: First, the support and train-
ing department receives substantial additional demands as
programs become more complicated in their program mix.
Older programs, for example, although they might not ap-
pear to need extra support based on an analysis of prob-
lems they experience, require more support as they get
into more specialized programs. They typically do not
have the staff to do start-up or even developmental work;
Neighborhood Reinvestment support and technical officers
provide this service. Indeed, the more complicated a pro-
gram becomes, the more support or technical assistance it
may require. In the early years, the Boston and Washing-
ton, D.C., programs both tried to deal with the serious
problem of vacant buildings in their neighborhoods. The
extensive financial and staff burdens required and the
technical know-how associated with rehabilitation of build-
ings by NHS (as opposed to helping an owner in loan under-
writing) required Neighborhood Reinvestment to make sub-
stantial effort in those programs to protect them from
failure. Since then, the Neighborhood Reinvestment staff
has tried to anticipate potential problems and to lead
local staff toward tackling problems in a more systematic
and strategic way.
Although the statistics do not support the notion that
small cities require more support, they do in fact hav'e
181
problems that are more costly in time (and therefore dol-
lars) to solve. In small communities, fewer resources,
fewer degrees of freedom for error or for alternative ave-
nues for development, fewer choices among neighborhoods,
fewer lenders, and the critical importance of city sup-
port all mean that support must be carried out more care-
fully. Support goes hand in hand with promoting, docu-
menting, and replicating innovations in neighborhood pre-
servation. Support, as provided by Neighborhood Rein-
vestment, does not suggest that every federal initiative
have an extensive support system, but support is an in-
tegral part of Neighborhood Reinvestment's mandate to pur-
sue an educational process that expands neighborhood rein-
vestment.
NEIGHBORHOOD HOUSING SERVICES OF AMERICA, INC.
In 1974, the Urban Reinvestment Task Force recognized that
after lending in NHS neighborhoods began, the revolving
loan fund would soon become depleted because money would
be lent out faster than it would be repaid. To prevent
this, Neighborhood Housing Services of America, Inc. (NHSA)
established and managed for Neighborhood Reinvestment a
loan purchase pool that provided liquidity to the local
programs without interfering in their normal operating
procedures. This model was effective through 1978.
Because loans were made to persons not thought credit-
worthy and because the NHS secondary loan pool supported
by grants from Neighborhood Reinvestment and others was
not adequate to meet anticipated demands, efforts were
undertaken to find private underwriting for this pool and
to do so in a way that interfered minimally with the local
nature and autonomy of the NHS program. In late 1979, the
Equitable Life Assurance Society of the United States agreed
to purchase from NHSA $1 million in notes, backed by a pool
of NHS revolving loans that NHSA had assembled from local
programs. An indirect subsidy was involved, because there
was a difference between the 5 1/2 percent average return
on revolving loans and the 8 1/2 percent that Equitable
expected as a return on its invested dollars.
The expansion of this loan purchase opportunity through
Equitable has made it possible for loan funds to be re-
plenished across the country. By the end of 1980, NHSA
had purchased loan packages totaling $1.39 million from
twenty-one NHS programs. Although these twenty-one pro-
grams represented less than one-fourth of the programs in
operation during 1980, they did represent more than half
of the programs in operation for more than three years,
!71(v o2-
182
a period by which the initial funds may have been depleted.
This program is important to NHS programs because it allows
them to remain flexible in their loan policies.? In addi-
tion, the programs in Baltimore and Philadelphia have de-
veloped their own secondary market sources through local
financial institutions.
CONCLUSIONS
This chapter summarized observations --both positive and
negative --of local partnership members and the role of
Neighborhood Reinvestment in support activities. It is
impossible to demonstrate statistically how much of the
success experienced by the local programs is directly at-
tributable to Neighborhood Reinvestment support activities.
However, these contributions have been significant, and
they have been critical to the success of many of the pro-
grams. Because Neighborhood Reinvestment has a mandate
to develop and support promising reinvestment initiatives,
every effort to assure that good ideas are not lost in
implementation is an important contribution well worth its
costs.
183
4Goz—.
Notes
1. This observation comes mainly from financial institu-
tions. Respondents suggested that work plans for three
to five-year periods would be appropriate. In 1980,
Neighborhood Reinvestment began to encourage NHSs to
develop such work plans, and planning was more systema-
tically incorporated in executive director training ses-
sions.
2. For example, shortly after the NHS program in Boston
was established, it took on the rehabilitation of sev-
eral severely deteriorated small apartment buildings
before it had established a track record in construc-
tion management or raised the necessary resources.
This program element resulted in a serious strain on
both staff and financial resources. The point is that
a work plan and a more systematic analysis of resources
and constraints would have suggested that the rehabili-
tation activity was. not a timely project for the NHS.
3. There are two reasons for the increase in the signifi-
cance of central boards. First, the number of cities
with multiple programs will obviously grow; and sec-
ond, fund raising will take on a more critical role
as NHS programs develop and take on new tasks. The
central board will then have the increasingly important
task of allocating resources not only among programs,
but among alternative program elements, and this will
therefore give them more control over what individual
neighborhood programs can do. The positive side of
this is that local programs will be able to devote
more time to programs and less time to fund raising.
4. Support, as discussed here, includes several activi-
ties, such as program monitoring, technical assistance,
training, resource development (i.e., assisting in de-
veloping fund-raising strategies and identification of
funding resources), secondary market activity, program
review, conferences, and workshops. Although most NHS
programs take advantage of a number of these different
types of support assistance, these activities usually
are made available on an as -needed or as -requested
basis.
5. See note 3 in chapter 9.
184
6. In addition to a more than 30 percent increase in
travel costs, more programs, over a wider territory,
had to be covered.
7
Flexibility and security are assured because loans
are purchased for the secondary pool with recourse.
If a loan becomes delinquent, for example, the origi-
nating NHS must buy the loan back or substitute a
good loan. The delinquent loan is returned to the
local NHS which, if it should go into default, may
recover its funds through a lien on the property. The
soundness of the secondary pool is not affected. This
element was critical to the underwriters because it
makes their participation subject to very limited
risk, and it was important to the local NHS nnnarn.o
CHAPTER 13
REINVESTMENT IN MULTIFAMILY HOUSING
So far, this report has concentrated on assessing the im-
pact of the NHS program on neighborhoods, on the partners,
and on various other actors. Another Neighborhood Rein-
vestment role has been to generate approaches to reinvest-
ment that, when combined with NHS, expand the number and
range of neighborhoods that can be served. This part of
the report deals extensively with a major new tool that
has been developed and which is undergoing replication
and development activity. It will evaluate the context
j and experience of the Apartment Improvement Program (AIP).
A later section of this report similarly explains the
Home Ownership Promotion Program (HOP).
The innovativeness of the Apartment Improvement Program
is found in the program's flexibility as it adapts to deal
with the problems confronting multifamily apartment build-
ings in specific neighborhoods. Difficulties 'may' be re-
lated to building operations; they may result from par-
ticular neighborhood effects that adversely influence the
economics of ownership; or they may be related to the tax
assessment, service delivery, and/or regulatory practices
of the local government. In any case, AIP's success de-
pends on its ability to make the building a viable long-
term investment, which may require solving a wide variety
of. problems that affect the economics of owning, maintain-
ing, and investing in multifamily rental properties.
THE MULTIFAMILY HOUSING MARKET
Many neighborhoods have experienced a declining or stable
demand for rental housing, brought about by the net migra-
tion of population or a decline in real incomes (people
moving into these neighborhoods usually have lower incomes
than do those who left). This economic factor has placed
a practical ceiling on market rents in many areas. There-
fore, on the demand side, the rent -income squeeze experi-
enced by many households has resulted in many tenants
paying a high percentage of their income toward housing -
related expenses and limits the extent to which market
rents can be raised to cover increasing operating costs.2
187 4 2_
On the supply side of the market, owners of rental property
are experiencing a cost -revenue squeeze, resulting from
their inability to pass cost increases on to renters. This
effect can be observed nationally --rents have not risen as
fast as operating costs. As a result, the financial posi-
tions of many owners of multifamily properties have deteri-
orated.3
As financial position or net cash flow declines or even
becomes negative, owners are less willing or able to re-
invest in or maintain their properties, and multifamily
units are permitted to deteriorate. Visual decay eventu-
ually blights the block in which the structure is located,
and the effects of the blight spill over to the rest of
the neighborhood.
The solution to the multifamily housing problem, however,
is more complicated than just the economics of ownership.
Neighborhood change, confidence in the neighborhood, the
availability of mortgage and home improvement financing,
the availability of funds to refinance existing mortgages,
tenant -management relationships, and property tax assess-
ment procedures and policies all play a part. This chap-
ter.examines these issues.
Investment and Reinvestment Decisions
The return on investment for a property owner is based on
the annual net cash flow (cash income less cash expense),
the tax shelter derived from the use of the building's de-
preciation to offset taxable income, and the appreciation
expected at time of sale.4 The liquidity of the investment
depends on the owner's ability to refinance the property
or to sell it to another investor.
As a neighborhood begins to decline, effective demand for
rental units decreases or at least increases less rapidly
than does demand in other locations. Prospective renters
with other housing choices will be willing to live in a
less desirable neighborhood only if rents are compara-
tively lower.
As operating costs rise, the inability to raise rents in
a declining market area creates a cash flow problem. If
low levels of effective demand or competitive market con-
ditions preclude passing cost increases along to tenants
in the form of higher rents, the investor's cash return
is reduced; thus, the return on investment declines. Not
only does the current return lessen, but the expected re-
turn at time of sale does also.
1116,:2-
The value of income-producing property is frequently based
on capitalization of the property's net income; therefore,
as costs rise faster than income, the property's return
diminishes and its capitalized value is reduced. This
assumes no change in the discount rate. In fact, as a
neighborhood becomes less stable, a higher return on in-
vestment is usually sought to compensate for the increased
risk. Thus, the discount rate is raised, effectively re-
ducing the current value of income-producing property.
As income from the property decreases, the investor must
decide the best method to increase the return on the in-
vestment. Investors can either sell the property or re-
tain it and continue to operate it. As market values de-
cline, sale of the property may not be economically justi-
fiable or possible. Lack of financing and minimum net
cash income may effectively preclude the sale at other
than a distress price. The owner is therefore able to
increase the return only by (1) retaining the property,
(2) increasing cash flow through undermaintenance, and
(3) perhaps through illegal means such as nonpayment of
real estate taxes.
Expectations of declining or stable property values do not
Provide an incentive for reinvestment. Assuming that owners
have other uses for their funds, reinvestment expenditures
must yield a return commensurate with what the investor
could earn from other investments. A declining housing
market may inhibit an owner's ability to earn a market
rate of return on additional expenditures on the property.
In addition, if the investment cannot increase the return
from the property, it will not raise the market value of
the property. (If it increases the return, but at less
than a normal market rate, the value of the property may
increase but the amount may be less than an alternative
potential return.) Given the uncertainty of earning an
adequate return on additional investment in the property,
an owner may decide to make minimal reinvestment expendi-
tures. In deteriorating markets, the return on investment
incentive actually operates to discourage investment.5
This behavior may be further supported by the withdrawal of
financial institutions from declining market areas. Nor-
mally, investors expect to refinance their properties to
obtain capital to refurbish them or to return a portion
of their equity. As a real estate market deteriorates,
however, financial institutions become less inclined to
commit their funds there. Therefore, investors are not
only less likely to be able to extract part of their
equity, but they may also be denied funds to upgrade their
properties. Again, a disincentive for reinvestment is
created.
189 4�.2_
Purchasers may buy rental property in declining neighbor-
hoods for speculative purposes. Uncertainty about future
values may inhibit their desire to make any financial com-
mitments to their properties in excess of purchase price.
The goal of increasing current returns --by deferring main-
tenance and capital expenditures --stimulates neighborhood
decline. Also, inexperienced investors who buy into high-
risk situations may find that they have made poor invest-
ment decisions. If these investors begin to experience
net cash outflows, they may be inclined to start defer-
ring maintenance expenditures.
Current economic returns play a critical role in the de-
cisions of investment property owners to maintain their
structures. Therefore, one key to solving the multifamily
housing problem is to ease the cash flow problem. This
goal is one of the objectives of the AIP.
Market Imperfections
The structure of the multifamily market, the importance of
perceptions about the future in determining investment and
reinvestment decisions, and the lack of valid information
about the future combine to create a difficult environment:
Once disinvestment starts, it is very difficult to stop.
If the number of units owned is small, an investor may not
be able to take advantage of economies of scale in operat-
ing or managing the building. As a result, tenant screen-
ing procedures, rent collection practices, and general
maintenance and repair decisions may lead to higher costs
and lower revenues than would otherwise be the case. To
the extent this occurs, the building may be in financial
difficulty earlier and its problems may be more severe
than if more units were owned and more professional manage-
ment personnel were employed.
A related problem stems from the wide dispersion of owner-
ship of multifamily property in many neighborhoods, pos-
sibly creating mutually reinforcing disincentives for main-
tenance of housing stock. Eventually neighborhood decline
becomes a self-fulfilling prophecy. For example, if each
multifamily property on a block is owned by a different
owner, each owner may decide that it is in his or her best
economic interest not to maintain the property.6 If an owner
decides not to reinvest, and owners B and C continue to a
maintain their structures, A will benefit from the positive
spillover of B's and C's reinvestment. However, if A re-
invests and B and C do not, the negative effects of two
undermaintained properties may outweigh the positive ef-
fects of A's additional expenditures, and A may not be
190
X-7-7
able to recapture the investment. Therefore, A may decide
it is in his or her best interest not to reinvest, and B
and O may come to the same conclusion. As a result, little
or no reinvestment will be forthcoming, and neighborhood
decline will be ensured.7 This situation is more likely
to occur in neighborhoods where future values are uncertain.
This problem is not as severe in a predominantly single
family neighborhood; peer pressure from neighbors may be
sufficient to motivate homeowners to maintain property.
In addition, the reinvestment decision of homeowners is
not based strictly on market economics; homeowners often
receive psychological returns from living in the structure.
Another type of market imperfection arises from the lack
of perfect information about the future of the neighbor—
hood. This problem can lead to owners' underinvestment if
they become uncertain, for whatever reason, about the
stability of values in the area. If property owners be—
gin to lose confidence in their neighborhood, they may
decide not to reinvest for economic reasons. Unfortu—
nately, that very act helps bring about neighborhood de—
cline.
Once a neighborhood begins to experience incipient decline,
the multifamily housing market may operate to accelerate
deterioration unless outside intervention can' offset the
negative consequences of the market imperfections. These
three factors --the possibility of an uneconomic scale of
operation that squeezes profitability, scattered owner—
ship, and lack of perfect foresight about the future --may
provide incentives for undermaintenance and contribute to
uncertainty about the neighborhood's future.
If left alone, the housing market will produce lower or
stable cash flows. Declining profitability will provide
additional evidence to investors that neighborhood risks
are high, and additional owner underinvestment will occur.
The problems of uncertainty, underinvestment, and decline
cannot be solved in a marketplace in which each owner acts
only on personal interests. Some mechanism is needed to
(1) lessen the uncertainty confronting investors and
change their perceptions of the future; (2) make them see
3. that it is in their best economic interests to maintain
their properties; and (3) provide for real changes in
investor economics.
191 -�4.2_
Lending Decisions
The influence of financial institutions in the real es-
tate market is primarily felt through their lending de-
cisions. The availability of financing, as well as its
terms, plays an important part in the ability of prospec-
tive purchasers to afford property. If mortgage financing
is not available or if the terms are stringent, a poten-
tial buyer may be effectively excluded from the market.8
Refinancing of existing mortgages is critically needed
in the multifamily housing market. Owners often operate
buildings for the cash flow and use the tax deductions
for depreciation and expenses to show "paper" losses.
Therefore, the total return to the owner is the net
cash flow plus the savings from reduced income taxes. As
the loan begins to be amortized and interest payments
decline, the tax loss diminishes, and the owner will re-
finance the loan. The proceeds of the new loan will be
used to pay off the existing loan. The balance will be
used to make repairs, if necessary; what remains is a re-
turn of - the owner's investment. Refinancing is particu-
larly important as a means of providing funds to repair
properties for which the cash flow is not sufficient.
The absence of available financing in a given market area
contributes to a reduced demand for housing. Lack of
funding translates directly into a depressed or unstable
housing market, because the financing burden falls on the
buyer (cash purchase), the seller (purchase money mort-
gage or land sale contract), or a combination of these.
Alternative financing schemes may be turned to such as
high cost funds (well over the going rate), wraparounds,
etc. As the opportunities for owners to extract their
investments (plus a normal rate of return) from their
properties diminish, their motivation for maintenance and
reinvestment wanes.
Financial institutions also provide loans for property
improvement and refinancing. To the extent that they are
no longer willing to make such loans in a market area, or
that the terms of such credit become more stringent, re-
investment will be further discouraged. Additionally, gen-
eral money market conditions may raise interest rates
to levels which discourage/limit the ability of investors
to borrow and earn a suitable rate of return.
192
1162
A financial institution's mortgage lending decision is
based on an examination of the borrower, the property to
be financed, the neighborhood, general credit market con-
ditions, and the availability of mortgage insurance. The
availability of mortgage insurance can be important in
high-risk neighborhoods. Although the final decision is
made by the mortgage officer, the appraisal of the property
is an important part of the process. Both the mortgage
officer and the appraiser have a certain amount of dis-
cretion in their analysis of neighborhood conditions and
neighborhood change.9 Their past experiences with the neigh-
borhood in question or with comparable neighborhoods will
undoubtedly influence their decision. They consider the
factors described below in their review.
Creditworthiness of the Applicant. Important considerations
include the applicant's income level, stability of income
over time, fixed expenses as a percent of income, previous
credit history, and experience as an investor. In the
case of multifamily property, the cash flow of the property
is crucial. The cash flow before debt service must be
sufficient not only to cover the payment of mortgage in-
terest and principal, but also to provide for an adequate
level of maintenance after operating expenses and taxes
have been paid.
Characteristics of the Property. The expected economic life
TY the property must exceed the life of the mortgage. The
estimation of economic life is a judgment factor. A dwell-
ing may have an almost indefinite life if it is maintained
adequately. On the other hand, lack of maintenance will
greatly reduce the life of the structure. For most inner-
city neighborhoods, appraisers consider sixty-five to
seventy-five years to be the normal economic life of a
property unless it has received substantial rehabilitation.
The value of the property must be in excess of the amount
of the mortgage. Under normal credit market conditions,
most institutions will not make a conventional mortgage
in excess of 75 percent of the appraised value of multi-
family property.
The value of property is appraised by (1) capitalizing
income in the case of rental property; (2) comparing mar-
ket transaction prices for comparable property; or (3)
estimating replacement costs (not often used for residen-
tial property). Judgments must be made relative to the
rate of capitalization and the degree of comparability
among properties.
193
The appraised value of the property is a critical factor
in determining the maximum mortgage a property can support.
Mortgages are normally issued up to a specified maximum
percentage of the property value; thus, a low appraisal
may make it impossible to finance the purchase and subse-
quent rehabilitation of property if these costs exceed
its appraised value.
Real Estate Taxes. Real estate taxes are established by
a public entity. If the taxes are set at a high level
(considering the building's cash flow), then the public
sector may unwittingly endanger the economic health of
property by taking more than its share of the property's
cash flow for taxes. If the property is experiencing a
cost -revenue squeeze, an excessive real estate tax bur-
den may be a contributing or exacerbating factor.10
Neighborhood Conditions. Neighborhood conditions are an
Important ingredient in the decision-making process of
financial institutions because the conditions affect cur-
rent and future property values. In markets experiencing
increased demand, the financial institution anticipates
real estate appreciation, and mortgage loans become more
secure over time because the difference between the mar-
ket value of a property and the outstanding mortgage bal-
ance becomes larger. In addition, as the value of the
property increases, the owner has a greater incentive to
maintain it and to avoid defaulting on the mortgage.
The risk to the mortgage lender is greater in a neighbor-
hood where property values are not rising. Although the
financial institution is protected (to the extent of the
down payment) when the mortgage is made, the gap between
the value of the property and the outstanding mortgage
balance widens only to the extent that the loan is paid
off --not to the property's appreciation. Thus, the loan
is not as secure as one in a neighborhood experiencing
rising market values.
The risks to financial institutions increase substantially
in neighborhoods where property values are declining. A
mortgage originally made for 75 percent of the value of
a property could easily exceed the property's value if
market prices decline. In markets where values are de-
clining, the incentive for a homeowner or investor to
avoid defaulting on the mortgage increases as the expected
value of the property declines. In case of default, the
lender may be faced with the prospect of foreclosing on
a property with a market value less than the outstanding
mortgage balance. In addition, if the property has not
been well maintained, its value may be further depressed.
194 if 6.--
To account for the increased risks in such neighborhoods,
financial institutions are more conservative in their lend-
ing practices. Borrowers receive more careful scrutiny,
and higher down payments may be required. In addition,
the institution may not be willing to make long-term mort-
gages.
Neighborhood characteristics are normally included in the
estimate of the expected economic life and in the appraised
value of the property. The economic life of other proper-
ties in the neighborhood is taken into account when mort-
gage officers assess the useful life of a property. Other
factors considered in valuation decisions include those
that pertain directly to the real estate market (vacant
and boarded -up structures, vacant rental units, "for sale"
signs, razed structures, and so forth) and the quality of
life (level of municipal services, extent of public in-
vestment, location, transportation availability, schools,
crime rates).
If most properties in a neighborhood are deteriorating and
have an economic life substantially less than that of a
specific property, the estimate of the expected useful
life of that structure will be reduced to reflect prevail-
ing neighborhood conditions. The likelihood of a proper-
ty's remaining functional after those surrounding it have
outlived their economic lives is remote. As neighborhood
deterioration accelerates, the market for property in the
area is greatly reduced or ceases to exist. Current own-
ers have little incentive to maintain their properties
because the prospects for earning a return on or eventually
recapturing their investments is negligible; therefore-, pro-
perty that is currently in good condition may be expected
to deteriorate faster than normal.
a Sales prices of comparable property in the neighborhood
and the direction of change are important appraisal con-
siderations. In a given neighborhood, the quality of the
environment, as compared with that of alternative loca-
tions, will normally be reflected in the sales prices of
nearby structures. In less desirable locations, market
prices often do not relect the underlying worth of a
dwelling from a structural standpoint. This factor makes
F it difficult for a mortgage lender to finance the purchase
and rehabilitation of a structure because the total cost
may be considerably more than the resulting market value
of the property. Lending in less stable neighborhoods
is therefore normally constrained by the shorter economic
life of property and lower appraisal value.
195 �_
Availability of Property Insurance. Without property in—
surance, if a structure is totally destroyed, the lender's
security or the mortgage loan is reduced to the value of
the land. As a result, a financial institution will not
make a loan on uninsured property unless additional collat—
eral is provided. If insurance companies are unwilling
to operate in a particular neighborhood, bank financing
is effectively excluded.
The cost of the insurance is also important. If insurance
is available but only at a high cost, the amount of an in—
vestor's cash flow available for debt sevice is diminished.
Availability of Mortgage Insurance. As a neighborhood dete—
riorates, the lender's risk increases and, therefore, the
availability of private or government mortage insurance
may be an important factor in determining the willingness
of financial institutions to extend credit in the area.
Credit Market Conditions. General Credit market conditions
also affect the lending policies of financial institutions.
The availability of funds for mortgages is normally re—
stricted during periods of high interest rates. During
these periods, higher mortgage interest rates and higher
down payment requirements make it more difficult to pur—
chase property with a modest cash flow. In addition,
funds are scarce, and therefore are most likely allocated
to purchases offering the greatest security for a given
expected rate of return.
Secondary Markets. Lenders frequently plan to sell mort—
gages to other lenders, investors, or secondary market
institutions. Frequently purchase or refinance and reha—
bilitation multifamily mortgages are not attractive to
secondary investors. The degree to which a prospective
mortgage is not attractive to secondary investors limits
the lending officer's ability to make the mortgage and
meet his institution's goals.
Lending Criteria Summary. The decision of a financial in—
stitution to lend in a given area is based on characteris—
tics of the borrower, the structure, the neighborhoods,
general credit market conditions, and the availability of
property insurance and, to a lesser extent, the availa—
bility of mortgage insurance. Changes in lending activity
occur over time as a result of changes in any of these
variables, as well as changes in the level of demand for
loans in the area.
196 ,/low
Restricted lending activity is the result of fundamental
economic conditions. Borrowers are less creditworthy;
they have lower incomes and are higher risks. Structures
have shorter economic lives and declining cash flows and
thus can support only small mortgages. The direction of
change for the neighborhood is questionable.
Lending institution bias toward a neighborhood also influ-
ences a financing decision. The appraised value is af-
fected by the appraiser's general perception of the neigh-
borhood. A lending officer confronted with a marginal
buyer, a marginal structure, and a marginal neighborhood
may refuse to make a loan that would otherwise be made if
the structure were located in a less risky neighborhood.
In general, the biases of financial institutions discourage
lending in deteriorating neighborhoods. The rewards of
conservatism to a lending officer or appraiser are higher
than those of risktaking,' Given the inherent difficulty
in assessing neighborhood change, a loan in a poor neighbor-
hood has a greater risk than does one in a higher -income
community. Even if the risk to a financial institution
is partially compensated for by increased loan amorti-
zation (through shorter -term mortgages, increased points,
or higher interest rates), the loan officer still bears
an uncompensated risk from having a loan go into default,
and the appraiser has a similar risk of having an appraised
value be greater than what is realizable from the sale of a
foreclosed property. As a result, appraisers may tend to
bias their estimates downward, and mortgage officers may
be more conservative.11
Biases built into the system make it exceedingly difficult
to increase the flow of private sector capital into less
desirable neighborhoods. Both appraisals and lending de-
cisions are based on years of experience with a neighbor-
hood. Thus, changing ingrained attitudes about an area
is not accomplished quickly. Nothing is built, into the
market system to reverse decline after it starts.
To increase private sector involvement in the inner city,
it is necessary to decrease the real or perceived risk to
the lender. Outside intervention, such as increased neigh-
borhood support from the public sector (street improvement,
better police and fire protection, adequate trash collec-
tion, and so forth) may be required.
197 46oz
cial
ns
not be
private
socialnprograms torutt onserven expected
the greater so -
tial good if their, actions will be detrimental to their
stockholders or depositors. In the absence of government e
itervention (regulation and program assistance),
ra-
tional decision by financial institution staff is to limit
involvement in high-risk neighborhoods.
BUILDING MANAGEMENT
Management
t satisfac-
tion; itis likewise an factor determining
tvariable einninfluencing
rent collections, delinquencies, and the care of property.
Management personnel of multifamily property must be highly
skilled and committed, particularly when the economics of
ownership are tight. If management is marginal, a property
that could be economically viable under ordinary circum-
stances may suffer losses.
Related to this concept is the relationship tenants and the manager. between
Tenant selection, rent collection
policies, and the responsiveness of the manager to tenant
complaints may have an important effect on the financial
health of the property.
Last, maintenance policies are ru ial in ed effect iof the
the
economic life of the property,
property on the neighborhood, the ability of the structure
to attract higher rents, the willingness of the tenants
to care for their units, and the rate of tenant turnover.
If anaemnt tenants
maymassumee that smanagement lax in edoes not e
care,and, therefore,
that they are not expected to take care of the property
either.
TENANTS
Tenants also play an important role in determining the eco-
nomic health of multifamily property. Apartment buildings
with high
or nonpayment, pr property abuse delin-
quency will necessarily
be expensive to operate and have a marginal or negative
cash flow. Of course, the tenants' income level places
an effective ceiling on rents which can contribute to a
property's financial predicament.
198
Aside from the income question, the willingness of tenants
to pay rent and to care for property is influenced by
other variables. These include the friendliness and help-
fulness of neighbors, the appropriateness of the unit to
tenant needs (size, amenities, etc.), the quality of pub-
lic services in the neighborhood, the severity of neigh-
borhood problems, the quality of the physical unit, the
responsiveness of management to tenant complaints, the
speed with which management makes emergency and routine
repairs (and the competence of the work peformed), and
the management's willingness to enforce rules of tenant
behavior.
Tenants who are unhappy with their apartment building be-
cause of problems with other tenants (noise,, messy appear-
ance, loitering, drug abuse), problems with the owner (un-
responsiveness), problems with the building (inadequate
maintenance and services), or problems with the neighbor-
hood, may take out their frustrations on the property it-
self or they may move. Therefore, declining levels of
tenant satisfaction and tenant commitment to the apartment
may contribute to behavior that undermines the economics
of property ownership.12
Unfortunately, as a building begins to decline it becomes
more difficult for an owner or manager to intervene in a
way that will change tenant attitudes. Owners, concerned
about an investment that is generating lower returns, will
try to augment their profits or cut their losses through
undermaintenance. Tenants, in turn, will be further con-
vinced that the owner does not care about them or the
property. Tenant perceptions of owner indifference and a
declining quality of building service can lead to higher
rates of abuse and tenant turnover. Such situations fur-
ther reduce the financial return from the building and
can generate additional disinvestment.
Higher levels of investment and a more responsive manage-
ment are necessary to change tenant attitudes. Owners will
not be willing to invest unless they believe the economics
of owning their properties will improve --either from levy-
ing higher rents or by achieving a more stable tenancy. Or
owners may fail to become more responsive, not because of
lack of desire to do so, but because they do not know how
to change the traditional tenant -management relationship or
because they do not recognize the benefits of making such
a change.
4.6
199
Reformulating a deteriorating tenant -management relation-
ship is difficult because of the lack of communication and
mutual distrust between owners and tenants. In addition,
given a property's economic situation, tenants may expect
more from management than management can deliver. Unless
tenant expectations are congruent with the economic reali-
ties of the property, management may not be able to sig-
nificantly lessen the amount of tenant dissatisfaction.
Of course, tenants may have legitimate complaints and ex-
pectations. The point is that the owners and the tenants
both need to understand what they can reasonably expect
from each other.
Under normal circumstances, it may be quite difficult to
open lines of communication between tenants and managers
and for the two groups to develop the trust necessary to
establish a working relationship that will enhance mutual
self-interest. Tenants are often suspicious of management,
believing that owners are earning exorbitant rates of re-
turn. Owners are likewise distrustful of tenants, believ-
ing that tenant demands are unreasonable and insatiable.
In the absence of a strong belief by both parties that they
each have something to gain by working together, nothing
may happen. This contributes to an environment in which
the economic decisions of owners to disinvest cause addi-
tional tenant dissatistaction, which leads to tenant be-
havior that influences additional disinvestment, and so
on. Both parties lose and the economic life of the proper-
ty is shortened.
CITY GOVERNMENT
Actions of local government affect the economic health of
the multifamily housing inventory both directly and indi-
rectly. The quality of life in a neighborhood affects
the satisfaction of the tenant with the apartment, but
the quality of the neighborhood environment --as reflected
in the conditions of the streets, safety of the residents,
frequency of trash collection --has a direct effect on the
property through the rents that can be charged. Apartments
in higher -quality neighborhoods command higher rents than
do similar units in less -attractive areas. In addition,
the condition of the neighborhood and the severity of its
problems, if any, indirectly affect the financial perfor-
mance of the property by influencing the desire of tenants
to remain where they are.
200 �(p.Z
If neighborhood problems arise and the city government
does not respond, tenant perceptions of the neighborhood
may become negative. If tenants feel that the city is not
committed to their neighborhood, they will be less inclined
to have pride in it and to work toward making it a better
place. Lack of neighborhood pride eventually translates
into a lack of pride in the apartment building and may lead
to behavior that raises the operating costs and vacancy
rate.
One implication of this factor is that the city govern-
ment cannot neglect the neighborhood's effect on multi-
family housing. If efforts are being made to stabilize
declining multifamily properties, public service needs of
these neighborhoods must be addressed simultaneously.
Unfortunately, however, the incentives in many local gov-
ernments run counter to solving the problems in the multi-
family housing sector. Generally, contact between local
governments and property owners and managers is adversary
in nature. Communication often occurs through the city's
building department in response to code violations or
through the tax assessor's office when requests are made
for a reduction in a building's assessed value.
Frequently, no one person in city government is responsible
for coordinating overall city policy with respect to multi-
family housing. There may be no well -organized lobbying
group to pressure city government to respond to the prob-
lems facing properties serving much of the renter popula-
tion (except for owners ofproperties serving upper middle -
and upper-income renters).13 Such cities do not have a
mechanism even to bring the necessity for developing re-
sponses appropriate to the problems of the multifamily
sector into the political arena.
Other factors also make it difficult for policies to be
implemented. Elected officials need to ensure that they
develop programs and policies that will gain them reelec-
tion. Their terms of office are short, and they need to
see results quickly. Programs that are not of the brick -
and -mortar variety may not produce visible results to add
to an official's list of accomplishments. In addition,
programs that do not serve large voting constituencies
will necessarily be less attractive than those that pro-
vide benefits to larger numbers of potential voters or,
at least, to well -organized vested interest groups such
as home owners.14
201
4 6 7-
Intervention strategies designed to cope with the financial
problems of multifamily apartment buildings suffer on both
points. Unless the building is badly deteriorated and se-
verely blighting the neighborhood, the visible effect of
the investment of public funds in a program to treat that
structure may not be dramatic. Also, the direct benefi-
ciaries of the program will be the owner and the tenants;
in many cities neither group has much political. clout.
Therefore, elected officials are naturally inclined to shy
away from these types of programs. The political rewards
are small, and the political costs may be high if homeown-
ers object to tax dollars being diverted to the multifamily
housing sector.
The al
lck of incentives for long-term perspective eocmakeseite difficult officials
to work
fromafor them
to focus ginning. oItmis ipoliticallyinea ier for tblemhem o
nlbe-
them to respond
when the deterioration is more serious and visible. A1-
thouh it is strategies when othe re cost-effective
isrpolitin
cally more difficult.
final solution
demolition orother activitiesthat lead otos results
a worsening
of the problem.
Finally, decisions to invest in or to maintain multifamily
gov-
ernmenthousing can be ed by state
actions. adverselyAsdicus ed tearlier, both othe local
reales-
tate tax rate and the assessment procedure may have a dis-
proportionate impact on lower, and moderate -income rental
structures. There may be several governmental units (city,
county, state, etc.) involved in providing services, setting
tax rates, and coordinating policy. The multiplicity of
government units and departments may result (unintentional-
ly) in a lack of coordination which may foster a percep-
tion of public disinvestment. Rent control legislation,
prohibitions or restrictions on conversion to cooperatives
or condominiums, and tenants' rights legislation can re-
duce the long-term profitability of owning rental property
or can increase the uncertainty of future returns, especially
when cost increases are likely. In either case, maintenance
and reinvestment expenditures can be expected to decrease,
and visual signs of deterioration will rise. This is not
to say, however, that there are not circumstances in which
all of these actions may be justified. Whether or not the
situation warrants it, the net effect on the multifamily
housing inventory will be the same.
fro .�--
202
CONCLUSIONS
Problems in the multifamily housing inventory may emanate
from a declining cash flow caused by a decreasing or non -
increasing effective demand for rental housing, at the
same time as operating costs are rising. The rent -income
squeeze experienced by renters limits the ability of owners
to raise rents and produces a cost -revenue squeeze for
owners, thus diminishing the availability of resources for
maintenance. If, at the same time, the neighborhood is
experiencing incipient decline, mortagage lenders, inves-
tors, appraisers, tenants, and homeowners may begin to
question the stability of the neighborhood. If property
owners decide it is not in their best interest to further
invest, if financial institutions begin to become more
conservative in their, lending and refinancing decisions,
if the more stable renters move from the area, and if
the city takes little or no action, normal market forces
will accelerate the decline. Some type of outside inter-
vention is required to stop the downward spiral, and the
t intervention strategy must be tailored to the individual
j neighborhood.
Just as each neighborhood is different, so is each multi-
family property in it. Each investor-owned structure has
its own mix of tenant, management, operating, and financial
problems. Therefore, to treat the multifamily problem in
a given heighborhood, the specifics of each property exhib-
iting signs of distress must be analyzed.
A multifamily treatment strategy must be part of a broader
neighborhood revitalization effort because the neighborhood
environment directly affects the demand for property there.
Neighborhood decline can result from negative perceptions
about the area and from a lack of confidence in the neigh-
borhood's future, just as it can be caused by disinvest-
ment by the public sector and by the lending community or
by a long-term decline in the demand for housing in the
area. The causes of decline must be understood to devel-
op appropriate treatment strategies.
Specific intervention strategy is necessary for neigh-
borhoods with high percentages of multifamily units show-
ing outward signs of neglect and deterioration. Frequently,
when decline starts, market forces work together to accel-
erate decline. Therefore, intervention strategies are
necessary to counteract the normal functioning of the multi-
family market in an unstable neighborhood environment.
203 ���
Notes
1. The data gathering and analysis on the Apartment Im-
provement Program was gathered by Professor Roger
Ahlbrandt for the School of Social Work of the Uni-
versity of Pittsburgh. Chapters 13 through 15 are
edited from his larger report, An Evaluation of the
Apartment Improvement Program, prepared for and avail-
able from Neighborhood Reinvestment. The report was
completed in June 1980.
2. A detailed discussion of the status of rental housing
is summarized in U.S. General Accounting Office,
Rental Housin A National Problem that Needs Immedi-
ate Attention Washington, D.C.: GAO, 1979
3. According to the GAO report cited above, during the
1970s annual rent increases averaged 4-1/2 percent,
while operating costs for rental housing increased at
an annual average rate of more than 8 percent. This
widening gap between revenue and cost explains not
only some of the disinvestment that has occurred in
rental housing but also the increasing difficulty in
attracting investors and arranging financing --problems
that the AIP addresses.
4. This discussion pertains mainly to investor-owned build-
ings with six or more units. For smaller structures and
owner -occupied structures, the decision-making process
is more complex involving motives beyond those of in-
vestment and tax shelter.
5. The foregoing assumes a relatively unattractive loca-
tion. If the location is a more attractive one, the
incentives outlined here may point toward condominium
conversions rather than disinvestment.
6. For a discussion of these issues see Rolf Goetze,
Understanding Neighborhoods (Cambridge, Mass.: Balling-
er Publishing Company, 1979)•
7. This decision-making process is often referred to as
"the prisoner's dilemma," and breaking this dilemma
was the reason that NHS was established. In the case
of multifamily buildings, investment is a central con-
cern (rather than shelter and investment, as in the
case of single-family housing); therefore, breaking
the prisoner's dilemma for multifamily housing requires
more formal agreements by which partners and owners
simultaneously agree to improve the neighborhood.
204
8. Of course, underwriting depends on other factors than
the characteristics of the potential investor. These
include the availability of capital, competing invest-
ment media, and regulatory constraints or incentives.
9. Appraising is not an exact science and in some cases
has been open to abuse. But one practice during the
late 1960s and early 1970s was to appraise the build-
ing based on comparable values rather than on income
which is considered more appropriate today. An ap-
praisal based on comparables may have the effect of
encouraging inflation and speculation. As a result,
some buildings were overfinanced and overinsured.
10. In some cities --Boston, for example --the city takes a
percentage of the rental income as the tax. In low -
rent buildings, this practice may squeeze profitability
by leaving too little for maintenance and debt pay-
ment. High taxes also exert a downward pressure on
price.
11. The extreme of this practice is redlining. The other
extreme, of course, is an appraisal method that re-
sults in overinsured and overfinanced buildings. How-
ever, dust short of redlining, overly conservative
appraisal exerts a downward pressure on investment,
since investors would not want to overimprove and
lenders would not want to overfinance.
12. When decreasing tenant satisfaction leads to a high
vacancy rate, the new tenants, if there are new ten-
ants, tend to be poorer. They cannot afford the high
rents that may be required, and as a result, even
less maintenance occurs and dissatisfaction increases.
Further, turnover creates more direct costs (such as
advertising the vacancy and refurbishing the apart-
ment), and long-term vacancies threaten the financial
condition of the building and attract vandals, who
in turn create problems that increase fear and cut
into regular maintenance.
13. Responsibility in local government is often split
among the planning, regulatory, and housing staffs,
which are often located in different departments. Com-
munity development staffs tend to deal with housing
as one among several areas, and then to focus mainly
on rehabilitation assistance to homeowners. In the
study sample, only cities where the AIP was established
had programs to deal with promoting investment in and
maintenance of multifamily housing.
14. In addition, many cities had a bad experience with
FHA financed multifamily housing in the 1960s, when
fraud and financial mismanagement led to the creation
of thousands of distressed units of both subsidized and
private housing.
1je6 �2_
205
CHAPTER 14
AIP ACTIVITIES AND IMPACTS
The Apartment Improvement Program (AIP) was developed in
Yonkers, N.Y., by the local government during the mid-
1970s to help stem decline in a neighborhood containing
a large number of multifamily apartment buildings.) City
staff realized that code enforcement alone would not sig-
nificantly affect the revitalization of most of these
structures. Many properties had negative cash flows, and
the owners had unfavorable perceptions about the future
of the neighborhood; both factors contributed to the dis-
investment that was occurring in the neighborhood.
During a two-year period, city staff gradually developed
a program that addressed the issues of a diverse set of
interests. The program brought together the city, finan-
cial institutions, tenant groups, and property owners in
a partnership effort to resolve the problems of a particu-
lar building and make it economically viable.
This chapter describes the AIP model in detail; drawing
on the original Yonkers program and replications sponsored
by Neighborhood Reinvestment in Hartford, Conn., and Mount
Vernon, N.Y.
The overall goal of the AIP is to stem decline in and pro-
mote the preservation of multifamily properties in well-
defined neighborhoods that are fundumentally healthy. The
specific objectives of the program vary because the prob-
lems confronting each property differ. Likewise, the ob-
jectives of each AIP partner may differ because each ap-
proaches a building and a neighborhood from a particular
Perspective. The most frequent objectives of each partner
are listed below:
City Government Objectives
• Halt neighborhood deterioration;
• Strengthen the real estate tax base;
• Develop a mechanism to halt deterioration in mar-
ginal multifamily properties;
• Upgrade the quality of investor -owners and their
property managers;
207
• Change attitudes about a neighborhood from nega-
tive to positive; and
• Leverage public resources.
Financial Institution Objectives
• Protect their investments (in a particular build-
ing or in an entire neighborhood);
• Provide opportunities for new investments;
• Stabilize the environment in which they do business;
• Establish working relationships with other parties;
• Improve their public image;
• Meet some of the requirements of national and state
legislation for increased community service; and
• Develop an effective urban revitalization strategy
that minimizes government regulation.
Owner Objectives
• Protect their investments;
• Make their investments economically viable;
• Improve the public image of "landlords";
• Establish a better working relationship with the
city to work out possible code problems;
• Establish a better working relationship with fi-
nancial institutions to gain access to mortgage
and rehabilitation funding;
• Establish relationships with neighborhood organi-
zations for mutual benefits;
• Improve working relationships with tenants for
various mutual benefits; and
• Increase the understanding of tenants with respect
to the financial realities of operating the pro-
perty.
Yz
i
s
f
Neighborhood Organization Objectives
• Obtain an improved quality of life for the neigh-
borhood;
• Protect property values;
• Upgrade declining multifamily properties that are
or may be a blight on the neighborhood; and
• Improve the image of the neighborhood held by
people and organizations outside it.
Tenant Objectives
• Maintain and upgrade the quality of their unit
without major rent increases;
• Improve the quality of their buildings and the
services provided;
• Improve the quality of life in the neighborhood;
• Work with other groups in the neighborhood on mu-
tually held concerns;
• Establish better working relationships with the
owner and the property manager;
• Increase the responsiveness of the owner and the
property manager to tenant needs;
• Increase the control of tenants over tenant selec-
tion; and
• Increase the control of tenants over the develop-
ment and enforcement of building rules and regula-
tions.
THE DEVELOPMENTAL PROCESS
In each city, one party has been primarily responsible for
the initial consideration of the AIP. In Hartford, Conn.,
the Society Savings Bank held a number of defaulted mort-
gages and saw the AIP as a possible means of finding a
market solution to its problem. In Mount Vernon, N.Y.,
Eastchester Savings Bank held defaulted mortgages on sev-
eral buildings and had a number of balloon mortgages com-
ing due in the early 1980s. Eastchester had participated in
the Yonkers program and was impressed with it. Both savings
institutions approached Neighborhood Reinvestment and asked
that their cities be considered for the AIP.
209
' '�.7—
i
The process through which the program evolves in a par-
ticular city is important to the development
make the
AIP.
Partners meet, learn about the program,andof the partners to
ments. The mit-
program does not ask any
provides a vehicle
sacrifice self -interests; rather,
that can enhance mutual self-interest.
As expected, specific aspects of the developmental process
vary from city to city because people's needs, expectations,
problemsand the same nor are
local
men
and localinstitutionalarrangements the same. g The nkey,
however, is to bring together all parties to interact in
an environment of mutual trust. Open communication is
critical to a program's success and is a prerequisite to
fulfilling commitments.
The Role of Neighborhood Reinvestment
The ation
the
thatbringshood the parties,ment togetherI,or, s explainsthe program,
and shows groups how the AIP can work. Neighborhood Rein-
vestment also provides significant technical assistance
during all initial phases of the program. Participants
interviewed in the three cities agreed that development
of the program was a direct result of the work of Neigh-
borhood Reinvestment staff members.
Neighborhood Reinvestment is viewed as a neutral party by
all concerned, and its impartiality is essential to elicit-
ing the trust of the other parties. Neighborhood Reinvest-
ment is also in a position to bring in the financial in-
stitutions; when they agree to participate in the elora-
con-
tory phases of the program, it is relatively easy to
vince others to explore the AIP's merits.
Prior to deciding whether the AIP is appropriate for a
city, Neighborhood Reinvestment staff members assess e
level of interest of and commitment by that city's prin-
cipal institutions and individuals, together with the com-
munity's needs. This process may
tand spend six months
or more.
Staff members touch many
o the
incipal
government,able
the prtime ogram
the community.
actors in
community
This groundwork is essential and helps determine whether
the forthcoming commitments will be sufficient for a suc-
cessful program effort.
210
W(Pz
After deciding to proceed, Neighborhood Reinvestment hosts
a lenders luncheon in the city. Representatives from all
major financial institutions and regional members of ap-
propriate federal regulatory agencies are invited. The
purpose of the luncheon is to explain the program, answer
questions, and secure tentative commitments to attend a
two-day workshop.
The workshop is held away from the city so that the par-
ticipants have few outside distractions. Participants in-
clude representatives from financial institutions, city
officials, homeowners, tenants, community representatives,
and owners of multifamily properties.
In Hartford and Mount Vernon, the AIP neighborhoods were
selected before the workshop; therefore, it was possible
to invite representatives of groups who were familiar with
or lived in the neighborhood. In general, few tenants
participated because the buildings had not been selected.
Attendance at these workshops has been excellent.
The content of the workshops for Hartford and Mount Ver-
non differed to some extent. In Hartford, there was
greater use of group work techniques. Mount Vernon's
workshop was more task -oriented. Both workshops produced
similar results. Stereotypes were broken down, and trust
and understanding of each other's point of viev} started
to build.
At the end of the workshops, the different actors met to
discuss their willingness to participate; all were will-
ing to make necessary commitments.
An interim partnership committee was established at the
conclusion of the workshops to develop organization by-
laws and set policy; an interim building evaluation com-
mittee was created to evaluate multifamily properties in
the target neighborhood and select buildings for the pro-
gram. Intensive work followed for these two committees,
which were staffed by the city. Neighborhood Reinvestment
provided technical assistance. In Mount Vernon, for ex-
ample, city staff had almost weekly contact with Neighbor-
hood Reinvestment. Such close contact is essential. It
helps to train the city staff, and it enables staff
members to deal effectively with organizational or finan-
cial problems that they may not have previously encoun-
tered. The ability to resolve problems as they arise is
critical at this juncture. It keeps the process moving
and convinces those involved that progress is being made
and that their time is well spent.
211
t/l�/�Z_
After the bylaws and building selection criteria are de-
veloped, a reaffirmation meeting is held. At that time,
the two temporary committees are dissolved and members
are elected to permanent committees.
Involvement of Neighborhood Reinvestment does not end at
that point; technical assistance is provided as needed
on an on-going basis. Part of this technical assistance
includes the use of a computerized real estate invest-
ment analysis model and, eventually, the transfer of the
model to the partnership. The model provides a financial
analysis of each building considered by the AIP and en-
ables the partnership and staff members to explore the
effects of various physical and financial solutions to the
building's problems. Specifically, the effects on profit-
ability and cash flow can be examined with respect to mort-
gage amounts, interest rates, and terms; restructuring of
expenses; change in rents; amount of proposed physical
improvements; and real estate tax deferrals. Because this
analysis is performed by a neutral party, the results are
"believable," which facilitates the workings of the partner-
ship. Each party is more willing to give when it knows the
specific effects of the commitments of other parties on the
economic health of the property.
The final commitment of Neighborhood Reinvestment is to
provide a grant to the city to help finance program
costs.
Role of the City
The city agrees to perform the following tasks:
• Adequately staff the program (unlike NHS, the AIPs
in Hartford and Mount Vernon are city operated);
• Review tax assessment procedures and be willing to
defer real estate taxes if necessary;
• Increase public services to the neighborhood if
necessary;
• Inspect buildings for code violations and sensi-
tively enforce violation notices for violations
that do not concern health and safety; and
• Appoint key officials to serve on the partnership
and the building evaluation committees.
212
�& Z-
Role of Financial Institutions
It is difficult for financial institutions to be specific
in their commitments because all buildings under consid-
eration are different. The banking community is generally
willing to
• Serve on the two committees;
• Restructure mortgages if necessary;
• Enforce "good repair" clauses and use other legal
means to encourage improvements; and
• Help identify and/or finance new owners as required.
Role of Owners
The role of the owner evolves as a particular building is
being considered. The owner must be committed to the AIP
concept, which means working on a partnership basis with
the other parties, including the tenants. (If the part-
ners feel that a change in ownership or management is
necessary for a particular building, they usually refuse
to include that building in the AIP until the change is
made.) Owners are expected to
• Participate in the analysis of their building;
• Provide financial information on the building to
permit an analysis of cash flow and profitability;
• Review the effectiveness of building management;
• Reinvest, making needed repairs and improvements;
• Follow the improvement plan developed through the
partnership; and
• Consult with the other parties before changing
the existing rent schedules.
Tenants and Community Representation
In Hartford and Mount Vernon, representatives from the
community -at -large were included from the outset; however,
few tenants were involved. Once a building is identified,
AIP staff actively encourage tenant involvement. Organiz-
ed tenant groups
• Develop and support a tenants' association,
213
y��o.Z
• Assist the management in screening potential ten-
ants;
• Establish and enforce standards for tenant behav-
ior;
• Arrange a procedure to improve communications be-
tween themselves and the property owner and manag-
er; and
• Use peer pressure to help the landlord deal with
problem tenants.
OPERATION OF THE PROGRAM
The Partnership Association
The partnership association is the governing body of the
AIP. It is composed of neighborhood representatives, ten-
ants, property owners, representatives from financial in-
stitutions, residents of the community -at -large, and city
officials. The partnership association elects the members
of the partnership committee and the building evaluation
committee.
The Partnership Committee
The partnership committee has sixteen members, four repre-
senting each of the four partners (financial institutions;
property owners; city government; and the community, which
includes tenants). The major responsibilities of this
committee are to prepare the bylaws and to set policy for
the program.
Composition of the committee varies among the cities: In
Hartford, tenants are not members of the partnership com-
mittee; in Mount Vernon, only one tenant is involved, and
this person is not a resident of any building being con-
sidered by the AIP. In Hartford, real -estate -related or-
ganizations are not included on any AIP committees.
The Building Evaluation Committee
The building evaluation committee has four representatives
from each of the four partners. This committee analyzes
buildings in the AIP area for suitability to the program.
In Mount Vernon, the criteria for building selection in-
cluded owner receptivity, prominence in the AIP area, fi-
nancial need, ownership history, presence of a tenant orga-
nization or willingness to form one, and the complexity of
the problems. An unwritten but extremely important require-
ment underlying the initial selection of the buildings is
214
the probability of success. It is critical to the develop-
ment of the program that the first few buildings treated be
successful. The program needs to demonstrate positive
outcomes to ensure that each partner's commitment remains
strong.
After analyzing the buildings, the building evaluation com-
mittee recommends a building or buildings for approval'to
the partnership committee and, if the building is approved,
the staff members begin assembling the program information.
In Mount Vernon, a problem arose because the roles of the
two committees were not defined beyond building approval.
The program did not provide for independent follow-through
by the committees or assign responsibility to one or both
committees to work with the staff to resolve problems.
This lack of follow-through meant that it took a year for
the committees to realize that the number of city staff
members assigned to the AIP was not large enough. In
d June 1980, the building evaluation committee was dissolved
and made a subcommittee of the partnership committee. At
that time, it was decided to assign a member of the part-
nership committee to each approved building so that pro-
gress could be monitored more thoroughly. In Hartford,
i the building evaluation committee also operates as a sub-
committee of the partnership committee.
Neighborhood Selection
The Yonkers program started in the North Broadway neigh-
borhood in the mid-1970s. This neighborhood has a popu-
lation of approximately 10,000 residents and consists of
three subareas. The program began in the southern edge
t of the neighborhood, adjacent to the old central business
district. This section is 90 percent renter -occupied and
had deteriorated rapidly in the 1970s --vacancy rates ex-
ceeded 15 percent, and some buildings were almost com-
pletely vacant. Several years later, the program moved
into the Garrett Place neighborhood, which has 2,500 re-
sidents in large apartment buildings, concentrated in a
six -square -block area. These multifamily buildings were
beginning to experience the problems typical of aging
structures but did not have financial, social, and manage-
ment problems as severe as those in the North Broadway
buildings.
In Hartford, the AIP is operating in the Asylum Hill
neighborhood. The area has a population of approximately
11,000, and an additional 25,000 people enter during the
day to work, study, or obtain a variety of services. Al-
though the neighborhood has a mixture of incomes, races,
215 1'/,2_
occupations, and land uses, modest incomes and rental
housing predominate. Many apartment buildings were con-
structed during the 1960s, but many of the neighborhood's
white collar and professional workers sought rental hous-
ing in the suburbs. Thereafter, the neighborhood's rental
housing market weakened. Several large apartment build-
ings experienced significant financial problems during the
1960s and 1970s; at the same time, enthusiastic owner -
occupants were buying up one- to four -unit structures and
rehabilitating them.
The neighborhood has a number of institutional supports.
It is near the headquarters of Aetna Insurance Company
and the Hartford Insurance Group, and a large Roman Catho-
lic cathedral, a hospital, a community college, several
social agencies, and a busy retail commercial district
are also in the area. In addition, Hartford's NHS pro-
gram was started in Asylum Hill through the joint efforts
of the city, financial institutions, and neighborhood in-
terests to support the improvement of the neighborhood.
All of these actors recognized the need for a mechanism
to tackle the multifamily housing problem.
Asylum Hill was selected for the AIP because the
problems
e
in the neighborhood, although severe,
Asylum Hill had many strong institutional supports; a
dramatic increase in investmentspecial interest upants groups was
already occurring; and many p
the neighborhood were anxious to become involved.
The East Lincoln Avenue neighborhood in Mount Vernon was
selected for the AIP for many of the same reasons. The
area had declined during the 1970s as a result of a weak-
ening demand for housing, particularly for the rental
housing stock, but the market seemed to have strengthened
during the late 1970s- The neighborhood had a strong
homeownership base and an active homeowners' association.
The neighborhood's rental population of 47 percent of the
15,000 people in 1970 primarily lived in nineteen large
apartment complexes; many of these buildings either had
significant financial problems or would have them soon
as balloon mortgages came up for refinancing in the early
1980s. In short, the neighborhood had strengths to build
on, but it also had problems that would soon become
unmanageable.
216
4X
The Role of Neighborhood Reinvestment
Neighborhood Reinvestment has provided significant tech-
nical assistance to the AIP staff members. This assistance
has been instrumental in training the staffs, developing
and applying the financial model, determining the commit-
ments needed from each party, and gaining the cooperation
of all partners.
After the reaffirmation meeting, assistance by Neighbor-
hood Reinvestment is normally provided only on request.
The Neighborhood Reinvestment staff philosophy is to let
the cities work out their own problems.
This approach is important to the development of the lo-
cal AIP programs. After and even during the workshop,
the AIP partners are making their own decisions; there-
fore, they quickly realize that it is their program and
that they must take responsibility. This independence
helps strengthen the commitment of the partners to the
program.
i
The on-call involvement by Neighborhood Reinvestment does
not lessen the importance of what participation does oc-
cur. Neighborhood Reinvestment staff members are the pri-
mary vehicle for training city personnel, and attendance
by Neighborhood Reinvestment staff at meetings during the
developmental process has an important stabilizing influ-
ence. Questions and problems arise during this process,
and the way that Neighborhood Reinvestment staff members
deal with them is also an important part of the learning
1 process for the local partners and staff.
The role of Neighborhood Reinvestment has evolved over
time. In Yonkers, Neighborhood Reinvestment staff mem-
bers helped program staff members design their preserva-
tion approach and develop it into a program. Neighborhood
Reinvestment also hosted a luncheon for representatives
of the banking community; it generated considerable lender
interest and support for the program.
In 1976, a Neighborhood Reinvestment grant enabled Yonker's
program staff to develop a computer model which describes
the effects on a building's cash flow from a number of
different intervention strategies.
217 /�o
Role of the City
The original Yonkers AIP was operated entirely by the city;
there is no partnership association, partnership commit-
tee, or building evaluation committee. The program is
lodged in the city's Department of Housing and Buildings,
and the program director (called a coordinator.) reports
to the department director. Other than the program co-
ordinator, the program currently has no full-time staff.
The supervisor of code enforcement, who also reports to
the department director, and his four inspectors work for
the AIP as needed. In addition, the deputy director of
the Planning Department provides considerable assistance
to the AIP. The tax as,sessor's office is also involved
as required, and the tax assessor is empowered to change
the assessment of individual properties unilaterally.
This somewhat cumbersome administrative structure works
well because all of these workers believe in and support
the program.2
The Mount Vernon program was established within the city's
Department of Planning and Community Development; however,
the director of the program reports to a planning admin-
istrator, who in turn reports to the commissioner of the
department. Although the director has a dotted line re-
lationship with the commissioner and can report to him
directly, the program's second echelon placement within
the department may indicate that it does not have high
priority.
Initially, a program director and a loan officer were
hired to implement Mount Vernon's AIP, but both persons
also had other responsibilities, requiring approximately
30 percent of their time, within the department. Six
months after the reaffirmation dinner, the director of
the program resigned, as a result of her perceptions of
a lack of strong city commitment, and no replacement was
hired. Through March 1980, one year after the dinner,
only $28,000 had been spent on the program, and approxi-
mately half of that was drawn from Neighborhood Reinvest-
ment's commitment.
Judging from the amount of the direct financial contribu-
tion, the city's commitment to the program has not been
strong during the first year. However, the city has been
willing to make indirect contributions by foregoing real
estate taxes. It approved temporary reductions in real
estate taxes for two buildings (by $125,000 over three
years for one building, and by $40,000 over one year for
a second building, which, unfortunately, will not become
a part of the AIP) and has indicated its willingness to
218 74�2_
continue to grant reductions for others. It has also made
staff members, primarily building inspectors, available
from other departments as needed. Since the director's
resignation, the mayor and the commissioner have expressed
a willingness to hire two staff persons and have reaf-
firmed their commitments to the program. A new director
was hired in June 1980.
The AIP in Hartford has had many of the same problems as
the one in 'Mount Vernon. Hartford's program is operated
out of the Department of Housing; the director of the
program reports to an assistant director within the de-
partment; the director has other responsibilities within
the department; a part-time financial analyst and a part-
time tenant counselor work for the director; and the di-
rector can draw on other city staff, primarily a building
inspector, as needed. In short, the program is not visi-
ble organizationally within the city, and it has a small,
part-time staff.
Hartford is committed to making real estate tax deferrals
as needed. These take the form of waivers on the addi-
tional real estate taxes that would have to be paid on
the value of improvements to the buildings. The deferral
on the city's first project will gradually be reduced over
a ten-year period and will amount to $36,000. Direct
costs to the city on an annual basis will be approximately
$40,000.
Another type of commitment made by the city of Yonkers
(one that is too early to make in the other two cities)
is to continue to monitor a building's condition after
the work has been completed. This step assures the lender
and tenants that the physical conditions will be maintained.
AIP staff members in Yonkers estimate that it currently
monitors 75 percent of the AIP buildings.
The Role of Financial Institutions
The banking community has been actively involved in all
AIP cities. In many instances, this partner has held
defaulted mortgages on the buildings and had vested in-
terests in seeking solutions. In other cases, financial
institutions have been willing to renegotiate mortgage
terms, to lower interest rates, and to make larger in-
vestments to strengthen the value of the properties and,
ultimately, to enhance the underlying security for loans.
219
�6 z
In Yonkers, most loans on AIP buildings have had interest
rates considerably lower than the prevailing market rates;
in fact, AIP staff members estimate that the present value
of the interest rate reduction from the market rate on an
average building is $50,000. Financial institutions ap—
parently are foregoing profits in this amount; however,
this estimate assumes that the institution could have re—
invested funds in a market rate investment, which, in many
instances, would not be possible because the funds are
tied up in the building, and there are limited options
for getting out from under a mortgage.
In Mount Vernon, financial institutions were willing to
increase mortgage amounts by approximately 30 percent in
order to finance necessary improvements. (For this pur—
pose, they received a slightly higher interest rate and a
more secure mortgage --the assessed value of the property
doubled.) In Hartford, financial institutions were will—
ing to double the amount of their investments in the first
project.
Financial institutions in all AIP cities are enthusiastic
about the program; they see it as the only answer to a
deteriorating multifamily market. The program provides
a mechanism to bring the vested interests together and to
obtain commitments from each of them. Mortgage lenders
do not believe the commitments would be forthcoming without
the program; they think that not enough trust exists be—
tween the city, themselves, owners, and tenants to produce
the voluntary commitments and concessions required to make
a building economically viable. The AIP is viewed as
neutral by all parties, a key element of program success.
Role of Owners
Owners have a vested interest in making the program work,
and their commitment has been high in all AIP buildings.
Owners are normally required to invest some of their own
funds in the building, particularly if additional invest—
ment is contemplated; they are required to work closely
with the tenants, and they must provide financial infor—
mation on each building.
In Yonkers, the average building required $200,000 of ad—
ditional investment; approximately $50,000 of this amount
was supplied by the owner. In Bailey Gardens in Mount
Vernon, the owner had to put up approximately $100,000.
In Hartford, although the owner of the first project only
had to make an equity investment of $5,000, additional
investment was supplied in the form of "sweat equity."
(The owner managed the property and did some of the re—
pair work.)
220 r6
Owner involvement in the AIP requires more than cash; it
also requires a willingness to work with tenants to ensure
good communication. Tenants must be informed of proposed
rent increases and the tenants must fully agree with de-
cisions to raise rents. In Mount Vernon, the owners of
one property chose not to work with the tenants or to in-
volve any other parties in deliberations concerning rent
increases. When this attitude became apparent, the Mount
Vernon AIP terminated its relationship with those owners.
Owners should be involved in the partnership and the build-
ing evaluation committees. This participation was the case
in Mount Vernon for the first building, but not in Hart-
ford. Owner representation might rotate on the committees,
and as new buildings enter the program, their owners could
be taken onto the committees.
In some cases, the major problem with a building is its
owner. The owner may have mismanaged the building, se-
verely undermaintained it, exacerbated problems with the
tenants, or defaulted on the mortgage. The lender with
the defaulted mortgage is usually responsible for finding
a new owner. However, if the building is being considered
by the AIP, as were the Sigourney Street buildings in Hart-
ford, then the building evaluation committee must assess
the qualifications of prospective owners and make a recom-
mendation.
In general, all owners interviewed were impressed with the
program. Those who owned buildings prior to AIP implemen-
tation stressed that were it not for the program they could
not have made the repairs and modernized the buildings; in
many cases they said they would have undermaintained the
buildings and eventually defaulted. These owners were ex-
periencing negative cash flows, they could not afford to
refinance their buildings, and they had not seen any solu-
tions to their buildings' financial problems.
The Role of Tenants
Tenant involvement in Yonkers diminished after building
improvements were made. In the beginning, Yonkers staff
members spent considerable time meeting with tenants to
explain the program, the improvements to be made, any
ownership changes, and rent increases. In addition, some
tenants were counseled and in some cases helped in organiz-
ing a cooperative. Generally, however, the staff did not
develop tenant organizations; consequently, after the build-
ing's problems were solved, any such organizations gradual-
ly disappeared.
221
Tenants have been involved in the AIP in Hartford and
Mount Vernon but generally have not served on the part-
nership or building evaluation committees. In Mount Ver-
non, one tenant served on each committee, but did not
represent any of the buildings in the program. Tenants
in Hartford have not been asked to serve on the committees.3
In Mount Vernon, tenant involvement has occurred through
the building's tenant association. The AIP staff helped
organize the tenant association in the first AIP building
and also worked closely with the group to ensure that the
tenants were kept informed of all program decisions. After
they were organized, tenants established rules pertaining
to noise level, loitering, tenant selection, and contact
with the owner and manager. The owner agreed to the rules,
and the tenants now have significantly more control.
Tenants view the AIP positively. They see it as a mecha-
nism to upgrade building services, and they also have a
voice in determining what repairs and modernization are
needed. In return, they agree to pay higher rents, if
necessary, so the owner can make the repairs. A key to
obtaining tenant cooperation in Mount Vernon was increas-
ing their understanding of the building's economics and
their trust in the AIP staff. The staff explained the
program and the financial problems confronting the owner
to the tenants' association.
Less attention has been given to tenant participation in
Hartford. Tenants were not organized in Asylum Hill when
the AIP was formed, and no effort was made to organize
them. Even tenants living in the only inhabited AIP build-
ing were not encouraged to become active participants.
They were given information as the program developed, but
their role was seen as supportive rather than participatory.
Tax Assessment Procedures
In general, when a building is considered for tax reas-
sessment or for a temporary tax reduction, AIP staff mem-
bers review the financial statements. The valuation method
stressed by the AIP is the income approach to value. The
owner is allowed to earn a return based on actual expenses
and operating costs of the building; the return based on a
rate similar to that earned on other investments is dis-
counted. A building that shows a return that is consid-
erably less than the market rate or that shows a loss makes
a strong case for an adjustment of the real estate tax
payable.
222
� e2—
PROGRAM RESULTS THROUGH 1979
Buildings Treated
In Yonkers, 65 buildings have been treated. These build -
Ings have an average of 65 units each and range in size
from 17 to 250 units. Approximately 4,200 households have
benefited from the program. Program records indicate that
the buildings were in various stages of disrepair, but most
had significant maintenance and financial problems. (The
level of treatment varied among the 65 buildings; approxi-
mately one-third did not require the city to make real es-
tate tax concessions.)
Hartford has completed one project, consisting of three
buildings with a total of 79 units, and another building
of 42 units is well along in the developmental phase.
Prior to implementation of the AIP, the first project had
severe financial problems. The bank had foreclosed on
the mortgages, rehabilitation needs were significant, and
two of the structures were already vacant.
Mount Vernon is currently working on its first project,
Bailey Gardens, a four -building complex containing 203
units. Prior to implementation of the AIP, the property's
cash flow could not support the improvements required to
maintain and modernize the structures, and its financial
problems would have become more severe as time passed.
Level of Commitment
All four partners --the city, financial institutions, owners,
and tenants --are involved in the program in each of the
three cities, but the level and strength of their involve-
ment has varied, as discussed below.
The City. In all three cases, the city has been an active
participant in terms of being willing to forego real estate
taxes, at least for a few years; also, city government of-
ficials have stated their willingness to fund program
staff. It is difficult to estimate the amount of real es-
tate taxes foregone by the cities, but it is between
$40,000 and $50,000 per year for the first year or two of
the program for the average building in Yonkers and Mount
Vernon, and $6,000 in Hartford.
There does not seem to be a staffing problem in Yonkers;
however, in Hartford and Mount Vernon the staffs have been
too small to move the program along quickly. Slow progress
may eventually undercut the enthusiasm of the partners for
the program.
223
Financial Institutions. The banking community has demon-
strated a willingness to be extremely flexible. Depending
on the needs of the building, financial institutions have
reduced interest rates; placed temporary moratoriums on
payments of principal and, in some cases, payments of prin-
cipal and interest; agreed to increase the amount of loans
in order to finance property repairs and improvements; and
occasionally have received a higher rate of interest in
return for restructuring or refinancing the loan. In
Yonkers, the present value of below-market interest rate
loans averages $50,000 per property. As pointed out, how-
ever, this may not really be a concession by the lender;
the lender may have no alternative other than to take back
the property.
In Yonkers, financial institutions have been willing to
extend an additional $150,000 in the form of first or sec-
ond mortgages for improvements on the average building.
In Hartford's and Mount Vernon's first AIP projects, the
banking community made $282,000 and $350,000, respectively,
available for improvements.
Owners. Owners have made significant additional equity
investments in buildings. In Yonkers, the average build-
ing owner financed approximately $50,000 of the repair
work. In Hartford, owners invested $5,000 in their prop-
erties; in Bailey Gardens in Mount Vernon, the owner will
finance approximately $100,000 of the repairs and moderni-
zation. The small amount of investment by owners in the
Hartford project is not indicative of their actual commit-
ment --they also manage the building and have made some of
the repairs. Therefore, they have a sizable sweat equity
investment in the building. The fact that the owners are
willing to invest a significant sum in their building in-
dicates they are committed to making the AIP work.
Owners in Mount Vernon were open and willing to work with
the tenants. In Hartford, tenants were not as involved,
and in Yonkers, this aspect could not be evaluated because
most of the buildings had already been repaired.
Tenants. Experience in Yonkers has been that tenant in-
volvement ceases after the improvements are completed and
management becomes stable. Exceptions include those build-
ings converted to cooperatives and those that continue to
have maintenance problems. AIP staff members in Yonkers
explained the program at length to tenants, but did not
organize a tenant association. Tenants have had a sig-
nificant influence on the Bailey Gardens project in Mount
Vernon, but they were not asked to join the partnership
or building evaluation committees. (AIP staff did help
organize the tenant association there.)
224
In Hartford, tenants in the one inhabited Sigourney Street
building were not meaningfully involved in the develop—
mental phases of the program.
Effect on Rents
In Yonkers, there was insufficient program information to
assess the AIP's impact on rents. Because some buildings
were vacant at the time of improvement and others were con—
verted to cooperatives, the impact on rents varies.
In Mount Vernon, the tenants must agree to any proposed
rent increase. In Bailey Gardens, rents can be raised by
10 percent plus an amount allowed by the rent guidelines
I board; the total cannot exceed 15 percent in the first year
upon renewal of the lease. Also, rents for apartments
under rent control are permitted to rise to market levels
i when they are vacated.
In the one occupied AIP building in Hartford, rents rose
less than 10 percent, but the leases are written month to
month, and the owner has indicated a need to raise rents
again to cover rising fuel costs.
Displacement
In the North Broadway neighborhood in Yonkers, vacancy and
turnover rates varied from building to building. In the
Garrett Place neighborhood, there was very little turnover
or vacancy before or after the program.
The objective of the Mount Vernon AIP is to serve existing
C tenants. Displacement has not been a problem, and the
j staff has secured Section 8 reservations to lessen the im—
pact of rent increases on tenants with low fixed incomes.
In Hartford, two AIP buildings were not occupied at the
time of the study. Turnover in the third building was
minimal.
Direct and Indirect Effects
i It is too early to see any spillover or neighborhood ef—
fects from the improvements in the Hartford and Mount Ver—
non AIP buildings. In Yonkers, hard data were not avail—
able to determine if additional private investments have
been made in the two AIP building neighborhoods. However,
talking to residents and driving through the neighborhoods
and adjacent areas revealed that the stabilization of these
neighborhoods has had positive side effects.
�.z
225
f
The most significant spillover effect of the AIP in Yonkers
has been its influence on the investment decisions of the
banking communities, owners, investors, and tenants in the
North Broadway area. Before program implementation, most
of the buildings in this neighborhood were experiencing
disinvestment, property values were declining, and the va-
cancy rate in the multifamily buildings was about 15 per-
cent. Disinvestment has now been replaced by investment,
property values are rising in real terms, and the vacancy
rate --now 5 percent --is less than the citywide rate. As a
direct result of the AIP, the neighborhood has experienced
a significant revival, the real estate market is function-
ing, financing is easier to obtain, and new residents are
moving in.
The older central business district in Yonkers near North
Broadway is currently undergoing extensive commercial re-
vitalization. It seems clear that, if the neighborhood
had continued to decline, improvements in the area would
have been unlikely. Therefore, an indirect effect of re-
versing decline in the North Broadway neighborhood has
been a strengthening of real estate values in the central
business district.
The Garrett Place neighborhood in Yonkers is a cluster of
large apartment buildings, surrounded by predominantly
single-family housing. The market for single-family units
in the area is strong, and the condition of this housing
is good. If the AIP had not been successful in upgrading
the multifamily properties, it seems likely that the strength
of the single-family market in the area would have eroded
and private disinvestment would have occurred.
Leverage
The leverage of public resources in the AIP is extensive.
To be conservative, private investment in the program will
be considered to consist only of the value of improvements
to a building. The value of time spent by volunteers on
AIP business is not counted here because it is difficult
to estimate and varies from year to year. The present
value of the subsidy provided by the differences between
market and actual mortgage interest rates is not included
because, in many cases, lenders do not have the option of
getting out from under the building mortgages on terms
comparable with those in the conventional market.
/�(v,Z
226
Public investment in the program consists of the direct
costs of operating the program and the value of property
taxes foregone if tax reductions have been granted. How-
ever, taxes foregone are not included as a cost of the pro-
gram for reasons similar to those discussed above. Many
properties that had taxes restructured were either in
foreclosure at the time they entered the AIP or were mak-
ing little or no profit. Tax reductions would have been
sought and probably granted for these buildings, and taxes
would.have been lost to the city anyway.
In Yonkers, the average building received approximately
$200,000 in improvements; the staff estimates that five
buildings could be improved per year, which means pri-
vately financed annual program improvements would total
$1 million. Assuming annual program operating costs of
$125,000, each public dollar invested in the program is
leveraged eight times. This computation is conservative;
it does not take into account the additional private in-
vestment that occurs in surrounding properties and neigh-
borhoods as AIP results are observed.
The leverage obtained in Mount Vernon is even higher. To-
tal public costs (including money spent by Neighborhood
Reinvestment and the city) amounted to $28,000, which
produced $450,000 worth of private investment in Bailey
Gardens. Therefore, each public dollar produced` sixteen
private dollars.
In Hartford, annual staffing costs are approximately $40,000.
This funding produced $282,000 worth of private investment
in the Sigourney Street project, and a leveraging of each
public dollar by a factor of seven.
CONCLUSIONS
The results document a program that has worked well, al-
beit not without some of the problems in development and
transfer that would affect any new activity. AIP offers
a way for cities and tenants to work with private partners
to conserve an increasingly scarce commodity --private, non -
subsidized rental property. Rather than relying on the
regulatory clout available to cities, local communities
now have a tool for setting in motion a process to manage
the various interests in a given residential property.
Already, development of the AIP is proceeding in several
cities --including Washington, D.C.; New York City, New York;
Los Angeles, Calif.; Newark, N.J.; and Dallas, Texas.
7
W.L
227
Notes
1. As used here, multifamily housing typically means
structures with at least twenty units; most have fifty
units or more. Properties are owned by professional
investors who own several buildings. Not included
here are small structures or small—scale investors.
There is a clear program preference for dealing with
housing professionals.
2. No public subsidy is associated with the AIP except
the occasional use of Section 8 certificates for eli—
gible tenants, who would be displaced if such rent
subsidy were not available.
3. This trend in diminished tenant involvement can be
looked at in two ways. It may be viewed in a posi—
tive way in the sense that once the tenants have been
helped, they go on to conduct their lives as normal
tenants and are not involved in the operation of prop—
erty. On the other hand, it may be viewed negatively
in .the sense that it may reflect a return to "business
as usual" and a decline in the interest or the ability
of tenants to enforce certain standards of behavior in
the building. It can also be viewed in terms of the
difficulty tenants have in dealing with strictly fi—
nancial and technical issues associated with apartment
building maintenance and rehabilitation. None of the
social service or resident governance aspects of NHS
applies to the AIP program. Once improvements have
been agreed to and management's practices rectified,
there is little to sustain tenant interest.
G oZ-
228
CHAPTER 15
AN ASSESSMENT OF THE AIP EXPERIENCE
The Apartment Improvement Program (AIP) is designed to help
stabilize problem multifamily properties in neighborhoods
experiencing incipient decline. The approach taken con-
siders the specific needs of the neighborhood, the build-
ing, and the various partners. All key factors --city offi-
cials, financial institutions, owners, and tenants --in-
volved in determining the building's and the neighborhood's
future meet to work out a solution. This process helps
build trust and confidence and produces a solution that is
workable and realistic in light of the financial, mana-
gerial, physical, and social problems affecting the build-
ing and its neighborhood.
The AIP addresses several problems confronting the multi-
family housing sector today. Owners of rental properties
are experiencing declining cash flows as operating and
energy costs rise, and they have not been able to raise
rents enough to recover the cost increases. In addition,
tenant and management problems often exacerbate a build-
ing's precarious financial situation. By focusing on a
specific building, the program examines not only the fi-
nancial condition but also the owner's ability to manage
the building; problems, if any, caused by tenants; and
repair and modernization requirements.
The program has worked well in Yonkers, N.Y., producing
significant visible improvements in the buildings in the
North Broadway and Garrett Place neighborhoods and has
generated investment in surrounding areas as well. The
program has not been operating long enough in the other
two study cities (Hartford, Conn., and Mount Vernon, N.Y.)
to evaluate its effect on neighborhoods; however, these
programs have successfully improved a number of units, and
more are in development.
ADAPTABILITY OF THE MODEL
Each element of the AIP model is flexible, with some quali-
fications. The actions required of owners, members of the
banking community, tenants, and city officials are all in
their own best interests in the appropriate context. The
most serious qualifications are whether sufficient city
229 4� ,, _
support can be developed for the program, whether owner
and financier cooperation can be developed,
and whether
hether
staff persons with the necessary
in key positions.
The AIP model requires a strong city commitment. If the
program is not completely staffed with full-time employees
directorand if the f the
responsibiliitiesin the department �program oimplementation
may suffer. If the heads of the city departments from
which staff are borrowed and in which the AIP director is
lodged are not fully behind the program, then the avail-
ability of staff and resources may be limited. City com-
mitment was not a problem in Yonkers, but it could be
elsewhere -1
The program requires at least two and probably three full-
time employees. Full-time employees are necessary to ad-
minister the program, to work with the tonants work in a the
ganizing and communications capacity,
owner to document the financial history of the building
and its repair and modernization needs, and to work with
all articial
thatpmosteScities v would have personnel package.It
Iunlikely
to could perform
the tenant organizing and the financial analysis functions.
There
thesefore, if functions,e the permanentstaff
directorowillred havetto perform
assume
them; such a program will probably develop very slowly
because of constraints on the director's time.
Another sensitive aspect of the city's commitment is the
the tax
adjustment of property assessments. In Yonkers,
assessor's office can make the decisions unilaterally.
council
The decision does not have to go through the city
and, therefore, it is kept out of the political howevearena r
some extent. Reductions in tax assessments must,
be approved by the city council in Mount Ver on. aAlthou
Although
has been no problem to date, it may
politi-
cally sensitive issue in the future.
Commitments of the other parties should not pose problems
in terms of program replication. Given the economicfinan-
pres-
sures confronting the multifamily housing sector,
cial institutions and owners should be predisposed to co-
operate with each other and with the city. Tenants should
be willing to cooperate if they are brought into the pro-
cess early and if they are offered meaningful participation
commitment of tenants will depend
in decision making. The
to some extent on the ability of the AIP staff to work
with them.
230
There is nothing unique about the AIP model to limit its
application in other cities across the country. The key
to making the model work is careful implementation, and
the responsibility for implementation rests most heavily
on the city. Primary concerns of financial institutions,
owners, and tenants are that they must have access to
city staff, that the red tape that accompanies most gov-
ernment programs must be eliminated, and that the city
must fulfill its commitments. If the city is unresponsive
to the needs of the program, the other partners may drop
out.
r
The role played by city staff members in Yonkers was criti-
cal to the success of the program. Owners and members of
t the banking community felt that they could make their in-
vestment decisions and conclude negotiations in a reason-
able time, and they had confidence in the city's ability
to respond to new problems. Active involvement of the
city staff was also important to tenants, who depend on
owners to keep commitments concerning improvements and
rents. Trust by all partners makes the program work, and
trust results from ongoing, open communication.
The city, therefore, holds the program together, and the
critical element is hiring enough competent, sensitive
staff members to accomplish the task. For replication,
then, the most important element of the model is, the com-
mitment of the city to provide enough staff and other re-
sources to make the program work.
t AIP AND NHS IN COMBINATION
i
The Neighborhood Housing Services (NHS) model is similar
1 in many respects to the AIP model. They both rely on
public-private partnerships with financial institutions
and the involvement of neighborhood residents. The key
differences between the two programs are their organiza-
tional structures and funding sources.
NHS is a nonprofit corporation with its own board of di-
rectors and funding sources. The AIP is placed in city
r government; its budget is controlled by the head of the
city department within which the program is lodged. The
NHS has one primary mission, and it is funded and staffed
to operate in the neighborhood where it is located. There
are relatively few non -NHS time demands imposed on the
staff and, because the board of directors controls the
budget, the board can allocate the resources as it sees
best.
231 ���
The AIP, however, is essentially a city program. Most
staff members have other responsibilities, and the part-
nership committee does not directly control the budget.
Although a program can work well with this organizational
structure, it may encounter problems if the non-AIP time
demands become too great or if the people who are assigned
to the program become too few.
In theory, there is no reason why the AIP could not be de -
signed to operate organizationally as a non-profit NHS -type
program, and there is no reason why it could not be incor-
porated into an existing NHS. In fact, there may be real
advantages to doing so.
NHS focuses primarily on single-family housing. However,
most NHS neighborhoods have multifamily properties that
need attention. The AIP could provide NHS with another
tool to cope with neighborhood decline. In addition, the
skills required to implement the AIP are not unlike those
already existing within an NHS. There is little differ-
ence between working with tenants and working with a
neighborhood organization --the community organizing skills
needed and the problems the two programs encounter are
similar. There is some specialized knowledge required to
work with financial institutions on multifamily financing
problems, but it can be learned easily. Likewise, some
specialized knowledge is needed to work with the tax as-
sessor's office, but it should not be difficult to obtain.
In fact, a member of that office could be added to the NHS
board. Finally, the skills needed to assess the physical
problems of single-family and multifamily properties are
not significantly different.
The primary disadvantage of operating the AIP through an
NHS is that the link between the AIP and city government
would not be as strong. Thus, the AIP might not be able
to "borrow" city building inspectors. However, this need
not be an insurmountable problem.
Moving the AIP outside city government could affect rela-
tionships with the tax assessor's office, the mayor's of-
fice, and the city council. Modifications in real estate
taxes or reductions in real estate tax assessments might
then be more difficult to obtain, and there might be less
incentive for a city to fund the program at an appropri-
ate level.
232
11/0,2
It is impossible to assess the extent of the effects of
these changes. If the AIP were to be operated outside
city government, the implications with respect to the will-
ingness of the city to consider real estate tax reductions
and to fund the program would have to be examined.
It could be argued that operating the AIP through an NHS
would limit the types of neighborhoods in which the pro-
gram could be implemented; however, there is no merit to
this argument. There is no reason an NHS could not oper-
ate the AIP in a nearby non -NHS neighborhood or why NHS
boundaries could not be expanded to include areas with a
substantial number of apartment buildings.
The AIP should not be constrained organizationally because of
the way it has been implemented to date. In some cities,
it may make sense to operate the program through an NHS;
the city would need to contribute funds directly to the
NHS operating budget to pay for an expanded NHS staff.
In other cities, it may make sense to continue the present
organizational arrangement or to develop new approaches.
PREVENTING DECLINE
As discussed previously, the workings of private market
mechanisms often accelerate decline in multifamily prop-
erties. An intervention strategy (such as the AIP) is
needed to counteract these market forces. Two factors
are important in assuring that the AIP will help prevent the
return of decline to a building or the entire neighbor-
hood. First, each building and the neighborhood as a
whole must see the return of private market mechanisms,
as has clearly happened in Yonkers' two AIP neighborhoods.
The increase in sales prices, the lower vacancy rates,
and the strong demand for existing rental units substan-
tiates the return of the private market in these locations.
Second, after the initial building improvements have been
made, it is critical that the structures continue to be:
upgraded and maintained. Such activity has occurred in
Yonkers. To ensure that decline does not recur, the build-
ings and the neighborhood must be monitored. Early detec-
tion and resolution of problems will prevent decline from
even starting.
/74i.Z
233
SUITABLE BUILDINGS
There is no reason why the AIP cannot be used to, treat any
building, so long as there is a market for the building
after improvements are made. Obviously, market rents will
have to be high enough to provide the owner with sufficient
cash flow to amortize the outstanding debt and provide a
"normal" rate of return. Therefore, if a building is badly
deteriorated, the costs of modernization and repair will be
high and it will be difficult to put together a financial
package acceptable to all parties and still make the build-
ing economically viable.
COSTS AND BENEFITS
To date, all parties have benefited from the AIP. A city's
major cost has been the amount of money it takes to fund
the program. The reductions in tax assessments are not a
real program cost because most of the buildings were in
sufficient financial difficulty to warrant these reductions
and, therefore, the real estate tax loss would have hap-
pened anyway. In return, the city is solidifying its real
estate tax base and will recoup its original investment
many times over through the taxes paid by a healthy
building.
Financial institutions have also benefited. In many cases,
they had few other options than to participate. The build-
ings were not marketable, or if they were the sales price
would have been less than the outstanding value of the
mortgage. The program strengthens the value of the mort-
gage's underlying security and provides cash flow for
amortization. A rate of interest on the outstanding mort-
gage, considerably less than prevailing market rates, is
often renegotiated; in most cases, this is not profit fore-
gone because there was no better alternative. Mortgage
holders are pleased with the program and view it as the
only solution to the problems many of these structures
face.
Owners have benefited in both the short and long terms.
In most cases, they were making no money from their in-
vestments and were faced with the prospect of losing all
of it. The program enables them to retain their invest-
ment and to avoid the recapture of accelerated deprecia-
tion if they defaulted; it also provides them with a
normal rate of return. Owners normally are required to
increase the amount of their equity investment in the build-
ing, but they receive a normal rate of return on the addi-
tional investment.
234
Tenants have benefited, but they may also have paid the
highest cost (as increased rents) for the benefits received.
Tenants receive a well-maintained, modern building; greater
control over tenant selection; more input into setting build-
ing rules and regulations; and a more responsive management.
Thus, tenants generally receive net program benefits. If
they have the opportunity to move and decide to stay, it can
be assumed that they see.themselves as better off than they
would be if they moved. In most buildings tenant turnover,
as a'result of the AIP, has been low. To ensure that tenants
benefit from the program, their participation must be encou-
raged, which may require extensive tenant organizing efforts
--even after a building has been successfully treated.
The benefits for all
of the tenants, have beenesustained s, with h over sstime. ible exception
provides ample evidence that the buildings have remained
economically viable. With respect to the tenants, it is
more difficult to reach a conclusion. Tenant involvement
in most of the Yonkers buildings ceased after the repairs
were completed. A formal survey was not part of this
i study, and it is not possible to evaluate what has of
i to rents, owner responsiveness, and general tenant satis-
faction with the property over time.
TENANTS SERVED
The AIP is not designed to displace tenants. The buildings
treated by AIP serve low- and moderate -income residents and
f it is important that the interests of the current residents
be protected. However, in some cases, rents must be raised
as part of the overall financial package. This increase
could cause displacement, particularly for those on limited
incomes. This potential problem is mitigated to a great
extent, however, because tenants are involved in the nego-
tiations and must agree to the amount of the increase. I£
a significant hardship is to be imposed on some tenants,
that fact is brought out early in the negotiations. In
addition, Section 8 certificates have been used to lessen
the impact of rent increases on lower-income tenants.
In most AIP buildings the owner, tenants, lender, and city
have reached agreement on the improvement plan and may
actually sign an agreement. During the first years the
cityts tax level may be predicated on the other three
partners' maintaining their end of the agreement. However
in some buildings where there is no tax reduction, the
AIP is less able to protect tenants after improvements
have been completed. Thus, an unscrupulous owner could
effectively force out low- and moderate -income tenants --
either by significantly raising rents or by converting the
235 7 6 �7
building into a condominium. The program should ensure
that the rights of low- and moderate -income tenants are
protected over time, not only for moral reasons, but to
protect the credibility of the AIP.
THE ROLE OF NEIGHBORHOOD REINVESTMENT
Neighborhood Reinvestment is the most crucial element in
the ATP developmental process, and the technical assistance
provided by Neighborhood Reinvestment is not limited to
the developmental phase. Program staffs in both Hartford
and Mount Vernon have found Neighborhood Reinvestment's as-
sistance to be invaluable in helping them to resolve the
problems that occur from time to time.3
As more AIPs are developed, Neighborhood Reinvestment
staff will be spread across a larger number of cities and
may not be able to keep abreast of all of the specific
details of each program. If this happens, the staff's
ability to help local programs resolve unique problems
could be impaired. Obviously Neighborhood Reinvestment
can add to its AIP staff; however, there is a risk that
the needs of the developing programs could outstrip the
capacity of the staff to perform satisfactorily. This
note of caution applies not only to the number of staff
persons, but to their level of experience and expertise.
It is imperative for Neighborhood Reinvestment AIP staff
to grow in number at the same rate as the programs expand,
but not at the expense of staff capability to respond
knowledgeably to the problems of AIPs.
CONCLUSIONS
The Yonkers program has been successfully replicated in
Hartford and Mount Vernon. Despite growing pains in these
cities, each program has shown positive results. The pri-
mary consideration for the long-term success of the pro-
gram is the level of staff resources devoted to it; neither
Hartford nor Mount Vernon has had sufficient city staff.
Although local circumstances dictate staff size and or-
ganizational configuration, three full-time professionals
should be considered as the minimum city staffing commit-
ment to the program. Fewer persons or heavy reliance on
a part-time staff may make it difficult for a program to
improve more than one or two buildings a year. If a pro-
gram does not treat more than this number, support from
the volunteer committee members may wane and support within
the city may dissipate also. In addition, the visual
impact on a neighborhood would not be large and, therefore,
the positivespillover as seen in Yonkers would not result.
236
Also, if program output is small, economies of scale do not
result; their lack would reduce the amount of leveraging of
public resources.
The major problem confronting the AIP is the willingness
of city government to commit adequate resources at its
inception and to sustain this funding level after the
first year or two. If resources are not sufficient, pro-
gram results will be minimal and the impact will be dif-
ficult to assess. If the results are not apparent to
elected and appointed officials in a fairly short time,
the city's willingness to commit funds may diminish and
effectively kill the program. Therefore, in considering
AIP expansion, Neighborhood Reinvestment must pay particu-
lar attention to the level of interest and commitment of
each city.
Finally, the number of projects undertaken by the AIP in
any city also depends on the ability of the program to
obtain mortgage financing; therefore, credit market con-
ditions may influence the level of program activity. It
did not appear that rising interest rates and the declin-
ing availability of funds affected program performance
during the first half of 1980 in the cities studied; how-
ever, it was obvious from conversations within the finan-
cial community that, if potential AIP projects had devel-
oped to the point of the need for financing during this
period, loan commitments would have been difficult to ob-
tain. Thus, there is a need to find a mechanism to shel-
ter the AIP from the vagaries of the financial markets.
A program such as the AIP, which is based on a partnership
effort, can be severely damaged if one of the partners is
unable or unwilling to deliver. If credit market condi-
tions make it difficult for lending institutions to pro-
vide sufficient funds on terms that make the project eco-
nomically viable, then the level of program activity will
decline. The momentum of the program in a city may be
curtailed, thus discouraging the other partners. After
this situation, it may be difficult for a program to re-
generate itself as mortgage financing becomes more plenti-
ful.
237 �Z4,2
1.
2.
3•
Notes
In both Hartford and Mount Vernon, the programs were
largely within a city department; the program director
reported to an administrative officer within the de-
partment who in turn reported to the head of the de- ;
partment. The individuals employed in each program
were few, and they had other responsibilities within
their departments. In Hartford, there were four part-
time people, three of whom are assigned directly to
AIP; in ne
is assigned
directly tounthe V program. A smallemployee
staffand multiple
responsibilities limit the speed at which a program
can be implemented and lengthen the time it takes to
develop a track record. If a program is slow to de -
d and lose
interestl,e andltheeers may program maymnotidevelop develop
visibility to sustain the initial momentum.
The major advantage would be to give NHS a broader
range of neighborhoods in which to work and a greater
control over developmental activities in those neigh-
borhoods. Funding for this work could be by contract.
matureMost have
con-
tracting give some sufficientexperience
that w
thisapproach
would work.
Some concern was expressed aboutthe
ability
b alitservices Neigh-
borhood Reinvestment to supply
other AIPs as they are developed. A great deal of
specialized and market specific knowledge is required
to help a newly created program. It may be appropri-
ate in places to have local consultants involved in
housing management and finance rather than full-time,
nonlocal Neighborhood Reinvestment staff.
238 46,2 --
CHAPTER 16
AN OVERVIEW: CENTRAL CITY HOMEOWNERSHIP
AND REVITALIZATION TRENDS
Since World War II, central cities have faced a dramatic
emigration of population and jobs and increasing disin-
vestment by property owners. In recent years, there have
been some indications of renewed interest in investing and
buying homes in central cities.l In many cities, vacant
and substandard properties are being purchased and rehabil-
tated, and property values are rising. There is evidence
that homeowners are becoming more willing to make improve-
ments to their properties. In some localities, entire
neighborhoods are in the process of being revitalized. An
increase in the level of homeownership seems to be linked
to the central city revitalization that is occurring, and
j homeowners and home buyers are playing a central role in
this process. Although there is a consensus among urban
observers that the existence of these trends is widespread,
there is less agreement about their causes, implications,
and long term effects.
i The Home Ownership Promotion Program (HOP), which a number
of Neighborhood Housing Services (NHS) programs have estab-
lished,•is designed to promote homeownership as a way to
deal with the problems of deterioration, disinvestment, and
displacement in neighborhoods. The HOP attempts to help up-
grade individual structures and increase the level of home-
ownership in a neighborhood. It is viewed by Neighborhood
Reinvestment as an important programmatic technique for
carrying out a comprehensive neighborhood improvement and
revitalization strategy.
Specifically, the HOP is designed to overcome the problems
associated with
• Housing abandonment and large numbers of vacant
properties in a neighborhood;
• The incidence of many absentee -owned properties
that are undermaintained and below 'general neigh-
borhood standards;
• A real estate market that is functioning ineffec-
tively or has ceased to function; and
• Displacement of long-term tenants if homeownership
rates were to increase.
239
4G,Z_
In NHS neighborhoods, the HOP works with current property
owners, renters who could become homeowners, otherrospec-
finan-
tive home purchasers, the real estate industry,
and tial institutions to
0 Facilitate and encourage the purchase and rehabili-
tation of vacant and for -sale housing by current
renters and other prospective home buyers;
• Increase the levels of homeownership and reduce the
percentage of absentee -owned properties;
• Reactivate and stimulate the neighborhood residen-
tial real estate market by improving the availabil-
ity of financing, by providing rehabilitation assis-
tance to home buyers, and by encouraging and assis-
ting the real estate industry to serve the neighbor-
hood; and
• Promote the neighborhood and make potential home
buyers aware of the housing opportunities that are
available. ;
This section examines the experiences of the HOP to date,
mainly through assessing the Philadelphia and Baltimore
programs. To describe the environment in which revitaliza-
tion must occur, this section also reviews national trends
in central city revitalization activities and in homeowner-
ship patterns. The link between homeownership and revitali-
zation is reviewed and issues that are posed are discussed.
The objectives, characteristics, and achievements of previ-
ous homeownership efforts are noted and discussed. Finally,
the scope of the HOP study is described.
THE DECLINE OF CENTRAL CITIES
In the past thirty years, social, political, economic, and
physical changes in U.S. cities have brought about large
declines in population, job opportunities, and commercial
and industrial activity. These changes have resulted from
such forces as high levels of new construction in suburbia;
increased personal income and expectations; nearly univer-
sal automobile ownership and an expanded highway system;
changes in manufacturing processes and the economy; the
availability of low-cost, attractive financing to purchase
new housing; and racial, ethnic, and income prejudices.
These forces have negatively affected the social and eco-
nomic health of central cities and have led to high resi-
dential vacancy rates, declining property values, stagnant
240 41 ;;Z_
or declining tax revenues, large-scale abandonment and dem-
olition of structures, disinvestment or lack of investment,
and deterioration of public services. As these trends have
interacted with one another, they have tended to reinforce
one another, thereby continuing the spiral of decline.
The population loss of central cities illustrates the magni-
tude of the decline. Between 1950 and 1975, the percentage
of the total U.S. population in central cities declined
from 35.5 to 29.2 percent.2 Several sets of statistics
document the trend. Of the sixty cities with 200,000 or
more population in 1970, 38 percent declined between 1950
and 1960; 45 percent declined between 1960 and 1970; and
73 percent declined between 1970 and 1973• Between 1970
and 1974, central cities lost 1.9 percent of their popula-
tions; for, cities in standard metropolitan statistical areas
(SMSAs) of 1 million or more population, the rate of decline
was 3.8 percent.3 For every person moving into a central
city, two left.
The population decline has not been uniform among all
groups or sections of the country. Cities in the Northeast
and North Central states have suffered a disproportionate
population decline, primarily due to the exodus of the
middle class to the suburbs. The middle-income popula-
tion decline, coupled with the immigration of low-income
rural migrants, many of whom are black or Hispanic, has
caused a significant change in the population mix of cen-
tral cities. For example, between 1950 and 1973, the per-
centage of whites who lived in central cities declined from
35 to 26 percent, whereas the percentage of blacks who
lived in cities rose from 44 to 60 percent.4 Average cen-
tral city income levels have been declining. Between 1970
and 1974, the median income of city emigrants was $14,169;
for immgrants it was $12,864.5
HOMEOWNERSHIP TRENDS IN CENTRAL CITIES
Most Americans are homeowners. As table 16-1 shows, nearly
65 percent of all families own their own homes, and the per-
centage of homeowners has been increasing over time. Home-
ownership is less common in central cities than in suburban
areas. About half of all central city families own their
own homes. In suburban ares, the homeownership rate is 71
percent. As table 16-1 indicates, homeownership has been
increasing in all parts of the country since 1960 but has
appeared to level off since 1975•
241
416
TABLE 16-1
National Homeownership Rates:
Percentage Distribution
1960 - 1977
Location
1960
1970
1975
1977
United States
61.9
62.9
64.6
64.8
Inside SMSAs
58.9
59.5
61.2
61.0
Inside central cities
47.4
48.1
49.6
49.0
Suburbs
72.7
70.3
71.0
70.8
Outside SMSAs
67.1
70.4
72.1
72.9
Source: S. Marshall and J. P. Zais, How Selected HUD Pro -
rams Serve Low and Moderate Income Families with Children
Washington, D.C.: Urban Institute, July 19 0 , P. 51.
Although homeownership increased slightly in central cities
in the 1970s, the data in table 16-2 show it increased at
a slower rate than it did in the suburbs.
Table 16-3 shows that central city homeownership has been
growing for all racial groups, particularly for blacks.
Between 1960 and 1975, black homeownership increased 14 per-
cent, compared with an increase among whites of nearly 5
percent. On the other hand, black and Hispanic families are
less likely to be homeowners, both nationwide and in central
cities. In 1977, only 36 percent of black families and 34
percent of Hispanic families in central cities were home-
owners.
Whites are more likely to be homeowners at all income levels,
but particularly among lower-income families. Generally,
homeownership rates correlate with income. In 1977, house-
holds with incomes of $8,000 or less had a homeownership
rate of 48 percent; households with incomes of $16,000-
$23,000 had a rate of 75 percent; and households with in-
comes over $35,000 had a rate of 90 percent.6
242 ///per
:I
TABLE 16-2
Owner Occupancy and Values of Housing Units
in Central Cities and Suburbs
Source: F. J. James, "Private Reinvestment in Older Housing and Older Neighborhoods:
Recent Trends and Forces" (Statement Before the Committee on Banking, Housing and Urban
Affairs of the.U.S. Senate, July 10, 1977), PP• 7,9•
Number of Owner -Occupants
(OOOs)
Central cities
10,300
11,087 11;199
11,280
7.6
1.0
0.7
Suburbs
15,790
17,854 18,509
19,104
13.1
3.7
3.2
.... ... ...... .
Median Estimated Value
M
Central cities
16,400
22,300 24,800
26,900
36.0
11.2
8.5
Suburbs
20,800
29,500 32,500
35,300
41.8
10.2
8.6
Source: F. J. James, "Private Reinvestment in Older Housing and Older Neighborhoods:
Recent Trends and Forces" (Statement Before the Committee on Banking, Housing and Urban
Affairs of the.U.S. Senate, July 10, 1977), PP• 7,9•
TABLE 16-3
Trends in Homeownership by Race and Location
1960-1977
Percentage
Percentage
Racial group
Homeowners
1960 1970
M
1975
1977
Change,
1960-1975
Change,
1970-1977
and location
U.S. total
White_
64.4
38.4
65.4
41.6
67.7
43.8
67.7
43.6
+4.7
+14.1
+3.5
+4.8
Black
Hispanic
n.a.
43.4
43.0
64.6
43.1
64.8
n.a.
+4.4
-0.7
+3.0
All
61.9
62.9
N
Inside central cities
White
50.3
51.3
53.4
52.3
+6.2
+18.5•
+1.9
+4.3
Black
31.4
34.8
33.0
37.2
34.5
36.3
34.1
Hispanic
n.a.
47.4
48.1
49.6
49.0
+4a6
+1.8
All
Source: Marshall and
Zais, How
Selected
HUD Programs
Serve
Low and Moderate
Income Families
with Children, p. 65.
n.a. not available.
The cost of buying and owning a home is increasing. The
median price of an existing home rose from $23,000 to
$42,000.7 As shown in table 16-4, it is estimated that
the annual housing cost of owning a standard single-
family house built in 1967 rose from $2,430 to $5,290
between 1967 and 1976. In relation to income, the cost
of ownership rose from 34 to 42 percent of median house-
hold income between 1970 and 1977•
Housing is less costly in central cities than in suburban
areas. Table 16-2 compares the median estimated values
for owner -occupied units
inshows central
cities
suburbaand
in suburbs
between 1970 and 1975; it
had
higher median values butthat epercentage
rceB hes same. over the 1973-75 Period are
In 1975, the median value of a suburban owner -occupied
unit was 31 percent higher than the median value of a
central city owner -occupied unit.
Many factors 'contribute to the lower housing prices in
central cities, but one factor is availability of mort-
gage financing. Mortgage loans have not been readily
available in many urban neighborhoods. In many localities,
private lenders lost confidence in the future of the cen-
tral city or in particular neighborhoods because they per-
ceived lending risks were high and they feared that pro-
perty values were declining. Some financial institutions
required abnormally high down payments or shorter mortgage
terms. Other lenders would not finance the purchase and
rehabilitation of a property. Publicly sponsored financ-
ing programs could not fill the gap left by private finan-
cial institutions because the programs either were funded
at a low level or were not readily available to most buyers.
In recent years, federal legislation and changing attitudes
by private lenders have greatly expanded the availability
of financing and improved terms and conditions.
THE NEIGHBORHOOD CHANGE PROCESS
Many factors influence neighborhood conditions, and there
are many explanations for neighborhood change and deteri-
oration. Regardless of the explanation, each city and each
neighborhood is affected in different ways by the variety
of influences that arise from national, local, and neigh-
borhood forces. These forces cause cities and neighborhoods
to be in a consland demand,nstate citieseanddneighborh neigon
hborhoods factors of supply
y
be growing, declining, or staying the same in terms of
population, employment, property values, extent of capital
investment, condition of structures, and environment.
245
X4.2_
TABLE 16-4
Estimated Average Annual Costs of Owning a
Standard Single -Family House Built in 1967, 1967-76a
Year
Cost ($)
Annual cost of owning
ercentage ange
from previous
year
and managing
Percentage Change
from 1967
Annual costo as a
percentage of
median household income
1967
2,430
--
-
34
34
j 1968
2,630
8.2
8.2
.
36
1969
2,980
13.3
22.6
a 1970
3,165
6.2
30.2
36
1971
3,245
2.5
33.5
36
1972
3,485
7.4
43.4
36
37
1973
3,865
10.9
59.0
1974
4,470
15.7
84.0
40
1975
4,900
9.6
101.6
42
1976
5,290
8.0
117.7
n.a.
Source: F. J. James, "Private Reinvestment in Older Housing and Older Neighborhoods:
Recent Trends and Forces," p. 23.
n.a. not available.
a. For a definition of the characteristics of the standard 1967 home, see U.S. Bureau
of the Census, "Price Index of New One -Family Homes Sold," Construction Reports, second
quarter, 1973.
b. Gross costs before homeownership deductions.
Neighborhood decline occurs when the demand for housing
lessens or when the character of demand changes, such as
when lower-income households who cannot afford the costs
of homeownership move into an area where owner occupancy
has predominated. Neighborhoods decline when they become
less attractive or competitive with other neighborhoods
in terms of homeownership or rental costs, amenities, and
environment, and when demand fails to keep pace with the
availability of housing.
The lack of competitiveness or attractiveness of an area
may result from several factors. Both objective conditions
and psychological expectations are important. For example,
the high rate of new construction in the suburbs since
World War II is believed to be an important factor in bring-
ing about central city decline. An area of mostly elderly
residents who are less willing or able to maintain their
properties is an example of an internally generated factor
that can negatively affect an area. Also, expectations
about the expected future of a neighborhood will help to
determine the willingness of property owners to invest in
the area. The attitudes of real estate agents and lenders
also may play a significant role in determining the level
of demand. The results of slacking demand can be falling
property values, disinvestment by property owners, changes
in the racial mix or income levels of residents, and a de-
clining housing sales market. In many cases, these changes
reinforce one another, and, as a result, the momentum of
decline increases. Unless the decline is arrested or sta-
bilized, an area ultimately may experience high levels of
abandonment.
By contrast, greater demand for housing can bring about
the upgrading and revitalization of an area. Increased
demand in a particular neighborhood may occur as a result
of an increase in the relative value of the housing com-
pared to other neighborhoods, population growth, the re-
moval of blighting influences and improvement of environ-
mental conditions, the recognition of available amenities,
and changes in lifestyle. Expanding homeownership is one
way to increase the demand for housing and bring about
more investment in properties. Additional demand can be
generated in a neighborhood by helping tenants to become
homeowners and by attracting additional outside buyers to
the neighborhood. Increased homeownership can lead to bet-
ter -maintained properties and increased neighborhood con-
fidence.
247
11,
446 �2_
The ob�ective of the HOP is to counter the forces of de-
cline. The HOP seeks to renew the neighborhood by faci-
litating the improvement, purchase, and sale of absentee -
owned properties to tenants and other buyers and by market-
ing the advantages of the area to homeowners and potential
buyers.
CENTRAL CITY REVITALIZATION TRENDS
Despite the evidence of central city decline, there are
signs of growing interest in central city living, and
available data show that reinvestment and revitalization
activities are widespread. These activities take two forms,
upgrading by existing property owners (as reflected in NHS
programs, for example) and gentrification reinvestment in
areas by new (middle-class) buyers or developers. For up-
grading reinvestment, the data indicate that central city
property owners who largely have low and moderate incomes
are investing more money in their properties than they had
been willing to before. There also is evidence of an in-
crease in homeownership in central cities and of rehabili-
tation and restoration of many vacant or substandard houses
by young, middle-class, small households.9
Table 16-5 presents data on property improvement activity
and shows that owners of single unit structures in central
cities have increased the level of their expenditures for
maintenance, repairs, and construction improvements. Ex-
penditures rose from a per property average (constant 1973
dollars) of $320 in 1970 to $467 in 1977, a 46 percent in-
crease for central cities. For suburban owner occupants,
the increase was only 19 percent.10
In many cities, rehabilitation of deteriorated residential
areas is taking place, much of which has been generated
spontaneously by private investors and urban pioneers. A
1975 survey by the Urban Land Institute found housing re-
habilitation and neighborhood revitalization under way in
half the cities with populations over 50,000 and estimated
that about 55,000 units had been rehabilitated during the
previous seven years.11 A follow-up survey conducted in
January 1979 indicated that renovation activity had spread
to more cities and that the number of units renovated had
increased substantially.12
IT�
M:1
I
TABLE 16-5
Average Expenditures for Maintenance, Repairs, and
Construction Improvements per Property for
Owner -Occupied, One -Unit Properties, 1968-1977
(in 1973 Constant Dollars)
Source: James, "Revitalization," P. 134.
a. Only expenditures made on jobs costing $25 or more are
included.
b. Figure assumes that the number of properties in cen-
tral cities, suburbs, and metropolitan areas held at their
1973 levels.
Information is fragmentary on the extent to which revitali-
zation is occurring, but in many cities such efforts are
highly visible, especially in larger cities and in older
cities in the Northeast and South.13 Neighborhoods with
special architectural or environmental characteristics are
most likely to be renovated. In some instances, proximity
to downtown and to white collar employment are important
in determining the attractiveness of particular neighbor-
hoods. An Urban Coalition study of displacement in forty-
four cities found that 85 percent of the neighborhoods
undergoing rehabilitation were located near the downtown
area or near universities. More than half were designated
as historic districts or were applying for that designs-
tion.l4
249
-Ir o.Z
Inside SMSAs
Total outside
Year
U.S. Average
central cities
Central cities
1968
336
368
375
1969
317
372
340
1970
329
388
320
1971
329
366
303
1972
1973a
330
281
409
350b
332
348b
1974a
299
358b
374b
1975a
309
374b
435b
1976a
350
449b
436b
1977a
359
462b
467b
Source: James, "Revitalization," P. 134.
a. Only expenditures made on jobs costing $25 or more are
included.
b. Figure assumes that the number of properties in cen-
tral cities, suburbs, and metropolitan areas held at their
1973 levels.
Information is fragmentary on the extent to which revitali-
zation is occurring, but in many cities such efforts are
highly visible, especially in larger cities and in older
cities in the Northeast and South.13 Neighborhoods with
special architectural or environmental characteristics are
most likely to be renovated. In some instances, proximity
to downtown and to white collar employment are important
in determining the attractiveness of particular neighbor-
hoods. An Urban Coalition study of displacement in forty-
four cities found that 85 percent of the neighborhoods
undergoing rehabilitation were located near the downtown
area or near universities. More than half were designated
as historic districts or were applying for that designs-
tion.l4
249
-Ir o.Z
Revitalization activities seem to be closely tied to the
increase in homeownership in central cities. Existing
homeowners and recent purchasers seem to be playing an
important role in rehabilitation properties and in trigger-
ing the revitalization process. An increasing level of
homeownership can stimulate revitalization activities be-
cause it indicates a growing confidence in the neighbor-
hood, increasing stability and commitment to the area by
residents or buyers, and improved opportunities for pro-
tecting or raising property values. Increased homeowner-
ship may help to reduce the incidence of vacant and aban-
doned properties; homeowners, unlike renters, have a vested
interest in maintaining their properties and improving their
neighborhood.
Several factors seem to be at work in making homeownership
in cities more attractive:
• Housing costs have risen rapidly, particularly for
new housing, and generally central city housing
is a bargain compared with housing in the suburbs.l7
The total number of households seeking housing has
been increasing because of the large number of
people in the 24- to 34 -year-old age bracket (the
bracket where household formation usually occurs)
and the growing number of single persons owning
homes and of small households (caused by divorces,
having fewer children, etc.). Table 16-6 shows
the trends of homeownership by household types
for the period 1970-77• The younger households
typically are first-time home buyers with limited
capital for down payments and relatively low in-
comes (though many such households have two wage
earners and are able to spend more for housing);
central city homeownership may be the only or the
most attractive housing option.
Rising energy costs have made central city living
more attractive for persons who work in the cen-
tral city.
Changes in lifestyle and attitudes have favored
central city living because it provides more varied
living arrangements; better access to cultural op-
portunities; and a variety of architectural, neigh-
borhood, and environmental amenities.
250 7�'2-
I
i
i
TABLE 16-6
Trends in the Relationship Between Ownership
and Household Types
1970 - 1977
Household type
Homeownership
percentage rates
1970 1974 1977
Homeownership
percentage
rate of change,
1970-77
One-person household
Head under age 65
33.5
32.4
31.7
- 5.4
Head over age 65
54.1
56.2
58.7
+ 8.5
Two -or -more -person
ouse o
Husband and wife
Head under
age 30
39.4
46.4
49.0
+24.3
Head age 30-44
73.1
77.7
79.4
+:8.6 j
Head age 45-64
80.8
85.2
86.8
+ 1.3
Single male head
under age 65
49.1
44.6
42.9
-12.6
Single female head
under age 65
42.7
41.9
41.7
- 2.3
Head over age 65
76.5
79.8
81.2
+ 6.1
Source: Sue Marshall
and John
Zeis,
How Selected HUD Pro-
grams Serve Low and Moderate Income
Families
with i ren,
251
�-.2
For some, the urban neighborhood environment is ap-
pealing, and many city residents have come to re-
cognize the attractiveness and advantages of their
particular neighborhood.
Reductions in social tensions, concern about crime,
and disruptive change have helped to reduce nega-
tive perceptions about city living.
Although the signs of central city revitalization are en-
couraging, this trend should be viewed in perspective.
It involves a relatively small number of households, pro-
perties, and neighborhoods. The trend does not appear to
be a "back to the city" movement; rather, it is a renewed
interest in certain specific neighborhoods. Studies have
shown that most buyers of rehabilitated housing are not
immigrants to cities; most were already living in the
central city and either wanted to become homeowners or
wanted to upgrade their housing.16 Nevertheless, under
certain circumstances the opportunities for central city
neighborhood revitalization are more favorable than they
have been for a long time.
GOVERNMENT REVITALIZATION INITIATIVES
Many federal, state, and local government initiatives have
been designed to deal with neighborhood decline and hous-
ing deterioration.17 Some programs attempt to solve par-
ticular problems, such as providing decent housing to
lower-income households; others are more comprehensive and
seek to improve overall conditions. Some have been de-
signed to subsidize or encourage private action; others
try to improve neighborhood and housing conditions through
public actions. They have included:
• Actions directed to improve the flow of investment
capital and financing in central city neighborhoods,
including the Home Mortgage Disclosure Act (1975),
which requires financial institutions to make in-
formation on the location of their loans available
to the public; modification of mortgage insurance
programs (such as FHA) and underwriting practices
to encourage central city lending and rehabilita-
tion; the Community Reinvestment Act (1977), which
is designed to motivate lenders to invest in cen-
tral cities; and the establishment of secondary
mortgage market programs through the Federal Na-
tional Mortgage Association (FNMA), the Government
National Mortgage Association (GNMA), and the Fed-
eral Home Loan Mortgage Corporation that attempt
to expand financing available in central cities;
252
• The provisions of comprehensive community develop-
ment assistance to cities, including HUD'sommu-
ch pro-
nity Development Block Grant program, develop -
vides block grants to cities for community
ment, neighborhood improvement, and housing rehabi-
litation;
• The enactment of housing subsidy programs adminis-
tered by HUD, such as the Section 312 rehabilita-
tion program and the Section 8 existing, new con-
struction, and rehabilitation programs, which aid
in for low -development and moderate nincomeafamilies; of housing
• Local government actions such as code enforcement
programs, local rehabilitation financing programs,
property tax abatement legislation, and the pro-
vision of neighborhood services designed to halt
blighting influences and to encourage property im-
provement; and
• Development of neighborhood-oriented
HUD'sCehomesteading
assistance approaches suchArea (NSA) program, the Neighborhood Strategy
ap-
proach adopted by the Community Developmentood Block
Grant program, and the Section 8 neighborhood
ing strategy area program, which target public funds
and subsidies to particular neighborhoods.)
The success of these efforts has varied by program and lo-
cality. Their success has been dependent on their ability
to look at the neighborhood in a comprehensive manner, to
coordinate private rehabilitation and public improvement,
and to include resident involvement in a meaningful way.
THE HOP STRATEGY
An NHS program deals with neighborhood ner problems
oci
between neigh-
prehensive basis and develops a p
andhthe staff residenofts,thetlocale
NHS nt'It attemptsfinanciali
trecognize
the complexity and diversity of the factors that bring
about decline and deterioration and to ru tbased on gram
to address these problems. Its approach o ram takes
the
recognition that a successful revitalization vprwpoints and
time to implement and that many ram uses several
interests must be considered. An NHS prog
253
programmatic tools. An NHS program that includes the HOP
will develop a revitalization strategy tailored to a par-
ticular neighborhood to
• Encourage current residents to remain in the area;
• Improve the condition of housing;
• Secure private financing for home improvements and
home purchases;
• Improve the neighborhood environment and public
services and stem blighting influences;
• Improve the functioning of the real estate market;
• Attract new residents to the area; and
• Improve the image of the neighborhood and restore
confidence to owners, lenders, city officials, and
others about the future of the neighborhood.
As a part of the overall NHS effort, a homeownership pro-
motion strategy such as the HOP seeks to upgrade neighbor-
hood conditions through increasing the level of homeowner-
ship. Implicit in the strategy are certain assumptions
about the effects of increased homeownership:
• Many renters would like to become homeowners if
given the opportunity.
• Many renters could afford to own and maintain homes
but have not done so because of lack of information,
assistance, or financing that meets their needs.
• Homeownership provides financial and psychological
benefits to former renters.
• Increased homeownership and the reduction of vacant
and absentee -owned structures improve a neighbor-
hood's environment, help to restore confidence in
the future of the area, and revitalize the real
estate sales market.
254
THE SCOPE OF THE HOP STUDY
The HOPS of the Baltimore and Philadelphia NHSs constitute
two approaches to strengthening a neighborhood through in-
creased homeownership. Each city's program reflects dif-
ferences in circumstances, objectives, and neighborhood
factors. To the extent that data are available, four
clusters of questions were explored as a part of this
evaluation of the program. These questions were used to
assess HOP assumptions and to assess its impact on parti-
cipants and the NHS neighborhoods. The research questions
are as follows:
1. Program and Institutional Characteristics.
What are the elements of the HOP program? What services
are offered and how do they function? What problems is
HOP designed to solve? What are the objectives of HOP,
and what strategies have been developed to achieve them?
How has the program been implemented, and what has been
the scale of activity? How is the HOP program tied into
( the overall NHS program?
i
i
2. Home Buyer Characteristics.
What are the demographic characteristics and circumstances
of HOP program participants who have become home buyers?
How do the characteristics of the HOP home buyers compare
with those of other homeowners in the neighborhood? In
the city?
3. Building and Financial Transaction Characteristics.
What kinds of properties have HOP home buyers been purchas-
ing? What have been the cost and the physical condition
of properties they have purchased? What have been the
cost and character of rehabilitation work? What types of
financing, and under what terms and conditions; have been
made available to HOP home buyers?
4. Program Impacts.
What impacts has the HOP program had on property values
and on neighborhood conditions? How do the costs of home-
ownership compare with the rents that program participants
previously paid? How do HOP participants evaluate their
experience with homeownership? What effects has the HOP
had in helping to restore normal market conditions to the
NHS neighborhoods?
255
I
These questions are explored in chapters 17 and 18. First,
the objectives and characteristics of the HOP program model
are described. Second, program activities in Baltimore and
Philadelphia are summarized. Chapter 18 concludes this sec—
tion assessment of the HOP model as a revitalization tool
in connection with NHS.
256
257
Notes
1.
Chapters 16 through 19 are from materials prepared by
Robert Dubinsky of Washington, D.C.
2.
Urban and Regional Policy Group, A New Partnership to
Conserve American Communities (Washington, D.C.: De-
partment of Housing and Urban Development, April 1978),
PP- I-11-13.
i
3•
Ibid., pp. I-12. Preliminary indications from the
1980 census suggest that further population decline
has occurred in older central cities.
4.
See William Gorham and Nathan Glazer, The Urban Pre-
dicament(Washington, D.C.: The Urban Institute,
19M, 62.
p .
5.
See Urban and Regional Policy Group, A New Partner-
ship to Conserve American Communities, pp. I-11.
6.
See Sue Marshall and John Zais, How Selected Programs
Serve Low and Moderate
Income Families Washington,
D.C.: The Urban Institute, 1961), p. 62.
7.
See National Association of Realtors, Existing Home
Sales, 1977 (Washington, D.C. National Associstion
of Realtors, 1978), P. 3.
8.
This objective implies a tremendous social meaning for
homeownership --social stability, residential confi-
'
dence, and so on. It is expected that this social
meaning leads to physical reinvestment even when an
i
economic rationale does not exist.
9•
For discussion of the extent of reinvestment, see
Thomas J. Black, "Private Market Housing Renovation
in Central Cities: An Urban Land Institute Survey,"
in Back to the Cit Issues in Nei hborhood Renova-
tion, eds. S. B. Spain and D. Laska New York: Pergamon
Press, 1980). For discussion of the two types of re-
investment activity, including the processes and dif-
ferences among them, see Phillip L. Clay, Nei hborhood
Renewal. (Lexington, Mass.: D.C. Heath Books, 1979
i
chapters 3 and 4. ,
10.
See Franklin James, "Revitalization," in The Prospec-
tive City, ed. Arthur P. Solomon (Cambridge: MIT
Press, 1980), p. 133.
11.
Black, "Private Market Housing Renovation."
257
12. Ibid., p. 11.
13. See Howard Sumka, "Displacement in Revitalizing Neigh-
borhoods: A Review and Research Strategy," Occasional
Papers in Housing and Community Affairs, vol. 2 Wash-
ington, D.C.: Department of Housing and Urban Develop-
ment, 1978), P. 149.
14. National Urban Coalition, Displacement, City Neighbor-
hoods in Transition (Washington, D.C.: National Urban
Coalition, 1978), F. 60.
15. Since 1970, the number of households that can afford
the typical medium -price new home has decreased to 15
percent from 50 percent as the cost of the typical new
home has increased from about $40,000 to almost $70,000.
High interest rates have also limited affordability.
16. See Dowell Myers, "Back to the City: Measurements in
Three Cities" (Paper prepared for the Annual Conference
of the American Planning Association, October 1980),
pp. 17-19.
17• For a summary of local approaches to neighborhood de-
velopment and variation among practices in larger cities,
see Neighborhood Development Agency, Slicing the Pie:
An Assessment of Neighborhood Resource Allocation Prac-
ornooa uevelopmenc Agency, lyou).
18. Forty-six states have at least nominal state home
finance agencies. Only six of these agencies, however,
have had a substantial level of program activity over
time. Only one, in Massachusetts, has some degree of
targeting to neighborhoods.
258
CHAPTER 17
THE HOME OWNERSHIP PROMOTION PROGRAM MODEL
• A large number of long-term vacant and for -sale
properties;
• A depressed real estate market that does not func-
tion effectively, in which real estate agents have
little incentive to match buyers and sellers;
• High levels of absentee ownership of properties in
substandard condition;
• Lack of confidence in the future of the area by re-
sidents and the community as a whole; and
261/��
The Home Ownership Promotion (HOP) program
ositeone
nes hf
help g
Neighborhood Reinvestments tools to p
It is currently undergoing pilot
borhood revitalization.
replication in several cities to test its effectiveness
under different conditions.
The HOP program is designed to increase the level of
in Neighborhood Housing Services (NHS)
homeownership a
neighborhood by expanding the ownership opportunities for
j
current tenants and for a limited number of newcomers to
the area. The HOP program provides a package of informa-
services to poten-
(
tional, financial, and rehabilitation
tial home buyers and supplements, and supports the basic
NHS objectives of neighborhood upgrading, expansion of
availability of financing, and restoration of confidence
on helping
e
in an area. While the NHS program focuses
the condition of their homes
owner -occupants to improve
and neighborhood, the HOP program seeks to expand the
number of homeowners in a neighborhood and to create a
NHS activi-
viable housing market. It complements other
available to NHS to deal
ties and broadens the resources
with problems of neighborhood decline and disinvestment.
By expanding the level of homeownership, the HOP seeks to
detri-
spark revitalization of the area by eliminating
mental factors such as
• A large number of long-term vacant and for -sale
properties;
• A depressed real estate market that does not func-
tion effectively, in which real estate agents have
little incentive to match buyers and sellers;
• High levels of absentee ownership of properties in
substandard condition;
• Lack of confidence in the future of the area by re-
sidents and the community as a whole; and
261/��
• Tenant and absentee -owner disinterest in property
maintenance.
The objectives of the HOP program are to eliminate these
blighting influences, thereby restoring confidence and
pride and increasing the demand for housing and homeown-
ership, by
• Helping long-term renters become homeowners and
thereby convert absentee -owned properties to owner -
occupied properties;
• Marketing vacant properties in "as is" condition to
new buyers who will rehabilitate them;
• Cooperating with real estate agents to promote the
sale of properties;
• Facilitating the sale of properties by providing
home purchase counseling, financing, and rehabili-
tation assistance to buyers; and
• Promoting the advantages and benefits of living
in the neighborhood to increase the level of de-
mand for housing.
The HOP was created and first tested in Baltimore. The
concept evolved from realizing that an impediment to re-
vitalization of the Patterson Park neighborhood was the
large number of absentee -owned, and in many cases vacant,
properties that were not maintained to community standards.
Neighborhood Reinvestment provided a Neighborhood Preser-
vation Project (NPP) grant to the Baltimore NHS in 1976-77
to help NHS test the feasibility of the concept.
Based on the success of the Baltimore program, the HOP
program has been offered to other NHS cities. By 1980,
HOP programs were operational in Philadelphia; Bridgeport,
Conn.; and Pittsburgh, Pa.; and were in development in
Charleston, S.C.; Denver, Colo.; Reading, Pa.; and Roches-
ter, N.Y.
PREREQUISITES OF HOP
From the outset, it was recognized that not all neighbor-
hoods are suitable sites for HOP. Many neighborhoods do
not have the physical and social environments to develop
a program to expand the level of homeownership; either
incomes are much too low or rehabilitation needs are exces-
sive. Generally speaking, the following conditions must
exist: (1) conversion of tenants to home owners is feasible;
262
1162,
(2) revitalization of the area appears to be manageable;
(3) adequate financial tools are available to facilitate
homeownership; (4) the housing stock is predominantly one -
to two-family structures and its condition makes rehabili-
tation practical; and (5) .NHS has enough staff resources
and expertise to provide marketing and rehabilitation as-
sistance to home buyers and to work with landlords and
real estate agents. The housing market conditions that
are conducive to implementation of an HOP include the
following:
•
Prices for houses in relatively good condition, or
after improvement, are low enough so that the net
cost of homeownership is generally comparable to
the cost of renting;?
•
A large number of properties are owned by absentee
landlords who are earning stagnant or declining
returns on their investments and are therefore in-
terested in selling their properties;
•
The real estate market is soft and there are many
"
vacant and for -sale properties;
•
The cost of house purchase and needed rehabilita-
tion is supportable by market value appraisals and
is affordable by potential buyers; and
L
•
A large number of tenants with good payment records
are interested in becoming homeowners.
CHARACTERISTICS OF THE HOP
The HOP operates in the context of a special set of cir-
cumstances and conditions. NHS neighborhoods are more
deteriorated and have lower levels of owner occupancy than
other neighborhoods do, and HOP buyers are not typical
home buyers. As table 17-1 shows, the average HOP buyer
in the East Frankford NHS area of Philadelphia is very
different from the average Philadelphia or Baltimore home
buyer in 1979. The East Frankford HOP buyer has a much
lower income than do buyers in Philadelphia and other
cities. While more than half the HOP buyers earn less
than $15,000, less than 8 percent of all Philadelphia
buyers and less than 6 percent of all Northeastern home
buyers earn less than $15,000. These data show that HOP
home buyers have low incomes, have limited funds for hous-
ing expenses, and could not afford to buy either new or
existing housing in most communities. All of the HOP buy-
ers have monthly housing costs of less than $300, while
263 44G
TABLE 17-1
Characteristics of Philadelphia NHS, Baltimore,
Philadelphia, and All Northeastern
Home Buyers, 1979
Total monthly housin
expenses
All
300 or less
Philadelphia
8.1
11.2
North -
$300+
NHS (East
Phila-
88.8
eastern
Down payment (%)
Frankford)
delphia
Baltimore
Home
Characteristic
HOP Buyer
SMSA
SMSA
Buyers
20% or more
S
63.5
51.6
62.0
Borrower median age
n.a.
32
31
32
Household size (%)
1 or 2
36
51.7
58.9
54.7
3 or more
64
48.3
41.1
45.3
Marital status (%)
Single
39
25.9
29.1
24.5
Married
61
74.1
70.9
75.5
Purchase price (%)
Less than $30,000
100
13.8
14.4
11.6
More than $30,000
-
86.2
85.6
88.4
Median ($)
9,250
46,400
51,000
53,900
Annual income (%)
Less than '15,000
54
7.6
4.3
5.8
$15,000-24,999
46
44.0
43.8
35.5
$25,000+
0
48.4
51.9
58.7
Median $
n.a.
24,750
26,000
27,597
Total monthly housin
expenses
300 or less
100
8.1
11.2
6.1
$300+
0
91.9
88.8
93.9
Down payment (%)
10% or less
95
17.0
28.4
16.6
20% or more
S
63.5
51.6
62.0
Source: NHS and HOP records; U.S. League of Savings Associations,
Homeownership: Coping with Inflation (Chicago: U.S. League, 1980).
n.a.' not available.
rr�
264
0
90 percent of the buyers in Philadelphia, Baltimore, and
the Northeast in general have housing expenses in excess
of $300. All HOP buyers bought homes for less than
$30,000, whereas only 14 percent of all Philadelphia buy-
ers and 12 percent of all Northeastern buyers did so. The
median purchase price paid by HOP buyers was $9,250; for
all Philadelphia buyers it was $46,400. Because of their
low incomes, HOP buyers can buy houses only in areas where
prices are low, such as East Frankford, and to do so they
require low down payment financing.
Based on the experiences of NHS programs that have imple-
mented the HOP, successful HOPs have the following features:
• A vigorous NHS partnership interested in adding the
HOP component;
• Active participation by residents who are concerned
about neighborhood housing conditions;
• The presence of tenants capable of and interested
in becoming homeowners;
• Financial institutions actively participating in
the NHS area who are willing to make low -equity
loans, and availability of state or city loans
that provide 100 percent financing of the
costs of home purchase, below-market interest rate
financing, or an adequate NHS loan fund to provide
temporary, permanent, or secondary financing; and
• NHS staff members with expertise and technical capa-
bility to provide HOP services (financial analysis,
rehabilitation assistance, and negotiation of pur-
chase prices with landlords) and who have devel-
oped good communication channels with landlords
and real estate agents.
The HOP model is not perceived by Neighborhood Reinvestment
as a rigid approach to dealing with neighborhood deteriora-
tion. The needs and problems of neighborhoods vary, as do
local real estate and market circumstances and conditions,
and the HOP must be flexible enough to respond to the
unique features of different neighborhoods. Consequently,
each NHS has wide latitude in the type and extent of ser-
vices provided.
265 //6 z'
Although HOPs vary in their emphasis and the services they
provide, all programs have three elements:
Homeownership Development. This involves identi-
fying renters and other potential home buyers and
providing home purchase counseling, housing infor-
mation, access to financing, and assistance in re-
habilitating properties. Creative financing that
requires minimal down payments and provides funds
for rehabilitation of the properties being pur-
chased is essential.2 Homeownership may be pro-
moted through a systematic block -by -block strategy
or in response to requests for assistance.
Marketing and Promotion Development. This involves
a campaign to publicize the advantages of the area
to attract outside purchasers. Buyers from outside
the MHS neighborhood increase the demand for housing
and are likely to make major improvements to the
homes they purchase.
Referral System Development. Because the real es-
tate market often is not functional, a referral
system must 'be developed. This entails collect-
ing information on properties available for pur-
chase, soliciting absentee -owners to make their
properties available to buyers, and working with
real estate agents in the area to complete sales.
THE ROLE OF NEIGHBORHOOD REINVESTMENT
Based on the success of the HOP model in Baltimore, Neigh-
borhood Reinvestment has informed other NHS programs about
the HOP approach. When an HOP appears to be feasible in
an NHS neighborhood, Neighborhood Reinvestment provides
developmental assistance and partial funding for the first
year of operation. Neighborhood Reinvestment conducts an
analysis of the feasibility of the HOP in a particular
neighborhood to determine that the requisite conditions
exist. It then helps to secure the support of local in-
stitutions and individuals, design and implement the ser-
vices to be provided, and train the program staff.
THE BALTIMORE HOP
Background
The Baltimore NHS program was established in 1974 by repre-
sentatives of the savings and loan industry, the city
government, and two neighborhood associations --Community
266 11Gz
Taking Action (CTA) and the Baltimore -Linwood Association.
The program was targeted on the neighborhood immediately
north of Patterson Park. Over time, the original NHS
target area has expanded and a second separate NHS neigh-
borhood, Govans/Pen Lucy, has been designated. The Balti-
more NHS program has a central office that develops policy,
raises funds, and performs bookkeeping duties; two neigh-
borhood NHS offices; and a home maintenance demonstration
site office.
Initial Baltimore NHS goals included (1) informing resi-
dents about the availability of homeownership counseling
through NHS; (2) making financing for home purchase uni-
versally available; (3) developing "model blocks" and
other homeownership promotion efforts; and (4) ridding
the area of vacant abandoned properties through homestead-
ing and the city's vacant house rehabilitation program.3
Homeownership efforts were focused on converting the large
number of absentee -owned properties to owner -occupancy.
To assist in this process, NHS developed Project Match to
match up landlords who wanted to sell properties with po-
tential buyers, including renters in the area.
The initial NHS neighborhood included the Baltimore -Lin-
wood area, which had a high level of homeownership and
a generally well-maintained housing stock; the People
Helping People area (later renamed Butchers Hill), which
was predominantly absentee -owned with large numbers of
vacant properties; and the Community Taking Action (CTA)
area (selected as the HOP target area and later renamed
Patterson Place). Figure 17-1 shows the original NHS
neighborhood and its subareas. Later, the McElderry Park
and Hopkins East areas were incorporated into the NHS
neighborhood, and in 1979 the NHS area was expanded to
the Hopkins East area immediately west of Butchers Hill.
NNS marshalled resources from the city, the state, and
the private sector, including:
• A commitment by the city to improve basic services
and construct public improvements to upgrade the
physical appearance of the neighborhood;
The establishment of a sensitive code enforcement
program, to be enforced by the neighborhood as-
sociations, to identify physical deficiencies re-
quiring correction;
The development of a package of flexible and gen-
erous financing from city programs, a state
267 �6-Z
E. Fayet
C
E. Monument Street
Key:
O1 Butchers Hill N
O2 Patterson Place
O3 McElderry Park
® Baltimore -Linwood
Figure 17-1. Map of East Baltimore and NHS Target
Area Neighborhoods.
268
mortgage insurance program, private lenders,4
and an NHS high-risk loan fund capitalized
by $100,000 from the Ford Foundation and
matched by $100,000 from a long-term city
loan.5
The Patterson Park Neighborhood
1 The NHS neighborhood is adjacent to Patterson Park and
is convenient to the downtown area. No major institutions
are located in the area, although Johns Hopkins Hospital
is four blocks away. Houses in the area are about 75 to
100 years old and are mostly two- and three-story brick
row houses. See table 17-2 for statistics comparing the
1 Patterson Park neighborhood with Baltimore as a whole.
Census tract data compiled by NHS staff show that the
( eastern part of the NHS area had sound housing, two-thirds
( of which was owner -occupied and whose residents had a
median income of $9,000. By contrast, the western sec-
tion had a median annual income of $5,800 and a deterior-
ated housing stock, only one-quarter of which was owner -
occupied. In the western section, one-third of the resi-
dents had incomes below the poverty line, and 53 percent
p of the residents were black. Some new residents were
i moving into the area from an adjacent urban renewal, project.
As suggested earlier, the NHS neighborhood is diverse in
terms of housing stock and resident characteristics. Table
17-3 provides 1970 data on three census tracts that compose
most of the NHS neighborhood. Census tract 603 (the Butch-
ers Hill area) has nearly all the black population in the
�. NHS area and a much lower income level. The extent of
homeownership is much lower than in the other tracts, and
property values are also much lower. The variety of air-
cumstances that NHS has had to deal with is illustrated by
the income levels; see table 17-3 for details.
The Patterson Park Housing Market
The housing market in Patterson Park in the mid-1970s had
the typical characteristics of a depressed market and de-
clining area, although the Baltimore -Linwood area (census
tract 601) was significantly healthier than other parts
of the neighborhood and transaction data show that prop-
erty values were increasing at a relatively rapid pace
before the NHS program was established. Characteristics
of decline that were evident included low property values,
difficulty in obtaining mortgage financing, a low level of
�49 -2-
269
TABLE 17-2
Selected Census Statistics Comparing Trends Between 1960-70
for Baltimore and the Patterson Park NHS Neighborhood
Source: Baltimore MI5, "Baltimore Status Report," undated.
# -
270
i
i
Patterson Park
City of
NHS
Characteristic
Baltimore
Neighborhood
Population
1970
905,759
11,948
1960
939,024
13,447
Percentage change
-3.5
-11.1
Percentage of black residents
1970
46.4
10.8
1960
34.7
3.5
Percentage of one-person households
1970
25.1
22.9
1960
17.9
15.0
Percentage of labor force unemployed
1970
4.6
6.0
1960
6.4
6.1
Median family income (3)
1970
8.815
8,083
1960
5,659
5,283
Percentage change
55.8
53.0
Percentage of owner -occupied units
1970
42.1
53.6
1960
51.6
64.1
Percentage of vacant units
1970
5.3
5.7
1960
5.0
3.9
Percentage of units more than 30
years old
60.0
97.3
1970
Median Gross Rent (3)
1970
108.00
99.00
1960
76.00
73.00
Percentage change
42.1
3S.6
Percentage of total structures
1 unit
61.3
76.4
2-4 units
20.9
22.0
5t units
17.7
1.5
Percents a of renter households
earning less than 310,UUO an
paying more than 25 ot income
or housing
56.6
55.2
Source: Baltimore MI5, "Baltimore Status Report," undated.
# -
270
i
i
TABLE 17-3
Demographic Characteristics, Patterson Park NHS Area, 1970
Source: Thomas J. Guidera, Jr., "Appraising and Underwriting Factors,
NHS Area," undated; NHS, "Homeownership Development and Marketing an
Adjunct to the Neighborhood Housing Services Concept, an NPP Proposal
by NHS of Baltimore," December 1975,
a. Figures in parentheses are percentages of total,
271
Census
Tract
Characteristic
Total
601
602
603
Total population
11,948
3,483
4,855
3,610
White population
10,442
2,559
4,714
2,269
Black population
1,302
(11)a
--
(0)
92
(2)
1,210
(34)
Population 60 years
or older
1,998
Percentage of high
school graduates
--
19.6
19.2
11.9
Median income, 1974
($)
--
10,743
9,649
6,637
Number of persons on
social security or
welfare
971
259
442
270
Percentage below the
poverty level
--
7.4
12.2
33.3
Occupancy
Owner -occupied units
2,137
(53)
822
(66)
1,025
(63)
290
(25)
Tenant -occupied units
1,644
(41)
367
(30)
540
(33)
737
(65)
Vacant
228
(6)
52
(4)
59
(4)
117
(10)
Total
4,009
1,241
1,624
1,144
Median value ($)
--
7,200
6,300
5,000
Source: Thomas J. Guidera, Jr., "Appraising and Underwriting Factors,
NHS Area," undated; NHS, "Homeownership Development and Marketing an
Adjunct to the Neighborhood Housing Services Concept, an NPP Proposal
by NHS of Baltimore," December 1975,
a. Figures in parentheses are percentages of total,
271
involvement by real estate agents, large numbers of va-
cant properties, and increasing absentee ownership and
speculation by investors. Owner -occupants were becoming
increasingly concerned about the apparent spread of blight
and the influx of low-income households who could not af-
ford to own their own homes.
The effects of these trends are evident in the sales and
lending data for the period 1970-74 for census tracts 601,
602, and 603, as shown in table 17-4. The number of
transactions varied little from year to year, and the
rate of turnover was less than 0.5 percen.
ing stock per year.7 t of the hous-
In terms of the 1980 housing market, the
varies widely and is affected cost of houses
to a large extent by their
condition. According to NHS staff, a two-story, three-
bedroom house in good condition requiring little or no
work may sell from $15,000 to $20,000. A house requiring
gut rehabilitation can be bought for very little but will
require $30,000 to $35,000 to rehabilitate. For tenant
conversions, a house in habitable condition typically sells
for $10,000 to $15,000 and typically will require an addi-
tional $8,000 to $10,000 to rehabilitate. Large houses
may need $35,000 to $50,000 for rehabilitation.
The Character of the HOP
The design of the demonstration program was based on an
assessment of local market conditions and premises about
what might be successful. These premises have continued
to define the characteristics of the HOP over the past five
years. The major features of the HOP include the following:
• Implementation of the program according to an over-
all plan and strategy, the objective of which is
to improve the area physically. The plan was to
be implemented aggressively taking advantage of
the public and private resources available to NHS
and dealing with the physical problems of the neigh-
borhood on a house -by -house and block -by -block
basis. Minimum standards for the condition of prop-
erties were established. Blocks with high and low
potential for success were identified and, based on
those determinations, blocks or properties were se-
lected for priority treatment.
• Recognition pf the special problems presented by va-
cant houses.0
272 lf�a oZ
TABLE 17-4
Patterson Park NHS Area Transaction and Mortgage
Lending Activity, 1970-74
Census Tract
1970
1971
1972
1973
1974
601
Number of transactions
48
45
55
68
48
Average sales price ($)
5,830
6,134
7,000
7,885
9,051
Median sales price ($)
5,850
6,500
7,000
7,950
9,000
Percentage financed through
financial institution
64.6
51.1
63.6
58.8
43.8
602
Number of transactions
50
73
73
83
71
Average sales price ($)
5,146
4,601
5,102
6,148
6,107
Median sales price ($)
4,550
4,750
6,450
6,300
5,000
Percentage financed through
financial institution
so
45.2
54.8
50.6
45.1
603
Number of transactions
41
42
36
37
42
Average sales price ($)
2,133
2,865
2,321
3,324
3,964
Median sales price ($)
1,900
2,000
2,180
2,500
2,850
Percentage financed through
financial institution
22
21.4
19.4
18.9
26.2
Total
139
160
164
188
161
Average sales price ($)
4,493
4,576
5,128
6,220
6,426
Total number of mortgages
financed through finan-
cial institution
65
65
82
89
64
Percentage financed through
financial institution
47
41
50
47
40
Source: Baltimore NHS, "Baltimore Status Report," undated.
273
A revitalization strategy based on the conclusion
that a healthy real estate market and an improved
environment could not occur without attracting new
buyers to the area.9 For a number of reasons, a
special effort was made to attract middle income
buyers to the neighborhood. They were encouraged
to buy severely deteriorated properties that re-
quired a larger investment to rehabilitate than
the current residents could afford. Purchases of
some structures by middle income buyers would pro-
vide a positive sign to residents that outsiders
believed that investing in the neighborhood was
worthwhile. Young middle income singles who were
less concerned about the environment were encour-
aged to buy in the most blighted blocks.
Development of effective working relations with ab-
sentee landlords.10 NHS encouraged landlord co-
operation by being in a position to enforce the
housing code and by making the sales process as
simple and trouble-free as possible.
• Creation and promotion of an "identification" for
different parts of the NHS neighborhood.11
• Treatment of each house and each potential buyer
on an individual, flexible basis. For example,
to the extent possible, buyers were matched with
houses in terms of household size, ability to
afford the home, and ability to rehabilitate the
home. Difficult (or expensive to rehabilitate)
properties were offered to buyers who could best
afford to rehabilitate them.12
Encouragement of the active involvement of resi-
dents to create credibility and support for NHS
in the neighborhood.
• Recognition that a variety of technical skills were
required to operate a large-scale HOP program.
The availability of various financing and homeownership
program tools beyond the commitment of private lenders to
buy bankable loans is an important NHS resource. These
tools enable NHS to provide financing to buyers with low
incomes or no equity capital for the purchase of build-
ings in almost any condition. They include the following:
The city's Rehabilitation Environmental Assistance
Loan Program (REAL), which provides rehabilitation
loans for code repairs and.improvements.13
274 4402-
s The City Housing Assistance Program (CHAP), which
also provides rehabilitation loans for code repairs
and improvements.14
• The Maryland Housing Fund of the State of Maryland,
which provides 100 percent mortgage insurance and,
if necessary, greater than 100 percent mortgage in-
surance (known as 100 percent -plus) to private lend-
ers.15
• The Rehabilitation Easement Program (REP), which
provides grants for critigally needed repairs to
owner -occupied dwellings.lb
• The Urban Homesteading program, which provides
houses for one dollar and special 7 percent fi-
nancing to buyers who would rehabilitate them with-
in two years.
• The city -sponsored Section 26(h) program, which ac-
quires and rehabilitates properties that require
public subsidy and underwrites their improvement
cost. The writedown under this program has been
as high as 50 percent.
j • The NHS revolving loan fund, which can be used for
permanent or temporary financing to guarantee the
top part of a conventional loan (hypothecation),
or for secondary financing.17
These tools were made even more effective when the city
agreed in January 1977 to contract with NHS to do all of
the processing and inspecting of city rehabilitation loans
in the NHS neighborhood.
During the second year of the demonstration, concern de-
veloped about potential displacement problems, particu-
larly the displacement of renters who could not afford
homeownership. Consequently, NHS services were broadened
to include Section 8 referral assistance, and NHS decided
to participate in Neighborhood Reinvestment's Section 8
set-aside program. An additional second -year objective
was to develop a program to involve the real estate in-
dustry in the NHS program.l
How the HOP Works in Patterson Park
Potential buyers are provided with interrelated services
to guide them through the purchase process and to help
them purchase a home. NHS maintains information on prop-
erties for sale, including units listed by real estate
275 416
agents and those offered by owners. These listings are
widely distributed. Potential home buyers are encouraged
to use NHS services through contacts made by block cap-
tains, door-to-door solicitation by NHS staff, referrals
from past buyers, mailings, and other promotional efforts.
Initially, a homeownership adviser meets with the house-
hold and determines its interest and eligibility for home-
ownership. If the household's income and credit are ade-
quate, the tenant adviser ascertains the housing needs
and requirements of the household and tries to match the
household with a home, or if the household has a house in
mind, helps arrange the purchase and appropriate financing.
When properties come on the market, the homeownership
adviser inspects them to get an idea of their condition so
that potential buyers can be identified. In the case of
vacant properties, the NHS rehabilitation estimator will
typically prepare an estimate to provide potential purchas-
ers with an idea of the extent of rehabilitation required.
The adviser tries to help the household work out financial
arrangements so that the sales price and the rehabilitition
costs are affordable and to provide the type of financing
best suited to the buyer. The adviser also monitors all
aspects of a transaction and helps the buyers, including
working out the financial Arrangements. When a sale is
made, the NHS rehabilitation estimator prepares a list of
code items that must be corrected as well as other needed
improvements. Based on the financial resources of the
buyer, the HOP staff and the household work out a list of
improvements. The NHS estimator then prepares a specifica-
tion of the work to be done and solicits bids from four or
five contractors. During the construction period, the es-
timator acts as the go-between between the contractor and
the buyer and inspects and approves the work.19
Data on the accomplishments of HOP between 1976-77 are shown
in table 17-5• One hundred and forty-two transactions
occurred in the NHS neighborhood, of which 85 percent oc-
curred as a result of assistance provided under the demon-
stration. Eighty-six percent involved conversion of inves-
tor-owned properties to owner -occupied properties. During
this period, HOP activities also included neighborhood
tours, operation of a City Fair booth, development of
promotional materials, open houses, and distribution of
property sales lists.
#10002-
276
N
TABLE 17-5
Selected Data on the Baltimore HOP, August 1, 1976, to August 1, 1977
Property Information
Buyer Information
Financin Information
Number
Percent
Number
Percent
Number Percent
Previous owner
Prior residence
100
70
Source
Sa nva gs & Loans
34
21
Investor
122
82
Inside NHS area
42
30
Bank
15
Homeowner
22
18
Outside area
fund
63 44
Total transactions
142
Cash
10 7
Marital status
Status at purchase
40
Single
Married
39
103
27
73
Source and loan amount ($)
Vacant
57
442,850
Occupied
85
60
Bank
254,710
35
Children
With
83
58
NHS loan fund
436 750
,
Tenant purchases
49
Without
59
42
Total
1,134,310
Price range ($)_
Source and loan amount ($) of
0-3,999
37
26
Race
1g
13
financing for rehabilitation
4,000-7,999
67
47
Black
114
80
REAL
178,650
8,000+
38
27
White
American Indian
5
4
CHAP
23,940
17,280
Amount of repairs ($)
Asian
4
3
Easement
NHS
133,403
0-999
28
20
($)
Total
353,273
1,000-4,999
52
37
Income
42
33
5,000+
62
44
0-6,999
7,000-12,999
52
41
Average loan amount ($) of
Average price ($)
6,572
32
25
219'999
financing for purchase
8 648
,
20 000+
'
Average loan amount ($) of
financing for rehabilitation
NHS
2,667
REAL
11,539
CHAP
6,548
I
I
Source: Baltimore
NHS, "homeownership
Development Final
Report,"
August
1977.
Program Impact
Between 1975 and 1980, as a result of NHS effort, the level
of homeownership was significantly raised in the Patterson
Park area; see table 17-6 for details.
No comprehensive data base on NHS clients exists in usable
form, but information is available on clients who were
helped under the NPP demonstration grant. Table 17-5 pro-
vides summary data on those clients. The data show that
NHS was involved in 142 transactions, most of which in-
volved low-income families buying inexpensive homes from
absentee owners.20
The NHS staff conducted a survey in June 1980 to ascer-
tain the types of services and assistance in which owner -
occupants might be interested.21 Personal interviews
were conducted with fifty owners randomly selected from
294 homeowners in the original Patterson Park target areas
who received home purchase assistance between 1975 and
1979. Although the survey was not intended to evaluate
the HOP activities of NHS, the data provide some useful
insights. Table 17-7 summarizes data on the characteris-
tics of the home buyers. Sixty-two percent of the re-
spondents earned less than $13,000 and lived in the NHS
neighborhood before they bought their home through NHS.
Only 4 percent were owners previously, and 38 percent of
the buyers purchased the unit they had been renting. A
majority of the buyers (54 percent) were single, and most
of the households were small. The incomes of the buyers
were relatively low. Nearly 22 percent of all buyers
earned less than $7,000, and 62 percent earned less than
$13,000.
NHS was the predominant source of financing for both pur-
chase and rehabilitation. Private lenders and the Balti-
more Home Finance Program were each the source of about a
quarter of the purchase loans. A majority of the purchase
loans were for less than $10,000; most rehabilitation loans
were under $6,000. Half the buyers had higher housing costs
as a result of becoming homeowners, but one-third had de-
creased housing expenses. Table 17-8 provides selected in-
formation on the financing and housing expenses of the re-
spondents.
Table 17-9 presents results of questioning survey partici-
pants about their attitudes toward the neighborhood, NHS,
homeownership, and the factors important in their buying
decisions. Of all the factors that were very important
278
i
TABLE 17-6
Patterson Park Program Activity, 1975-80a
279 �4.2—
1979 and
Jan -Mar
Activity
1975-76
1977
1978
1980
Total
'
Vacant house treatment
City vacant house
8
11b
58
rehabilitation
16
23
S
Urban homesteader
0
0
25
`r.
rehabilitation
17
8
i
City demolition of unsafe
0
18
i
vacant houses
9
6
3
k
NHS marketed private pur-
39
44
SOC
133
chase and rehabilitation
--
r
I
Total
42
76
55
61
234
{r.
f
Homeownership promotion
Total NHS -assisted new
88
95
428
homeowners
113
122
r
t
Total previous neighbor-
hood renters assisted
70
90
31
n.a.
n.a.
in buying
;t
(
Investor-owned properties
purchased for owner -
92
83
64
n.a.
n.a.
occupancy
--
92
92
t
l
Section 8 placements
--
--
i
Source: NHS Annual Reports.
i
--
f
n.a. not available.
a. Some annual report data
have been
adjusted because of
inconsistencies.
b. Includes demolitions of
unsafe vacant houses.
c. Includes urban homesteader rehabilitation.
279 �4.2—
TABLE 17-7
Selected Characteristics of a Sample of HOP Home Buyers, 1975-79
(n = 50)
Characteristic Number Percent
Location of current residence
Baltimore -Linwood
Patterson Place
McElderry Park
Butchers Hilla
Other
Previous residence
Inside Patterson Park
Outside Patterson Park
Previous status
Renter in same unit
Renter in different unit
Previous owner
Other
Marital status
Single
Married
Household size
Small (1-4)
Large (5 or more)
Not available
Income of purchaser at time of purchase ($)
Below 7,000
7,000-12,999
13,000-19,999
20,000+
Don't know or won't say
16
32
14
28
is
30 ;
3
6
2
4 !
34
64
16
32
19
26
2
3
27
23
38
11
1
11
20
11
4
4
38
52
4
6
54
46
76
22
2
22
40
22
8
8
Source: Cindy Gail Konitz, "MHS Homeownership Promotion Study,"
Baltimore NHS, August 1980.
a. After January 1977, middle-income buyers who received NNS assistance
were considered clients of Southwest Development, Inc., and were not
categorized as NHS clients and were not part of the sample.
Y�?_
280
TABLE 17-8
Selected Financial Characteristics of a Sample of HOP
Home Buyers, 1975-79
(n = 50)
Characteristic Number Percent
Source of purchase loan
NHS loan fund 21 42
Baltimore home finance program 14 28
Private lenders 13 26
Private transaction and homestead purchase 2 4
Purchase loan amount ($)
0-9,999
10,000-14,999
28
S6
15,000-19,999
13
26
20,000+
5
10
Private transaction and homestead purchase
2
2
4
4
Source of rehabilitation loana
NHS loan fund
REAL
30
75
312
3
81
Maryland Mortgage Company
2
2
Baltimore home finance program
3
5
Private transaction
8
1
2
Rehabilitation loan amount ($)
0-5,999 23 62
6,000-10,999 11 30
11,000-15,999 0 0
16,000-20,999 2 5
21,000+ 1 3
Changes in housing expenses as a result
of home purchase
Increase 25 50
Decrease 17 34
Same 4 8
Special circumstances 4 8
Source: Cindy Gail Konitz, "NITS Homeownership Promotion Study."
a. Thirty-seven home buyers secured rehabilitation loans; three se-
cured two loans.
��
281
TABLE 17-9
Selected Data on Attitudes of a Sample of
HOP Clients, 1975-79
(n = 50)
Question
Number
Percent
you feel rour particular neighborhood
20a
gOOd, aYeragl, Or p00r place t0 live?
Gpod
24
48
Average
22
44
Poor
4
8
What factors were very important in your
decision to buy a homeF'
Special financing
34
68
NHS encouragement
14
28
Wanted bigger house
13
26
Landlord wanted to sell
18
36
Never wanted to rent
16
32
What factors !ter ver, i ortant in our
ec151pn to buy this particular ome7
Price
34
68
Size
19
38
Neighborhood
21
42
Already renting this home
19
38
Special financing available
40
80
Now do you feel about your home?
Very pleas e3
32
64
Moderately pleased
is
30
Displeased
3
6
Do You think property values have
gone up sine! You ought?
Yes
35
70
No
7
14
Don't know
8
16
How do you feel about NNS services?
Very pleased
37
74
Moderately pleased
12
24
Displeased
1
2
Do you think rou could have bought
a house without NHS?
Yes
11
22
No
37
74
Don't know
2
4
Source: Cindy Gail Konitz, "Nils Homeownership Promotion Study.'-
a.
tudy."a. For these questions, only the most frequent responses are
provided.
//&.z-
282
! &pZ
282
r
in their decision to buy, special financing was mentioned
most frequently. Nearly two-thirds of the buyers were
very pleased with their home and nearly three-fourths of
the buyers believe that they could not have bought a
house without NHS.
Because the HOP is integrated into the overall NHS pro-
gram, it is not possible to separate the impact of the
HOP from the impact of NHS; however, it is evident that
the achievements in Patterson Park in terms of neighbor-
hood improvement and expansion of homeownership are im-
pressive. The scale of the program is large, and the ex-
tent of investment that has occurred has been substantial.
A large number of vacant properties have been occupied
and hundreds of properties have been converted from absen-
tee -ownership to owner -occupancy. As had been hoped, mid-
dle-income buyers have moved to the area and rehabilita-
ted properties. The area has developed an identity, and
residents appear to have a positive view about neighbor-
hood trends. In five years, the NHS program, including
the HOP, has
• Participated in the improvement of more than 200
vacant houses;
i
( • Brought 2,000 homes into code compliance;
I • Helped 428 households to become homeowners;
• Been involved in 977 home improvement and mortgage
i loans with a value of $10.9 million, of which $6.7
million came from conventional loans, $1.4 million
{ from the NHS high-risk loan fund, and the remaining
$2.8 million from public programs;22
• Developed spinoff programs (the Section 8 Rental
Service and the Iiome Maintenance programs) to deal
with related
problems of tenants who cannot afford
to become homeowners and of elderly persons who
have difficulty maintaining their homes.
Table 17-10 provides data on all transactions in the. NHS
neighborhood over the period 1970-79 and shows that the
level of sales activity has risen substantially, as has
the average sales price of properties sold.23 Although
it appears that NHS has had a strong and positive impact
on neighborhood housing values, between 1970 and 1975 the
increase in sales prices was 76 percent, or more than the
percentage increase between 1975 and 1979 after NHS began
operating. The factors that influenced the increase in
sales prices in the period prior to the NNS are not known,
but inner-city property values were certainly adversely
283 z
TABLE 17-10
Number of Transactions and Average Sales Prices by Patterson Park
NHS Neighborhoods, 1970-79
Source: gonitz, N0lvhborhood (lousing Services Before and After Study, 1975-1980, Baltimore MI5, June 1980.
Na. Fifteen investor purchases; average price, $2,336.
b. Twenty-seven Community Holding Co. purchases; average price, $6,066. Seventeen investor purchases; average price, $3,806.
C. Twenty Johns Hopkins University purchases; average price, $15,055.
d. For every neighborhood except Baltimore -Linwood, average prices are based on 1979 Lusk Reports through Juno 1979. Baltimore -Linwood
figures are based on assessment data.
e. Percentage change of average 1975 -June 1979 compared to 1975 average. Between 1970 and 1975, percentage change was 76 percent. Between
1970 and 1979, it was 121 percent.
Jan -June
Period
Neighborhood
1970
1974
1975
1976
1977
1978
1979
1975 -June 1979
Baltimore -Linwood
Total ( )
539,804
1,139,014
1,094,239
1,591,150
1,609,970
2,435,296
657,929
7,388,584
Transactions (number)
91
130
118
152
120
163
45
598
Average price ($)
5,931
9,761
9,345
10,514
13,416
14,989
19,771
12,355d
i change increase (decrease)
64
(4)
12
28
12
32
32e
Butchers Hill
Total ()
63,957
90,600
116,950
250220
583,750
688,647
247,374
1,661,941
Transactions (number)
Average price ($)
32
1,999
18
5,033
30
318980
36
7,005
91
6,414b
73
9,433
21
11,779
251
6,621
t change increase (decrease)
--
52
(77)
79
8
47
25
700
N Patterson Place
Co Total )
50,700
155,410
191,950
4570098
4970598
381,855
235,378
1,763,879
A Transactions (number)
Average price ($)
18
2,817
34
4,570
41
4,682
73
6,262
73
6,816
36
10,607
13
18,106
236
7,714
E change increase (decrease)
--
60
2
33
8
55
70
600
Ib kine East
Total ($)
78,011
152,750
1450233
245,775
1970666
658,705
107,648
1,355,027
Transactions (number)
Average ($)
35
2,229
40
3,791
32
4,S38
47
5,230
40
4,298
91
7,2300
22
4,893
232
59841
price
1 change increase (decrease)
--
79
19
15
(18)
68
(32)
29
McElderry Park
Total
217,105
392,810
458,050
627,380
651,539
998,766
469,800
3,205,535
Transactions (number)
Average price ($)
50
4,342
68
5,777
51
8,981
87
7,211
72
9,049
95
10,513
37
12,697
342
9,373
t change increase (decrease)
--
33
55
(20)
25
16
20
4
All neighborhoods
Total (TT-
949,577
1,930,584
2,006,422
2,946,623
3,540,523
5,163,269
1,718,129
15,374,966
Transactions (number)
Average
226
4,202
290
6,657
272
70377
395
70460
396
8,941
458
11,273
138
12,450
I,G59
9,268
price ($)
7 change increase (decrease)
--
--
--
1
21
Sl
69
26e
Source: gonitz, N0lvhborhood (lousing Services Before and After Study, 1975-1980, Baltimore MI5, June 1980.
Na. Fifteen investor purchases; average price, $2,336.
b. Twenty-seven Community Holding Co. purchases; average price, $6,066. Seventeen investor purchases; average price, $3,806.
C. Twenty Johns Hopkins University purchases; average price, $15,055.
d. For every neighborhood except Baltimore -Linwood, average prices are based on 1979 Lusk Reports through Juno 1979. Baltimore -Linwood
figures are based on assessment data.
e. Percentage change of average 1975 -June 1979 compared to 1975 average. Between 1970 and 1975, percentage change was 76 percent. Between
1970 and 1979, it was 121 percent.
t
affected by the civil disorder of the late 1960s. The
smaller number of transactions that occurred in the 1970-
75 period may reflect that it was more difficult to sell
property before NHS became active.
Table 17-11 shows that NHS has been able to achieve many
of its revitalization goals. For example, by 1979, the
number of vacant properties in the neighborhood had been
reduced to 105, most of which were located in the Hopkins
East area. By 1980, about 63 percent of the properties
were owner -occupied, although the data on range of owner -
occupancy by block show that conditions varied widely.24
Table 17-12 documents the changes in tenure patterns in
Patterson Park and the dramatic results achieved by home-
ownership promotion on some blocks.25
It is difficult to predict the future demographic and
physical character of the area, given all the factors
that affect housing market conditions. However, it is
recognized that NHS and the HOP benefited from a set of
unusual circumstances in Baltimore. All necessary tools
and expertise were available, the residents of the area
were committed to and supportive of NHS, the city provided
support and leadership, and market conditions were ideal
for expanding homeownership. Consequently, the experi-
ence of Baltimore in implementing its homeownership and
marketing activities demonstrates what can be achieved
with a strong partnership.
The extent of change has varied by subarea. Baltimore -
Linwood was a strong neighborhood prior to NHS and con-
tinues to be so. Both Patterson Park and Butchers Hill
appear to be viable neighborhoods and, because of the im-
provement that has occurred, do not need the attention
and service provided in the past. Significant improve-
ment has occurred in McElderry Park.
Hopkins East is the next target area for NHS; it will be
rehabilitated through a joint effort of NHS, Johns Hop-
kins Hospital, a private developer, and the city. The
$14 million project will be funded with private capital,
city funds, and an Urban Development Action Grant from
HUD. This area presents a major challenge because it has
low levels of owner -occupancy and an absence of institu-
tions and other inherent assets.
285 4Z?,
,-j
TABLE 17-11
Selected Characteristics of Patterson Park NHS Neighborhoods, 1979-80
Source: Konitz, Neighborhood Housing Services Before and After Study, 1975-1980.
a. Includes Patterson Place.
NHS
Percentage
NtIS
estimate
Percentage of
Percentage of
range of
Number of
estimate of
of vacant
properties
properties
owner -occupied
properties,
population,
properties,
investor-
owner -occupied,
properties by
NHS neighborhood
1980
1979
1979
owned, 1980
1980
block, 1980
Baltimore -Linwood
2,604
8,300a
15a
20
80
4-98
Butchers Hill
874
2,600
25
52
48
0-82
Hopkins East
455
3,600
49
87
13
5-29
McElderry Park
1,233
3,500
16
36
64
18-93
Patterson Place
802
--
--
48
52
19-80
Total
5,968
18,000
105
37
63
0-98
Source: Konitz, Neighborhood Housing Services Before and After Study, 1975-1980.
a. Includes Patterson Place.
TABLE 17-12
Changes in Homeownership, Patterson Place, 1975-80
Source: Konitz, Neighborhood Housing Services Before and After Study, 1975-1980.
1975
1980
Percent
Percent
Number of
Owner-
Percent
Owner-
Percent
Block
Properties
Occupants
Investors
Occupants
Investors
E. Baltimore 2300-2400 (evens)
38
58
42
74
26
Bradford Unit 200
63
49
51
49
51
E. Fairmount 2300-2400
45
44
56
80
20
E. Fayette 2300-2400
76
24
76
76
34
Milton Unit 200 (evens)
68
66
44
80
20
Montford Unit 200
104
60
40
41
59
Orleans 2300-2400 (odds)
11
9
91
45
55
N. Patterson Park Unit 200 (odds)
55
24
76
53
47
101
49
52
80
20
Port Unit 200
561
45
55
64
36
Total
Source: Konitz, Neighborhood Housing Services Before and After Study, 1975-1980.
THE PHILADELPHIA HOP
Background
In 1975, the Greater Philadelphia Partnership, a civic
oranizatod
establishianj NHSedprog ram. The Reinvestment o help
Philadelphia HOP began
operation in June 1979 in the East Frankford NHS area,
one of two NHS neighborhoods in Philadelphia (the other
is Allegheny West).
Unlike Baltimore, where strong and active neighborhood
organizations sought to secure the NHS designation,
selectionthe
NHS areas in Philadelphia did not actively se
The lack of community organization and East local supportfor
NHS was particularly evident
initiallyany
cresidents ism, and after the v heHSapproach w programwasest established mskepti-
cism,
time was spent in developing the partnership and creating
staff credibility.
The Philadelphia NITS program has a central office staff
and a board of directors that are involved in fund rais-
ing, fiscal management, public relations, and setting gen-
eral administrative policies for the two neighborhoods.
Each neighborhood has its own board of directors
irectaandnd istaff
to handle community relations, loan approvals,
mentation of local programs and projects.
Prior to the establishment of the HOP program, the staff
of the East Frankford NHS office included the director,
a rehabilitation specialist, an administrative assistant,
nnual
and 00o. Before andoperated
Hop, ethen an East Frankford budget
NHSf about
hada
X95,
homeownership aid activity, which
sought to encourage ome-
ment sery
ices,and shiupplemental counseling
a
pplemental financinghrougmorththepNHSeloan fund.
The East Frankford Neighborhood
The East Frankford NHS area is located in northeast Phila-
delphia. The Whitehallplictoh the ngoprojectuth i o are
the
eastern boundary; the areas
largely industrial; and the residential. Figure 7 2as to the north showsathew
are predominantly14HS
neighborhood.
288 V �'x
N
W
b
I
The Frankford area has no major institutions, nor does it
have any special amenities. It has always been a moderate -
income area whose residents have strong family ties and
attachments to the neighborhood. The racial pattern is
stable.
Based on the 1970 census data, the population of the area
is about 9,000. The residents have low and moderate in-
comes, and the median family income is about $8,500.
Nearly 20 percent of the population are elderly. About
10 percent of the population are families below the pov-
erty line. About two-thirds of the families are homeown-
ers. About 25 percent of the households are nonwhite and
tend to reside in the central section of the neighborhood;
the northern and southern sections are predominantly white.
Over 60 percent of the households have lived at the same
address for five years. In 1974, the vacancy rate was
estimated to be 9 percent.
The housing stock is old; more than 75 percent of the
structures were built before 1935. The stock is diverse
in character and includes two- and three-story brick row -
houses, duplexes, and a few apartment houses. Most houses
are modest in size and character. About 70 percent are
one -unit structures.
In terms of many demographic characteristics (age distri-
bution, racial composition, percentage
of Frankford vacant properties,
and extent of homeownership), t
similar to
citywide averages. However, East Frankford has much lower
median income, median housing value, and median rent than
the city as a whole. Table 17-13 shows socioeconomic
statistics on the neighborhood.
East Frankford is a Community Development Block Grant tar-
get area and received $150,000 a year during each of the
first four years of that program; currently
it receives
$200,000 a year. The funds are used to pay the salaries
of two city housing inspectors housed in the NHS office
and to fund various neighborhood site improvements such
as street repair, maintenance of trees, sidewalks, and
neighborhood parks; and purchase of home improvement ma-
terials such as paint and flower boxes.
The Whitehalted
public housing project is the only publicly
hous-
ing project in the area.
290 )/- 6�-
I
TABLE 17-13
Housing and Socioeconomic Characteristics
of Census Tracts 294 and 300
Characteristic
Census
294
Tract
300
Population, 1970
4,402
7,814
Percent nonwhite, 1970
17.4
23.6
Percent elderly, 1970
11.8
16.5
Median income, 1970 ($)
8,747
8,429
Percentage of citywide median income, 1970
93.4
90
Percent below the poverty line, 1970
9.5
10.8
Percent receiving welfare assistance, 1972
18.5
15.2
Number of residential units, 1976
1,497
2,893
Change in number of residential units, 1970-76
-40
-41
Percentage change in number of residential
units, 1970-76
-2.6
-1.4
Percent owner -occupied residential structures,
1970
59
59.1
Percent multifamily structures, 1970
28.4
32.7
Median rent, 1970 ($)
65
68
Median home value, 1970 ($)
6,500
8,600
Dollar change in median home value, 1960-70
(500)
(1,100)
Percentage of citywide median home value, 1970
61.3
81.1
Number of single-family sales transactions, 1975
49
73
Median single-family sales value, 1975 ($)
6,374
14,624
Percentage of citywide single-family sales
value, 1975
49.1
112.7
Percentage of stock sold, 1975
4.2
3.3
Source: Philadelphia City Planning Commission, "Housing and Socio -
Economic Inventory, Technical Information Paper," June 1979; Phila-
dclphia NHS program records.
291 �167,
In 1969, part of East Frankford was certified as a state/
city urban renewal area. Some demolition occurred under
the program, and forty new townhouses (Meadow I) were com-
pleted in 1976.
The East Frankford Housing Market
At the time NHS was established, the East Frankford hous-
ing market showed many characteristics of neighborhood
decay and decline. In terms of negative indicators, cen-
sus data show that median house values declined between
1960 and 1970. In census tract 294 the median value de-
clined from $7,000 to $6,500, and in census tract 300 from
$9,700 to $8,600. Turnover rates were low; about 4 per-
cent of the stock was sold each year. Many houses were
not well maintained or modernized.
There were also some positive signs. Blight was not as
widespread as in many other city neighborhoods. In the
early 1970s, values were beginning to increase somewhat.
Vacancies were estimated at over 9 percent in 1972 but
declined to 4 percent by 1974. Financial institutions
were making loans in the area. Conventional financing was
available, but most houses were sold with private financ-
ing or without financing. Unlike some depressed markets,
real estate firms were located in the area and were in-
volved in selling houses prior to NHS. However, many
homes were sold by word of mouth, and typically it took
many months to sell a home. In a few cases, real estate
firms and individuals were buying and selling homes on a
speculative basis, but there were no landlords with large
holdings in the area.
In short, the area had been suffering a period of decline
due to an aging population, housing stock, and physical
plant. The supply of housing exceeded the demand, and
few households were interested in moving to the neighbor-
hood.
Currently, house prices in East Frankford vary widely.
NHS staff and real estate experts state that for existing
houses in very good condition, $20,000 is the maximum mar-
ket value. Unremodeled houses in reasonable condition but
with many code violations usually sell for $5,000 to
$10,000. Vacant shells are offered at $3,000 to $5,000,
but there is no market for them because the cost of re-
habilitation typically exceeds their "after rehabilitation"
market value. Thus, the neighborhood provides buyers with
a variety of housing choices.
292 Yf C2_
The HOP Grant
The Philadelphia NHS was awarded a grant in early 1979 by
Neighborhood Reinvestment to develop and implement an HOP
in the East Frankford area. Actual operations began in
June 1979. The grant of $36,000 was based on an esti-
mated annual operating budget for the program of $51,800.
The budget provided for two new staff positions --a home-
ownership counselor/neighborhood marketer and a rehabili-
tation specialist, part-time involvement of regular NHS
staff, and the cost of promotional materials and office
expenses. The Philadelphia NHS made a two-year commitment
to the program, and Neighborhood Reinvestment agreed that
if local resources were inadequate to fund the HOP in the
second year, an additional $25,000 could be used from a
previous grant.
The HOP was viewed as a strategy to help market houses,
particularly those that had been unoccupied for long pe-
riods of time. . By assisting potential buyers, many of
whom had relatives living in the area or other ties to
East Frankford, to purchase homes, the demand for housing
could be strengthened and homeownership could be increased.
Extensive discussions were held between Neighborhood Rein-
vestment and the Philadelphia NHS about the feasibility of
the HOP and what its character should be in Philadelphia.26
Through a series of meetings, various issues were resolved.
Subsequently, Neighborhood Reinvestment provided extensive
technical support services to help the East Frankford NHS
design and implement the HOP.
r
The Character of the HOP
The Philadelphia HOP is based on the Baltimore model but
differs in several respects and has its own program pri-
orities. First, the marketing and promotion of housing
opportunities in East Frankford have been low key and have
not been directed to residents in other parts of the city.
The lack of an aggressive marketing initiative reflects in
part the conservative attitudes in the community and the
board's reluctance to encourage outsiders to move into
the area. Board members hope to improve and stabilize the
area, but they do not want to change its character, nor do
they want to assist households that cannot pay their own
way.27
293 ���
Second, the opportunity provided by the HOP to convert
tenants to homeowners has also been promoted in a low-key
manner. Demand generated by word of mouth and by real es-
tate agent referrals has been large enough to fully occupy
the HOP staff.
Third, the program has not adopted a targeting strategy or
model block approach because demand for services has de-
veloped without such a strategy, and available financial
resources have been limited wand the fragmented ownership
patterns make it difficult to purchase properties in a
systematic manner.
Fourth, displacement and investment by middle-class out-
siders (gentrification) have not occurred in East Frank -
ford, and no one expects that they might be problems in
the future. As a result, the HOP has not had to design
its program to protect current renters from potential dis-
placement or rising housing costs.
Finally, HOP staff members have not systematically tried
to purchase properties from absentee landlords because a
large number of properties have been available, there are
no absentee -owners with large holdings in the area, and
there is little staff time available for such an effort.
However, NHS staff and lenders have on occasion discouraged
real estate agents from investing in properties.
The purchases of nearly all of the HOP clients have been
financed conventionally through _one savings and loan as-
sociation. It has provided bel w market financing with
attractive terms and conditions.26
This financing arrangement has been an important factor
in the ability of HOP to assist homebuyers. On the other
hand, the financing is not as generous as that available
through state and city financing programs in Baltimore.
Philadelphia has fewer housing rehabilitation and financ-
ing programs of which the NHS can take advantage. The city's
programs operate at a relatively small scale and, with the
exception of the Gift Property Program, have not been
available in East Frankford.29
294
7A0�,
How the HOP Works in East Frankford
The HOP provides home purchase services similar to those
provided by the Baltimore NHS. For households seeking to
buy a home or requesting home purchase assistance from
NHS, a screening interview is conducted. HOP staff mem-
bers then determine the financial circumstances of the
household, and if the household has the resources to buy
a home, the HOP reviews its housing needs. The household
is referred to real estate agents or owners to inspect
available properties with which many of the HOP staff
are familiar. When the potential buyer finds a house,
HOP staff members inspect it and determine what improve-
ments are needed. Based on the financial resources of
the buyer, HOP staff members and the household agree on
improvements to be made.
Depending on the circumstances, the buyer may be referred
directly to a lender, or, in unusual cases, NHS may provide
mortgage financing. NHS prepares the plans and specifica-
tions for rehabilitation and the loan application on behalf
of the buyer and submits the package to the lender.
HOP staff members also help buyers in rehabilitating their
homes. They will prepare a plan and specifications for
bidding purposes, solicit bids from contractors, and help
select the contractor or subcontractor to do the work. In
many cases, because of the savings involved, NHS has acted
as a general contractor. NHS inspects the work in progress
and approves payment to the contractor when the work is
satisfactorily completed. Once the work is finished, any
escrowed funds are released and the NHS temporary loan
repaid. Table 17-14 illustrates a typical transaction.
Program Impact
Table 17-15 provides data on the level of activity of the
HOP during the period June 1979 to June 1980. During the
first thirteen months of the program, 133 clients were as-
sisted. This generated a workload that averaged about ten
new cases a month, and the staff handled an average monthly
caseload of forty-six active clients. Each month about
eight cases were processed to completion, of which an aver-
age 1.6 clients bought a home and 6.3 did not and were
judged inactive.30
295 4.,2-
TABLE 17-14
Profile of Typical East Frankford Property Transaction
and Housing Costs
Building
Construction type
Number of bedrooms
Number of baths
Number of stories
Heat
Site
Lot size (feet)
Purchase requirements ($)
Purchase price
Rehabilitation cost
Total cost
Cash requirement ($)
Down payment
Closing costs
Mortgage amount ($)
Monthly house payment ($)
Principal and interest
Real estate taxes
Fire insurance
Private mortgage insurance
premium (1/4%)
Source: Philadelphia NHS.
Brick rowhouse or duplex with front porch
3
1
2
Gas or oil; hot air or hot water
296
15 x 62
10,500
3,500
14,000
2,000
700
1,300
13,300
166.99
130.37
21.62
12.00
3.00
1
TABLE 17-15
Philadelphia HOP Workload, June 1979 -June 1980
Source: Philadelphia MIS program records.
a. Cases where client sought to buy the home he or she was renting.
Total
Total
1979
1980
June 1979-
June
June 1979-
Average
Category
June
July
Aug
Sept
Oct
ov
ec
Jan
Feb
MarchApril
May
Flay 1980
1980
June 1980
Per Flonth
Continuin client cases
from orev ous mond
IS
28
34
33
29
37
36
40
42
41
44
45
424
43
467
35.9
New client cases in month
total
14
16
30
7
16
9
5
11
6
9
10
10
123
10
133
10.2
eT nant conversionsa
2
3
0
1
1
3
0
0
0
1
0
2
13
2
15
1.1
Other
12
13
10
6
1s
6
5
11
6
8
10
8
110
8
118
9.1
Total client cases during
N
moot
29.
44
44
40
45
46
41
51
48
s0
54
55
547
53
600
46.2
b
V
Location of new cases
From within E. Frankford
7
10
3
4
12
7
3
7
3
4
5
6
71
5
76
5.8
From outside E. Frankford
7
6
7
3
4
2
2
4
3
5
5
.4
52
5
57
4.4
Total client cases closed
inurn
0
2
8
12
12
10
10
2
11
6
9
9
91
10
101
7.8
,:onto,
Purchased home
0
1
4
2
0
1
4
0
4
1
0
1
18
1
19
1.5
With NNS temp. mortg.
--
--
3
1
--
--
I
--
1
--
--
--
6
--
6
.5
With NNS perm. mortg.
__
__
1
__
.__
__
2
__
0
__
__
__
3
__
3
.2
With inst. perm. mortg.
--
--
--
1
--
1
1
--
2
--
--
1
6
1
7
.5
Without NHS fin. assist.
--
1
--
--
--
--
•-
--
1
1
--
--
3
--
3
.2
Did not purchase home
0
1
4
10
12
9
6
2
7
5
9
8
73
9
82
6.3
Source: Philadelphia MIS program records.
a. Cases where client sought to buy the home he or she was renting.
The demographic characteristics of HOP home buyers are pro-
vided in table 17-16. (The sample included twenty-eight
buyers. Besides the fifteen home buyers who bought between
June 1979 and May 1980, the eight households that purchased
homes through NHS before the HOP began and the five house-
holds that purchased homes after May 1980 or had loan com-
mitments by June 1980 are included in the analysis.) The
data show that the program is largely serving a group of
lower -middle-income minority households who previously rent-
ed. In most cases, the head of household holds a relative-
ly low-paying blue collar or service job. Most of the buy-
ers (82 percent) lived in East Frankford before they became
homeowners.
Table 17-17 provides information on the homes that the IIOP
buyers have bought. Typically, the homes are two-story,
three-bedroom structures. Variations in purchase price
are a reflection of the condition, size, and location of
the homes. Most homes (82 percent) were bought for less
than $15,000, but almost half (43 percent) cost less than
$7,500. As of June 1980, the average asking price for
single-family properties being offered for sale was $13,200.
Table 17-18 provides information on the rehabilitation
that was undertaken by HOP clients and shows that exterior
work to the structures and remodeling of the ikitchens and
bathrooms were the most common typeso
Table 17-19 provides information on the financial charac-
teristics of the transactions. The total cost of the homes
bought by HOP clients, including acquisition, rehabilita-
tion, and closing costs, ranged from $3,600 to $22,800;
57 percent fell into the range of $5,000 to $14,999•
variety of financial arrangements was employed to finance
the home purchases. In buying homes, purchasers tended to
increase their gross monthly housing expenses, but not
dramatically. Typical monthly increases were $25 to $50
over the typical $150 per month housing cost. However,
in a few cases housing costs were lowered.
A limited amount of data were collected by the HOP staff on
clients who received NHS assistance but failed to purchase
homes. As table 17-20 shows, of the eighty-six clients
who were assisted but did not become buyers, most (70 per-
cent) were not interested in buying a home at that time.
(Note that NHS data concerning clients who did not buy are
inconsistent with the workload statistics presented it
table 17-15•) About one-quarter were determined by NHE
to have inadequate financial resources to buy a home.
298
TABLE 17-16
Selected Characteristics of a Sample of HOP Home Buyers
Source: East Frankford HOP records.
a. Includes information on two buyers who bought without NHS financial assistance.
Data are not available for a third buyer who bought without NILS assistance. Nino
buyers bought homes before June 1979.
299
Home Buyers
'
Home Buyers,
in Process
Home Buyers
June 1979-
of Purchase
Prior to
Characteristic
May 1980
as of June 1980
Jane 1979a
Total
Number
i5
5
8
28
Location of previous residence
East Frankford
13
3
7
23
Outside East Frankford
2
2
1
5
Previous tenure
Homeowner
0
0
0
0
Tenant conversion
4
0
2
6
Tenant at different address
10
4
5
19
Lived with parents/relatives
1
1
1
3
Marital status
Single
4
2
2
8
Married
8
2
4
14
Divorced
1
1
1
3
,Separated
2
0
1
3
Household head
Malo
11
3
6
20
Female
4
2
2
8
Ageof household head
Under 25
2
1
4
7
25-35
6
2
2
30
36-54
6
2
2
30
55-65
1
0
0
1
Over 65
0
0
0
0
Race of household head
White
5
1
2
B
Black
8
4
6
18
Hispanic
2
0
0
2
Other
0
0
0
0
Household size
1
3
1
2
6
2
2
1
1
4
3
6
3
2
Il
4
2
0
1
3
5+
2
0
2
4
Total family SnComo (S)
Lass i an 5,000
1
0
0
1
5,000-9,999
4
2
1
7
10,000-120499
1
0
3
4
12,500-14,999
3
0
0
3
15,000-17,499
3
1
2
6
17,500-19,999
0
1
0
1
20,000•
3
1
2
6
MMafamily income source
d
11
5
7
23
Public assistance/social security
1
0
0
1
Combination
3
0
1
4
Source: East Frankford HOP records.
a. Includes information on two buyers who bought without NHS financial assistance.
Data are not available for a third buyer who bought without NILS assistance. Nino
buyers bought homes before June 1979.
299
t
TABLE 17-17
Characteristics of Homes Purchased by HOP Buyers
Home Buyers
Home Buyers, in Process Home Buyers
June 1979- of Purchase Prior to
Characteristic May 1980 as of June 1980 June 1979a Total
Structure type/size
2 story/2 bedroom
3
1
1
5
2 story/3 bedroom
7
3
5
is
2 story/4 bedroom
0
0
0
0
2 story/5 bedroom
0
0
1
1
3 story/2 bedroom
0
0
0
0
3 story/3 bedroom
0
0
1
1
3 story/4 bedroom
0
1
0
1
3 story/5 bedroom
2
0
0
2
Not available
3
0
0
3
Purchase price ($)
Less than 5,000
4
1
2
7
5,000-7,499
2
2
1
5
7,500-9,999
3
0
1
4
10,000-12,499
3
0
0
3
12,500-14,999
2
0
2
4
15,000+
1
2
2
5
Cost of rehabilitation ($)
No rehabilitation
2
0
4
•6
Less than 2,500
3
1
0
4
2,500-4,999
5
1
1
7
5,000-7,499
2
0
3
5
7,500-9,999
0
2
0
2
10,000+
2
1
0
3
Not available
1
0
0
1
Status of home prior to sale
Vacant
8
3
5
16
Occupied
7
2
3
12
Intermediary used to
purchase home
NHS
8
3
1
12
Real estate agent
7
2
5
14
No intermediary (family-owned)
0
0
2
2
Source: East Frankford HOP records.
a. Includes information on two buyers who bought without NHS financial assistance.
Data are not available for a third buyer who bought without NHS assistance. Eight
buyers bought homes before June 1979.
300
..........
.............. .
TABLE 17-18
Type of Repair/Rehabilitation Made to Residences
of HOP Home Buyers
1
Number of
Je of repair/rehabilitation
Replace or repair roof
Install/fix-plumbing, remodel and modernize bathroom14
4
Install storm windows, storm doors, insulation
Exterior work and repairs 8
13
r Repair/replace floors S
{ Repair/replace stairs 4
Repair furnace, hot water heater, or heating system 9
Repair walls, including patch basement 10
Remodel and modernize kitchen 13
Repair/replace electrical parts 8
Number of different repairs/rehabilitation
11
3 4
3 3
4
i
5
3 3
i 6
d 7+ 1
5
t
ti
t Source: East Frankford HOP records. Table includes data on HOP cli-
ents through June 1980, and four pre -HOP purchasers. Of twenty resi-
dences involving rehabilitation, twelve have been completed and
eight are in progress.
r
r
i.
301
1
a
TABLE 17-19
Financial Characteristics of HOP Home Buyers' Purchases
Home Buyers
Home Buyers, in Process Home Buyers
June 1979- of Purchase Prior to
Total cost
--2'4A1,112,
f home (acquisition
[las nR costs. 6 retia it ti<o<�
Ms than 5,000
1
0
0 1
S,000-9,999
2
0
2 4
I0,00D-14,999
8
19
15,000.
4
3
S
Monthly housing ax�enses (S)
er or nsa
expenses
1
1
1 3
Less than 75
Le s than
1
0
I 2
75-9'1
0
0
100-124
3
0
4
1 4
123-149
1
1
1 3
150-174
4
1
2 7
175-199
0
0
1 1
200•
4
1
1 6
CurrentS
o expense
0
0
0 0
Less than 75
0
0
0 0
7S-99
1
0
0 1
100-124
2
0
2 4
125-149
4
3
1 8
150-174
5
0
3 8
175499
1
0
0 1
200+
2
2
1 5
Te of amunt financin n
F rst mortgage only
9
5
1 18
First and second mortgages
5
0
3 8
No permanent financing
1
0
0 1
Financing arrnn ements°
tem{wrNliS ary flnancing 6 56L
permanent first mortgage
5
2
2 9
NILS temporary financing, S&L
first mortgage and NILS
second mortgage
4
0
1 5
SAL first mortgage only
3
3
2 8
SAL first mortgage and NHS
second mortgage
0
0
2 2
MUS first mortgage only
3
0
0 3
Total amount ofermanent
nanc n
Eass an 5,000
1
0
0 1
5,000.9,999
6
1
1 8
10,000-12,499
3
I
3 7
12,500-14,999
2
1
3 5
15,000-17,199
0
0
0 0
17,500-19,999
3
2
1 6
20,000+
0
0
0 0
Loan term (years)a
5
1
0
0 1
10
1
0
0 1
Is
2
1
1 4
20
1
0
3 4
25
9
4
3 16
No permanent financing
1
0
0 1
A. Data were not available on one transaction, which was completed without NHS finan-
cial assistance prior to June 1979.
b. Includes information on two buyers who bought without NHS financial assistance.
Data were not available for a third buyer who bought without NHS assistance. Nine
buyers bought homes prior to June 1979.
302
y�z
1
Reasons for Closing Cases and NHS Assistance to HOP Clients
Who Failed to Buy Homes, June 1979 -June 1980.
Source: East Frankford HOP records.
a. Some clients received more than one type of assistance.
303
�6�
Number of
Number of
Residents
Residents of
Outside
Reason for Closing Case
East Frankford
East Frankford
Total
Reason for closing case
Lack of client interest
34
26
60
Insufficient finances
13
9
22
Transaction could not be
completed
3
1
4
Total
50
36
86
Assistance provided by NHSa
NHS inspection of house
10
7
17
Preparation of work write-
up and specs
5
2
7
Preparation of bid and
contract documents
3
0
3
Financial counseling
25
17
42
Prepurchase assistance
28
25
53
Home purchase assistance
5
5
10
Lender referral
1
1
2
Inspection for code
violations
16
6
22
Provision of property
sale list
i8
11
29
Total receiving above
services
111
74
185
Of total, those --
Receiving one service
19
16
35
Receiving two services
1s
10
25
Receiving three services
8
5
13
Receiving four services
4
3
7
Receiving five services
2
1
3
Receiving six services
2
1
3
Total
50
36
86
Source: East Frankford HOP records.
a. Some clients received more than one type of assistance.
303
�6�
A special telephone survey of HOP home buyers was conducted
to determine their views and experiences related to pur-
chasing a home. Fifteen clients responded to the survey;
the findings are presented in table 17-21. The data con-
firm that a tight -knit social structure exists in the
East Frankford area because most of the clients learned
about the HOP through personal contacts. Respondents were
positive about the NHS help they received. Eighty percent
thought the help very useful or extremely useful. Forty
percent thought without NHS they could not have become
homeowners. Overall, the survey indicated that respondents
thought the HOP was very helpful in assisting them to
negotiate and handle the process of purchase, an experience
which none had previously had.
The HOP in East Frankford has been in operation for only
one year, and it is difficult to predict its future im-
pact on the East Frankford community. Its success will
depend not only on the effectiveness of the program it-
self, but also on the impact of NHS and non -NHS programs
in the neighborhood and on citywide and national events
and forces. External factors such as the city's rate of
unemployment or the rate of inflation may largely deter-
mine the feasibility of increasing homeownership and ex-
panding the demand for housing in East Frankford.
The HOP represents a relatively modest effort to stem
blight and decay. Its design and its limited financial
and staff resources mean that its impact will necessarily
be limited. Even the overall NHS program can address
only some of the factors that blight the area. The pur-
chase of eighteen homes by former renters in one year is
a significant accomplishment; nevertheless, these purchases
constitute only a small fraction of the units in the area,
and eighteen transactions represent only about 20 percent
of all the transactions that occurred on average annually
during the period 1974-78. Because many sales are not
financed, eighteen purchases constitute 30 percent of all
financed sales.
Sales data confirm that the IfOP was established at a time
when the market in East Frankford seemed to be strengthen-
ing because of NHS and other factors. Prices were rising,
even though the volume of transactions was not growing
rapidly, and, as table 17-22 shows, in fact dropped between
1977 and 1978. Prices increased most in the period before
NHS was established, but between 1976 and 1978 the average
price of all properties sold increased from $9,506 to
$11,012. The rate of increase was solely attributable to
the increase in the value of financed properties; the value
304
W6 )_
TABLE 17-21
Survey of a Sample of East Frankford HOP Home Buyers
cation Number
Now did ou first hear about the NHS o amt
Relnt ve nvolve w t NHS
6
Friend
3
Neighborhood meeting
1
Realtor referral
3
r Nord of mouth
2
Wh didu move from our previous address?
Not applicable cl ant bought name e s e was renting)
5
Wanted to buy a house
7
Other neighborhood was bad
1
Liked East Frankford
1
Marital separation
1
Wh did a want to bu a home rather than rent?"
Flnnnc al cons erat ons
11
Pride of ownership
2
More room, own space
2
Stability
2
Nhy Ndn't You bought a home before?
- Financial considoratlon5
11
Didn't consider it previously
3
Not capable for nonfinancial reasons
1
- Now long had au tern lookin for a home before you went to N'NS?b
Less than one moot
2
One to five months
3
Six to twelve months
2
More than one year
r_T
5
What kinds of assistance did rovide to you?"
T
Ass stance Sn re 1 cat g n Dose
8
Assistance in financing
13
Real estate information
6
Referral to a lender
3
Real estate counseling
5
Finding a hoose
3
Inspecting a house
3
Finding a contractor
3
In Your opinion how useful was the assistance that NHS provided?
Extremely useful
6
Very useful
6
Somewhat useful
2
Not very useful
1
Arseyou satisfied with our new home?
e
IS
No
0
IWVe You had any problems with your home or with your new
stacua as ans. r t at you not expect to a put
Yes
0
No
IS
Mh did u choose to bu a house in East Frankford?c
v ere most o my IT e
8
Family lives here
4
Like area/nice area
5
Cheap houses
2
Liked this particular house
1
Good schools
2
Convenient location
I
D" you think you would hove tem able to buy this house without
NIR ass a[ancePmR ass (lyes w Y t rn d d rou go through NIR?)w y t rn d d rou Ro through NIiS?)
No
6
Yes, they didn6t give ouch help
2
Yes, but with more difficulty
3
Yes, but not as good a deal
2
Perhaps, real estate referral
2
Source: Special survey conducted for this report by Susan Christian dur-
ing June 1980. The sample includes fifteen of the twenty-eight HOP home
buyers.
a. Some clients cited more than one answer.
b. Three buyers who bought the home they ranted did not look for a home.
c. Two respondents bought homes bnfore June 1979.
305
�6.z-
TABLE 17-22
East Frankford Characteristics of Financed and Nonfinanced
Residential Sales and Nonsale Mortgages, 1974-78a
-
•" "
iyi�
1976
1977
197E
Total number residences sold
Financed sales
Nonfinanced sales
88
59
29
91
61
30
89
58
31
106
66
40
74
54
20
Total number nonsale
mortgages
62
79
90
94c
49
Total number all mortgages
150
170
179
200
123
Percentage change number
sold
Financed sales
Nonfinanced sales
--
--
3' 3.4 4
3.4
-2.2
-q.9
3.3
19.1
13.8
29.0
-30.2
-18.2
-50.0
Percentage change nonsale
mortgages
--
27.4
13.9
4.4
-52.1
Average price all sales ")
Financed sales
Nonfinanced sales
7,776
8,688
5,891
9,171
10,565
6,337
9,506
11,156
6,421
9,902
11,400
7,430
11,012
12,800
6,185
Avera a loan amount, non -
sale mortgages ( )
3,320
3,126
4,995
5,082c
5,294
Percentage change all sales
Financed sales
Nonfinanced sales
--
--
--
18.1
21.6
7.6
3.6
5.6
1.3
4.2
2.2
1S.7
11.2
12.3
-16.8
Percentage cne loan
amount of nonhasale mortgages
__
-5.2
59.8
1.7
4.2
Source: Contract Research Associates,
a. Excludes Meadow Homes project; data include some small commercial
and multifamily transactions.
b. eased on data for first six months of year.
c. Estimated.
306
41.�?'
of nonfinanced sales did not rise during the 1976-78 pe-
riod. The reasons for the differential charges in average
sales prices are not known.31 It could not be determined
to what extent the increasing taotrendsinthe type of
values
n scan b attributed
NHS. Table 17-23 presents
financing available. While conventional financing ercntage
available in East Frankford prior was
to NHS,
ncreased signifi-
of purchases
thfinanced
centagenventionallyesifinanced privately
and ercent of all transactions in 1974
decreased, from 37.3 P
to 18.5 Percent of all transactions in 1978•
Another positive trend affecting the area was the reduc-
tion in the vacancy rate. Table 17-24 shows that the
high estimated vacancy rate of 9.4
of percent i decline occurred
a
shrunk to 3.4 percent by 1977; the rred
between 1972 and 1974• During the period 1974-77,
re-
ber of vacancies decreoase23from
14 ur o 115 structures,
into
fleeting reoccupancy f
account new vacancies and the demolition of 30 structures.
These market data suggest that the housing market was im-
NHS was established
proving modestly in the years after
and prior to the HOP• If these
market objectives Cends and createuan
they should help to Support
environment favoring homeownership.
The shows that a
demandfornce in East homeownership Frankford existsamong renters,a a d renters,
this demand can be filled if the right mix of programmatic
tools is available. More than 120 households sought infor-
mation or assistance from the HOP during its first year of
i operation, and all successul HOP clients have been former
renters. Some of these buyers might have bought anyway,
but given their incomes it is reasonablebuyerass insthe East
that
many could not have done so. In 1978, Y
Frankford area made average dowflecting sinfpaabout
fi15per-
cent of the purchase price,
conditions. In contrast, many HOP clients nancing
did not even
have funds to cover closing costs.
HOP purchasers helped to improve the physical conditions
in the area. More than half the homes purchased had been
vacant, and most buyers made physical improvements. Judg-
ing by the low cost of some homes and the relatively
homes
amount of money spent on rehabilitation, 000 or
were extensively improved. Five buyers spent $5,
more on rehabilitation.
307
,41G.z
1
East Frankford Percentage Distribution of the Number and
Dollar Amount of Sales Financing Provided by
Type of Financing, 1974-78
Type of Financing 1974 1975 1976 1977 1978
Conventional
Number of financed sales 42.4 50.8 63.8 50.0 63.0
Dollar amount of financing provided 44.9 55.0 63.3 47.8 68.3
FHA/VA
Number financed sales 20.3 29.5 25.9 37.9 18.5
Dollar amount of financing provided 26.4 35.4 30.7 43.2 16.8
Private
Number financed sales 37.3 19.7 10.3 12.1 18.5
Dollar amount of financing provided 28.7 9.6 5.9 9.0 14.9 ;
Source: Contract Research Associates,
Housing Services Inc. Interim Evalua
1978.
308
Nei hborhood +'
1: Program Impact,
I/& z
' yv
TABLE 17-24
East Frankford Long -Term Vacant Residential Structures by Census Tract, 1972-77, and Changes
in the Number of Long -Term Vacant Structures, 1974-77
Number of Vacant Structures and Percentage of All Residential
Structures Vacant
Year
Number
Percent
Number Percent
Number Percent
1972
138
11.7
180 8.1
318 9.4
1974
72
6.1
68 3.1
140 4.1
1977
55
4.8
60 2.7
115 3.4
CD
Changes in
Number of Long -Term Vacant
Structures
`D
Between 1974-77
Structure
Census
Tract 294a
Census Tract 300a
Total
Total vacant, 1974
72
68
140
Removed by demolition, 1974-76
14
18
32
New vacants, 1977
16
14
30
Total vacant, 1977
55
60
115
Net number reoccupied, 1974-77
19
4
23
Source: Contract Research Associates, Philadelphia Neighborhood Housing Services, Inc., Interim
Evaluation, Vol. 1: Program Impact, 1978.
a. Includes 72 percent of units in East Frankford.
The HOP's encouragement of buyers to make improvements
at the time of purchase is one of its major accomplish-
ments. Many homes might have been bought in the absence
of the HOP, but it seems probable that many buyers, in-
cluding those referred by realtors to NHS, would not under-
take such extensive rehabilitation.
With the rising cost of rehabilitation, it is becoming in-
creasingly difficult for buyers to afford to make improve-
ments to their properties or for NHS to do something about
long-term vacant properties. Given current market condi-
tions and the incomes of potential buyers, severely deteri-
orated homes cannot be made livable without a rehabilitation
capital subsidy. For this reason, NHS staff members believe
that it is important for NHS to develop a program to re-
habilitate problem properties using writedowns from the
Community Development Block Grant program.
Respondents varied somewhat in their views and assessment
of the HOP. Neighborhood residents viewed the willingness
of HOP clients to buy homes as a positive sign of an in-
terest in the neighborhood and the willingness of lenders
to finance home purchases as an indication of the area's
viability. They believe that the HOP and NHS have made
residents more aware of the problems that need to be solved
and have motivated residents to play more active roles in
their community.
Lenders and real estate brokers differed in their views of
the impact of the HOP and the overall NHS program. Some
believed that the neighborhood looks better now, yet others
considered the changes in the area's physical appearance
to be more modest. Some believed .that the real estate mar-
ket is improving, while others were more cautious and be-
lieved that it may have bottomed out but that market con-
ditions have not changed substantially. NHS staff, however,
have noticed an increased awareness and interest in NHS by
real estate agents.
For the city, the HOP and NHS are effective programs that
require relatively small public investments. NHS provides
a package of coordinated services that the city would find
difficult to assemble. This one-stop service feature con-
trasts with the city's housing program, which is fragmented
among many different agencies. The city considers the NHS
approach as exemplary and is studying the feasibility of
expanding it to other Philadelphia neighborhoods.
310
Some of the differences in viewpoint about the HOP's im-
pact relate to expectations. For residents, tangible
changes and improvements can be identified; for lenders
and real estate agents who are concerned about market
trends, the HOP and NHS have not significantly changed
the character of the market or transformed East Frankford
into a different kind of neighborhood. For the city, NHS
is an exemplary effort with tangible success compared with
other public efforts.
The East Frankford HOP lacks an aggressive promotion and
marketing component designed to attract new buyers, par-
ticularly middle-class buyers, to the area. The promo-
tional efforts that have occurred are low key and occur
in block meetings or on a personal basis. This approach
contrasts with the Baltimore HOP, which has conducted an
extensive marketing effort to attract buyers to Patterson
Park from other parts of the city.
Therefore, the HOP in East Frankford can have only a
limited impact on the real estate market, the number of
vacant units, and the percentage of absentee -owner prop-
erties. The number of HOP transactions is too few and
the scale of demand too small to affect property values.
tib This does not mean that the program has not had a positive
impact on the neighborhood; everyone agrees that the HOP
is making an important contribution to improving the area.
It is seen to fulfill important needs, including improv-
ing properties, helping to build neighborhood confidence,
and changing the attitudes of residents, lenders, and
real estate agents.
311
Notes
1. This means that the neighborhood will be a low-cost
neighborhood. While "low-cost" generally means housing
prices of less than $25,000, prices can be higher if a
substantial number of two- to four -unit structures are
available, if the tax rate is low, or if some other factor
substantially reduces the carrying cost for the home buy-
er. The program can work in a higher -cost area if
there is a subsidy, for example, a below-market in-
terest rate mortgage or the transfer of tax foreclosed
property. The program can also work if the revolving
loan fund (with its very low rates) is used for second
mortgages.
2. Creative financing involves combining loans from vari-
ous sources, including the revolving loan fund, for those
who do not qualify for conventional loans.
3. In the original formulation, strengthening the real es-
tate market in general was not a goal of the program,
but it has become a goal in subsequent replications of
the HOP.
4. Lender participation was prompted by coincidental cir-
cumstances. Prior to 1974, financial institutions were
not active in lending on residential propert3 in the
City of Baltimore. As part of an agreement to help
lenders get the usury limits raised from 8 to 10 per-
cent, the city secured a pledge from the lending com- 1
munity to lend $45 million in Baltimore in 1974 and to
evaluate mortgage applicants on their individual merit
and not principally on the characteristics of the neigh-
borhood.
5. In 1976, Neighborhood Reinvestment made a $33,000 grant
to the Baltimore program (whose total first-year budget
was $55,000). The grant was to increase the level of
homeownership in Patterson Park, to determine whether
the program model worked, and to help Neighborhood Re-
investment determine whether the concept might have
national application.
The HOP neighborhood is composed of portions of two
census tracts in the NHS neighborhood --one tract with
a median 1970 income of $10,700, the other with a
median income of $6,600. The first neighborhood is
mainly white, and the other is mainly black. The
HOP target area, however, was predominantly white with
a median income intermediate between the higher and
lower tract median income.
312 #6z
7. Although prices increased substantially over the period,
they still remained relatively low. In 1974, the aver-
age sales price was $6,400, which was up from $4,500
in 1970. Most sales were financed through sources
other than lending institutions. In 1974, 40 percent
of all sales were financed by lending institutions.
There was wide variation in sales prices, indicating
wide differences in condition, character, and selling
price of properties.
8.
The strategy was to eliminate vacant buildings (1) by
having the city (under its Section -26(h) program) re-
habilitate them and absorb the difference in cost be-
tween the cost of rehabilitation and market value,
(2) by encouraging medium -income buyers to consider
deteriorated vacant properties, and (5) by encouraging
participation in Baltimore's federally supported Home-
steading program.
9.
Attracting newcomers to the neighborhood was viewed
as an important feature of the program because many
tenants expressed a reluctance to buy a home due to
lack of confidence in the area's future. It was felt
that newcomers would help reverse that lack of tenant
confidence. Also, for many of the most deteriorated
buildings, buyers with higher incomes than local ten-
ants had would be required. Fixing up the most deteri-
orated buildings would substantially boost the overall
attractiveness of the neighborhood.
10.
There were no landlords with extensive holdings in the
neighborhood. Many landlords had previously lived in
or had inherited the property they were renting. By
creating a market, this program provided them with an
opportunity to get out of the rental housing business.
11.
The NHS program reported a deliberate attempt to use
marketing techniques to change expectations. Typical
activities included neighborhood fairs, newsletters,
promotional campaigns, bumper stickers, and the like.
12.
For the period covered by this study, Baltimore was
unique among cities in the variety of state and lo-
cal programs that provided below-market rate loan funds
for home purchase and rehabilitation.
13.
Loans up to $17,400 were available for up to twenty
years at an interest rate of 7 percent.
14.
The same terms were available as those in note 13,
though in this program the interest rate varied be-
tween 1 and 7 percent.
313
44,7-
15. A down payment of only $500 was required, which was
designed to partially offset settlement costs. The
loan rate was at least 2 percent below the market
rate.
16. This program provided payments up to $5,000 (for an
easement) and gave the city the right to carry out
physical changes to the exterior of houses. This was
seen as a way to help the elderly improve their hous-
ing without the burden of additional loans.
17. Among the criteria used to qualify: the loan amount
is less than a specified amount, currently $16,000;
down payments are not otherwise available; and the
borrower's credit does not meet lender's credit stan-
dards. The usefulness of the NHS revolving loan fund
has been increased by arrangements whereby NHS sells
participation in loans to local banks at interest
rates not to exceed 6 percent. The Baltimore program
also participated in NHSA's secondary mortgage pool.
18. Lack of knowledge on the part of real estate agencies
about the changes occurring in the area were major
impediments to the real estate industry's constructive
involvement. A training and demonstration program was
designed and implemented. This was funded (at $50,000)
in January 1979 by the Baltimore Board of Realtors and
Neighborhood Reinvestment.
19. Middle-class buyers received NHS counseling and as-
sistance. They were advised and assisted on issues
of the cost of rehabilitation in relation to potential
market value of the property and on the reaction of
lenders to their financing and rehabilitation pro-
posals. NHS was also helpful to these buyers because
it provided a one-stop center for buyers who wanted
to take advantage of various programs. Lenders in
the case of both middle-income buyers and others looked
to the counseling and assistance program to reduce
their processing costs and to provide some additional
protection against bad loans based on poorly executed
property or unrealistic expectations.
20. Most home buyers lived in the NHS area; nearly 75 per-
cent of the buyers were married and had children and
most of the buyers were white; however, 13 percent
were black, most were low-income (75 percent with in-
comes of less than $12,000), and 40 percent of the
units involved were vacant. As of the end of 1978,
323 purchases were made in the neighborhood, 191 by
renters in the neighborhood. Of all purchases, 235
were bought from investors.
314 4/PX
21. The survey was conducted by Cindy Konitz, and her
findings appear in Neighborhood Home Ownership Promo-
tion Study, Baltimore NHS, August 19 0.
22. See
od Housina Services
yuuscs for cu -i runcing, April y, lyou. by compari-
son, through 1979 city programs had achieved the fol-
lowing results: 500 homes to homesteaders, 342 CHAP
loan commitments, 942 REP loan commitments, 497 REAL
loans, and 1,108 Section 312 loans.
23. The average sales price increased from $7,300 to
$9,200, or about 26 percent over the period 1975 to
1979•
24. No preprogram baseline data were available. However,
the 1970 census showed that only about 57 percent of the
properties in census tracts 601, 602, and 603 were
occupied. See T. J. Guidera, Jr., "Appraising and
Underwriting Factors Neighborhood Housing Services Area"
(undated).
25. For example, on the 2300 block of East Fayette, which
has seventy-six •properties, the percentage of owners
rose from 24 to 76 percent between 1975 and 1980. On
the 2300 block of East Fairmont, which has forty-five
properties, homeownership increased from 44 percent
to 80 percent. Overall, homeownership increased from
45 percent to 64 percent over the same five-year
period.
26. It was generally agreed that East Frankford rather
than Allegheny West best met the prerequisites of
the program that had proved essential in Baltimore.
Various local representatives had reservations about
an HOP. They were concerned about making a two-year
commitment to the program given the difficulty in
raising NHS operating funds. They felt that if the
program had a chance to succeed and have an impact,
it would be in East Frankford rather than in Alle-
gheny West.
27. The board, for example, has been reluctant to make
loans to prospective buyers to help them buy homes.
It is also felt that middle-income homeowners would
not be attracted to the neighborhood, and as a result
extensive activities carried out in Baltimore to achieve
this have not been duplicated in Philadelphia.
315
4blp_
28. Mortgage funds were reserved in 1979 before the rates
went up and were 1.5 to 2 percent below market. About
$200,000 has been set aside, and loans of 95 percent
of the after -rehabilitated value were made for a term
of twenty-five years. A representative from a lending
institution sits on the NHS loan committee, which
insures that cases approved by the committee are likely
to gain approval by the bank as well.
29. Under the city's Gift Property Program, city houses
were made available to individuals or neighborhood
organizations who agreed to rehabilitate them.
30. A total of 133 clients were served during the first
year of the program, 13 of which sought to buy the
home they were renting. The data show that most cli-
ents do not purchase a home. The cases of 73 clients
were closed because for a variety of reasons they de-
cided not to buy a home. Eighteen clients bought
homes ,in the first year of the program. Three cli-
ents used NHS services but did not need financial
assistance from NHS. In providing HOP services,
$30,744 out of a grant budget of $36,000 was expended
during the program year.
31. Possible explanations include the conditionof the
buildings or the fact that the rehabilitation cost
is included in the mortgage cost for buildings that
are financed, a cost not included for nonfinanced
buildings.
316 z
CHAPTER 18
THE HOME OWNERSHIP PROMOTION PROGRAM
IN A NATIONAL CONTEXT
APPLICABILITY OF THE HOP MODEL
Because the Baltimore Home Ownership Promotion Program
(HOP) has had five years of experience in promoting home-
ownership and the Philadelphia program is only one year
old, it is difficult to compare experiences and accomp-
plishments. In addition, the character and objectives
of the two programs differ, as explained in chapter 17.
The Baltimore program was the original model for the HOP,
and it provides an example for other cities. The Phila-
delphia program in East Frankford has learned from Balti-
mores experience but has adapted the program concept to
its own objectives and circumstances.
Based on the experiences of the Baltimore and Philadel-
phia HOPS and discussions with numerous HOP participants
and observers, the HOP elements appear to be replicable
in many communities where adequate financial and staff
resources can be assembled and where real estate market
conditions exist that will enable renters to become home-
owners. There is nothing unusual in either of the HOPs
that could not be duplicated in other cities, although
experience shows that the program should be tailored to
local conditions and needs.l
The elements of the HOP --providing home purchase assis-
tance, encouraging tenant conversions, and promoting home-
ownership --are relatively clearly defined and standardized.
The HOP can be organized and packaged in many different
ways, and many Neighborhood Housing Services (NHS) neigh-
borhoods could benefit from this program tool. This does
not mean that every HOP service is universally applicable
or that all neighborhoods will benefit to the same degree.
Each neighborhood has a different set of problems that
must be considered in developing an appropriate revitali-
zation strategy.
Baltimore demonstrates the impact and central role that
homeownership promotion can play in a neighborhood revital-
ization strategy. And even though many neighborhoods may
not be able to conduct a large-scale tenant conversion
317 ?-
program, they can benefit from the HOP's counseling and
assistance services. For many reasons, these services
are often not readily available to home buyers, partic-
ularly those who have special credit problems or those who
want to buy homes that cannot be readily financed. The
HOP can expand the services NHS offers even if its objec-
tives are less ambitious than the HOP model.
Any NHS revitalization strategy must address the problems
and needs of buyers and sellers as well as those of exist-
ing homeowners, the traditional clients of NHS. HOP=type
services are implicit in NHS objectives and complement and
reinforce the effectiveness of other activities. While
widely applicable, homeownership promotion can take many
forms, and the HOP concept recognizes the importance of
considering local conditions and circumstances in designing
an HOP program.
Adequate financing seems to be the central prerequisite
for a successful HOP. Without it, increasing the extent
of homeownership is not feasible. Adequate financing
means that sufficient mortgage money is available to handle
the demand, and that close to 100 percent financing is
available to finance the purchase cost and a minimum level
of rehabilitation. Adequate financing can take many forms.
Baltimore has had access to many different financing mech-
anisms, including state -insured conventional loans that
provide 100 percent of the cost of acquisition and rehabil-
itation, city rehabilitation loans, conventional financing,
and NHS loan fund financing. In Philadelphia, 95 percent
financing is available, and NHS can provide secondary fi-
nancing through its revolving fund when necessary. In
both cities, credit underwriting standards are tailored
to each situation, and each loan is carefully evaluated
by loan committees intent on making the HOP succeed. Be-
cause HOP clients typically have no savings or capital
and relatively low incomes, they could not become home-
owners without such generous financing.
Although housing prices are low in Patterson Park and East
Frankford, there is no reason why a successful HOP could
not work in areas with higher housing prices. What must
be present, however, is a set of circumstances in which
(1) tenants are paying rents that are not much different
than the costs of a mortgage payment and taxes and insur-
ance; (2) absentee -owners are interested in selling their
properties; and (3) the housing stock is in relatively
good condition or can be upgraded at a cost that makes pur-
chase feasible. HOP could also use subsidized capital
grants to make up the difference between the cost of
318
WP 'L
purchase and rehabilitation and what potential buyers
could afford to pay. subsidized loans could also be used
to make high-priced housing affordable. Both HOP cities
used Community Development Block Grant funds to write down
the cost of rehabilitation of properties to market value.
Also, the concept of lenders sharing in the future appreci-
ation of the property might be considered.
Although generous financing is essential, its absence is
not the only reason renters may not buy homes. Many ten-
ants may be reluctant to buy property in an area whose
future is uncertain. Tenants must believe that their deci-
sion to become homeowners will be beneficial, or they will
conclude that there is no advantage in changing their sta-
tus. If their expectations about the neighborhood are neg-
ative, homeownership will not be attractive. A sense of
confidence about the future of the area is required not
only to induce owners to maintain their properties but also
to motivate renters to become homeowners.
The study of the two HOPs shows that thepatterns of
ownership and impact of absentee -owners are more complex
and dependent on local circumstances than might have been
expected. Baltimore benefited because several older ab-
sentee -owners wanted to sell their holdings and viewed
NHS as the most profitable way to do so. This enabled
NHS to operate on a wholesale basis. Currently, invest-
ment by nonoccupants is occurring, but these buyers are
different investors than those who had traditionally bought
in the area and to some degree they are helping to sustain
the sales market. Absentee -owners in Philadelphia have
small holdings and are not professional investors; therefore,
the opportunity to buy large numbers of properties relatively
easily has not occurred.
An important finding of both programs is that the physical
character of the housing stock is an important variable.
The large number of small rowhouses, which had few windows
and limited exposed roof and wall areas, in Baltimore's
Patterson Park was the important factor in keeping the re-
hab cost of homes low. Conversely, the large houses in
Butchers Hill require extensive improvements that few ten-
ants or low-income households can afford. In both neigh-
borhoods, vacant houses have been a problem because reha-
bilitation requires an investment that exceeds their market
values. The special circumstances that long-term vacant
houses present can be solved only through public subsidy
or through attracting buyers who are willing to invest
319 �� oZ
more money than is justified by market value consider-
ations. Baltimore has used both techniques to deal with
the problem.
The study has shown that local factors largely determine
which program elements will be most in demand and shape
the character of the program. These local factors also
determine the program's potential impacts. In the case
of Baltimore, Patterson Park has benefited from circum-
tances that increased the chances for success, including
the following:
• The existence of strong community organizations
that endorsed NHS and gave it political influence
and credibility in the neighborhood;
• Participation by aggressive and talented lenders,
neighborhood residents, and an NHS staff that de-
veloped effective working relationships;
• A strong spirit of cooperation and support for NHS
from the city and its housing and community devel-
opment staff;
• Generous public loan programs and homeownership
promotion activities by the city; r
• Interest in and demand for housing in the NHS
neighborhood by outsiders who had the financial re-
sources to rehabilitate vacant and problem proper-
ties; and
• Extensive local and national publicity about pro-
gram successes.
In short, the HOP is a flexible tool that NHS programs can
adapt to local needs and objectives. Local conditions,
program design, and expectations of staff, board members,
lenders, and city officials will determine what can be
accomplished and the extent to which the program can pro-
duce positive neighborhood change. Although the Neighbor-
hood Reinvestment site selection criteria may be important ;
in identifying areas of high potential, particularly for
tenant conversions, local conditions and factors largely
determine character and potential impact of the program.
RELATIONSHIP BETWEEN THE HOP AND NHS
The HOP is clearly an important NHS tool. It enables NHS
to conduct more comprehensive neighborhood revitalization
320 ���
efforts. In many NHS neighborhoods, vacant or hard -to -sell
properties or absentee -owners contribute to negative envi-
ronmental conditions and make it difficult to build the
confidence needed to trigger reinvestment.
As a matter of course, NHS programs respond to requests
for home purchase assistance, so that even without a formal
HOP, an NHS program probably is providing many of the same
services. Both Baltimore and Philadelphia provided HOP -
type services before a formal program was established.
The establishment of an HOP shows that the local NHS board
considers homeownership promotion important and creates an
administrative structure to plan and implement an inte-
grated program. With the creation of an HOP, staff members
are designated and trained to handle HOP services. Estab-
lishing an HOP provides lenders with the motivation to
make a financial commitment to provide financing for home
buyers with the assurance that the NHS staff will provide
in-depth assistance to buyers and undertake much of the
work related to processing cases. An HOP can also help
increase neighborhood confidence by publicly recognizing
the opportunity to attract new buyers and investment to
the area. In short, by expanding the revitalization tools
available, the overa•11 NHS effort becomes more effective
' and capable of dealing with the variety of factors that
relate to neighborhood blight and decline.
Homeownership promotion depends on other NHS services, and
it probably would not be effective in isolation from otenr
ther
NHS efforts. Its success depends on expectations by poten-
tial home buyers that purchasing a home in an area will be
a good investment. This kind of climate can be stimulated
only when there is evidence and confidence that other NHS
efforts are succeeding and that neighborhood conditions
are improving. NHS must be able to demonstrate that the
goals of the HOP --homeownership promotion and tenant con-
version --are reasonable and justifiable given the neigh-
borhood environment.
PROGRAM BENEFICIARIES AND IMPACT ON STRUCTURES
Even though the Baltimore and Philadelphia programs have
differed significantly, the beneficiaries of both cities'
programs appear to be largely first-time home buyers --
either singles or young couples just starting a household
or middle -age small families who are able to buy a home
for the first time. These buyers would not be able to af-
ford homes in most neighborhoods, and many would not be
able to buy without the financial assistance and counsel-
ing NHS provides.
321
Beneficiaries of the HOP will vary by locality and will
be determined by the goals set by NHS and the neighbor-
hood conditions and circumstances in which the program
operates. In East Frankford, the study showed that buyers
tended to have blue collar jobs or better -paying service
jobs such as mechanics or nurses. Most were black and
had previous ties to the area. They were not very dif-
ferent from other residents of the area. In Baltimore,
the beneficiaries were more diverse. Most were white.
Many were former renters in the area who held low-paying
jobs, but many others were low -salaried professionals or
persons who temporarily had low incomes, such as students,
medical interns, or young professionals in their first
jobs. Many were single -person households or couples with-
out children. Some moved to Patterson Park from outside
the area; they viewed homeownership as a better investment
than renting and were attracted to Patterson Park because
of its low cost housing, its location, the neighborhood
character, and the excitement of participating in a neigh-
borhood revitalization process. Many of these "newcomers"
have moderate incomes and are willing to make extensive
improvements to their homes. Their commitment to the area
and investment in their homes provide, in the opinion of
NHS staff, the needed leadership and evidence to residenits
of the area that the neighborhood is being upgraded.
While the concept of tenant conversion is an important
element of the HOP, simply converting tenants to home-
owners may not improve the climate .for investment and
neighborhood conditions. Tenant conversion makes sense
only if the homes bought are in good repair or are im-
proved and meet reasonable neighborhood standards. The
HOP approach provides the opportunity, in most cases,
to finance rehabilitation costs as part of the purchase.
Most homes need some rehabilitation work, and many are
severely deteriorated.
The rehabilitation requirements implicit in the HOP, but
absent in non -NHS private market transactions, serve three
objectives. They ensure that the new homeowner will not
face major repairs in the early years of ownership; that
improvements are financed as part of the long-term loan
provided rather than through more costly improvement loans;
and that structures are upgraded, thereby improving physi-
cal conditions in the neighborhood. Under the HOP, tenant
conversion becomes a technique for upgrading the physical
conditions of properties.
k4,2-
322
DISPLACEMENT
Displacement has not been a problem in Philadelphia's East
Frankford neighborhood. A large supply of housing is
available, and no programs, including NHS, are dislocating
families. Most (57 percent) of the homes bought through
the HOP had been vacant. It does not appear that any
displacement has been generated by absentee -owners trying
to sell properties. There is no gentrification occurring,
and, unless there were radical changes in the program and
in the community perceptions of the area, it is unlikely to
occur in the future. The sales market is soft and the sup-
ply of housing far exceeds demand.
In Baltimore's Patterson Park, the sales market is rela-
tively soft but some displacement is taking place. What
constitutes involuntary displacement is difficult to define,
and data were not available on the extent of displacement.
Some displacement is the result of absentee -owners selling
to new buyers; some renters cannot afford to purchase the
homes they occupy. Although some families may. be forced
to move, NHS has developed a displacement strategy and
tries to provide financial and other assistance to renters
looking for alternative housing. The Section 8 rental
program is used largely to provide housing for displaced
renters. Baltimore has also tried to maintain the low -
and moderate -income character of its HOP neighborhoods to
preclude gentrification and prevent abnormal increases in
property values.
NHS staff members believe that the HOP can effectively pre-
vent future displacement. By facilitating the conversion
of tenants to owners, the program protects new buyers from
potential displacement. Not only do the owners physically
control the unit they occupy, but they can participate in
the financial benefits arising from increased property
values. Homeownership helps to stabilize housing costs,
protecting them from rent increases. The HOP can help
assure that current residents benefit from the improvement
that occurs. However, rising values can result in increased
property taxes and tempt many lower-income owners to sell
their properties to more affluent buyers. In Baltimore,
displacement could become a troublesome problem if values
were to rise rapidly and residents were prevented from
continuing to rent or buy in the area. Whether this occurs
will be determined largely by how attractive the area be-
comes to outsiders.
1, �2_
323
COST EFFECTIVENESS
Both Baltimore and Philadelphia have a variety of pro-
grams, including NHS, designed to promote homeownership,
eliminate vacant properties, and encourage rehabilitation.
In comparison with other programs, the scale of the Pat-
terson Park effort has been impressive, but other Balti-
more programs also have been successful. The level of ac-
complishment in East Frankford has been more modest, but
its resources and opportunities have also been more circum-
scribed.
Lack of similar programs makes it difficult to compare the
cost-effectiveness of the HOP approach; however, the HOP
has been able to assist in creating a large number of home-
owners at a relatively modest administrative cost in both
sites. For example, in East Frankford it cost about $700
in the first year to help a tenant to buy a house, not tak-
ing into account the value of the assistance provided to
those who did not buy and the cost of efforts to motivate
and involve realtors. Another measure of cost-effectiveness
is to compare administrative costs to the investment gener-
ated. With an expenditure of $30,000, the IiOP was able to
generate an investment of $115,035 in property purchases
and $62,900 in rehabilitation or a total of $177,935• Each
East Frankord HOP grant administrative dollar was matched
by five dollars of private investment. Some of this in-
vestment may have occurred anyway, but even if the HOP
were responsible for only half the purchases, its adminis-
trative budget would be leveraged, two and one-half times.
Because of Baltimore's integrated program approach, it is
not possible to develop cost estimates for the HOP. As a
demonstration effort, in one year 122 homes were purchased
when the program had a $55,000 budget; the average adminis-
trative cost per purchase was about $450. HOP administra-
tive costs are low compared with federal and city efforts
that subsidize the costs of rehabilitating properties or
of homeownership.2 The relatively low cost of the HOP is
possible because it relies on the private sector and does
not rely on major subsidy.3
The HOP also differs from many other programs in the com-
prehensiveness of its services and the personal attention
provided to each client. It provides personal assistance
and counseling and coordinates all the processes involved
in buying a home. Most other programs provide more limited
services.
1144 Z2
324
t
Relying on private sector mechanisms and normal market
conditions, however, sets limits on program acomplish-
ments. The HOP cannot help buyers who are not credit-
worthy or deal with the properties whose rehabilitation
costs are excessive relative to the debt capacity of po-
tential buyers. It cannot help very low income households
buy homes. This does not mean that the HOP is not an
important and cost-effective homeownership promotion strat-
egy, but its applicability is limited to neighborhoods
where public subsidies are unnecessary.
THE ROLE OF 14EIGHBORHOOD REINVESTMENT
Neighborhood Reinvestment played important but different
roles in Baltimore and Philadelphia. The Baltimore program
was supported with financial aid, the guidance and experi-
ence gained during the development process, and an opportu-
nity to sell NHS loans in a secondary market. In Philadel-
phia, Neighborhood Reinvestment provided financial assist-
ance and extensive technical support and training from
Neighborhood Reinvestment and from the Baltimore NHS. The
assistance was probably an important factor in the level
of accomplishment achieved in both cities. On the other
hand, because the problems that HOP intends to address
exist in many neighborhoods, it is very possible that
HOP -type activities would be developed in the absence of
Neighborhood Reinvestment support." In fact, many cities
have programs to promote homeownership. Both Baltimore
and Philadelphia were involved in aspects of homeownership
promotion before they received Neighborhood Reinvestment
assistance.
Neighborhood Reinvestment funding and guidance is essential
in creating the NHS motivation and commitment to establish
a formal HOP and to make such services available in a
structured manner. It is also essential to help NHS design
tools to take maximum advantage of both public and private
resources that have to be applied to the problem. Many NHS
programs are probably providing one or more HOP services,
but they probably would not make the same financial and or-
ganizational commitment as recipients of Neighborhood Rein-
vestment grants. Neighborhood Reinvestment helps promote
and support the replication of the HOP and helps sell its
concept to lenders and board members. Neighborhood Rein-
vestment has provided a legitimacy and a credibility to
the program that local NHS staffs could probably not pro-
vide. It has helped NHS programs understand the many fac-
tors that must be in place to assist potential HOP clients.
It has transmitted the lessons learned in Baltimore, pro-
vided experienced and credible consultants, and has prob-
ably reduced the time needed for program implementation.
l�G oZ-
325
CONCLUSIONS
East Frankford and Patterson Park present contrasting ap—
proaches to promoting homeownership and to developing an
HOP. Patterson Park's experience seems unique in many ways.
Its achievements should not be used to judge other efforts
but to show the potential of the HOP concept. East Frank—
ford's program points out both the limitations and the
flexibility of the program concept when developed under
different circumstances or in a different environment. The
HOP broadens the capability of. NHS to deal with neighbor—
hood problems, but its success largely depends on each com—
munity's developing a program that reflects its own special
needs and circumstances.
#69X
326
Notes
1. One Philadelphia city official interviewed thought the
HOP could be replicated in about one-third of the city's
block grant target neighborhoods. Baltimore's Depart-
ment of Housing and Community Development reported that
the HOP could be established in a comparable number of
additional neighborhoods.
2. Efforts to obtain an estimate of local administrative
costs for similar programs were not successful. Even
where some budget figures were available, specific
activities associated with program administration spe-
cifically related to homeownership promotion could not
be be said separately
identified.
it ca
dth tif theadministrativeon
costs are � identity
fied, they are substantially higher than the figures
reported for the HOP.
3. The program does use subsidized loans, but subsidized
loans alone were not responsible for the increased re-
investment because they preceded the program and failed
in the program's absence to increase significantly
the rate of homeownership.
4. While such development is possible, it is not likely
in cities without well-developed housing rehabilitation
and assistance programs. Baltimore clearly has such
programs and provided the initial model for the develop-
ment of neighborhood reinvestment programs. The larger
question now is whether the city can and is willing to
mobilize itself to meet the kinds of needs that it ad-
mits exist. Philadelphia officials said, for example,
that the program could apply in one-third of their
block grant target neighborhoods, yet they had not
done the elementary coordinative work required for such
programs to emerge privately. The unique contribution
that Neighborhood Reinvestment makes is the creation
of a local process which breaks the inertia as each
partner sees how his or her interests can be secured
through simultaneous commitment to local private ac-
tion. Cities must deal with the broad range of neigh-
borhood and eonomic development issues, and such
action in a single neighborhood is not possible. Few
cities have the capability or interest in doing the
important developmental activity required to create
partnerships. Finally, as a result of past experience,
the private sector and residents are skeptical about
the city's capability for or sincerity about helping
neighborhoods.
7ZZ197
327
z
CHAPTER 19
j NEIGHBORHOOD REINVESTMENT: THE JOB REMAINING
This chapter explores some of the reinvestment issues that
remain for the Neighborhood Reinvestment Corporation, in-
cluding expanding the range and types of neighborhoods,
coordinating reinvestment activities with those of other
programs, and phasing down operations or changing the
focus of mature programs.
NEIGHBORHOODS IN NEED OF REINVESTMENT
Estimates of the number of neighborhoods that might benefit
j from reinvestment activity must be made with caution.
First, there is no standard definition of "neighborhood",
it depends on whether the interest in defining the neighbor-
hood is political, social, or economic, for instance. In
addition, the number of neighborhoods in a city is a func-
tion of how boundaries are drawn. A given geographic area
may include one, five, ten, or more neighborhoods. For ex-
ample, in Boston the Dorchester neighborhood is generally
referred to as a single neighborhood in economic terms,
but in social (and in some political) terms it represents
more than twenty separate neighborhoods with identifiably
separate social, racial, and economic characteristics.
The neighborhood definition also depends critically on
certain local factors, such as the stability of social
relations over time. Neighborhoods can be created by so-
cial events or demographic transition. Sometimes a neigh-
borhood emerges out of the interests of a group rather
than geography, so elderly persons or renters may have a
common interest over an area larger than a neighborhood.
Their interests and needs could support a particular type
of reinvestment initiative.
A second reason for caution is that even if the number of
neighborhoods can be identified, the selection of neighbor-
hoods appropriate for Neighborhood Housing Services (NHS)
or other Neighborhood Reinvestment programs depends on the
physical characteristics of the neighborhood and the inter-
est and capacity of a neighborhood group to start a program.
Neighborhoods that are similar on all other significant in-
dicators differ in level and effectiveness of the social
organization.
329
Third, program elements are continuously being developed
by Neighborhood Reinvestment that expand the range and,
therefore, the number of neighborhoods to which the part-
nership model could apply.
Finally, Neighborhood Reinvestment Corporation programs are
only one initiative for reinvestment. Several other pro-
gram initiatives are generated by private groups, by local
governments, and by federal agencies (i.e., HUD Innovative
Grants, HUD Self -Help, etc.).
Keeping these limitations in mind, however, a tentative
estimate can be made of the number of neighborhoods to
which neighborhood revitalization initiatives would apply.
Table 19-1 provides a basis for estimating that number
in the twelve cities in the study sample. Adding the
numbers in the last column of table 19-1 reveals that at
least several hundred neighborhoods might benefit from
reinvestment activity along the lines described. This
figure may be projected to the more than 250 standard
metropolitan statistical areas (depending on how neighbor-
hood boundaries are drawn and how other issues are con-
sidered). Also, some smaller cities that are not standard
metropolitan areas might benefit.2 Whether the total num—
ber of neighborhoods is 2,000 or 10,000 depends on how the
estimate is made. Nevertheless, many times the number of
NHS neighborhoods currently served would benefit from the
NHS program.
The answer to the important question of how many neighbor-
hoods Neighborhood Reinvestment should develop cannot be
determined by this type of analysis. The educational and
demonstration role and the testing and replication activi-
ties of Neighborhood Reinvestment are much more central to
its mission than creating a massive number of NHS neighbor-
hoods. It is important that Neighborhood Reinvestment's
success be measured by the quality and the continued dis-
covery and development of innovation, not by the number of
neighborhoods.
Neighborhood Reinvestment should continue to develop pro -
rams in additional cities and to expand programs in cit-
ies already participating. Programs in these neighborhoods
should focus on identifying new opportunities for expanding
the range of neighborhoods for which neighborhood revitali-
zation activities can apply and on improving and expanding
the number of tools for dealing with various neighborhood
problems --not just the original ones.
330
)lam" �2_
f
I'
U4
W
r
TABLE 19-1
Low- and Moderate -Income Tracts with Low -Density Housing
City
Total
Central
City
Tracts'
Tracts with
Median In-
come Less
Than 601 of
City Median
1 of All
Tracts Less
Than 801 of
Median
Tracts Less
Than 801 of
Median and
at Least 501
1-4 Family
Units
1 of Tracts
Less Than 801
of Median and
at Least 501
1-4 Family
Units
Number
of NHS
Programs
Additional
Potential
Programsb
Atlanta, Ga.
119
61
51
28
36
54
59
93
2
2
12
19
Baltimore, Md.
208
58
9
60
2
1
Bridgeport, Conn.
45
862
15
264
33
31
145
55
6
52
Chicago, I11.
Cleveland, Ohio
208
51
25
32
63
2
30
2S
Dallas, Tex.
169
88
52
69
2
78
100
3
1
1
La Habra, Calif.
14
2
14
33
89
2
11
Nashville, Tenn.
91
37
41
New York (Queens
County), N.Y.
660
118
18
81
69
1
24
Oakland, Calif.
107
45
42
36
80
92
1
2
13
26
Philadelphia, Pa.
362
77
21
71
75
1
1
Racine, Wis.
1s
4
27
3
Total
2,860
820
2'9
571
70
31
195
Source: Calculations from U.S. Department of Commerce, Bureau of the Census, 1970 Census of Population
and Housing; 1970 Final Report PHC (1) for various cities.
Note: The typical NHS is composed of the equivalent of two census tracts. In practice, however, it is
often composed of parts of three or more tracts.
a. Central city census tracts are only a part of the total SMSA. There are many suburbnn neighborhoods
that could benefit from an NHS program.
b. Based on the number of neighborhoods that have the minimum housing and demographic characteristics to
be an NHS. This assumes an MIS is at least 2.5 census tracts.
EXPANDING THE RANGE OF
Expanding the range of neighborhoods that might benefit from
the Neighborhood Reinvestment approach means in most cases
going into neighborhoods that have more severe or more com-
plex problems than existed in the original NHS neighborhoods.
Critics of NHS have often stated that the early programs
were conducted in neighborhoods that were easy to assist --
in other words, that a process of "creaming" occurred.
Program records do not indicate that neighborhoods or
individuals not needing assistance received it; however,
what is different about the first NHS neighborhoods and the
more recent ones is that the first neighborhoods were more
uniform in their characteristics. For example, they had
more often single-family housing and had a higher percent-
age of home ownership, and their principal problem was a
denial or severe limitation of credit and a resultant de-
pression in real estate prices and resident confidence.
They did not, as do some more recent NHS neighborhoods, have
major commercial areas, large apartment buildings, exten-
sive foreclosure, more absentee -ownership, etc.
The expansion neighborhoods and the neighborhoods organized
since 1977 are somewhat different from the first NHS neigh-
borhoods. The later programs include higher percentages
of renters and multifamily units. Other data suggest that
the newer neighborhoods more often have problem properties
or require more expensive rehabilitation for reinvestment
to make a difference.
These neighborhoods were also organized at a time when
interest rates and costs had escalated substantially, when
the opportunities for mobility were impaired (because of
higher rates and costs), when competition for valuable
space within the central city was increasing, and when
real or potential displacement and the more limited options
for low-income elderly and renter households had become
more evident. As discussed earlier, Neighborhood Reinvest-
ment has already begun to face the challenges of more dif-
ficult neighborhoods, which are likely to become a more
central aspect of NHS development and expansion in the
future.
In the study, executive directors were asked if they felt
their organizations could take on more difficult neighbor-
hoods in their cities. Most (eight of twelve) directors
indicated that they could handle.more difficult neighbor-
hoods, that there had been a substantial "learning curve"
that let them apply many more tools than they were aware
of or were available in the early and mid-1970s when their
programs started. However, success would require a con-
tinuation of the present level of government funding or
a substantial increase in private funding.
332
WP,2.
This challenge also highlights the need for continued
development of Neighborhood Preservation Projects (NPPs)
to identify and document tools that are helpful in dealing
with specific problems, such as small apartment buildings
(for which the Apartment Improvement Program is not help-
ful), vacant buildings, vacant land, and blight in neigh-
borhood commercial areas. The experiences of these pro-
grams will also benefit city and federal efforts in housing
and neighborhood development in the coming years.
INFORMATION DISSEMINATION AND TECHNICAL ASSISTANCE
To this point, Neighborhood Reinvestment programs have
been assessed for their direct impact and their effect on
the development and support of local partnerships. Another
mandate that Neighborhood Reinvestment has from Congress
is to disseminate information on Neighborhood Reinvest-
ment activities. The Neighborhood Reinvestment Corporation
is held in high regard among housing and community develop-
ment people we interviewed and its activities have sub-
stantial influence in housing and reinvestment circles,
whether in local government, advocacy and citizen groups,
or the lending and financial industry. The question that
remains is how the specific lessons learned from develop-
ment activities in several issue areas can be more widely
disseminated within NHS and to reinvestment programs ini-
tiated by other organizations. Specifically, implementa-
tion could involve efforts to offer training to non -NHS
persons and to provide workshops and other training activi-
ties for people outside NHS.
There is a temptation to suggest that Neighborhood Rein-
vestment should offer even more technical assistance and
continuing education to a much larger audience. However,
there are limitations to present Neighborhood Reinvestment
resources, making it difficult for Neighborhood Reinvestment
to increase the client categories for its direct services.
That is, Neighborhood Reinvestment cannot become a resource
for providing general development and support services for
neighborhood development. Such expanded activities would
take resources from NHS development and from testing, doc-
umenting, and replicating new approaches to solve neighbor-
hood problems.
This conclusion notwithstanding, Neighborhood Reinvestment's
current low profile might be expanded to include activities
that could broadly be called professional information ex-
change and professional development. In particular, it
333
7002--
might offer training programs for persons in small- and
medium-size cities; transfer information on neighborhood
reinvestment to professionals through continuing education
programs in major professional organizations in housing
and city planning; and orient professional organizations
of realtors, housing managers, and others whose enlighten-
ment and sensitivity would substantially improve their
ability to help low-income urban residents.
COORDINATION WITH FEDERAL PROGRAMS AND PRIVATE SECTOR
ACTIVITIES
Neighborhood Reinvestment has made a substantial effort
to integrate its efforts with those of federal programs,
principally those within HUD. Formal agreements relating
to the allocation of Section 8 Existing subsidies have
been made, and Community Development Block Grant funds and
the Neighborhood Strategy Area program frequently are avail-
able for NHSs. While HUD's central office has encouraged
the channelling of resources, the basic agreements are worked
out between NHSs and local government. Section 312 and
the homesteading program have had very limited application
in NHS neighborhoods. Initiatives with other agencies
and with programs in the federal government are beginning
to take place but are not extensive at this time.3
Coordination with the private sector has been much more
substantial. As of 1979, 44 foundations, including the
Ford Foundation and the Lilly Foundation as well as local
and regional foundations, have contributed to local rein-
vestment programs. The Ford Foundation has entered into
agreements with Neighborhood Reinvestment to pursue de-
velopment of programs in energy conservation and rental
housing. In addition, Neighborhood Reinvestment has de-
veloped "full partnerships" with the insurance industry.
To meet the needs of existing programs in the future, to
develop new programs, and to expand the range of resources
available, private sector involvement should continue.
THE FUTURE OF MATURE NHS PROGRAMS
Although the NHS program represents a substantial addition
to the resources available to a neighborhood, the program
in its original form need not operate in the neighborhood
indefinitely; after a time private reinvestment is stimulat-
ed, as reflected in improved credit availability and
increased reinvestment by residents. Leaving aside the
question of how to determine when this point is reached for
a given program, the task of Neighborhood Reinvestment is to
help local NHS programs assess how to best serve the neigh-
borhoods with the available resources and how to ensure that
7rp�
334
the NHS programs continue to respond to their mandates and
not settle into static operation. This issue cannot be
dealt with conclusively in this report and, therefore,
suggestions made here are tentative. They are tentative
partly because relatively few programs have been in opera-
tion for more than five years, viewed by many participants
as the minimal time needed to achieve program goals.
The impetus for phasing down NHS operations typically comes
from lenders, who fear that their involvement in the NHS
could become long term and that they might be asked to help
support both existing and new neighborhoods. Several lend-
ers have stated that at some point they should be able to
transfer their contributions to an NHS in another neigh-
borhood or to another kind of community initiative. In
the study cases, NHSs in Dallas, Baltimore, and Near North-
west Chicago are examples of programs that have indicated
the ability to phase down the operations of the original
program or to drastically change program focus.
Most NHS staff and neighborhood residents see a need for
some residual NHS activity in a neighborhood, even if the
program phases down or moves to another neighborhood.
There are two reasons for this belief. First, people in
need of revolving loans are not likely to benefit from a
change in lending activity. Their problems are limited or
fixed incomes, age, credit history, employment status --all
of which limit their access to credit at conventional
terms. The present and near-term future economic trends
and credit market are not likely to offer much hope for
higher income or cheaper credit. For these residents to
make the reinvestment and repairs necessary, they will
need access to some kind of below-market loan fund.
The second reason concerns home maintenance. Persons who
improve their homes need continuing access to advice and
assistance regarding rehabilitation. After a program
achieves its initial goal of improving the private rein-
vestment climate in the neighborhood, a way is needed to
help owners keep up their homes, to reach owners who
after five years still have not made improvements, and to
help them negotiate the maze of public and private resourc-
es.
One approach for mature NHS programs to consider is that,
although reinvestment activity on the part of homeowners
may pick up substantially, the neighborhood may continue
to have problems with apartment buildings, absentee -owned
44G .Z
335
or vacant property. An NHS program might shift its program
emphasis as an alternative to phasing down. Instead of
dealing with owners, they might work with landlords or with
tenants to increase homeownership opportunities.
Another avenue for a mature program is to expand the
neighborhood's boundaries to pick up areas where obvious
impacts could be made. Many original boundary decisions
were made in light of assumed limitations of the then un-
proven NHS model. Boundary expansion would involve a
substantial refocusing of the program, but it would also
offer the opportunity to shift a major portion of staff
time and resources to new activities without abandoning
the original neighborhood.
i
Of course, this discussion is not conclusive. One of the
research activities of Neighborhood Reinvestment should
include more detailed analyses of alternative scenarios
for the more than thirty NHS programs that will be five
years old by the end of calendar year 1982. Concurrently,
Neighborhood Reinvestment should explore how the partner-
ships can be preserved through what may be a tense adjust-
ment period. Such changes will be favored by contributors
to the operating budget, but will cause anxiety among
residents.
336 ,l6 2,
337 '/6�
Notes
1. In political terms, there are "wards"; in social pro-
gram terms, there are "catchment areas," "target areas,"
"service areas," etc. These are formal and real bound-
aries, even if they are not recognized socially, since
they define the area within which certain services are
available or within which certain regulations apply.
They are not neighborhoods, but they have been treated
as such for government programs, sometimes with nega-
tive consequences.
2. If the thirty-one programs developed in twelve cities
in the study are extrapolated as the incidence for the
full universe of standard metropolitan statistical
areas (SMSAs) and a pattern of concentration as re-
fleeted in the twelve cities (from one to seven pro-
``
grams in the city depending on the city size and other
factors) is continued, this means that about 650 NHS
programs could be established. If, on the other hand,
the future development is based strictly on the number
i;
of additional neighborhoods in the cities that might
have programs developed (column 6 in table 19-1), then
f,
the net potential projected to all SMSAs comes to
about 4,100 NHS programs. Of course, the number of
programs that might be developed in a city depends on
other factors than the straight demographic and popu-
lation factors reflected in this estimate.
3. For example, these agencies and programs include the
Department of Energy, certain manpower training pro-
grams in the Department of Labor, certain social serv-
ice programs (Title XX), and programs for the elderly
in the Department of Health and Human Services.
4. Only in Dallas has the program phased down its opera-
tions almost entirely in the original neighborhood
and the activity of the partnership moved on to a sec-
ond neighborhood. In the other cases, this phased -
down operation is taking place gradually or was in
the planning stage at the time of the study.
337 '/6�
CHAPTER 20
EXPANDING AND STRENGTHENING THE BASE OF SUPPORT
FOR REINVESTMENT
Several chapters in this report discuss the compelling
need to strengthen and expand local partnerships for rein-
vestment. The contributions that present partners can make
are limited and, as more difficult neighborhoods and more
diverse problems are tackled, additional resources will
be needed.
Likewise, opportunities exist for expanding the capacity
of the partnership. In addition to generating additional
resources, other actors, who are not presently or consis-
tently involved, can be involved in the reinvestment pro-
cess. Expanding the partnership's capacity allows for a
broader range of actors who can strengthen institutional
activities in urban neighborhoods.
This chapter discusses ways to expand and strengthen part-
nership capacity, both by local Neighborhood Housing Services
(NHS) and Neighborhood Reinvestment. These suggestions are
based on observations as well as conclusions about program
experience.
EXPANDING THE REINVESTMENT BASE
Neighborhood Reinvestment has made extensive efforts to
expand the NITS corporate participation to include insurance
companies. As the insurance industry increase its partici-
pation in a local NHS, it increases the NHS's resources
and flexibility. For example, the NHS has increased capa-
city to effectively enable homeowners to purchase voluntary
property casualty insurance. The insurance industry also
provides a contribution to the NHS. However, additional
partners could be involved in the NHS program, again,
substantially increasing the resources available to the
neighborhood. First, major corporations have a history of
providing significant levels of charitable support to im-
portant national issues. NHS programs may now be attrac-
tive candidates for such gifts either as individual pro-
grams in particular cities or collectively through a na-
tional fund-raising program for all NHSs, since NITS is the
only private community revitalization program operating
in a large number of cities.
339
//- (,p 02-
In addition, there are many potential local corporate
participants or supporters who might be approached for
involvement in the NHS reinvestment partnership. Some are
discussed below.l
Major Local Employers
Many NHS cities and neighborhoods have major employers
who hire a significant portion of the residents. Such
employers range from steel companies to hospitals, univer-
sities, and manufacturing firms. Many companies sponsor
employee credit unions, group buying schemes, and other
financial activities. Many employers already make contri-
butions to charitable and educational activities. NHS
might well qualify.2
Utility Companies
Utility companies are under increasing pressure from both
federal and state governments to provide energy conserva-
tion services to their clients. Specifically, they are
being urged to provide low-cost loans, energy audits, and
other services. Most companies have no conduit for pro-
viding these services and are reluctant to set up a system
for delivering these services directly. The NH4 program
might serve as their delivery mechanism.
Building Materials Suppliers
Several cities have major building materials firms that
might be convinced to offer discounts to NHS on bulk pur-
chases of items such as insulation, paint, and lumber.
For example, if NHS were to identify several homeowners
who wanted to buy insulation materials, they might be able
to make a large purchase for the entire group at a savings
over the retail price. This discount may be considered a
charitable contribution; however, it is also the kind of
discount that is routinely provided when contractors make
large purchases.
Labor Unions
Just as many neighborhoods have large employers, many have
residents who are members of large labor unions. Large
labor unions typically provide services to their members
relating to financial assistance or major purchases such
as group buying. In addition, many unions contribute to
service activities in their city. Craft unions, for ex-
ample, may contribute their members' time to make emergency
repairs for elderly residents.
340
Religious and Fraternal Groups
Many neighborhoods have the same boundaries as parishes or
other religious jurisdictions. Churches may be able to
contribute space or services. In addition, religious and
fraternal groups can provide valuable services in outreach
and counseling, although care has to be taken to avoid in-
stitutions that are not widely accepted in the neighborhood.3
This list cannot be inclusive of all the groups that have
or could be approached. We did not include corporate founda-
tions, department stores, cooperatives, etc. We only mean
to suggest categories of potential participants.
All of these groups have an interest in or a potential role
in improving their neighborhoods, and all stand to benefit
from neighborhood revitalization. These groups would like-
wise benefit from having a mechanism for pursuing their
service interests or for providing them with the opportunity
to provide services. Some NHSs have already made progress
in involving some of these actors. The Dallas program in-
volves a major department store; the Bridgeport, Conn.,
i NHS receives substantial corporate contributions (fifteen
corporations contribute to the NHS operating fund); the
Catholic Church in Baltimore provided initial office space
for the program; and real estate agents are involved in
the Atlanta program.
In suggesting these additional supporters, it is important
to make two points. First, a few programs have already made
progress along these lines. Second, supporters do not need
to be brought in as formal partners with board representa-
tion. They may be partners in the sense of limited cor-
porate membership where they are assigned specific roles
consistent with their business or charitable interests.
They need not be viewed as equals with traditional part-
ners. In many cases it is not appropriate (because the
relationship is casual) and in other cases, formal partner-
ship is not practical.
STRENGTHENING THE REINVESTMENT PARTNERSHIP
After ten years, NHS can be viewed as an ongoing institu-
tion, not as an experiment, even though there is a testing
and learning aspect to every developing program. The edu-
cational process used to develop programs and to identify,
test, and replicate additional tools is inherently experi-
mental; reinvestment changes continuously as new challenges
are sought and responded to. However, a core set of acti-
vities relating to the activities of the residents, finan-
cial institutions, and the city is common among established
programs.
341 �lb z
This section looks at what each NHS program and Neighborhood
Reinvestment can do to strengthen local partnerships.
The NHS Role
NHSs can do several things to strengthen their partnerships.
In terms of residents, there is a definite need to increase
the residents' role and their level of participation. Resi-
dent activity is limited by program maturation, slow board
turnover, and difficulty in involving additional resident$
(such as tenants and absentee landlords) in NHS activities.4
Efforts to strengthen the residents' involvement in the pro-
gram will ultimately involve additional efforts at outreach
and improved community relations. These might include find-
ing new ways to serve owners who have already made improve-
ments but who might need assistance in home maintenance.
It would involve attempts to find new roles or residents
in the ongoing operation of the NHS program. It would also
involve efforts to reward or support residents who have
been particularly active in improving the neighborhood.
Activities along these lines often are not given top prior-
ity in mature programs, which appear to become mode staff -
oriented as the day-to-day operations and decisions about
changes in program design or emphasis are made by the
staff and the most active members of the board. This type
of operation has a tendency to make residents feel that
there is relatively little for them to do.
NHS should also pay increased attention to the representa-
tives of financial institutions. Many have expressed con-
cern about the direction of the NNS program and how long
they would be asked to contribute to it. Questions about
NHS program activities were raised; for example, some ob-
jected to the NHS's taking on additional programs; others
viewed the core program as being less important as the pro-
gram ages; and still others, out of a notion of efficiency,
want a work plan that outlines (and justifies) futurepro-
gram support. The best way to deal with these issues may
be for NHSs, after a year or two of operation, to develop
a plan for the next three to five years. This would re-
assure financial institution and city officials and also
provide a chance for the partnership members together to
plan future program priorities and to reaffirm the partner-
ship. This planning activity would be helpful in fund
raising. As the number of potential recipients of chari-
table contributions increases, the need each one has to
Justify its support increases.
342 116z
To strengthen the city's participation in the program, NHS
could expand the number of agencies involved, even if only
in an ex officio capacity. But this participation would
allow NHS to take advantage of other activities the city
manages that relate to the NHS neighborhood. For ex-
ample, commercial and economic development activities might
suggest the involvement of city officials from the appro-
priate agencies. It might also be appropriate to Add of-
ficials from social service agencies when a relevant group
in the NHS neighborhood is affected by those services. In
particular, NHSs should look for ways to expand their so-
cial services to the elderly, since this is a significant
group in many NHS neighborhoods. The public housing author-
ity might be another helpful agency, especially if the NHS
program makes extensive use of the Section 8 set-aside pro-
gram or if the city has a substantial and active scattered -
site public housing program.
Another concern reflected in the study interviews was that
city officials wanted increased accountability from the
!' NHS program. Preparation of a program plan, as suggested
above, would help to take care of that concern.
The Neighborhood Reinvestment Role
In reviewing the foregoing material, we make the following
recommendations with regard to what Neighborhood Reinvest-
ment might do to strengthen the NHS partnership:
I. Neighborhood Reinvestment can provide assistance to
local NHSs in short-term planning, including how to assess
how much reinvestment has taken place, how to know when
Promotion of private lending in a neighborhood has oc-
curred, how to identify and set new directions for program
activity given problems in the neighborhood, and how to
incorporate additional partners. Some of these activities
would be consistent with the initiatives in developing
Neighborhood Preservation Projects, but they also represent
substantial effort that could be included in the support
and technical assistance capacity of Neighborhood Reinvest-
ment. Assistance in planning could be a critically impor-
tant service to offer to local programs; although it is
often done informally, it should be offered systematically
to mature programs. In fact, Neighborhood Reinvestment
should suggest that planning is an appropriate activity
for local programs to pursue. NHSs should get help from
local groups first, such as colleges, universities, and
city planning departments, but they should be aware that
Neighborhood Reinvestment will provide materials, support,
and information to help programs strengthen their relation-
ships with the city and the financial community. Support
343 ��a-
activities in this area might be incorporated in workshops
for executive directors and boards.5
2. Neighborhood Reinvestment has recognized the need to
strengthen the residents' role in NHS activities and in
1978 began to sponsor workshops for resident participants.
At present, there are three regional workshops. As the
number of NHSs increases, it might be more appropriate to
have a larger number of workshops in more areas.6
3. uld
artici-
pationibyb financial orhood iinstitutions nvestment oand cities strengthen byproviding
more training opportunities for them in small cities on
how to initiate and support reinvestment activities. In
larger cities, they are often familiar with housing and
development activities that would support reinvestment,
and Neighborhood Reinvestment's development role is largely
a matter of convincing key participants to join. However,
in smaller communities, orientation in advance of the NHS
developmental activity might help win their support and
also make the support they provide more consistently help-
ful. This is one way to deal with the problems of added
costs and burdens in developing programs in small cities
and rural communities. This orientation, organized on a
state or regional basis, would reduce costs and
strengthen
the role that these partners can play
from very
beginning.
4. Neighborhood Reinvestment should provide more train-
ing and orientation sessions for financial institution
officials --loan officers, underwriters, and appraisers.
For example, efforts should be made to expand Baltimore's
successful urban lender program in a cost-effective way to
communities around the country, perhaps in conjunction
with state meetings of banking associations and savings
and loan foundations or with activities of financial regu-
lators. Lending institutions may even offer financial sup-
port for urban lender training as part of a continuing
education activity for their professional staffs.
5. Neighborhood Reinvestment should assess local program
activity more systematically by maintaining a management
information system that provides information on what pro-
gram activity includes, where the problems are, and which
areas need resources and support. The reporting and eval-
uation activity should be kept at a minimum, however, to
avoid burdening NHSs with excessive paperwork or reporting
requirements. In the past, there has been only a limited
oeiinresult
is and are
theirrelatively
few systmatcdata on program activtieimpacts.
344
Y
The suggestions for strengthening and expanding partner-
ships for reinvestment are supported by research obser-
vations in the twelve study communities and a review of
i other materials on the NHS experience. Many programs have
already made some initiatives that support, if not validate,
the appropriateness of these suggestions. However, because
a program cannot undertake all these efforts, a substantial
effort is needed to help each NHS start the appropriate
combination of initiatives.
Additional efforts toward improving and strengthening the
support relationship would not only expand the reinvestment
y activity, but would also increase the leveraging ratio on
federal funds. In that regard, support by Neighborhood
Reinvestment represents not an ongoing cost but an invest-
ment that will have a significant return. Providing sup-
port on an ongoing basis represents an opportunity to
improve and expand the benefits of what has been built
rather than a need to spend money to salvage a problem
program.
345
446� -
I
1
Notes
1. The term "partner" has a special meaning for those in-
volved in the NHS program. There appears to be little
inclination on the part of those interviewed to change
the basic relationship of a partnership among repre-
sentatives of financial institutions, residents, and
city officials.
2. In the study cases, the Bridgeport NHS has done an es-
pecially extensive job of bringing in local corpora-
tions --it has involved more than a dozen in its local
program activities.
3. In several NHS neighborhoods, the Catholic Church, or
its service organizations, has already been helpful in
this regard.
4. Some landlords will not cooperate, but some do want to
improve their properties and provide more and better
rental units. These landlords should be encouraged
even to the point of providing them access to a limited
amount of subsidized loan or revolving loan funds when r'
they are willing to establish limitations on rent in-
creases or other mechanisms to ensure that public sub-
sidy is not subverted for their own increased profits J.
or used for non -needy tenants.
5. Neighborhood Housing Services of America, Inc. (NHSA)
is developing an effort to be known as the Financial
Development Project which will help local NHSs address
their fund-raising activities.
6. NHSA is currently developing mechanisms to identify
additional ways to strengthen resident participation
in NHS programs.
346 ?�Z
■
CHAPTER 21
EMERGING ISSUES FOR NEIGHBORHOOD REINVESTMENT
This chapter examines some of the emerging issue's that
Neighborhood Reinvestment will have to face, specifically,
fund raising, strategies for development in small cities
and rural communities, displacement, linkages to commer-
cial reinvestment, and professional development.
FUND RAISING
As the number of cities with Neighborhood Housing Services
(NHS) programs increases, the need for additional support
to operate local NHSs will increase dramatically. Public
dollars, mainly from Community Development Block Grants,
have filled the gap in recent years; but if the NHS program
is to retain its character, public funds cannot be the
1 only resource for new support.
This situation suggests the need for Neighborhood Reinvest-
ment to move in two directions. First, the number of con-
tributors and partners for the local programs should be
expanded. Second, new mechanisms should be identified and
created to raise funds as the number of programs increases.
This must be done in a way that does not increase the bur-
den of fund raising for local programs or cause competition
among programs in a city or region. The state foundation
t in California is one example of how financial institutions
have dealt with these problems. Other models should be
sought that allow for some central body to raise and allo-
cate funds for local programs. Neighborhood Reinvestment
is well aware of this issue, and NHSA is developing strat-
egies to mount a national fund-raising effort as well as
a program to assist local programs in improving the fund-
raising capacity with minimum interference in program
operations.
In pursuing this issue, several potential problems must be
discussed. First, an organization or foundation raising
funds might try to impose priorities or restrictions on
local programs that may be difficult for them to accept.
Priorities differ according to program age and neighbor-
hood problems; therefore, program funding will need to be
targeted toward a variety of initiatives. For example, a
new NHS might require funding assistance to deliver core
'� '7-
347
services, while a mature NHS might be interested in fund-
ing for specialized programs such as homeownership assis-
tance. Problems could also arise when multiple neighbor-
hood programs desire to maintain autonomy from the central
board with respect to determining neighborhood priorities.
Second, additional fund-raising efforts will impose more
structure (such as requiring a work plan) on NHS develop-
ment and on support from Neighborhood Reinvestment. Some
may view these attempts as increasing bureaucracy, regard-
less of whether the source is Neighborhood Reinvestment in
Washington or a potential private contributor.
Fund-raising initiatives are necessary to keep the private
sector as the basis of permanent program support. The ab-
sence of enhanced private fund-raising will mean the ac-
celeration of a trend already documented, in which local
programs seek contracts and grants and enter into other
arrangements with cities to obtain additional funds. In
some programs, these arrangements have the effect of re-
stricting what the NHS program can actually do. In the
worst case, for example, it means that more than half of
the staff's time is spent in administering city programs
rather than operating the NHS program. Putting greater
emphasis on identifying additional private resources would
help maintain NHS's flexibility in determining program
dimensions. Private fund-raising would also deal with an
issue raised by many residents --that an NHS program, as
it matures and as private funds fail to keep pace with
program demand, eventually becomes dependent on city hall.
SERVING SMALL CITIES AND RURAL COMMUNITIES
Despite its big city origins, in many ways the Neighbor-
hood Reinvestment approach to neighborhoods is a commu-
nity approach. It is based on a recognition of the im-
portance of the neighborhood social fabric in developing
commitment for collective action (in this case for re-
investment). Yet to this point, efforts have been directed
more toward large cities; less than 1 percent of cities
under 50,000 have NHS programs. Recent experience with
NHSs in small cities has pointed out the requirement for
significantly more resources per program. Part of the
cost is logistical, and part is because the staff has to
mobilize the more limited resources available in these
smaller areas. The needs of smaller communities cannot
be met dust by expanding the present scale of develop-
mental activity. Training, testing, documenting, and dis-
seminating programs and information and development assist-
ance will be especially important because of the low levels
348 7,�°2"
of local expertise in small cities. The reader will note
though that NHSs in smaller communities address a greater
proportion of the total reinvestment need in the smaller
city--potentially 50 percent or more of needy neighbor-
hoods.
Neighborhood Reinvestment should search for additional me-
chanisms to generate reinvestment activity in smaller com-
munities--mechanisms that will be less costly and more in
keeping with the scale at which Neighborhood Reinvestment
can be effective. With some success in this search, the
reinvestment needs of more than 1,500 small cities can be
addressed.
As far as could be determined, there are no efforts to im-
prove delivery capacity and to develop and mobilize re-
sources such as those found in the NHS partnership. The
Department of Housing and Urban Development (HUD) has re-
cently made initiatives to help small cities in planning
and development activities, but this is primarily in the
form of limited technical assistance and short-term assis-
tance to help communities better use discretionary funds.
Neighborhood Reinvestment's contribution could be to de-
velop appropriate delivery mechanisms in these communities
and identify and test innovative preservation approaches.
This contribution is sorely needed if HUD's efforts in
promoting development in small communities are to be effec-
tive. Indeed, developing these mechanisms will create a
demand for HUD resources and for state and local resources.
DISPLACEMENT
Neighborhood Reinvestment has focused on helping long-
term residents to improve their neighborhoods; to that
extent, the NHS program represents a major effort to pre-
vent or minimize displacement. There is no evidence that
NHS programs have resulted in significant displacement in
the neighborhood at -large; in fact, some NHSs have served to
prevent displacement that might otherwise have occurred.l
Nevertheless, there are serious challenges to whether this
record can be maintained in the future without special
efforts. First, there is the problem of renters. It is
important for the Apartment Improvement Program to be
available to assist neighborhoods in cases where large
multifamily buildings might become unavailable because of
disinvestment (abandonment) or reinvestment (such as
44�z
349
condominium conversions) that leads to displacement. How-
ever, adequate tools for dealing with small apartment build-
ings have yet to be developed, a major challenge for Neigh-
borhood Reinvestment. The availability of the Section 8
program has been instrumental in minimizing the negative
impact that renters might otherwise have felt in NHS commu-
nities; its continuation or the development of alternative
ways to help renters is strongly urged.
OTHER ISSUES
Another issue for Neighborhood Reinvestment involves help-
ing very low-income households within NHS neighborhoods.
As NHSs are developed in more deteriorated neighborhoods,
family resources (including the ability to get credit)
will be more limited. The revolving loan fund analysis
pursued in this study showed that a typical family using
the revolving loan fund has two adults and often two in-
comes. As more deteriorated neighborhoods are taken on,
the higher proportion of low-income families will mean
more potential clients for the revolving loan fund. More
residents will be renters who may be unable to deal with
even modest increases in rents that might result from re-
habilitation, and low-income homeowners who will have lim-
ited resources to invest.2 These communities have par-
ticipated in previous government initiatives that have
not worked well, and the level of cynicism and even oppo-
sition to government programs that require personal in-
volvement (such as submitting to means tests and code
inspection) will be substantial.
Neighborhood Reinvestment must also decide how to deal
with neighborhoods where a number of the structures, such
as old mansions or estate houses, cannot be rehabili-
tated by the residents without large subsidies. In a
few cases, this problem may be remedied by Section 312
or Section 8. If those programs are not available, then
local resources will have to be identified. State programs
might also be helpful in a few states (Massachusetts,
Maryland, California, Minnesota, etc.). Without subsidy,
private investors will have to be sought, though the poor
are unlikely to benefit directly. But in several neigh-
borhoods in the study cities --Atlanta, Nashville, Dallas,
and Bridgeport-- many large old frame houses exist.
These houses were originally built as mansions, many have
architectural or historical value, and many are on large
lots. Some have been used as rooming houses or have been
subdivided into apartments. There are a number of choices
for dealing with these buildings. One is that the building
can be renovated as a rental building for low- and moderate -
116 oz
350
income families. This is fairly expensive and may be ob-
the density, if
jected to by nearby homeowners who view
unacceptable. Although
not the transient population, as
these the o st Of
this may b positive use of
this kind of aprohibitivehomes,
rehabilitation is w without large
subsidies.
Another alternative is to seek outsiders, including middle-
if
income persons, to rehabilitate the property, especially
displacement would be involved.
it is vacant, since no
Middle-income families are more likely to have the money
or access to credit required for substantial rehabilitation.
Some may be interested in these houses for their architec-
neighborhoods, middle-
tural or historical value. In some
would be viewed positively by existing
income resettlement
owners for several reasons, not the least of which is the
on nearby
appreciation that such renovation would generate
houses.
In short, the issue of middle-income movement into NNS
in neigh-
areas will have to be faced more squarely some
. There
it has been in the pastro
borhoods in the future than
riate
conflicts among residents about the appropriate
are real fo
approach. In several cities in the study,
it
there was opposition to using Section 8 becausewould
bring in lower-income families. This opposition often arose
in the neighborhood.
from board members who were residents
be demands by renters to preserve
There will also substantial
housing in the neighborhood that they can afford, regard-
i_
any
less of its condition, especially considering current low
vacancy rates. There may even be resistance to rehabilita-
fear that it will
tion of such housing because the tenants
ultimately result in their displacement as general rent
levels rise. These concerns will affect Neighborhood Re-
its
investment in its support of existing programs and
development of future programs.
It is not Neighborhood Reinvestment's responsibility to de-
cide how to deal with this dilemma; local decisions must be
made by each program. But Neighborhood Reinvestment must be
in a position to counsel programs on how to deal with these
issues and be ready to suggest various tools to prevent or
minimize displacement.
LINKAGES TO COMMERCIAL REINVESTMENT
Commercial reinvestment is an area where Neighborhood Re -
be-
activities are st
therefore ram developmentu
di in this report.
ginning, and isnot csse
351
sug-
Nevertheless, the experience in the sample progr
s Com-
mercial
that the partnership approach is applicable.
reinvestment is important for several reasons.
en the most
sible
First,
of neighborhoodstatustoas are t vi
neighborhoodresidentsi
remind-
ers and
to outsiders. Second, commercial reinvestment is impor-
tant because the presence of commercial services and re-
tail services helps to keep current residents in the
ial
rneihborhood eind new
residents. rd
vestment isimportant
also mean more jobs.
In making reinvestment decisions, business people decide
quite differently than do homeowners. Property or business
owners are making investments in the neighborhood; they are
guided by the potential to recoup their investment through
the stimulation of additional revenues generated by high
incomes or more sales. In the absence of some assurance
will
that either incomes or owners andes businessowners are increase, commer-
cial property less likely
to improve their properties, even if they recognize that
such improvements are necessary. This is especially true
of cosmetic improvements or expansion of space or commer-
cial amenities.
Thse reinvestment
st be weigh-
edeagainst rthe Vefact r that commercial
u
new businesses fail within
five years and that many neighborhoods have businesses
that residents would like to see removed (such as garages,
junkyards, adult movie theaters, and liquor stores). There-
fore, the goals and requirements of commercial reinvestment
will have to be pursued in a manner compatible with the
neighborhood development goals of NHS. Although the goals
of the residents and local business people may appear
to
conflict frequently, as with NHS partners, Neighborhood
Reinvestment's role is to discover the overlapping inter-
ests --the common ground on which the local business commu-
nity and NHS can stand in revitalizing declining commercial
districts ent to NHS areas. This becomes
important when especially
nconsidering that development of future NH
icult than
ent of
neighborhoods
original programs, and will take place in more m
thediffi-
cult neighborhoods --difficulties that arise in part because
of a weak or blighted commercial area.
A NEED FOR REINVESTMENT PROFESSIONALS
neighborhoodIn the past
ack
of adequatelysk
lledpersonnels vsuffered to follow through onithe
352
initiatives generated as a result of community action.
NHS, largely because of some of the training activities
that Neighborhood Reinvestment sponsors, has a significant
advantage over other local programs. Further development
of staff by Neighborhood Reinvestment is needed. In addi-
tion, new skills will be required as programs tackle more
difficult problems.
To this point, Neighborhood Reinvestment has largely been
responsible for training development staff, as well as
executive directors and rehabilitation specialists, who
provide the basic core services and managerial leadership
for the program. But given the other initiatives already
in replication or demonstration, several additional types
of housing professionals will be needed, especially hous-
ing'managers. Reinvestment in multifamily housing requires
that a group of individuals be available to provide manage-
ment assistance to the program and to recruit and train
prospective building superintendents. The first step, per-
haps in conjuction with NAHRO or some similar group, would
be the development of a model that puts this training in
the context of the larger reinvestment model. For example,
developing such training programs would be comparable to
recent activity in •training urban lenders. Training in
commercial reinvestment, homeownership counseling, and in
certain aspects of program administration may also be re-
quired.3
353
4V
Notes
1. Reinvestment displacement is the exclusion of low- and
moderate -income households or the eviction of these
households from units that have, because of reinvest-
ment activity, become unavailable or unaffordable.
This is private displacement. Such displacement might
result from such changes as increased tax assessments,
condominium conversion, or substantially higher rents
as a result of rehabilitation. Displacement can also
occur because of public action or because of disinvest-
ment. Only in Atlanta were there claims made that any
significant displacement occurred, and then only in a
part of the neighborhood that abuts a gentrification
area.
2. In many neighborhoods, there is what is sometimes
called a "social rent." That is, owners of two- to
four -unit structures do not charge a rent based on
the economics of the structure or its place in the
market. Rather, they charge a submarket rent because
of long-term tenure or some special relationship or
characteristic of the tenant. For example, an older
person on a fixed income might not have his rent in-
creased for years because the owner faces no addi-
tional costs. Meantime, rents for comparable housing
in the neighborhood rise. When rehabilitation is done,
there is pressure on the owner to have tenants pay
part of the extra cost; rents may increase sometimes
substantially and yet still be reasonable, given the
overall market position of the unit in the neighbor-
hood. When this occurs, displacement (of needy house-
holds) could occur even though the rents are not un-
reasonable.
NHSA has developed the Educational Development Project
to address the difficulty many NHSs have in attracting
qualified applicants for NHS staff positions. This
project has included a short-term internship program
which has recruited and trained eighteen persons to
date. Twelve of these persons became employees within
the NHS network: six as NHS directors, and six as
Neighborhood Reinvestment staff members. Work con-
tinues on a long-term effort to strengthen NHS staff
capacities. Efforts to build relationships with univer-
sities (e.g., University of San Francisco) and to pro-
vide summer training opportunities (for college interns)
are also being carried out. However, efforts to train
more specialized staff such as commercial reinvestment
specialists and developer/managers of multifamily pro-
jects have not been initiated.
3511 4�z
CHAPTER 22
CONCLUSION
This report has examined several areas of Neighborhood
Reinvestment activity in an effort to assess its impact
on the Neighborhood Housing Services (NHS) neighborhoods
and on the members of the NHS partnership. The role of
Neighborhood Reinvestment has also been discussed. In
this short conclusion, two points will be made. The
first is that Neighborhood Reinvestment is no longer a
demonstration program. It has developed an institution-
' alized way of helping local actors take advantage of neigh-
borhood dynamics to promote reinvestment on behalf of
long-term residents. Its potential impact cuts across
geographical regions and across communities of different
sizes. It has been successful in many neighborhood con-
texts, ranging from neighborhoods suffering only from li-
mited lending activity and moderate decline to neighbor-
hoods whose problems were more numerous and complex.
The second point is that Neighborhood Reinvestment's pro-
grams should be viewed fundamentally as the creation of
innovative delivery mechanisms. In that regard, it is
different from federal neighborhood initiatives, even when
they appear to be similar. For example, with respect to
rental housing, it is the responsibility of the Department
of Housing and Urban Development (HUD) to provide resources
and support to local communities for public housing and
building or rehabilitating subsidized private housing.
HUD also provides insurance programs and other efforts to
support the construction and housing industry. But HUD
does not have a program that directly creates mechanisms
for the receipt and delivery of services; HUD assumes that
local governments and local special purpose authorities
are adequate for this purpose or, where appropriate, new
entities will be created by local communities. Experience
has shown, however, that cities are not able to have a
significant presence in neighborhoods, nor do they fully
help residents in doing what residents can do for them-
selves. The critical and unique role played by Neigh-
borhood Reinvestment is to create mechanisms so that resi-
dents can work with private actors and local agencies to
rehabilitate and develop their neighborhood. The federal
government has been able to deliver resources. But what
has been missing in the past is the mechanism by which the
resources are managed to deal with neighborhoods --a basic
yZ(;;,z_
355
and largely social entity. NHS builds on social relations,
identifies the interests of key actors, and serves as a
delivery medium for achieving widely shared goals.
Neighborhood Reinvestment programs also have the potential
to serve as delivery mechanisms for federal initiatives.
As more responsibility is given to local communities, NHS
will continue to be important as a service delivery me-
chanism for local government as some have already done.
In short, Neighborhood Reinvestment has successfully cre-
ated, largely with private support, a network of neighbor- j
hood delivery systems that help residents help themselves
and that provides an opportunity --widely accepted and
highly regarded --for financial institutions and other pri-
vate organizations to participate in improving American
neighborhoods.
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INTERVIEW GUIDE FOR CITY OFFICIALS
1. When did your agency first become involved with the NHS program?
2. What was your agency's major reason for becoming involved in the
program?
3. Have you worked with any other community-based housing organizations
since you started the NHS program? (Probe for the names of the
organizations, nature of the activities, and date of first involve-
ment. Note: If there is a long list of organizations, simply
identify the number of organizations, the types of neighborhoods
in which they work, and the nature of the activities they sponsor.)
4.
In the beginning, did you have special concerns or reservations
about becoming involved in the NHS program?
5.
What role does your agency play in the NHS program? (Probe for
whether staff member is on the board, agency makes contracts or
grants, etc.)
6.
What was your original impression of the likelihood of the NHS pro-
gram working in this neighborhood? What were your original expec-
tations of the program? Have they changed? If so, explain?
4 7.
How do the program activities of your agency in the NHS neighborhood
compare with your activities in neighborhoods similar to NNS?
(Probe for which neighborhoods are being compared and for similar-
ities or differences in agency treatment.)
8.
What changes (physical and social) have occurred in the NHS neighbor-
hood since the development of the NHS program? Which of these
changes do you attribute to the NHS program and which are attributable
to other factors? What are the other factors?
9.
Did your agency work with lenders in neighborhood revitalization
programs prior to NHS other than urban renewal? If yes, how did
that relationship compare with the relationship you have with
lenders in the NHS partnership?
10.
Has the involvement of lenders in the NHS program been reflected in
other city activities since the development of the NHS activity?
If yes, is it the same lenders?
11.
How do you feel about the role of lenders in the NHS program? For
example, do you believe the program had any effect on the way banks
feel about urban neighborhoods? About underwriting or appraisal
criteria for older housing? (Probe for specific evidence to support
response.)
12. What role, if any, has Neighborhood Reinvestment played in helping
the city develop its neighborhood revitalization program in the
NHS neighborhood? In other neighborhoods?
13. A great deal has been made about the notion of "partnership."
What does this term mean to you?
14. What is your overall assessment of the impact of the NHS program on
reversing decline in this neighborhood? (Probe separately for phys-
ical impacts such as rehab, removing blight, capital improvements,
etc. and other impacts, etc.)
15. In your opinion, has the NHS program had impacts beyond NHS neigh-
borhood boundaries? If yes, specify the neighborhoods, types of
impacts, and illustrations or evidence.
Code Enforcement
16. What is the normal procedure for code inspections in your city? For
enforcement?
17. What was originally agreed to with respect to code inspections and
enforcement in the NHS neighborhood? What have been the processes
used?
18. How are inspection enforcement personnel selected and deployed in
the NHS neighborhood compared to other neighborhoods?
19. What legal or other constraints have affected the way code enforce-
ment or inspection has been done in the NHS neighborhood?
20. Has there been any change in the code inspection or enforcement pro-
cess in the NHS neighborhood since the development of the program?
21. What is your overall assessment of the specific role of code enforce-
ment in revitalization in the NHS neighborhood?
Capital Improvements
22. From your agency's point of view, what were the major capital improve-
ment needs in the NHS neighborhood at the time of incorporation?
23. What specific agreements were made? (List with attached dollar
amounts. Ask only if this list has not been obtained previously.)
24. What improvements have been made? Has there been a change in the
timing or the scale of improvements?
1-2
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25. Have there been changes in the original priorities of capital im-
provements in the area?
26. What has been the role of the NHS program in determining capital
improvements priorities? Do non -NHS neighborhoods play a compa-
rable role?
27. Were there additional capital improvements made in the NHS area
beyond those originally agreed to?
28. How were capital improvements in the NHS area financed? (Probe to
identify separately funds from CDBG, city operating funds, bond
funds, state funds, EDA, or other federal programs by amount, if
possible.)
29. What social services are provided in the NHS area compared with
those available to all neighborhoods in the city?
30. What is the city's strategy for improving low -and moderate -income
neighborhoods in the city?
31. How are neighborhoods similar to the NHS area assisted by the city
in terms of neighborhood development, capital improvements, and
housing rehab? (Probe for illustration of neighborhoods and activ-
ities as well as for dates programs were started.)
32. How does the city use its Section 8 Homesteading, Section 312, CDBG
(and NSA's), and UDAG funds in the NHS area? (Probe to determine
the extent to which they are used in the NHS neighborhoods and in
conjunction with NHS activities.)
33. Is displacement an issue in the city? (Probe for which neighborhoods
and which groups.) Is it an issue in the NHS neighborhood? Are
there any specific strategies needed to deal with displacement?
What is the city's role in these strategies?
34. If displacement or concern for displacement exists in the city, in
your view, does the NHS program contribute to minimizing or pre-
venting displacement or does it have some other effect?
35. How have Community Development Block Grant funds been used in the
NHS neighborhood? (Probe for amount and activity by year and
whether NHS was a delivery mechanism for the CDBG funded activity
or whether the money was used for revolving loan fund or operating
fund of the NHS.)
36. How does the NHS program compare in productivity to other neighbor-
hood based rehab programs? (Note: Describe what is being compared.)
37. Are there additional areas where the partnership would be beneficial
in dealing with your city's housing or neighborhood problems?
38. What has been the role, if any, of the mayor or his senior aides, or
the city council in the NHS program?
39. How would you compare the city's relationship with the NHS to other
neighborhood based organizations active in physical development?
40. Do you feel there have been major shortcomings or weaknesses in the
program? What are they?
41. What do you see as the major strengths of the NHS program? Please
elaborate.
1-4��
INTERVIEW GUIDE FOR NHS EXECUTIVE DIRECTORS
1. How did you become involved in the NHS program?
2. What were the critical neighborhood needs identified in the develop-
mental process?
3. What do you view as the principal features of the NHS in this neigh-
borhood? What services does this program offer? What is the relative
emphasis of this program on advocacy, community organizing, develop-
ment, service delivery?
4. Is the NHS program as a neighborhood -based program different than
other local community-based organizations? If different, explain.
5. Did established community-based organizations in this neighborhood
play a role in the development of NHS? (If yes, probe for which
organization and what role.)
6. A great deal has been made of partnership. What does the term mean
to you? Do you think the partnership makes the NHS program different
(that is, more or less effective) than other community organization
strategies? If yes, how?
7. Since the post -development period for this program, what have been
some of the major issues or problems of the NHS program? In your
opinion, can any of them be traced to the development process?
Explain. How have these development -related issues or problems
been dealt with? How were the other ones dealt with? What was the
role of Neighborhood Reinvestment, if any?
S. What are some of the improvements that have occurred in this neighbor-
hood since the development of the NNS program? (Probe for both physi-
cal and other changes.) Which of these changes, if any, do you attri-
bute to the NHS program and which do you attribute to other factors?
What are some of the other factors to which you attribute the change?
Code Enforcement (Ask additional questions as appropriate depending on
data in the files.)
9. What is the normal procedure for code enforcement in your city (for
1-4 unit structures)? Inspections? (Probe separately on inspections
and enforcement procedures.)
10. What were the pre -NHS procedures in this neighborhood for code enforce-
ment? Inspection?
�'2—
2-1
11. What was originally agreed to with respect to the role that codes
would play in the NHS program? Describe the process for inspection
and enforcement.
12. What does "sensitive code enforcement" mean in this program? .Have
there been changes in the role of code enforcement since the NHS
program started? If yes, what were the reasons for these changes?
13. Is code enforcement and inspection applied differently to the most
seriously blighted or vacant buildings in the neighborhood? To
absentee -owned properties?
14. What is your overall assessment of the contributions of code enforce-
ment to the NHS program? What are major positive contributions?
What are the major negative ones?
Capital Im rovements (Ask additional questions as appropriate based on
data from the file.
15. What specific improvements wsre agreed to in terms of capital improve-
ment for the NHS neighborhood?
16. Which of the improvements originally agreed to have been completed?
What is the dollar value of these improvements? (Ask this question
only if information has not been documented beforehand.) What
improvements have not been made? Why is this?
17. Does the NHS program have a role in deciding which improvements are
made and where? If yes, for how long has this been the case? Is
this true for other neighborhoods?
18. Were there changes in the original priority for capital improvements.
Explain.
19. (Ask only if the information is not obtained from city officials.)
How have the capital improvements in the NHS area been financed?
(Probe specifically to identify separately CDBG, city operating funds,
state funds, bond funds, etc.)
Services
20. What services does the NHS offer other than the revolving loan fund?
(Probe for complete list, not general categories.) Please describe
these. Which of these were initiated by NHS? Which are financed by
funds other than regular operating income? What are these sources
for other funds, if applicable?
I
21. Has the NHS program entered into agreements or contracts with the
city or the state or federal agencies to provide services? (Specify
service, type, and date.) Who initiated these contracts or agree-
ments? Are you aware that these agencies have similar contracts
with other neighborhood -based agencies?
22. In your opinion, what do you think is the outer limit of your capac-
ity to deliver NHS services? For example, if you had a larger oper-
ating budget, would you say you could handle two, three, four, or
five times as many loans, rehab projects, referrals, etc.? Given
your goals, how many more personnel and how many more budget dollars
would you estimate you need?
23.
The typical NHS starts with a three-person staff. How many staff
members do you have? (If response is more than three:) Why did
you hire more staff members? (Probe for whether additional staff
1
members were needed for new services, better service delivery, size
on housing stock, nature of neighborhood problems, etc.)
i 24.
In your view, does the city have a strategy for improving neighborhoods
in the city, especially. housing and revitalization activities for low -
and moderate -income neighborhoods? How would you describe this
strategy?
25.
In your opinion, has the NHS program had an impact on the city's neigh-
borhood strategy? (Probe for evidence of alleged impact.)
26.
To your knowledge, has the city assisted other neighborhoods similar
to NHS in rehab or revitalization programs? (Probe for the neighbor-
hood name, dates of the programs, and detail on program characteris-
tics. Also probe for the use of UDAG and NSA, HUD innovative grants,
etc.)
27.
Does the city use its Section 8, Homesteading, Section 312, NSA, or
block grant funds in this neighborhood? If yes, is there any formal
(contractual) or informal relationship between the NHS program and
the city's administering agency? What about state programs where
applicable?
28.
Is reinvestment displacement an issue in this city or neighborhood?
If yes, what groups are thought to be affected. (Probe for docu-
mentation.) Have there been specific strategies developed to deal
with displacement in the NHS neighborhood or in the city generally?
(Probe specifically for impacts and activities related to the elderly,
renters, and low-income households.)
29. What has been the NHS involvement in the displacement issue, if any?
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30. Has the NHS neighborhood been affected by displacement of residents
from other areas of the city? If yes, what has been the NHS response
to this impact?
31. Have other neighborhood organizations approached this NHS about
developing an NHS program? If yes, how many and list them by neigh-
borhood. To what extent has this contact resulted in: a) the
expansion of the NHS boundaries; b) additional NHSs in this city;
c) the development of another organization or rehab activity in a
neighborhood that does not have an NHS program? (Probe for details
on such non -NHS rehab programs, including specific dates, activities,
and structures.)
32. Based on your experience with this neighborhood, do you think the NHS
model could apply to a broader range of neighborhoods in this city,
for example, neighborhoods with small apartment buildings, or neigh-
borhoods with more deteriorated housing? If not, why not?
Residents
33. Compared to other major community development organizations in the
neighborhood, what role do residents play in the NHS decision-making
process? (Probe for offices held, committee chairs, and other
specific decision-making roles.)
34. The boards of some community organizations are often dominated by
professionals and highly educated members. Is this true of this
NHS program? If yes, have•you noticed any change in this pattern
over recent years?
35. Has the role of residents in decision-making changed over time?
Explain.
36. What decision or issue, in your opinion, best represents the resi-
dents' sophistication in decision-making now versus when the program
was first started?
37. Lookina back over the activities of the NHS program, what would you
say the program has meant for: a) long-term owners; b) long-term
renters; c) new renters; d) new buyers; e) the elderly; and f) sin-
gle parents? (Probe for specific impacts, if any, for each of
these groups.)
The City
38. What city agencies have you dealt with extensively in the NHS program?
(Probe for specific relationship with each agency.)
2-4
39. Have community development funds been spent in the NHS neighborhood?
(Probe for amount and activity by year and whether the NHS program
was a delivery mechanism for the CD funded service or whether the
money was for the revolving loan or operating fund.)
40. What is your overall assessment of the role of CDBG funding in the
NNS neighborhood, including activities not directly associated with
the NHS program? Is the NHS an NSA? If yes, what is NHS's role in
the NSA activities?
41. Has the city hindered or weakened the NHS program? If so, how?
42. In what ways, if any, has the NHS program helped the city (i.e.,
served as a delivery mechanism for city programs, etc.)?
Lenders
43. How would you describe the overall response of lenders to the NHS
program? (Probe should relate to lender type, lender size, partic-
ipating versus non -participating, etc.)
44. Not counting financial contributions, what evidence best illustrates
the level of lender support or change in lender support since the
program began?
j 45.
In your opinion, has there been a change in underwriting criteria
on the part of area lenders in the NHS neighborhood regarding:
a) first mortgages or b) home improvement loans? (Probe for the
change and specific evidence.)
i 46.
Was this neighborhood one in which there were allegations of red-
lining? If yes, was there evidence that the neighborhood was red-
lined or were there few loans because demand was weak? How would
you describe the present status of lending in the neighborhood?
(Probe for whether conventional lending is available for all clients.
Note: Use 1978-79 as a reference point to avoid the effects of the
current critical lending situation.)
47.
For lenders who were not part of the original NHS agreement, how
many have since joined NHS? How many have dropped out? Why? Do
those lenders who have not joined or who have dropped out lend in
the neighborhood?
48.
In your view, are there benefits lending institutions have received
from participation in the NHS program? Please list.
49.
Have real estate taxes or assessment practices affected the operation
of the NHS program? (Probe for changes in assessment or rates;
probe for whether tax relief exists for those seriously affected by
increases.)
2-5
50. What has been the impact of recent high interest rates, credit
restrictions, housing costs, etc. on the NHS program? (Probe for
change in the number of loans, ratio of revolving loan funds to
conventional loans, delinquency rates, characteristics of recent
borrowers, etc.)
51. What would you say have been the most significant achievements of
the NHS programs? Most significant shortcomings? (Probe separately
for shortcomings and achievements.)
52. The question is often raised: When will the NHS program complete
its job? How would you respond to this question for this program?
How many of the rehab needs have you completed? (Probe for per-
cent.) In five years, do you estimate that this program will still
be operating in this neighborhood? With the same program emphasis?
With the same boundaries? With the same financial support from
lenders? What housing needs in the neighborhood are not being
addressed that could be addressed with the NHS model?
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INTERVIEW GUIDE FOR BOARD MEMBERS (RESIDENTS)
1. How did you first become involved with the NHS? When was that?
2. Do you hold or have you held board offices or committee chairs?
3. Have you been active in other community organizations in the neighbor-
hood? In outside neighborhoods? (Probe to identify major organiza-
tions, offices held, and dates.)
4. What was your original impression of the likelihood of an NHS pro-
gram working in this neighborhood? What were your original expec-
tations of the program? Have they changed? Why?
5. Did you have any special concerns or reservations about becoming
involved in the NHS program? (Probe for what concerns existed, if
any, and whether these concerns have been resolved.)
6. Were you active in "war on poverty" programs or the Model Cities
program? If yes, do you think those programs gave residents the
opportunity to influence neighborhood redevelopment efforts?
(Probe.)
7. What changes, if any, have occurred in the NHS neighborhood since
the program was established? Which of these changes do you attri-
bute to the NHS program and which do you attribute to other factors?
What are the other factors, if any?
8. (If respondent was involved in anti -poverty program or Model Cities
program:) How would you compare your experience in those other
programs with your experience in the NHS program as far as resident
influence on programs is concerned?
9. Have you worked with city officials in neighborhood programs prior
to NHS? If yes, explain. How would you compare that experience(s)
with your NHS experience?
10. What is your assessment of the city's role in the NHS program? Do
you think they have helped or hindered the program? Explain.
11. Have you worked with lenders in previous community programs? What
was your view of lenders and has your view changed since being
involved with NHS? Explain.
12. How do you feel about the role of lenders in the NHS program? Do
you believe the program has had any effect on the way lenders feel
about lending in your neighborhood? Why do you feel this way?
3-1
13. What role has Neighborhood Reinvestment played in your organization
since the development process? (Probe for specific issues or prob-
lems on which Neighborhood Reinvestment may have provided training,
technical assistance, or support services.)
14. A lot has been made of the issue of "partnership." What does that
term mean for you? Does the notion of "partnership" make the NHS
program different from other neighborhood -based organizations with
which you are familiar? If yes, how?
15. Would you say that partners (i.e., residents, city officials, lenders)
in the NHS program have equal roles or would you say one partner is
more equal than others? (Probe for evidence and change in feelings
over time.) Are all of the partners respectful of one another's needs
and limitations in your opinion?
16. What would you say has been your greatest personal satisfaction in
participating in the NHS program? What has been your greatest
frustration?
17. What change, if any, have you noticed in the role of the Board in
decision-making in recent years? (Probe for leadership roles,
priorities, etc.)
18. In your view, what issue or decision best represents the influence
of residents on the NHS program activities?
19. What, if anything, do you think the NHS program has meant for resi-
dents in the neighborhood who are: a) long-term owners; b) long-
term renters; c) new renters; d) new buyers; e) the elderly; and
f) single -parents? (Probe for illustration of both positive and
negative impacts.)
20. Which groups do you feel have benefited most from the NHS program?
Which groups do you feel have benefited least? (Probe for whether
this was intentional or not.)
21. In your view, has the program affected: a) absentee property owners;
b) apartment building owners (if applicable); and c) the commercial
areas? If yes, how have they been affected? (Probe for specific
cases or evidence.)
22. In your view, has the NHS program had any impact on: a) reducing
crime; b) improving public education; c) improving city services;
d) improving public transportation; and e) improving the general
physical appearance of the neighborhood? (Probe for specific illus-
trations. If no effect, probe for whether efforts have been made
by the NHS on these issues.)
3-2
23. Is displacement an important issue in your neighborhood? If yes,
explain which groups have been affected.
24. (If yes to number 23:) What, if anything has been done about the
issue? What, if anything, has the NHS done about this issue?
25. What would you say are the greatest achievements of the NHS program?
What are the greatest shortcomings?
INTERVIEW GUIDE FOR LENDERS
1. How and when did your institution first become involved in the NHS
program? How and when did you become personally involved?
2. Has your institution worked with other community-based housing pro-
grams since it started with the NHS program? (If yes, probe for
name of organization, nature of activites, and dates.) If yes,
was this alone or in conjunction with other lending institutions
such as in a mortgage pool?
i
3. What was your institution's main reason for becoming involved in the !
NHS program?
4. Do you perceive the NHS programs strictly as a social endeavor or
does it have a business value apart from the social value? (If j
(
business value is indicated, probe for what this value is.) i
5. Did your institution have any special concerns or reservations
about becoming involved in the NHS program? (Probe.) If yes, how,
if ever, were these concerns or reservations resolved?
r
6. Have you participated in any city -sponsored program in housing rehab?
(Probe for date(s), program(s), and city agencies and activities.)
r
7. What was your original assessment of the likelihood of the NHS pro-
gram working in this neighborhood? What were your original expec-
tations of the program? Have they changed? Explain.
e
f 8. What specific changes have you noticed in the NHS neighborhoods since
197 ? (Use incorporation date.) Which of these changes would you
attribute to the NHS program and which would you attribute to other
activities? What are the non -NHS activities that have contributed
to the observed changes? j
9. What is your overall assessment of the impact of the NHS program on
reversing decline in the neighborhood? (Probe separately for physi-
cal impact such as rehab completed, number of loans, capital improve-
ment, etc. and other impacts such as the change in attitudes among
the various actors or in social relations.) Give illustrations of
these impacts.
10. Are any of the impacts mentioned in the two previous questions evi-
dent in nearby neighborhoods? If so, what impacts and which neigh-
borhoods? (Probe by asking for specific neighborhoods, indicators
of change, etc.) What leads you to attribute changes to NHS?
4-1 l4o.L
11. Have there been any changes in the way your institution services the
NHS neighborhood (i.e., number or types of services, special programs,
etc.) since the NHS program was instituted? If yes, which of these
apply to other urban neighborhoods and which to the NHS neighborhood
only?
12. Has your institution appointed specific personnel or designated task
units (i.e., community relations officer, urban lending task unit,
etc.) to work with the NHS neighborhood? (If yes, probe for number
of people, titles, activities, dates, and relation of these personnel
or units to line personnel and activities.)
13. Has your institution created any special lending activities or pro-
cedures for handling loans referred from the NHS program? If yes,
describe these procedures or activities.
14. From your point of view as a lender, has the NHS program been of
specific benefit to you? (Probe for whether NHS performed outreach,
counseled potential borrowers, provided drawings for the rehab cases,
helped in dealing with contractors, etc.)
15. Are there other services that you think the NHS program should perform
for you as a lender? (Probe for type of service and why it is impor-
tant.)
16. Are the NHS activities performed for borrowers or prospective borrowers
such that they increase the attractiveness of loan applications from
your point of view or would you say that all things being equal, the
activities make little difference?
17. Has Neighborhood Reinvestment assisted you as a lender in any way
related to your urban lending activities? If yes, what has this
assistance included? (Probe specifically about help in understanding
neighborhood dynamics, tapping new markets, designing new lending or
underwriting strategies, sensitizing lender staff, reducing community/
lender tensions.)
18. Ask this uestion onl if data are not available in files or from some
of er source. How many ome improvement loans, by year and amount,
id your institution make in the NHS neighborhood since the program
has been in operation? What type of work was performed and what were
the characteristics of the borrowers? How many such loans did you
make in the year prior to NHS incorporation?
19. How many first mortgages were made by year and amount in the NHS neigh-
borhood by your institution since the NHS program has been in operation?
How many were made in the year prior to incorporation?
4-2
20.
In making loans in the NHS area, were any special appraisal or under-
writing criteria applied because the property was in the NHS area?
(Probe specifically for whether the presence of a targeted program of
rehabilitation and capital improvement count as criteria in judging
the value of a loan.)
21.
Have there been trends in the last three to five years which have
"risk" in urban lending?
caused you to revise or rethink the nature of
If has the NHS program contributed to this rethinking
Elaborate. yes,
(Probe for specific trends and comparative illustrations.)
or revision?
22.
Some of your lending colleagues in this city did not participate in
Are
the NNS program initially and have not participated to date. you
which might
j
aware of any concerns that they have about the program
explain why they have not participated in the program or why they may
have dropped out of the program?
23.
There are housing problems in the city other than those for which the
in
NHS program was originally designed. Has your experience urban
suggested any ideas for how lenders might be
}
lending in'recent years
active in a) residential areas more blighted than the NHS area;
more
b) increasing rental housing opportunities; c) dealing with vacant
buildings; or d) dealing with absentee -owned buildings? (Probe for
comments in reference to specific neighborhoods in the city where
feel the NHS approach would
these types of problems exist.) Do you
be relevant to solving the problems?
24.
What has been the experience of this institution with default on loans
in the NHS neighborhoods? How does this compare with the experience
What about delinquency experience (same
in other urban neighborhoods?
comparisons)?
25.
What do you see as the major strengths and shortcomings of the NHS pro-
for specific strengths and shortcomings. Also
gram? (Probe separately
probe for whether the shortcomings are with the approach or with the
program as locally implemented.)
4-3 17Z6`7-