Joint Legislative Study Committee
On
Housing Redevelopment
Final Report
December 31, 1992
JOINT LEGISLATIVE STUDY COMMITTEE ON
HOUSING REDEVELOPMENT
AUTHORITY:
The Joint Legislative Study committee on Housing Redevelopment was
established under HB 2562, Laws 1992, Chapter 285. Membership for
the Committee consists of two members each from the House of
Representatives and from the Senate and private citizens appointed
by the President of the Senate and Speaker of the House. In
addition, the Governor appointed three citizens. The members are:
Representative Ernie Baird Senator " Liton Pena
Representative Ruth Solomon Senator Ed Phillips
Mr. Marvin Andrews Monsignor Edward Ryle
Mr. Rich Crystal
Mr. Kevin DeMenna
Mr. Martin Schultz
DUTIES :
The duties of the Committee are:
1. To examine the existing and potential applications of tax
incentives to encourage private investment in the development
or redevelopment of multi- family housing stock in urban areas
of the state. The Committee should specifically consider:
a) incentives including but not limited to reductions or
abatements in property and possessory interest taxes;
b) the total amount of property within individual cities
that should be eligible for the application of such
incentives; and
c) the appropriate length of time during which such
incentives should be in effect.
2 . Examine the extent to which multi- family housing exists within
the urban centers and downtown areas of urban cities, and the
impact that various incentives may have on increasing the
number of multi- family housing units in such areas.
3. Require a specific portion of multi- family housing units
constructed as the result of such incentives to be designated
as available for low- income individuals and families.
4. Prepare a final report including recommendations and proposed
draft legislation to the Governor, the President of the Senate
and the Speaker of the House.
BACKGROUND:
During the 1992 regular session, HB 2577 was introduced to address
the need for market- based housing in the urban areas of the state.
The purpose of the bill was to provide tax incentives to developers
so that a city could establish a housing redevelopment area and
work toward improving safe and sanitary housing in the central
urban area. Due to concerns of the sponsor that the bill would be
caught in the time constraints of the session and that more study
on this issue was needed, a joint legislative study committee was
established.
COMMITTEE ACTION:
The Committee met several times to gather information on the
housing needs of the two major metropolitan areas of the state.
Officials from the cities of Phoenix and Tucson provided
information on the current status of market based housing within
the central areas.
Recently the City of Phoenix has initiated several projects to
enhance the central city area. This includes retail projects such
as the Arizona Center, expanding transit routes and improving the
landscaping. However, the key area that needs to be addressed to
improve the central city is housing. In terms of a housing
redevelopment area, Phoenix is seeking to improve the market rate
multi- housing shortage between the area from Camelback Road to
Jackson Avenue and from 19th Avenue to 24th Street. ( See Appendix
A)
Officials from the City of Tucson agreed that their urban core area
is in need of market based housing and provided information from
the City Planing Department which depicts high density areas and
reviewed thirty- one stress factors which lead to out migration.
( See Appendix B)
In order to improve the housing market, financial incentives need
to be offered to developers because of the higher risks associated
with developing in the core areas of the city. Lack of financing
for higher risk areas include costs of security due to higher crime
rates, more parking areas and lack of retail activity, especially
grocery stores.
In addition, the Committee heard testimony from Gerald Trimble, a
partner in the real estate consulting firm of Keyser Marston
Associates, Inc. Mr. Trimble was involved in the redevelopment of
the downtown San Diego area over the past twenty years and shared
with the Committee some of the pros and cons of improving housing
in central cities.
He recited his experience that it is much more difficult for a city
to attract and develop market rate housing in the core city area
than it is to promote retail and commercial development. The city
must address the issues of crime, blight, pornography and other
problems and create more than a level playing field for downtown
for an extended period, until the free market can really take over.
In San Diego, the City retained the services of planners,
architects and economists and appointed a citizens committee and
prepared an urban design plan for the downtown residential
neighborhoods. The urban design plan established residential as a
priority land use, created land use controls and development
incentives. The importance of the urban design plan was that it
clearly established that the City was serious about downtown
housing and that developers, lenders and residents knew that they
would be part of a residential community and not isolated. Mr.
Trimble outlined the incentive plan used in San Diego and noted
many of the benefits. ( See Appendix C)
The Committee also examined the current areas of assistance to
improve housing in core city areas. However, most of the
assistance plans relate to low- income and affordable housing and
not necessarily to market rate housing. Additionally, information
was provided relating to state housing policies throughout the
nation. ( See Appendix D)
RECOMMENDATIONS:
After considerable discussion of housing needs throughout the urban
areas of the state, the Committee respectfully submits the
following recommendation for legislative consideration that is
modeled after the existing Slum Clearance and Redevelopment Act.
The recommended legislation allows cities to establish a housing
redevelopment area in which residential, recreational, commercial
or other projects consistent with residential activities could be
financed through public monies and to provide tax incentives for up
to twelve years through favorable property valuation relating to
the possessory interest tax. ( See Appendix E)
Summarv of the Provisions of the Recommendation Lesislation:
+ Provides definitions.
+ Provides that municipalities may establish housing development
areas and prepare housing development plans.
+ Allows municipalities, within housing development areas:
- To purchase or otherwise obtain; hold, improve or
prepare in any way; or sell or dispose of any real or
personal property necessary to the housing development
project;
- To enter into contracts with developers regarding the use
of such property;
- To borrow money and issue bonds or other obligations and
to provide security for such obligations;
- To insure or provide for insurance for any real or
personal property or operations of the municipality in a
housing development area;
- To finance, construct, operate, manage or maintain
projects within a housing development area;
- To apply for and enter into agreements regarding public
and private financing;
- To extend credit or make loans to any person or entity,
including nonprofit organizations, for the costs of any
housing development project and to establish requirements
for securing loans.
Prescribes allowable investments for housing development area
funds .
Requires municipalities to prepare plans and provide
assistance for the relocation of families displaced by any
project within the housing development area.
Allows certain powers to be delegated to the housing
department or housing authority of the municipality.
Provides that a municipality has the power of eminent domain
within the housing development area.
Requires that a governing body of a municipality may declare
a portion of the city to be a housing development area if it
is determined that a housing shortage exists and that the
shortage would be reduced as a result of the development.
Prescribes requirements for the housing development plan and
for modification of the plan.
Allows municipalities to dispose of property within a housing
development area, and prescribes procedures for such disposal,
including public notice requirements and requirements for
consideration of proposals.
Allows municipalities to issue bonds to finance a project
within a housing development area.
Provides that the bonds are not a general obligation or
general debt of any political subdivision of the state.
Provides that bonds are authorized by resolution of the local
governing body.
Prescribes procedures for providing additional security for
bonds and for the certification of the bonds by the attorney
general.
Establishes remedies for persons holding housing development
project bonds in the event of default.
Provides that any property held for the purpose of the housing
development project is exempt from property tax liens and from
execution sales.
Allows other public bodies to assist in the development of a
housing development project by conveying property to a
municipality, incurring expenses for public improvements,
lending or granting funds to a municipality, using funds to
purchase bonds or other obligations or entering into
agreements with a municipality regarding the project.
Provides that any sale or other conveyance of property by a
public body. to a municipality for the purposes of the housing
development project may be made without appraisal, public
notice or public bidding.
Allows a municipality to levy taxes, incur indebtedness and
issue bonds in an amount determined by resolution of the
governing body to be necessary for projects within the housing
development area.
Provides for the creation of a possessory interest for up to
twelve years. The redevelopment project would be taxed based
on the greater of the value of the property before its
acquisition for redevelopment or its value as unimproved land.
Provides that if a housing development plan is terminated, the
municipality is liable for any outstanding debts of the area.
APPENDIX A
CENTRAL CITY TARGET AREA
Multi- Family Construction:. 1985- 1 991
Units by Year
City
Year Total Sponsored Comments
0
60 ( 63 luxury condos)
0 ( All units in one complex)
0
- 56
278
I
Prepared by the City of Phoenix Planning Department
CENTRAL CITY TARGET AREA
Units Lost
1970 - 1990 ( Net)
CAMELBACK RD.
INDIAN SCHOOL RD.
THOMAS RD.
McDOWEU RD.
VAN BUREN ST.
BUCKEYE RD.
Legend
+ Number of units gained - Number of units lost
Total Net Loss
- 4403 Units
Census tract number
Prepared by the City of Phoenix Planning Department
CENTRAL CITY TARGET AREA
Multi Family Units*
Added
1985 - 1991
CAMELBACK RD.
INDIAN SCHOOL RD.
THOMAS RD.
McDOWELL RD.
VAN BUREN ST.
BUCKEYE RD.
Legend
( ) City sponsored
* 5 or more units
Census tract number
Total Units
961
( 278)
Prepared by the City of Phoenix Planning Department
APPENDIX B
INDICATORS OF NEIGHBORHOOD STRESS 4
CITY OF TUCSON I
Prepared by
Tucson Planning Department
MAYOR AND COUNCIL
George Miller, Mayor
Bruce Wheeler Roger M. Sedlmayr
Janet Marcus Steve Leal
Michael Haggerty Molly McKasson
OFFICE OF THE CITY MANAGER
Reuben Suarez
City Manager
Luis G. Gutierrez
Deputy City Manager
PLANNING DEPARTMENT
William D. Vasko, Director
John F. Sky, Assistant Director, Advanced Planning
David K Taylor, Planning Program Coordinator
Joshua Lytle, Senior Planner
INDICATORS OF SEICHBORHOOD STRESS
CITY OF TL'CSON
IhTRODUCTION
Information about population and housing characteristics is central in the assessment of
community needs. These data are necessary if not sufficient in forming a comprehensive
strategy for community development and betterment. These data can be used as supporting
information in targeting areas for rehabilitation and renewal of the physical housing
inventory and for implementing programs to support and nourish those in need.
The present study essentially replicates an earlier study done in 1983 using 1980 Cenws
data. It differs from the 1983 Study in the foI1owing ways.
1) It is not limited to the corporate limits of the City of Tucson. The former
study has proven to be of such value to service providers in the metropolitan
region that a wider scope seems warranted.
2) The 105) O study differs in the composition of two of 31 original f~ ctors( t hey are
no longer enumerated) used to diagnose the need and dependency of census
block groups.
This report includes several maps of stress areas and their respective census tract and block
group polygons. Detailed census maps available in the Planning Department Library
should be reviewed to get the specific boundaries of any individual areas of interest.
This report included only the summary composite scores indicative of stress for each census
block group. Detailed tables of the components of these composite scores are about one
hundred pages long. They may be copied by those wishing this level of detail. Master
copies are on file in the Planning Department Library.
METHODOLOGY
Neighborhood Stress Index -
In 1983, in order to arrive at a meaningful list of data items which could be used to
determine target rehabilitation areas, an extensive survey was conducted of the literature on
social indi~ at~( rcsf. ' Bibliography," CDP Technical stubies. Volume I). Previous
Community Development Program reports were also reviewed and the indicators used
were evaluated as to their predictabili~ yo f community needs. As a result of these efforts 31
data items from the 1980 Census were selected which were judged the best indicators of
social and environmental stress. The concept of stress as used here is one of dependency
and need. That is. measures indicative of need. such as poverty, unemployment, inadequate
housing; and dependency, such as the ratio of youths and elderly to working age persons,
isolation, and mobility or work disability, are an elemental part of this conception. Also
included was information on economic status, shelter costs, housing age and condition and
possible social dependency, such as youth, old age or language disability. Excluded were
some traditionally used indicators such as renterlowner status and racial or ethnic
composition. These were felt to reflect the character of the neighborhood, not its quality or
stability. The concept of stress and its metric score as developed here are meant to aid in
the allocation and prioritization of service delivery by governmental units and community
agencies.
. INDICATORS OF NEIGHBORHOOD STRESS - 3 -
For this second report on Indicators of Neighborhood Stress, we have retained to the extent
possible the same variables used one decade ago so as to preserve the maximum
comparability. It is true that many changes to census questions over the decade might have
produced a different data selection in 1990 if comparison were not an issue.
Relevant Variables Defined:
1. minor Population
Persons 18 years old or less as a percentage of the total population.
2. Elderly Population
Persons aged 65 years or more a percentage of the total population.
3. Minority Elderly Population
Persons aged 65 years or more who are not White, non- Hispanic as
percentage of the total population.
4. Pre- School Index
Children 5 years or less as a percentage of the total youth population aged
18 years or less.
5. Dependency Index
Ratio of youths ( 18 years or less) and elderly ( 65 years or more) to working
age persons ( 19 - 64 years).
6. Fertility Index
Number of children less than 5 years of age per 1,000 women aged 15 to 44
years of age.
7. Language Disability
Persons 18 years and over who do not speak English well or at all as a
percentage of the population aged 18 years and over.
8. Mobility Disability
Civilian, noninstitutionalized persons 16 years and over with a disability
limiting mobility and self- care as a percentage of all civilian,
noninstitutionalized persons 16 years and over. .
9. Work Disability
Persons aged 16 to G4 years of age with a work disability as a percentage of
all persons 16 to 64 years of age.
10. Poverty Status - Persons
Persons below the poverty level as a percentage of all persons for whom
poverty status is ascertained.
11. Poverty Status - Families
The number of families below the poverty level as a percentage of all
families for whom poverty status is ascertained.
12. Poverty Status - Elderly Persons
Persons 65 years or over who are below the poverty level as a percentage of
all persons 65 years or over.
. INDICATORS OF NEIGHBORHOOD STRESS
13. Educational Attainment
Persons aged 25 years and over who have completed less than 4 years of high
school as a percentage of all persons 25 years and over.
14. Unemployment Rate
Unemployed persons 16 years and over who are in the civilian labor force as
a percentage of all persons 16 years and over in the labor force.
15. Not Working in 1989 ( replaces a variable used in 1980 which is no longer
available)
Persons 16 years and over with no employment in 1989 as a percentage of all
persons 16 years and over.
16. Working Mothers
ema ales 16 years and over who are in the labor force and have children
under 5 years of age a$ a percentage of all females I6 years and over with
children under 5 years of age.
17. Female Householder
Families who have a female householder with related children under 18 with
no husband present as a percentage of all families with related children
under 18 years of age.
18. Family Dependency Index
Families that have related children under 18 years and families that have
persons aged 65 and over as a percentage of all families.
19. Crowding
~ o u s iunn~ its which have more than 1.01 persons per room as a percentage
of all occupied housing units.
Housing units that lack plumbing for exclusive use and which have more
than 1.01 persons per room as a percentage of all occupied housing units.
21. Plumbing usin in^ units that lack plumbing for exclusive use as a percentage of all
housing units.
22. Housing Age
Housing units built before 1940 as a percent of all housing units.
23. Kitchen Facilities
Housing units which lack complete kitchen facilities as a percent of all
housing units.
24. Sewage Disposal
~ o u s i unn~ its which are not connected to either a public sewer or septic
tank as a percentage of all housing units.
25. Source of Water ( replaces a variable used in 1980 which is no longer available)
Housing units whose source of water is either dug wells or some source
other than public/ private water companies and drilled wells as a percentage
of all housing units.
INDICATORS OF ? EIGHBORHOOD STRESS - 5-
26. Heating Fuel
Occupied housing units lacking adequate heating fuels, i. e., that use fuel oil
or kerosene, wood, coal, or no fuel at all, as a percentage of all occupied
housing units.
27. Vacancy Rate
Vacant housing units as a percentage of all housing units.
25. Owner Costs
Owner households with incomes less than $ 20,000 with owner costs
exceeding 34% of their income as a percentage of specified owner occupied
housing units.
29. Renter Costs
Renter households with incomes less than $ 20,000 with gross rent exceeding
34% of their income as a percentage of specified renter occupied housing
units.
30. Communications
Occupied housing units with no telephone and with a householder aged 65
years or over as a percentage of all occupied units.
31. Access
Occupied housing units with no vehicle available as a percentage of all
occupied units.
Sample data from the 1990 Census contain most of the information reflective of need and
dependency. These data are reported at their smallest geographic unit in census block
groups, about six to ten city blocks. All 561 census block groups in Pima County formed the
largest of three data bases used in this Study. The Metropolitan Tucson data base is
comprised of 514 block groups and that limited to the City of Tucson 404 block groups.
The geographic units of analysis used here are census block groups not recognized
' neighborhoodsn. However, block groups are a neighborhood- scale census geographical
entity, and form the lowest level of reporting of the data used here. Using the data listed
above, ' neighborhood stressn scores were computed reflecting the physical and social
conditions indicative of dependency and need. These scores were standardized ( i. e., z-scores
were computed):
Zi = ( Xi - MEAN X)/ STANDARD DEVIATION OF Xi
to transform then into unitless measures with means of zero and variances of one. This
allows a more straightforward approach to developing an overall composite score for each
block group reflecting their average score across these 31 variables. The variables are not
weighted in any manner. Each variable contributes equally to the final composite score.
There is little theory and no practice suggestive that one versus another ought to be
weighted more heavily. Each block group was sorted on its standardized composite score.
The higher the score, the greater the social and environmental ( i. e., housing related) stress
in the area. The sorted block groups were divided into two groups; those with composite
scores greater than that of the City ( i. e., they were worse than the average of Tucson) and
INDICATORS OF NEIGHBORHOOD STRESS - 6 -
those that were lower. The latter are only generally portrayed in the foIlowing maps as
their scores suggest that they, when compared to the first group, are more able to maintain
themselves without the need of special governmental support or assistance. One must
remember that these data reflect only population and housing variables as measured by the
1990 Census. Highly relevant matters such as nutrition, cultural deprivation, health status,
crime, social cohesion of households and neighborhoods, external environmental matters
such as noise, vibration, smoke, dust, or many other highly relevant social, economic,
biological, and psychological factors which impair a high quality of life are not included in
this analysis.
Caution must be exercised in the use of these data and interpretations of their meaning.
Areas with very high scores indicative of high need and dependency may in fact have
healthy, vital households. These scores are not qualitative assessments of an area's spirit or
vitality; rather, these scores are simple, mathematical indicators of population and housing
facets indicative of need. The scores have no agenda. They are provided to assist in fuller
assessments of areas to be supported by community resources. Areas scored as having very
low need or dependency may in fact have serious problems concerning issues or subjects
outside the scope of this Study. These scores and the rankings of " neighborhoods" should
not be used as a substitute for the judgement of professionals, the public, and their elected
leaders but rather as supporting facts in determining the allocation of services and support.
The attached tables list the composite standardized scores of block groups. The " cvorst*
( most in need) areas are ranked first. We have portrayed the spacial distribution of these
rankings in the attached NEIGHBORHOOD STRESS MAP. The darker shaded areas are
those most in need. Areas whose composite score was better than the community average
are not shown in detail as they were deemed to be less in need of the expenditure of
community resources. That is not to say that such areas might not exhibit need or
dependency based on other measures or a few of the thirty- one variables used in the
composite score. The Planning Department has copies of the data and scores for all areas
in the analysis.
ATTACHMENTS:
1. COMPOSITE STRESS INDEX MAPS
[ The most heavily shaded areas have the highest stress scores. Thefollowing
two maps may be used to more precisely locate each block group area.]
2. TUCSON METROPOLITAN AREA: CENSUS TRACT MAP
3. TUCSON METROPOLITAN AREA: BLOCK GROUP MAP
4. COMPOSITE SCORES OF NEIGHBORHOOD STRESS:
SORTED IN R4NK ORDER
[ To find specific areas of the City from this list, first note the cenws tract,
then locate the tract using the census tract map. Then note the block group
within the tract, locating it from the block group map. Major streets and
features are depicted on both maps]
APPENDIX C
Keyserhlars to~ ssociatesInc.
Heinz A. Schilling 7690 El Camino Real. Suite 202
LOS ANGELES 2131 622- 8095
Richard L. Borti
Calvin E. Hollis. I1
Kathleen H. Head
SAN FRANCISCO 415/ 398- 3050
limothy C. Kelly
A. Jerry Keyser
Kate Earle Funk
Robert J. Wetmore
Michael Conlon
Denise E. Conley
TO:
Carlsbad. California 92009
619192- 0380 Fax 6191942- 3012
MEMORANDUM
Betty Ohr, Assistant Director
Neighborhood Services Department
City of Phoenix
FROM: Gerald M. Trimble
DATE: November 27, 1992
SUBJECT: Joint Legislative Study Committee on Housing Redevelopment
The following is a transcribed version of the testimony that I will provide to the Joint Legislative
Study Committee on November 30, 1992.
INTRODUCTION
My name is Gerald M. Trimble and I am a principal in the real estate consulting firm of Keyser
Marston Associates, Inc. My address is 7690 El Camino Real, Carlsbad, CA 92009. Keyser
Marston Associates has been in business for 20 years advising private sector and public sector
clients. Prior to joining Keyser Marston Associates I was the Executive Director of the
Pasadena Redevelopment Agency from 1971 to 1977, the Executive Vice President of San
Diego's equivalent of a downtown redevelopment agency, the Centre City Development
Corporation from 1977 to 1987 and the President of the USC Real Estate Development
Corporation, a business Subsidiary of the University of Southern California, from 1987 to 1992.
I have been involved in numerous downtown revitalization efforts during the past 22 years either
as a staff person running the program or as a consultant.
I have been asked by the City of Phoenix to describe some of the work that I have completed
in the area of downtown residential development, why housing is important downtown and the
kinds of incentives that I have found to be successful. I have been involved in urban housing
development for all income groups in Los Angeles, Pasadena, Burbank and San Diego. Most
recently in Los Angeles, I ran acompany that developed housing in an urban area for faculty
and staff of the University of Southern California. Since time is limited, however, I will focus
my remarks on our experience over a 16 year period in creating the environment and causing
the development of housing in Downtown San Diego.
DOWNTOWN SAN DIEGO, A CASE STUDY
San Diego is a very conservative city that did not take advantage of federal urban renewal funds
in the 1960s to revitalize its urban areas. In the early 1970' s Mayor Pete Wilson and the
business community realized that the city needed to undertake a major revitalization effort in
downtown San Diego because of the physical deterioration, crime, concentration of pornographic
uses, economic dislocation and the overall drain of the area on city services and finances. When
the redevelopment process was started, we recognized that new retd, office, hotel, restaurants,
entertainment and convention center uses were important in bringing people downtown, but these
uses were not sufficient for successful redevelopment. The missing ingredient was residential.
It was important to find a way to get people to live downtown - to appeal to the people of San
Diego to consider downtown as an alternative residential community.
This was very, very difficult. The development and financing of market rate housing in
downtown San Diego was far more difficult than developing major retail, office or hotel uses,
which were not easy. Horton Plaza took- 10 years to plan, implement and build. We had to
create and use every incentive we could think of to make downtown competitive with other San
Diego residential neighborhoods after arresting the blight, crime, porn and other problems. The
important concept is that we had to create more than a level playing field for downtown for
an extended period, until the free market really took over.
In 1976, redevelopment plans were adopted establishing residential development as the high
priority land use. We worked with the City Council in creating funding mechanisms for
implementing our plans. Mayor Pete Wilson and business leaders hosted meetings and
luncheons in San Diego, Los Angeles and San Francisco for financial institutions and residential
development companies allowing us to describe our redevelopment plans and our emphasis on
housing development.
We then requested development proposals from housing developers, proceeded through the
selection process, negotiated agreements with developers, purchased sites and sold land for
housing development. The first phase of market rate housing was approximately 150 units in
two developments and by different developers. This initial complex of housing was multifamily
- for sale. Developed out eventually on six blocks, these two projects totalled 450 housing units
clustered around a one block park.
Concurrently we retained the services of planners, architects and economists - appointed a
citizens committee and prepared an urban design plan for our downtown residential
neighborhoods. The urban design plan established residential as a priority land use, created land
use controls and development incentives. The importance of the urban design plan was that it
clearly established that the city was serious about downtown housing - that developers, lenders
and residents knew that they would be part of a residential community and not isolated.
We went through some very difficult economic periods, e. g., attempting to sell condominiums
with interest rates at 18 - 20%. However, the effort has been successful and has produced
approximately 4,000 housing units ranging from 200 square foot SRO units to rental loft
apartments, adapted warehouses and soap factories into housing to garden style townhome and
apartments and high rise luxury for sale units. This has taken 16 years and San Diego will
probably be involved in the process for at least another 15 years. Many projects are on the
drawing boards, stalled because of the recession and the state of the real estate capital markets,
but they will eventually be built because people finally want to live, shop and dine in the
downtown area.
The consumer groups we were trying to attract were primary residents ( buyers and renters), the
second home market, empty nesters, young adults new to the job market and of course,
investors.
INCENTIVES
1. Financial - Generally we found with many different projects over an extended period of
time, that the range of financial subsidy necessary was in the $ 20,000 to $ 30,000 per
dwelling unit range. Financial incentives that we used are as follows: \
Land price subsidy, parking development assistance, off site improvements
Credit enhancement for project financing
Mortgage revenue bond financing
Financial assistance to the project for inclusion of low and moderate income
housing units
Working with financial institutions to secure construction and permanent financing
for downtown residential projects.
Sources of funding: City loans, tax increment, CDBG Section 108 loans and
mortgage revenue bond financing.
From the public sector's standpoint, we were concerned about developers reaping
a windfall in this process so we carefully analyzed every transaction and priced
the land in a manner to reduce our financial subsidy over a period of time, e. g.,
participation in the future sale of condominiums, participation in the resale of
units and participation in the rental income stream. The public sector was not in
partnership with the developers - we merely priced the land or the development
opportunity with participation provisions. Financial institutions do this with
developers in many instances, therefore we used this as a model.
2. Planning, land use and urban design guidelines, land use bonuses providing for more
density or revenue producing uses on a site or nearby to stimulate the development of
housing units.
3. Priority and assistance in the processing of plans for housing development.
4. Creating an atmosphere where residential would thrive, assisting other uses that are
compatible with residential to occur, developing amenities, activities for people such as
parks, service commercial, etc., security and safety issues, urban lighting and
landscaping.
5. Psychology - Advertising downtown as the place to be - to shop, dine, live.
Development of a major marketing and public relations campaign to promote and sell
downtown and downtown housing.
BENEFITS OF DOWNTOWN RESIDENTIAL
1. Supports all other uses such as retail, restaurants, theaters, service businesses, etc. The
discretionary income, the buying power of downtown residents is very important. It
creates demand for more retail and restaurants and in turn for more residential.
Generates sales tax revenue to the state and city.
2. Supports the live- work relationship
3. It is clearly a security measure - more people on the street is very important, especially
people that live there - pride of ownership.
4. Reduces traffic congestion
WBY HOUSING?
Housing is a major industry important to the economy of all regions. Market rate housing
development will not occur downtown without the assistance of the public sector because of high
land cost, physical conditions ( lack of housing, services, crime, amenities) and because
consumers will not be attracted to the downtown alternative without it being competitive with
other residential neighborhoods. There are very few cities where downtown housing works -
where a vibrant housing community exists without public sector involvement. This is especially
true here in the west where we invented suburban spmwl, flight to the suburbs of people and
all of the services. The suburbs where people found cheap land and none of the urban problems.
m Urban Lifestyle:
Dcvclopers, backed by Los
Angcles and Sirn Diego. city
officials, are building
residential units in ' commuter
downtow~~ s.'
By DIRK SUI'RO
I n Europe and in cities sich as
Cllicago. New York and Boston,
there arc long traditions of urban
living. It's taken for granted that those
who want to can find homes. work.
restaurants and shops all close together
in derlsely developed urban centers.
' That's 1101 the case in Southern Cali- -
fornia. though. where it has taken years
tor kcdevelopment agencies to create
residential neighborhoods in downtown
Los Angeles and San'Diego, and where
the migration to the suburbs during the
19T& and 1960s resulted in commuter
downtowns. deserted at night.
In San Diego. Ted Odmark and partner
John ' Chelan are among a new generation
of developers who see dowritown as a
land of residential opportunity.
' Thcir frrst downtown effort was Co-lumbia
Place, a 103- unit condonlinium
project at Columbia and C streets. The
-- -
condos. from 775 to 1.107 square fect in
size and priced from $ 90.000 to $ 175.000.
sold out by the time of 11s grand opening
In 1988.
Odmark and Thelan bu'llt the project
' with assistance from the Centre City
Development Corp.. the city's redevelop-ment
arm. which assembled land at a
cost of $ 55 a square foot and sold It to the
partners for $ 30, a subsidy of $ 1.5 million.
Through a development agreement
under which CCDC received a pay- back
based on sales, CCDC received $ 1.2
million- more than expected- when the
projecl sold faster than predicted and at
hlgher prices.
" Our mission with CCDC was that they
knew I knew how to produce and sell
attached housing." Odmark said. " We set
out on a course of four projects down-town.
Columbia Place was, in effect, the
starter kit. To get to where a home run is
standard might take three or four proj-ects."
Or maybe only two.
Odmark and Thelan's second project.
the $ 28- million Watermark, at Indra and
C streels, is being done without govern-ment
assistance. One-. two- and three-bedroorri
condominiums. 1.056 to 1,800
square feet. are expected to sell for
5200.000 to S 500.000.
Now under construction, the project IS
scheduled lo hit the market next March.
w
but already the developers have more
than 500 names on an interest list.
CCDC was created in 1977 to redevelop
360 acres in the heart of downtown San
Diego. Thirteen years later, the city's
nonprofit redevelopment arm has
achieved many of its goals;
T he Horton Plaza shopping mall, the
centerpiece of the new downtown,
opened in 1985. There was a decade- long
btmm in office towers and hotels. A new
254.000- square- fool waler[ ront conven-tion
center was christened last year. and
a Victorian- era historic district known as
the Caslamp Quarter has made steady
progress.
All of these goals were crucial to Ule
success of housing. Initially. the CCDC
hoped to spur the construction of 3.000 to
4.000 dwelling u~~ itNs. e arly 2,000 units
are finished. and another 2,344 are in
v; rrious stages of development. including
700 scheduled to hreak ground this year.
" We could t . e 6.000 units downtown
by 1997." prtd~ cted Pam Ilarnilton.
CCDC's executivr. vicc president.
Developers are ilrld~ ng a whole range
of opportunities. frc. several single-room-
occupancy hote j ( SROs) to low-rise
and high- rise condominiums and
apartments.
Compared to San Diego. Los Angeles
hits had a longer. harder battle to spur
successful residential developmerits
downtown. .
Gerald Trinible- who as president of
the USC Real Estate Development Corp.,
a subsidiary of the ~ rniversilys. irpervises
the development of properties USC owns
In Los Angeles redeveloprnent arcas-thinks
San Diego may have an edge.
" Residential takes a while lo work." lie
said. " Los Angeles is different. 11 doesn't
have the same waterfront view potential
as San Diego. San Dicgo has a little better
handle011 downtown residential.
" But the thing that still plagues San
Diego is that people aren't coml~ ellcd to
live downtown by traffic co~ rgestion.
Tlley can still cornmute In reasonable
tirrie."
That's not the case in Los Angeles,
where redcveloprricrrt efforts encorril) ass
19 projecl areas and 7,000 acre$. includ-in(:
1.519 in the Cet~ tralD usinesv L) istrrct
alone.
" Bunkcr tiill was one of the first urban
renewal projects in the state ant1 reflect-ed
the policies of the ' GOs." said Johll
' Mc: Cuire, dcputy atlrninistrator of lious-in!:
services at the L. A.' s Co~ nrnut~ it~
Rrd- veloprnenl Agency.
' Th, " total clear" process left 19603
downtuwn. includi~~ Bgu nker HIII, look-
Ing like " battle zonrs," McCuire said.
" ln a way. it was self- defeating. l't~ ere
Please see DOWNTOWN, K2
. I DOWNTOWN: Residential Areas Developed *
towcr whcre prices ranged from f~ rstt o give them a product t h c ~
under 5300,000 lo more than $ 1 were famil~ arw ~ th. B ut those proj-
. m~ lllonw hcn the project opcned in ects d ~ dst r~ kem e as very subur-
1985. Five year3 later. Smyk indi- ' ban, not having the Ilesl relation-catctl
that the projcct is in the ship to thestreet"
black. , Cohrmbia Place andl other newer
; - " We're abkut 86% sold." he said. projects are denser ar rd have more
, " We paid off our ! oan around the s~ dew, rlk entrances, l ~ k ec lassic
. first of the year." New York brownstonc! s.
Several more high- rise residen- Developer/ archite~: t Jonathan
tial projects in San Diego are in the Segal has gone all- out for this
works; urban atmosphere a t his 7 On
- One- Harbor Drlve, twin 41- Kettnrr townhomes, built on a
I story condo towera across from the small wedge of land next to the
Convention Center, with units . railroad tracks. Ilomeas have side-ranging
from $ 211,000 Lo $ 2 6 mil- . walk cntrances, w~ th parking hid-
-
. . P
' Los Angelesis different. It doesn't have th e same
waterfront view potential'as Sat1 Diego. Sain Diego
has a little better handle- on downtown residential.'
GERALD TRIMBLE
USC Real Estate Devdopn~ ertt Corp.
I
. .
lion, Is scheduled for June ground den ir~ b ack. Segal sc ) Id Six of his
breaking and cornplction in early seven ) romes, priced f rom S290.000
1992. Already. 150 of 202 units are to $ 500.000. before th e project was
in escrow. the sales office claims. completed
- The Huntington Is a high- rise Now he is working on a larger-condominium
tower proposed for a 45 units- but still I ruman- scaled
site on Broadway. project on Market S lrCCl. sched-
- Two aparlnient high- rises uled to break ground t his summer.
' planned for corners at Front and C " I personally don'. t understand
streets have been delayed by un- where all the peopic: are comlllg
derground toxlc waste. from to purchase thos . e homes. If it
- Roger Morris Plaza is a 50- took all that time lo sell the
. Story npartrncnt/ hotcl tower Meridian, why would buyers colrrc
planncd on IIarbor Drive, across out of the woodwor . k for other
from the convention center. projccls?"
While the architecture of the Smyk agrees that th e markct for6
llew generation of downtown resi- luxury high- rise livin ~ g in down-,
clential towers Is a mix of fairly town Sitn Dicgo is limit cd.
polished styles. the architecture of In 1 ~ ) Asn geles' cent lral business
low- rise housing in downtown San district, more tha~ r 3, 100 housing
Diego has come a long way since units have, bee11 fin ished since
the earliest CCDC- seeded projects. redcvelopmcnt bcgarl in 1977. a
" My initial reactton to those first CRA spokesman said. I ': fforts have
projects was they . were too subur- focused on low- arid In oderate- in-ban,
too large. too much of the come housing, includir rg rehabili-same
thing." said Pam Ilamilton, tatctl SROs arid nccv apartrnerrt
Trimble's successor as executive projects.
vlce president at the CCDC. At South Park. 80 dov vntown 1.0s
" 1 utrderstand what the rationale Angcles acres boundctl by 8th and
was. If you were going to ask San ; Maiir streets arid the Sn nla Monica
1) legaris 10 live in dilfercnt loca- ;~ nd Itarbr freeways. t . he CRA is
lions. perhap3 it would be best at ' putt~ ngt o use the pla1111 ing know1 -
Contlnucd fron~ K 1.
was so nluch vacant lantl. it was
I d~ fficull to get developers. Today,
we're assembling much smaller
parccls- 20 blocks in Bunker tfjll
versus three- quarter block' in
South Park."
- Si~ rce the redevelopment ol
! Bunker IIill's 133 acres began in
the carly 1960s. about 3.000 hous-
I ing units have been complcted.
Including market- rate apartments
and condominiums and 1.300 units
of low- and moderate- income
housing.
San Diego CCDC's decision to
focus its housing efforts between
Broadway and the waterfront in a
125- acre area known as the Marina
seems to be paying off.
With the Horton Plaza center 1 serving the area with movlcs,
plays, shopping and several res-laurants,
and with the waterfront
as a giant back yard, the combina-lion
of urban living rn a natural
setting is hard to beat.
But when redevelopment began.
CCDC had a hard tlmc pcrsuatling
developers and politicians that
housing was the best use for this
area.
" Residential was a real question
mark for a long time," recalled
Trimble, who served as the CCKs
, edge it has g;~ inctl from carlicr
projects. iilsisting on mixed- usc
projects with grou~ rd- level conr-mercial
and retiril to create a
neighborhood atmosphcrc.
Grand Hope I'ark. a ' planncd
$ 6- million, 2.5- acre park dcsigncd
by landscape arcl~ itect Lawrence
' Halprin,. is sccn as the inviting
public space that will knit the
community together.
But evcn in Soyth Park, where
the CIiA hopes eventually to spur
the creation of 8,000 to 12.000
housing unils. residential develop-ment
has taken tinle to come of
. age.
Los ~ ngclesci ty planners began
discussing a village of high- rise
aparlnierrts and conclos in 1972, but
rising land costs ant1 weak fcderal
funding support put plans on hold.
In 1980. the CRA and developer
Forrest City Dillion agreed on a
two- phse. 412- unit condon~ iniu~ n
project, and Skyline I. the 200- unit
first phase. opened in 1983.
" They thought they could mar-ket
them for a much higher price
than was ft: asiblc." McCuirc said.
' They didn't go broke, but thcy
had to exte~ idt heir sellout time by
more than a year."
For iLn secoi~ d projcct. Forrest
City Dillion switched to apart-
' ments, The Metropoiitan. 2' 10
apartments, opened last year and is
80% occupied, a CRA spokesman
said. The 192- unit Dcl Prado apart-ment
tower is di~ ct o open next
year. in addition. thc CItA has also
supervised the rehabilitation of 700
residential hotel unils and 300 units
In the Embassy Ilotel to serve
studcnts at 1JSC.
Although both Sirn Diego and
Los Angcles have a mix of housing
types In their downtowns, the CIlA
is charting a diffcrcnl direction for
residential devclopnlent in South
Park.
" We've nloved away from con-dominiums
toward apartments,"
McCuire said. " Wc dccidcd the
downtown conclo nrarkct wasn't
there for that nt: ighborhood, or
even for .'; outRel. n Califorrlia."
- - - -
Sulro f a / rr8e- lunce iun'ler living in
Curdill.
top executive from 1977 to 1987.
By today's standards, the f~ rst
San Diego downtown housing proj-ects
built under redevelopment- I the Park Ilow and Marma Park
condominiums- seem outdated
and otldly suburban for their urban
rettingr. DuL Trimble recalls what
a task it was to entice bu~ idcre,
most of whom had no experience
doing urban housing projects,
" You have to walk before you
can run. ' I'hcr~ was just no way
they were going to go in with
high- density, hlgh- rise projects.
You have to remember whcre
downtown was. Even today, you'd
have to prove to me that h~ gh- iIse
really works from an income
standl) oint."
So far. the only lest of the
high- rise hous~ ngm arket has been
dcvelopcr Walt Smyk's Mcridiar~ a,
172- u11i1, ZI- story luxury condo
I' Hard- herded efficiency. Srure und lucul emp1u) ues likt ilris huilditrg iti. sl)~~ cro~ rt rIJ lru~~ turr~ er l ~, urtri~ rlgo work ttrorc+~ ~ rorl~ rc~ iric~ ly.
1
Bureaucracy busters
Business is teaching government how to give tuxpayers more for their money
X erox senior manager WC En-mon
spends his days training
work teams in customer satisfac- .
tion, quality measurement and process
redesign. That should come as no sur-prise.
The Stamford, Conn., corpora-tion
has been using such total- quality
concepts for 10 years to fight Japanese
competition and win back market share,
from a low of 10.3 percent of the U. S.
copier market in 1985 to 17.6 percent in
1991. But Enmon is not working with
Xcrox cmployces; he is putting these ; corporate tools in the hands of the
I 226.000 civil servants and cxecutivcs of
the Texas state government in Austin.
The Xerox- paid special adviser to Dem-1
ocratic Gov. Ann Richards acknowl- edges that government cannot be run
exactly as a business, but he believes the
same techniques that helped improve
copicrs will better the efficiency and
service of government. " We're talking
about delivering service that mccts the
dwsn't matter whether it's a widget or
a driver's license."
From Fort Lauderdale, Fla., to Fort
Collins, Colo., from Oregon to Ohio,
I
Improvement Network, a Madison, Wis.,
group that teaches business principles to
government leaden. And the platforms
of candidates in eight of the 12 gubcrna-customers'
needs," says Enmon. " It
state and local governments have begun torial elections this month had planks
seizing upon the business featuring rn[ rcprenrur-concepts
that American iai government.
companies began usingin U(( WWRWO tn8 Intensifying this trend
the 1980s to reform their FRONT UNI was the publication this
own stifling corporate B& ginrpctom year of " Reinventing
bureaucracies. The new Phocnk Government," by David
buzzwords of the board- Osborne and Tcd Gae-room
- empowerment, m T TTICC TIC: Mov- bler, which spotlights
customer- driven, team- i" g lo lower many ut' the citics, htatcs
work and especially total- lrvchforspcedeficicnc~ fcJcruagl encies
quality management - ~ rrrUCnnCE: F ield where practice> Iloncd in
are increasingly becom- inrpctors huvc & en the private sector arc sav-ing
the mantra in council tmincd lo mob budding- ing taxpayers' dollars and
chambers, statehouses codcdecrYautha~ wcw making the phrase " gov-and
pockets of the feder- oncep~ vcdfivclf lch up ernment work" a label of
a1 bureaucracy. In thc lkchainofcommand pride, not derision. " Wc
past six months alone, Decirionsthatuscdlo s ~ i ltlh ink of govcrnnicnt
1,000 inquiries have lakc a awmcrL on as n~ onopoly, hurcaucra-pourcd
into the offices u l ' hesW. cy, hierarchy." sip Mcryl
the Public Sector Quality Libbcy of tiarvard's Kcn-
U. S. NEW & W0N. I) ~ EI? H( I'. N l J V ~ ~ ~ W:#. I:, H1% 49
ti. SNEWS B W( ML1) REPORT. NCNE.. fBER 3. ivlr I
bccn short on specific ilans,
his national economic strategy promises
3 percent administrative savings in every
agency and a 100.000- position reduction
in the bureaucracy, enhanced by a " shift
from top- down bureaucracy to entrcpre-ncurial
government." Clinton could find
an unexpected ally in House Republican
Whip Newt Gingrich. who last week in a
speech before Republican governors op-timistically
estimated that total- quality
management could save 15 to 25 percent
of the cost of government over five years.
Government waste. Falling profits
wokc husincss up to the need for change..
hut govcrnmcnt is responding to tax- rc-volting
voters who refusc to pay another
dollar for lcss than a dollar's worth of
scrvice. Scventy percent of Americans
hclicvc that when something is run by the
government. it is usually inefficient and
wnsreful. according to a recent Times
Mirror poll. Busincss. too. has tircd of
pi1yin2 more nntigctting less. which hclps
cxpl; lin why such cornpanics as Xcrox
i~ ntKl odi~ kh ave bccn so cngcr to share
thcir cxpcrtisc. Florida Power & Light.
the only American company to win Ja-pan's
coveted Deming Prize for quality,
forexample. isactingasa mentor for the
Florida government's efforts to reform
its bureaucracy, " Whatever wc can do
[ hill helps the state." cxplains Dale But-
Icr. an FP& L supervisor. " could have a
tremendous impact on our tax costs."
The privatization movement has also
stirred bureaucrats to the realization
that their monopoly is no longer safe. A
survey by the National they prepare batches of I
Conference of State Leg- PLWIWO specialized computer
islatures found that near- THH CUSTOMIR chips. Because such dcci-ly
60 percent of legisia- Tmficpolice sions have been impie-ton
now favor privatizing Reno, Nev.
through the chain of
I mented without passing .
traditional government
activities. Thc public sec- ctxmMn 1- On'- command, most Motor-tor
is increasingly faced etonmtincgr work around cus- ola units in Phoenix have
with the option of learn- eliminated at least two
ing from business or be- PUT lwro rrucna: Reno layers of management.
I
ing replaced by it. " Gov- police found that simp@ Executives credit the im-ernment
has to change issuing mow tickers proved productivity and
the way we opcrate." says made midents angry responsiveness with
Steve Burkctt. city man- without reducing acci- helping reverse Motoro-
I
agcr of Fort Collins. " We denu. Afrcrso[ icitbtk la's slide in worldwide
arc going lo hiive to be- semiconductor market
come morc productive." ~" fmficcopsfound share, which has grown
To makc rcal produc- morr"* ted and Icu I
over the past two years. ,
tivity gains. politicians ' ffmivc lo cOnmd while revenues have riscn
are learning. corpnra- sfmpcffeicd, d smucohn iatosr tihnigss ign $ 600 million.
tions had to change their CitLm happier, and Flattened. Across
very shape. Exccut ives accidcnU falling- town, Phoenix Mayor
hccamc ohscsscd with do, 20pKen, in rh Paul Johnson isn't much
flattening thcir organizn- ml ~ f ~ f l 9 9 r worried about market
tions in thc IOXOs as they share, but he is equally
came to rcirlize that in-ing
the hierarchical hu-enthusiastic
about alter-formation
and decisions
were slowed and garbled as they moved
up and down each additional layer of
management. The solution was to put
more decisions in the hands of lower-reaucracy
of city government. Phoenix
has studied Motorola's success. and
Johnson now boasts that the city serves
more people today with 450 fewer em-
I
level cmployccs who can act on them
quickly. whilc eliminating the need for
several laycrsof supervisors. At Motoro-la's
semiconductor division in Phoenix.
for example. " empowered teams" now
set their own production schedules as
ployees than it had three years ago.
largely because of cuts in senior- and
middle- management positions. Thc
mayor is particularly emphatic that de-
I
cisions not get passed from desk to
desk, a lesson he learned battling red I
1 BUSINESS
tapc ; IS thc ouncr of ; I local
construction firm.
In the past. for example.
when Phoenix building in-spectors
came across unccr-tain
situations that rcqilircd
thcm to interpret rhc build-ing
code. they would routine-ly
refer the clucstion up the
chain of comm; lnd to an as-sistant
director. five layers
above. Developers would
have to put parts of a con-struction
projcct on hold
while waiting for a decision.
which was irually hrrscd on
thc advice of the inspector
anyway. Today. inspectors
make similar dccisionson the
spot. or refer them to their
immediate supervisors. sav-ing
developers tens of thou-sands
of dollars. Such im-provemcnts
hirvc Icd to a
drop in customer complaints
at thc Development Scrvices
Department, despite a 23
percent reduction in staff.
In most government agencies. the
number of complaints coming over the
transom is not followed very closely. but a
new vanguard of cntrcpreneurial govcrn-mcnts
is taking up the customcr rcvolu-tion
hcgun hy corporate America in thc
early 1980s. In Phoenix. every depart-ment
has conducted customer focus
groups in the past six months. The city of
Fort Lauderdale hopes to polish its im-age
by putting parking cnforccrs. who
oftcn deal with ir;~ tc toilrists. through
customcr trilining. Fort Collins annui~ lly
scnrts ( 1111 siin. c); s to ISMU) of its citi~ cns.
Sitys City Illilnagcr I3urkctt. " Wc can
hilvc all kinds ol' c l i ~ t i la hout how great
our lihriiry is. hut if our customers think
it's lousy. wc'rc not achieving oirr goal."
Productive police. If thc Kcno. Ncv..
Police Dcpilrt mcnt hiitl hccn interested
in custcinicr ccn. icc in thc early I0l; Os. it
wnilltl hitvc I'c> ullri ; In irlcirl motlcl close ; I\
hilnrl. tl;~ rri~ hC'si ~ sinoH otels wils thcn
dcvcloping what is perhaps the most ex-tensive
customcr- scrvicc data collection
system in its industry. Nearly 2.000 visi-tors
are surveyed by phone each year
after returning homc from Harrah's.
while thousilnti~ m ore arc intcrvicwcd on
sitc. Thc rcsults arc trackcd monthly. But
thc Rcnn policc wcrc more interested in
writing tickets than reading surveys. Ac-cidents
rose in the early and mid- 1980s.
Reno cops. armed with 21 new radar
units, more than doubled the number of
traffic citations. But the accidcnt rate
refused to budge. and in 1986 and 1987
angry citizens turned ty or efficiency, 85 per-down
two ballot- box pro- CURING w- cent or more lies within
posals that would have in- IlROM lna CROCUS the process, not the peo-creased
police funding. Tree- trimming cmvs ple who work it. Bob
With somc advicc from Cleveland Garda of McKinsev Fr
Harrah's. Rcno police Co. finds that 10 t i 20
have begun listcning to "- TET- Redc- percent of the costs can
their customers. More s i 8 " i " g ' h ' w o r k ~ ~ ' ~ be, rungoutofaproc- than a thousand citizens in Search of etfiCiencics ess - in business or gov-are
surveycd each year by pvr rwro nucncr: When ernment - by redesygn-tclcphone.
As a result of business consultants u- ing it. " We have good
thcir advicc. mi~ nyin ter- amined the way Cleve- people in government
\ cctions hilvc hccn im- land cut frees, they found trapped in bad systems."
prnvcd. Police ilrc 110 Ion- crews spcnding almost says Gaebler. " They
gcr cncouragctl to write much time dnvingfrom have to go."
tickets in rirndom loca- to Site, stuck lh tmf Out on a limb. The tree
lions. instead targeting & jam and waiting trimmers of the city of
siteswithlargcnumhers thegarolincpumpac Cleveland would agree.
of accidents or custorncr fheyspenrmmingrrers. For as long as anyone
t ri~ fficc ompli~ ints. T o- The problem was not la-ziness
but orgonuation. could remember, several
d; ly. 9 of I0 Reno citizcns a schedule tree crews had criss-i~
pprrwc of t hc dcpart- and divirion of crossed the city daily.
mcnt. up from 4 of I 0 in p ~ u c t i v i , , r, o se mow pulled away from rou-
1988. And though ticket- , hn 40perccnt. tine trimming tasks to
ing is down. the accident handle emergency, re-rate
fell 10 percent in the quests. When Garda
first six months of 1992. studied their movements
In their pursuit of satisfied custom- in the late 1980s. he found that they
crs. American companies in the 1980s wcre actually working with trees only
sought out thc teachings of W. Edwards five hours of the day, spending much of
Dcming. thc quality consultant many the other three hours in traffic. Garda
Japanese industrialists credit with their recommended that one crew be as-success.
One of the key tenets of his signed to emergencies, while the others
philosophy of total- quality management stick to their assigned trimming jobs all
is music to the ears of government day. As a result of such changes. the
workers weary of the stigma of the lazy department now services more trees
bureaucrat: Of any problem with quali- with 18 people than it could in the past
with 27. Productivitv has risen 43 per- j BCS[% E
ccnt whllc c~ tizen complaint5 have 1 ~ 1 1 -
en 63 percent.
In the front- running governments
that are using Derning's total- quality
management seriously, government
workers themselves are finding ways to
improve the efficiency of their work sys-plate
renewals. which were generat
ing weekly complaints from citizens who
were waiting up to three weeks for their
certificates and decals. The team decid-hatch-
printed on the weekend,
could simply attach computer
stickcrs to the old certificates as they
arrived. All renewals are now mailed out
within a day, while the department saves
$ 10,000 a year on forms alone and even
more on printing.
If Clinton promises to do for Ameri-ca
what he has done for Arkansas, how
large a revolution could he stir in the
halls of the Washington bur
The new president may find h
preoccupied with reviving th
economy to make any early,
toward creating a m
federal govcrnment. And if
will find all manner of obst
way. The federal bureaucrac
nization far larger than Gen
and IBM combined, with a
system rewarding a manage
a bigger staff. not a morc e
Nonetheless, at the Fe
Institute. an appendage o
leadership has spnrkcd
Personnel Management.
Don Mitaur. whose staf
years as the federal gove
pal cheerleader and ca
quality management. sa
ton is " not seeing t
measurable results tha
pcctcd." The private
BY CXIfir L B m I GIIS Clinton. Her h
APPENDIX D
INCENTIVES AVAILABLE TO
DEVELOPERS, OWNERS OR OCCUPANTS
OF SINGLE FAMILY AND RENTAL HOUSING UNITS
SUBMITTED BY THE CITY OF PHOENIX
TO
JOINT LEGISLATIVE STUDY
COMMITTEE ON HOUSING REDEVELOPMENT
DECEMBER 3, 199 2
M E M O R A N D U M
The i n c e n t i v e s avail- able t o cities and towns t o
encourage t h e development of new housing u n i t s a r e l i m i t e d and
where they do e x i s t a r e g e n e r a l l y l i m i t e d t o low and moderate
income f a m i l i e s or persons. The following is a l i s t of
i n c e n t i v e s t h a t would be a v a i l a b l e t o any c i t y or town for market
- r a t e housinq u n i t s on t h e b a s i s described:
( 1) In a Redevelopment Area ( slum and b l i g h t ) a c i t y or
town can a c q u i r e , c l e a r , and r e s e l l land a t an adjusted
p r i c e t o developers of r e s i d e n t i a l u n i t s . This a c t i v i t y
could not occur in neighborhoods where housing stock is
d e c l i n i n g but which a r e f r e e of slum and blighted
c o n d i t i o n s .
( 2 ) In a Tax I n c e n t i v e D i s t r i c t w i t h i n a Redevelopment
Area, possessory i n t e r e s t t a x e s could be abated f o r both
a f f o r d a b l e and market r a t e housing u n i t s which a r e owned
by t h e c i t y o r town and leased t o a p r i v a t e p a r t y .
( 3 ) ~ u l t i - F a m i l y I D B s f o r c o n s t r u c t i o n of r e n t a l u n i t s
w i t h set a s i d e s f o r family u n i t s with low or moderate
incomes. The cash flows on t h e s e mixed income l e v e l
p r o j e c t s a r e d i f f i c u l t under present economic
c o n d i t i o n s , and o f t e n t h e cash flows a r e not s u f f i c i e n t
t o permit t h e issuance of multi- family I D B s .
( 4 ) S i n g l e Family Mortgage Revenue Bonds a r e an
i n d i r e c t i n c e n t i v e i n t h a t they make a v a i l a b l e mortgages
t o home buyers a t a tax- exempt r a t e of i n t e r e s t but do
not d i r e c t l y b e n e f i t t h e d e v e l o p e r s o f r e s i d e n c e s .
In a d d i t i o n t o t h e foregoing i n c e n t i v e s , a c i t y or town
can a c q u i r e and c o n s t r u c t u n i t s f o r a f f o r d a b l e housing located
anywhere within t h e i r boundaries. The a v a i l a b i l i t y of t h i s
i n c e n t i v e is l i m i t e d by a v a i l a b i l i t y of funding out of t h e budget
of t h e cities and towns. General o b l i g a t i o n bonds could be used
for t h i s purpose. F u r t h e r , a number of f e d e r a l l y funded programs
a r e a v a i l a b l e t o cities and towns b u t o n l y f o r a f f o r d a b l e housing
a s s i s t a n c e .
In a d d i t i o n t o t h e i n c e n t i v e s l i s t e d above f o r new
devel. opment, cities and towns have a number of programs a v a i l a b l e
for neighborhood maintenance and s t a b i l i z a t i o n . While t h e s e
i n c e n t i v e s w i l l not lead t o t h e development of new housing u n i t s ,
they may r e t a r d t h e l o s s of housing u n i t s i n e x i s t i n g
neighborhoods. Attachment 1 is a l i s t i n g of t h e programs offered
by t h e City of Phoenix both f o r development of new u n i t s and
maintenance of e x i s t i n g u n i t s . ~ l lof t h e programs l i s t e d a r e
f o r low o r moderate income u n i t s , except those funded with bond
proceeds a s noted above.
ATTACHMENT 1
CITY OF PHOENIX
NEIGHBORHOOD IMPROVEMENT AND
HOUSING PROGRAMS
FOR LOW AND MODERATE
INCOME FAMILIES AND PERSONS
A. mANCIA1 AIQ H O V E R V I E W
1. OPERATIOEl PAINTBRUSH
o Coverage: Cltyvlde o A $ 250 lraxinw~ o ne- time rebate i s provided for the purchase of paint and supplles to restore the
o Target Population: Low and ) lodarate Inccnne the exterior of owner- occupied hanes.
o Fund Source: COW Funds o Owners w s t submit orlginal recelpts as proof of purchase of rnaterlals.
o Adm. Dept./ Dlv.: NIH/ Houslng Services o Owner's incoos must be equal t o Or less than 80% of the Phoenix medlan Income.
o Information. Contact: 262- 7210 o During the f i r s t four months o f each flscal year, 75% of the allocated funds are earmarked for
o Address: 920 E. Madison, Suite 6 neighborhood Improversent areas and 251 1s available cltywlde. I f neighborhood improvement area
funds are not u t i l i z e d durlng the fourlonth perlod, then the remaining funds are open for
cltyulde distributlon.
2. OPERATION LANDSCAPE
o Coverage: Citywide o A $ 260 maxlmua one- tlae rebate i s orovlded t o pay for yard cleanup, removal of abandoned vehicles,
o Target Population: Low a d Moderate Income md landscaping lcproveabents.
o Fund Source: COBC Funds o Eligible wner/ occupants must ~ 0 t l S f yt he quallfylng c r i t e r i a of havlng equal to or less than 80%
o A6. Dept./ Olv.: NlWHouslng Services of the Phoenix lredian Inconre.
o Information Contact: 262- 1210 o During the f i r s t four months o f each fiscal Year 75X of the allocated funds are earmarked for
o Address: 920 E. Madison, Suite B neighborhood improvement areas and 25% i s aval lable c l tyulde. I f neighborhood lmprovoment area
funds are not u t l l l z e d during the four- month period, then the remalnlng funds are open for
cltywlde distributlon.
3.. HARDSHIP ASSISTANCE PftoGIW
o Coverage: Cltywlde o Assistance I s provided t o law income hocPe wner/ occupled residences which have an lncome teve 1
o Target Population: Law Income equal t o or less than 65% of the Phoenix median income and who have been clted under the
o Fund Source: CDBG Property Maintenance Ordinance.
o Ada. Oept./ Div.: NIH/ NMZE o Minor violations of the exterlor prtWklSes can recelve up to $ 500 i n old.
o Inforaatlon Contact: 495- 7019 o Violations requiring major repalr can receive up t o $ 2.000 In ald.
o Address: 920 E. Madison, Suite E o This I s a last resort funding progrm for those items whlch cannot be addressed/ funded by other
Departmental programs. Appropriate referrals w i l l be made.
KEY: NIH = Neighborhood Improvement and Housing Departrent HUD = U. S. Department of Housing a Urban Development
MZE = Neighborhood Maintenance and Zoning Enforcement Division IDA = Industrial Development Authority
COW = CaaPunlty Oevelo~ arent Block Grant
NOTE: box and 50% of Phoenix median income defined by A t t a c b n t A Rev. 5/ 92
* .
A. FINANCIAL AIQ ( Continued)
6. HWE IMPROVEMENT REVENUE BOND PROCRAM( S)
o Coverage: Citywide
o Target Pop. : Median and Lou Income
o Fund Source: IDA Mortgage Revenue Bonds
o Adn. Dept./ Dlv.: NIH/ Houslng Servlces
o Informatlon Contact: 262- 7210
o Address: 920 E. Madlson, Sulte B
1. RENTAL REHAB PROCRAH
P R O G R A M O V E R V I E U
o Owner/ occupants will be able to make major renovations to thelr property by taklng advantage of
an FHA Title I Insured loan not to exceed $ 15.000 for a 15- year term.
o Moderate Income applicants not exceeding gross fmlly Income of $ 39.330 and fulfllllng
underwrltlng and bond requirements wtll be eligible for approximately an 8 . 5 ~ loan.
o Low lncotne appllcants havlng equal to or less than 80X of the Phoenlx medlan lncome and
fulfllllng underwrltlng and bond crlterla wlll be eligible for a 5x loan.
o Applicants with a gross family Income up to $ 41.880 wlll be ellglble for the 8.5% loan if the
homes requlrlng lmproveaent are located In the Internal Revenue Service's deslgnated areas.
o City wlll conduct a property evaluatlon to ensure that properties wlll conply wlth the Clty's
Property Maintenance Ordinance.
o program's life expectancy Is based on avallabll ity of loan funds.
o Coverage: Rental Rehab Targeted Areas o Matching funds to allowable llmlt are made avallable to owners of slngle or multi- fmily uolts to
o Target Populatlon: Apartment Ownersflenants upgrade them based on a M D formula to satlsfy Property Rehab Standards. In order to recetve the
o Fund Source: HUD- Rental Rehab Allocation loan, ? OX of the units rust be reserved for tenants having 80x of the Phoenlx medlan lncome or
o A&. Dept./ Div.: NIH/ Houslng Servlces less.
o Infonratlon Contact: 262- 7210 o Owners' matching funds lust be deposited In non- Interest bearlng escrow at time of closing.
o Address: 920 E. Madison, Suite B o Property must be located In an area which meets the HUD ellglblllty approved crtterla.
o A code violatlon must be in evidence to quallfy for assistance.
8. SECTION 312 LOAN PROGRAM
o Coverage: Citywide o Owner occupled rehabllltatlon loans are available at 3%. not to exceed $ 33,500.
o Target Population: Low and Moderate Income o Property oust be brought to property rehabllltatlon standards.
' o Fund Source: HUD Sectlon 312 o Quallfylng and underwriting crlterla Is slnllar to that of a prlvate lender.
0 Adm. Dept./ Dlv.: NIWHousing Services o An eligible ouner/ occupant aust satisfy the quallfylng crlterla of havlng equal to or less than
o Infomtlon Contact: 262- 1210 80% of the Phoenlx median Incam.
0 Address: 920 E. Madison, Suite B o ( hmer/ occupants with Incomes between 80% end 95% of the Phoenix nedlan lncome are ellglble for
a loan based on the current govermnt securltles rate at tiam of loan approval.
o All qualifled partlclpants are required to complete the Clty's Home Maintenance Tralrrtng Progrm
which consists of four 2- hour sesslons.
o A code vlolatlon aust be In evidence to quallfy for assistance.
KEY: NIH = Neighborhood Improvement and Housing Departrent HUD = U. S. Department of Hourlng 6 Urban Development
W E = Neighborhood Molntenanco and Zoning Enforcement Olvlslon IDA = lndustrlal Development Authority
CDBC = Comunlty Development Block Grant
NOTE: 8M and SOX of Phoenlx median Income defined by Attachment A Rev. 5/ 92
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- Page 5
A. FINANCIAL A@ ( Cont lnued) P R O G R A M O V E R V I E W --
11. SINGLE FAMILV HOHE PURCMSE HORTCAGE
REVENUE BWO PROCRAW( S)
o Coverage: Cltywlde o Provldes a 30- year Home Purchase Mortgage orlented to the first- time buyer and those not havlng
0 Target Populatlon: Low and Woderate Incomes owned a home i n the last three Years. Homes may be purchased throughout the C l t y of Phoenix.
o Fund Source: IDA Mortgage Revenue Bonds o Lower than market interest rates ( usually 1.5% to 2% less).
o Adm. Dept./ Dlv.: NIH/ Houslng o Annual gross incane may not exceed $ 35.000 for one- or two- person households, and $ 40,835 for
Development and Modernlzatlon three or nore person households I n the non- targeted areas. Twenty percent higher I n target areas.
o Infomation Contact: 262- 6913 o The purchase prlce of homes i n the Program w i l l be limited by the FHA loan I t m i t of $ 128,700 for
o Address: 920 E. Madison, Suite 0 the non- targeted areas and $ 157,300 for the targeted areas.
o Program's l l f e expectancy I s based on the avallablllty of funds.
12. DOWNPAYMENT AND CLOSING COST PROGRAM
Coverage: Citywide o Provides assistance with down Payrnent and closlng costs to e l l g l b l e low lncome home buyers.
Target Population: L w Income o Funds are offered i n the fom of A matching dollar for dollar grant.
Fund Source: Housing Trust Fund o The participant i s required t o Pay a ~ i n lorf $~ 50 0 towards downpayment and/ or closlng costs.
State of Ari~ Ona The mxlmum grant mount cannot exceed $ 1.750.
A h . Dept./ Olv.: NIH/ Housing Development o Eligible borrowers must have incomes below 80% of median.
and Modernlzatlon
o Information Contact: Local lenders
partlclpatlng i n program or 262- 6913
o Address: 920 E. Madison, Sulte D
KEY: NIH = Neighborhood Improveaent and Housing Department HUO = U. S. Departlnent of Housing 6 Urban Development
NMZE = Neighborhood Maintenance and Zoning Enforcement O l ~ l S l ~ n IDA = Industrial Development Authority
COBG = Coinmunlty Development Block Grant
NOTE: 80% and 50% of Phoenix redlan Income defined by Attachment A Rev. 5/ 92
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* .
A. rn ANCIAL 41l) ( Continued)
Pago 7
P R O O R A M O V E R V I E W
IS. NONPROFIT ASSISTANCE ( Technical k Flnancial
Assistance for Lou Incoa~ o Houslng Development)
o Coverage: Cltywlde o Staff asslsts nonprofit organizations that seek to produce low and moderate Income housing and
o Target Populatlon: Low and Moderate Income Improve lower income neighborhoods.
Households and Neighborhoods o Asslstance can be I n several forms. ranging frm asslstance In applylng for varlous programs to
o A&. Dept./ Dlv.: NIH/ Houslng Development produce houstng to providing aatchlng funds t o acquire and rehabllltate single family homes and
and Modernization apartment complexes.
o Infomatton Contact: 262- 6017
o Address: 920 E. Madison, Suit8 0
16. COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM FUNDING
o Coverage: Citywide o Provides grants t o e l l g l b l e organlzatlons for a varlety of projects whtch benefit low and moderato
o Target Population: Low and lncolle persons or eliminate s l w and blight condltlons In the Clty of Phoenix.
Hoderate Incoes o Provldes technical assistance to applicants on procedures for requestlng fundlng.
o Fund Source: COBO Funds o Provldes tralnlng t o funded agencles on contract and project Impleumntatlon.
o Ada. Dept./ Dlv.: NfH/ C4# mlty Devel. o Executes and adalnlsters project contracts.
o I n f o m t l o n Contact: 262- 7168
o Address: 920 E. Madlson, Suite C
17. WLTI- FAHILY PROPERTY ACQUISITIONS -
GENEfUL 08LIGATION BWDS ( 0.0.) PfWfW
o Coverage: Citywide o A llmtted nunber of apartments and other m u l t i - f m l l y properties are purchased for use In the
o Target Population: Low Income affordable rental program.
. o Funding Source: 0.0. Bonds o Properties are primarily located I n areas with a lack of affordable houstng.
o A&. Dept./ Olv.: NIWHousing o Properties wlth prevlwsly two- and three- bedroarr unlts are sought.
Development and )( odernlzation o Properties must be locatlonally desirable, close to shopping, schools. transportation, etc.
o Information Contact: 262- 4785 o Propertles wfth from 10 to 200 unlts are acceptable.
o Address: 920 E. Madison, Suite 0
KEY: NIH = Neighborhood Inprove~ nent and Housing Department HUD = U. S. Department of Housing 6 Urban Development
NMZE = Neighborhood Malntenmce and Zoning Enforcsrsnt DIvlslon IDA = I n d u r t r l a l Development Authority
COB0 = Cornunity Development Block Grant
NOTE: 80% and SOX of Phoenix median income defined by Attachment A Rev. 5/ 92
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Page 10
P R O Q R A M O V E R V I E W --
1. W E SAFETY INSPECTIONS
o Coverage: Cityuide o Safety Inspections ( for a nominal fee) are done upon request of home owners or prospect tve home
o Target Population: Citizens of Phoenix buyers.
o Fund Source: City's General Fund/ o Inspections include electrical, mechanical, plumbing, and structural.
Offset by Fee
o A h . Oept./ Dlv.: NIWNWZE
o Information Contact: 262- 7644
o Address: 920 E. Madison, Suite E
5. GRAFFITI BUSTERS
o Coverage: Cityuide o Residences and businesses which are located on major thoroughfares can contact Houstng Services
o Target Population: Phoenix Residences t o paint over g r a f f i t i on block walls and fences surrounding thelr property at no cost.
on Major Thoroughfares o Signatures granting pemission t o abate g r a f f i t i w t l l be requested of the owners.
o Ada. Oept./ DIv.: NIWHouslng Services o Fund Source: COBG
o Information Contact: 262- 1210
o Address: 920 E. Hadlson, Suite 0
6. TECHNICAL ASSISTANCE ADVISOR ( TM) FOR
THE RESOLUTION TRUST CORPORATION ( RTC)
o Coverage: Statewide except for Tucson o Asslst I n marketing the sale of multi- unit properties t o nonprofit organizations and governmental
0 Target Populatlon: Non P r o f i t agencies l i s t e d through the RTC Affordable Houslng Disposition Program.
Organizations and Govorental o Assist nonprofit organlzatlons I n obtaining flnanclng for the purchase of the properttes.
Agenclos o The buyer I s t o obtain private financing of 60X ( 1st mtg.); RTC w i l l provlde 35% financing ( 2nd mtg.) . o Fund Sour-: Prlvato Londlng and buyer t o pay a 5% downpayment.
I n s t l t u t l o n r o RTC requlres that buyers set aside a alnlmua 35% of the rental units for lower Income families.
0 A&. Dept./ Div.: NIH/ Houslng o The program provides affordablo, houslng t o low lncme families. Rents are set at affordable levels.
Developosnt and Werntzation
o Information Contact: 262- 6602
o Address: 920 E. Madison, Suite 0
KEY: NIH = Neighborhood Improverent and Housing Department MUD = U. S. Department of Housing ( I Urban Development
NMZE = Neighborhood Maintenance and Zoning Enforcement Oivlslon IDA = Industrial Development Authority
CDBO = Coonunity Development Block Orant .
NOTE: 80% urd 60% o f P h n l x aedian incane defined by Attachment A Rev. 5/ 92
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11. SENIOR HOUSING
o Coverage: Cltywlde
o Target Populatlon: Very Low Incocae,
Elderly ( 62 years or older).
Handicapped or Disabled
o Fund Source: HUO
o Ado. Oept./ Div.: NIH/ Senlor
Hous lng
o Infomatlon Contact: 282- 6952
o Address: 830 E. Jefferson
Page 13
P R O O R A H O V E R V I E W --
o Six Complexes. 636 unlts: Haryvale Terrace, Washington Hanor, Sunnyslope Manor, Flllmore Gardens,
Plne Tower Apts.. and HcCarty Apts. Quallfled appltcants cannot choose placement site. except for
Sunnyslope and Fillmore.
o Ellglble applicants referred by Occupancy Sectlon according to HUD and Clty policy.
o Rent based on 301 of adjusted annual Income.
o Refrlgerator and stove provlded.
o U t l l l t l e s provlded on an approved HUD based allowance; surcharged for excess usage.
o Efficiency, one- bedroan, or wheel chair accessible units.
o Features: 24- hour resident manager. securlty entry systems. laundry f a c l l l t l e s on a l l floors.
convenlent parklng. coanunlty rooas. stoves and refrlgerators. drapes. f u l l y carpeted, a i r
conditioners, and emergency l i g h t systems.
o Pets are allwed 4 t h restrlctlons on nuber and size.
12. SCATTERED SITE PROGRAW
o Coverage: Citywlde o Single faally detached houses - 2- 5 bedrooas. 218 units
o Target Population: Very Lou Income o Ellglble applicants referred by Occupancy Section according t o HUD and Clty pollcy.
Faml l i e s o Rent based on 30% of adjusted annual Income.
o Fund Source: WH) o Refrigerator and stove provlded.
o Ada. Dept./ Dlv.: NIH/ Scattered Sites o U t t l l t l e s provlded on an approved HUD based allowance; surcharged for excess usage.
o Infonratlon Contact: 262- 6952 ' o Yard maintenance 1s the sole responslblllty of the famlly.
o Address: 830 E. Jefferson o Houslng s t a f f w l l l respond to calntenance servlce calls.
KEY: NIH = Neighborhood Improverent and Housing Oepartment HUD = U. S. Department of Housing L Urban Development
M E = Nel@& orhood Malntonance and Zoning Enforcement OIvislon IDA = Industrial Development Authority
COW = Coomunlty Development Block Grant
( MOTE: 80% and 50% o f Phoenlx eedlan Income defined by Attachment A Rev. 5/ 92
. .
0. DIRECT SERVU ( Continued)
13. SECTION 8 HOUSING ASSISTANCE PAYMENT
PROORAH
o Coverage: Citywide
o Target Population: Very Low Income
o Fund Source: HUD
o Adin. Dept/ Dlv.: NIHjSectton 8
o Information Contact: 262- 4710
o Address: 830 E. Jefferson
Page 14
P R O Q R A H O V E R Y I E W
0 Certlflcates/ vouchers, 3,400
0 Low- income families and elderly are assisted I n renting apartments, townhouses, condomtnlums. or
houses owned and managed by prlvate landlords.
0 Participants seek out dwelling units on the private market where a contract ts entered into wtth
the landlord.
o Eligible appltcants referred by Occupancy Section according to HUD and C i t y pollcy.
o Rent based on 30% of adjusted annual incane
o U t l l l t l e s provided on an approved HUD based allowance where applicable.
0 Total rent bPrount w l l l be negotiated between the owner and NIH and w l l l not be greater than the
by W.
o Owners are responsible for structural maintenance of the property.
o Tenants, unless noted, are responslble for the care and general maintenance of the premlses. Damages
i n excess of normal wear are chargeable t o the tenants.
0 Tenants are expected to pay securlty deposits not t o exceed one month's contrtbution. as well as
u t i l i t y deposits if applicable.
0 If a rental household wishes t o p a r t l c i p a t ~, it d u t i l i z e their current dwelling, this I s acceptable t f
the dwelllng mets HIH standards and If the landlord agrees t o participate.
14. AFFCMDABLE RENTAL PIWERTIES
o Coverage: Citywide o Program has no federal subsldies.
o Target Population: Lower Income o The City's affordable rental properties provide rental housing of less than market rents to quallfled
( 40 - 60% of median) persons.
o Fund Source: G. O. Bonds o Rents are approximately $ 100- 150 less than market.
o Ada. Dept./ Dlv.: NIH/ Housing o Resident's Incaw i s primarily 40- 60f of aedlan.
Development and Modernlzatlon o Properties are operated by prlvate management firms.
o Infomation Contact: 262- 1249
o Address: 920 E. Wadlm, Suite 0
o Rental Off ices: 252- 6620 ( Individuals)
265- 3022 ( Senlors. Faai lies)
KEY: NIH = Neighborhood Improvement and Houslng Department HUD = U. S. Department of Housing Q Urban Development
W E = Neighborhood Maintenance and Zontng Enforcement Oivislon IDA = Industrial Development A u t b r i t y
CDBG = Coarwnity Development Block Grant
NOTE: 80% and 50% o f Phoenlx medlan lncoae deflned by Attachment A Rev. 5/ 92
Page 15
P R O O R A H O V E R V I E W -- -.
1. ZONING ENFORCEMENT
o Coverage: Citywide o Enforces City's Zoning Ordlnance relating to permitted restdentlal, c m e r c t a l , and industrial uses.
o Target Population: A l l citizens of o 24- hour hot line at 262- 7847 I s available to take complaints.
Phoenix
o Fund Source: City * s General Fund
o A&. Dept./ Dlv.: NIH/ NMZE
o Information Contact: 262- 7844
o Address: 920 E. Madison, Sulte E
2. ENVIRONMENTAL SAFETY
Coverage: Citywide o Enforces ordinances regarding hazards on vacant land, vacant hazardous structures, structural
Target Population: A l l citizens o f nutsances, excavations, unsecured pools, open vacant buildings, and occupted property which may
Phoen t x constitute a f i r e hazard from dry vegtrtation, debris. or piled flaaraable matertal.
Fund Source: City's General Fund o 24- hour hot line at 262- 7847 I s available t o take complaints.
o Ada. Dept./ Div.: WIWWWLE
o Information Contact: 262- 1844
o Address: 920 E. Madim. Sulte E
3. PROPERTY MAINTENANCE OROINANCE
o Coverage: Citywide o Enforces minimum standards for the maintenance of a l l bulldings and lands In the c i t y of Phoenix
o Target Population: A l l citizens of as they relate t o health, safety, blight, and deterloratton.
Phoenix o Response i s based on a complaint basis only.
o Fund Source: City's General Fund o 24- hour hot line at 262- 7847 i s available t o take complalnts.
o A&. Dept./ Dlv.: NIH/ NMZE
o Inforration Contact: 262- 7844
o Address: 920 E. Madison, Suite E
KEY: NIH = Neighborhood Improvement and Housing Department HUD = U. S. Department of H ~ ~ s l n6 gU rban Developnent
NMZE = Neighborhood Maintenance and Zonlng Enforcaent OIvlsion IDA = Industrial Oeveloprnent Authority
CDBG = Coamunity Development Block Grant
NOTE: 80% and 50% o f Phoenix W i a n income defined by Attachment A Rev. 5/ 92
ATTACHMENT A
1 PERSON
2 PERSONS
3 PERS( X( S
4 PERSONS
5 PERSOESS
6 PERSONS
7 PERSO)( S
8 PERSONS
50% OF PHOENIX MEDIAN - 80% OF PHOENIX MEDIAN -
( Phoenix metro area W i a n Income from May 7, 1992 HUO reao was $ 31.300)
Rev. 5/ 92
hfe- Lwn?. to ownera of rental housing for rehabilitation oi the uni: s.
banr forgiven 100% at the end c f period of affordability.
36,500 for 1- bedroom unit, $ 7,500 for 2- bedroom units and
m ebedroom tilit.. H CtB funds may provide up to 50% of
approvable rehab costs. In accordance vith HUD regulation.. no more than the
minimum amount of HOHE fund8 necessary to provide for affordable housing may
committed to a pro~ cct.
Per Unit Rehab; 82,000 total.
Average W t J ' Minirnun
8- u
Sl. oOo* 5 Year8
Above $ 5.000 10 years . . Proparty must haw at least one building code violation. HCtS
Program regulations allow rehab to inelude modifieatioru to meet energy
efficiency standards or requirements for badicapp. d accessibility.
or m e rof k - If this o c w a during the priod of affordability,
loan becomes due md p a 3 e by seller, with 8% interest compounded annually.
unless new omer agree3 to rent natrietion. and set- asides for the remaining
life of tire Period of affordability. In eases where the neu omer is willing t o
abide by the rent restriction. and set- uidea, the trrnsfer of the lien is
sub? ect to the approval of the City. If the tranafer does not neelvs the City - 8
approval, the lo= must be repaid in full with iatenat.
Rmta end S e t - k i d s Ranrimtaz All HW- usisted units must meet federal
requirements for affordability during the period of affordability. Projects of
5 or more units must set aside 205 of the unit. for households earning less than
50% of medium income. These households would pay rent ( including utilities 1
vhich is no hiher than 30% of the income of households vath 50% of median
incoae. . Renta ( again ineludiw utilitie.) on other HOPZ assisted unita cannot.
k more than 30% ef 60% of median income a d tenant. must have income8 of less
than 60% of medim income.
tion 8 b* ifica* and vowher H o l m may not be restricted from renting
units assistod vith HCXiE funds.
munt be brought into compliance with smcified housin~
s . The percentage of unit s aasisted with 608 fund. a d
subdeet to the affordability repuiomenta will k detemined on a case- by- case
basis.
- During the period of affordability, the omer must agree to pay
!%%% its by an independent CPA of occugurcy practices. resident income
verifications and Zinancial records.
Deferred Payment Loan Prcgrro
This progran is administered by thc Housing Services Division of the ~ eighbothood
Improvement and Housing Departaent. Additional information and application
instructions may be obtained by calling 262- 7210.
tiond fun& will be ptovided to the rehabilitation loan pa01 of the Housing
Services Division for use in the Rehab Program. The Rehab Program provides one-tiae
loans of up to tlS, 000 to homeowners with incomes below SOX of the median
income. The loans are used to bring homes into conplianee v i t h specified housing
rehabilitation standards. A minimum of one building code violation aust be in
ev idence .
Joan Tens: Loans are interest free and no payaunts are due ms long as the owner
continues to occupy the hone. A lien is attached to the property. In the event
the property is sold, transferred to a party other than immediate faaily, or
vacated, the lien sust be satisfied by repaying the reorinins balance of the
loan.
E r- eTa During the first four months of each fiscal year, 75% of the
funds will be reserved for use in are- designated as neighborhood revitalization
areas in the CHAS and 25% will available citywide. During the next 8 months the
remaining funds will be available citywide.
mCit~' sHo me Maintenance Training P r o m is required for all recipients of
this assistance.
The Home must be the PrincCpal Besidencq of the recipient family and its value
following rehabilitation nay not exceed limits set by the HOME Program
regulations.
HOME FACT SHEET
0 All HOME- assisted units must meet housing quality standards
h Maximum per unit investment of HOME funds:
Studio - $ 27,869
1- bedroom unit - $ 31,946
2- bedroom unit - $ 38,846
3- bedroom unit - $ 50,253
4- bedroom unit - $ 55,162
b Minimum investment of $ 1,000 per HOME- assisted unit, under certain
conditions not all units in a project would qualify for HOME assistance
Affirmative marketing requirements apply to all multi- family projects
b Davis- Bacon wage requirements apply in all projects with 12 or more units
b Environmental clearance must be received before funds are committed
b Displacement and relocation costs are eligible HOME expenses
PENTAL HOUSING
b Maximum Income: 60% of median income ($ 22,400, family of four)
b Maximum Rent: Based on 30% of monthly income of a household with 60% of
median income ($ 48l/ month, utilities included, for a two bedroom unit)
b 20% of units set aside for households with less than 50% of median income
($ 18,650). Rent must be $ 398/ month or less, utilities included, for a two
bedroom unit.
b Household incomes must be recertified annually by the property owner
b Minimum period of affordability - 5 to 20 years, depending on amount of
HOME funds invested
HOMEOWNERSHIP HOUSING
b Maximum Income: 80% of median income ($ 29,850, family of four)'
b Purchasers must be first time homebuyers
b The home must be the family's principal residence during the period of
af fordability
h Period of Affordability: 15 years for existing housing, 20 years for new
construction
b Resale allowed only to other low income, first time homebuyers during the
period of affordability
b Subsequent homebuyer's monthly payment for principle, interest, taxes and
insurance ( PITI) cannot exceed 30% of income of household with 75% of
median income ($ 699 for four person household)
b Value of property cannot exceed FHA mortgage limits ($ 104,000)
Acquisition l Rehabilitation of Rental Housing
Th~ s program 1s admin~ stered by the Housing Development and Modernlzatron Oivrsion of the Neighborhood
Improvement and Hous~ ng Department. Addrtronal information and applicatlon instructrons may oe obta~ ned
by calling 262- 6602. m Loans of up to S250, OOO to not- for- proflt or for- profit developers of low income housing Loans w~ ll be pa~ d
back over various lengths of time dependrng on the loan amount Funds are for acqu~ sitron only or acquisition
w~ thre habil~ tatronA rnlnlmum 5% cash equrty Investment is requrred of the project owner In accordance with
federal regulatrons, the C~ tyw ~ lnl ot ~ nvestm ore HOME funds In combinat~ onw ith other federal assistance tnan
I
is necessary to prov~ dea ffordable housing.
Annual Interest: Interest rate would be based on whether the loan is a 1st Lien I2% interest) or 2nd Lien
14% interest).
Period of Affordability and Loan Terms:
Average Minimum Maximum
Per Unit Loan Amount Affordability Period Loan Term
$ 0 - $ 5,000 5 years 10 years
55,001 - $ 10,000 10 years 15 years
61 0,001 - $ 25,000 20 years 25 years
Sale or Transfer of Property: The remaining balance of the loan becomes due, including any accrued interest,
upon conveyance of the property unless the new owner agrees to rent restrictions, set- asides and other program I requirements for the remainder of the period of affordability. If the new owner so agrees, helshe may assume
the HOME loan, subject to City approval of transfer of the City's lien.
Rents and Set- Aside Requirements: All HOME- assisted units must meet federal requirements for affordability
during the period of affordab~ lity. P rojects of 4 or more units must set aside 20% of the units for households
I
earning less than 50% of median income. The rents these households would pay ( including utilities) must be
no higher than 30% of the income of households with 50% of median income. Rents ( again including utilities)
on other HOME assisted units cannot exceed 30% of 60% of median income and renters of those units must
have income of less than 60% of median income.
100% of the units in a complex must be brought into compliance with specified housing rehabilitation standards.
The percentage of un! ts assisted with HOME funds and subject to the affordability requirements will be determined
on a case- by- case basis.
Section 8 Certificate and Voucher Holders may not be restricted from renting units assisted with HOME
funds. I
Annual Audits: During the period of affordability, the owner must agree to submit to the City annual audits
of occupancy practices, resident Income verficat~ ons and financial records. The audits must be prepared by an
independent CPA or other firm approved by the City.
Application Process An application must be completed for submission to the Housing Development and
Modernization Division. In addition, recipients may be required to provide environmental reports, contract I documents, work specifications, analyses of the financial feasibility of projects and other items necessary to
meet local and federal requirements for the implementation of HOME projects.
I New Constuction for Homeownership
8 Ths orograrn 1s aam~ nlsteredb y the Housing Developmenr and Modernizat~ onD lv~ s~ oonf the Neighborhood Improverre.!
and Hous~ ngD epanment Add~ tional~ nformationa nd appl~ catlonl nstructlons may be obtalned by calltng 262- 6662
fl Program Description: As a subrec~ plento f HOME Program funds, a Community Houslng Develo~ mentO rganizat~ on iCHDOl may buy and clear land, provide canstruct~ onfi nancing 10°/. lnteresrl, and sell land to f~ rst- timeh omebuyerr
The land w~ ll be sold througn a deferred payment loan 10% Interest, loan forglven at the rate of 10% a year for
I years 6 througn 15) The homebuyer must be able to obta~ np ermanent f~ nanc~ ntog repay the HOME funds at the
completion of construct~ on
Eligible Uses: May be used only in areas designated in the CHAS as neighborhood revitalization areas or to construct I units for large families [ five or more family members) or families with physically ~ mpa~ remde mbers,
Homebuyer Responsibilities: Farn~ l~ emsu st be f~ rst- t~ mheom ebuyers w~ thIn comes of less than 80% of the area 8 med~ an Construction of the home must commence w~ thrn 6 months of a commitment of HOME funds to purchase
the land. Construct~ onm ust be completed w~ th~ 1n2 months. The homeauyer must obtain prel~ minarya pproval for
financing prlor to enterlng Into an agreement for the land.
( HOME Pmgnm investment in Land: capped at $ 10,000 per single family lot Demolition and blight elimination
are eligible cost/ activities included in the cost of the land.
1 A CHDO is necessary under HOME Program rules to act as program sponsor/ developer, unless the housing is for
special needs. The CHOO would recruit and prepare families, lenders and burlders for participation in this program.
The CHDO would oversee the construction of the home. For construction of homes for large families or other special I needs housing, for- profit organizations are eligible to participate.
-
Per- Unit Limit on HOME funds: 1 - bedroom home - $ 31,946
I 2- bedroom home - $ 38,846
3- bedroom home - 550,253
4- bedroom home - $ 551 62
I Note: Other funds may be necessary to provide enough funds for the construction because of the limits on the
investment of HOME funds. Possible sources include CDBG, State Housing Trust Fund and private funds.
Minimum Homebuyer Equity Investment The Homebuyer's minimum cash equity investment is 11,500. Down ) payment and clos~ ng cost assistance may k used to meet this minimum for homebuyets with incomes below 60%
of median income, provided the homebuyer invests at least $ 750 of his own funds. I Qualifying Guidelines The homebuyets payment for PITI may not exceed 34% and total debt may not exceed
38% of gross income. I The City's Home Maintenance Training Program and Prepurchaw counseling is required for all recipients of
this assistance prior to entering into an agreement for the land and house.
The Home must be the Principal Residence of the homebuyer and the home's appraised value may not exceed ) the limit set by HUD.
Period of Affordability is 20 yean for new construction. During this period the homeowner may sell the home ( only to other low income households and the new PITI total cannot exceed 3096 of the monthly gross income of
a household with 75% of median income ($ 699 in 1992, four member household). The resale restrictions will be
monitored by the CHDO through a deed restriction on the land. fi Monitoring would be performed by the CHDO. Reports relating to HOME requirements would be submitted no less
than annuallv.
. I ( TO: Richard Perlauto, Public Capital Program coordinator
FROM: Kristen Clements
RE: State Housing policy Strategy
DATE: June 30, 1992
The Statest role in affordable housinq
While the federal government has taken some action for
affordable housing in the last decade by enacting the National
Affordable Housing Act of 1990, funding for implementation of
NAHA has limited the effect of the Act. One of the features of
NAHA, moreover, is the shift of emphasis from federal to state
responsibility for assessing needs and planning strategies..
Moreover, because they are focused. on more than just housing
policy, the states have the ability to integrate the variety of
economic and social services needed to affect comprehensive
change, and develop a long- term investment strategy to that end.
Thus, with this expanded role, states are in the key
position to affect housing policy for the coming years. Even
with limited state budgets, states have the potential to, and
must learn to, use optimally the tools at their disposal.
1. States allocate federal program money; therefore, they have a
opportunity to use their limited money to'innovatively leverage
federal and private. funds, and see their intended target group
benefits in constructive ways.
Under the National Affordable Housing Act of 1990, each
locality or state must file a Comprehensive Housing Affordability
Strategy with HUD to receive funds, which details their plans and
needs for the flexible sources of money available. CHAS is not
only a bureaucratic necessity; it constitutes a genuine chance
for state legislators to help achieve legislative objectives of
providing affordable housing and improving communities.,
Advocates and citizens have already gotten involved in the
CHAS process, with help from places like the Center for Community
Change and its Citizen's ~ ction Guide for CELAS. Local housing
departments, too, are fulfilling their legislative capabilities
in planning for the community level. It is now time for the
states to achieve their potential by coordinated planning for
affordable housing needs through the CHAS process.
HOME program
As planned, HOME would provide about $ 2 billion to
participating jurisdictions, some of which are states,
for flexible use by public/ private partnerships in
providing affordable housing. States administer the
money and, in states with no qualifying localities,
have the ability to allocate money on a priority basis
to urbanized areas.
, HOPE program
As federal funds must be matched on a 3: l or 4: l basis,
HOPE provides a good opportunity for states to become
involved in promoting home ownership by providing
grants, land, fee waivers, or other contributions to
constitute the match.
Community ~ evelopment Block Grant
Another flexible source of funding, CDBG allocations
also necessitate submission of a CHAS, as do HOME and
HOPE. States can leverage additional grants with
targeting by localities to serve specific populations
or neighborhoods, and can coordinate programs. by
communication about the CHAS goals before submission.
McKinney Act programs
The McKinney Act of 1988 requires that state
governments design coherent strategies to . meet the
needs of their homeless. NAHA required these plans be
included in the CHAS, detailing how federal assistance .
will leverage money for available services; thus,
states can combine their funding with federal and local
sources for maximum effect.
Low Income Housing Tax Credits
States mete out federal tax credit allocations and
therefore can tie additional requirements onto federal
guidelines to best accomplish state housing goals.
2, States have their own sources of funding which can leverage
federal, local and private funding by attaching strings or by
stipulating that state funds be matched.
State appropriations
Money can be gotten from appropriations by itate
legislatures for specific programs or general purposes.
The establishment of housing trust funds is one example
of a specific designation establishing a permanent
source of funding.
State funding sources
Aside from legislature appropriations, states can raise
revenue by bond reserve funds, tax increment financing,
title transfer tax or conveyance fees, mortgage
recordation fees, extraction revenues, escheated and
abandoned funds, surplus funds, lottery proceeds, tax-linked
contributions, linked development contributions,
and escrow account funds.
State tax credits
' States can link the granting of state tax credits to
specific objectives, i. e., the production of certain
amounts of affordable housing units for people with a
percentage of median area income.
3. States have the institutional structures through which they
can expand their role.
State Housing Finance Agencies
HFAs can continue to increase their role to include
more than the mortgage revenue bond issues which have
been a staple of their existence for years. They have
the ability to take the lead at being a strong
intermediary between varied parties involved in housing
provision; they can connect the public with programs,
helping to assist with applications and providing other
services; and they can implement innovative targeted
programs of their own.
State housing authorities
Housing authorities already have the mission of
supplying affordable housing; with quality leadership,
they can administer new programs, perhaps focusing on
enhanced services, and educate the public as well.
State economic development agencies
State agencies concerned with economic development can
be a resource to tie overall economic development and
jobs to those residents who need affordable housing.
4. States can rely on, support and work with networks of
community organizations.
In the last few years, community development corporations
have grown tremendously in their maturity and ability to develop
viable affordable housing suitable for their communities. Over
2,000 CDCs now exist, which have produced over 35,000 units of
affordable housing since their development in the late. 1970s.
States can put resources into effective CDCs through their
CHAS, and are joining them in housing partnerships involving the
private, public and non- profit sector. With continued
establishment of such enabling partnerships, a " third sector
economyIt can grow and effectively produce the affordable housing
so desperately needed by a growing portion of our nation's
population.
Thus there exists capacity at the state level which has not
yet been explored fully, and which could yield large benefits for
affordable housing and community development causes. To assist
I development of this capacity, communication and coordination among states is vital, to which our goals of progressive
federalism speak: encouraging states to serve as the proverbial
laboratories for policy development.
Below are examples of innovative state programs that benefit
I multi and single family housing.
MULTIFAMILY HOUSING
Aside from the states1 traditional ability to issue tax-exempt
bonds to fund state programs, a number of innovative.
policies on the state level have identified instruments for
financing affordable housing which circumvent the scarcity of
federal funding and credit crunch of the last few years.
Tax Credits for Low- Income Housinq
A few states have instituted a low- income housing tax credit
against state taxes, which is separate from state administration
of the federal LIHTC.
r Californiars tax credit provides up to $ 35 million total
to entities for which the federal tax credit is
insufficient, and returns up to 30% of qualified costs of
new construction, rehab and inquisition.
Missourits low- income housing tax credit closely parallels
the federal credit; all federal credit recipients are
automatically considered for the state credit, and are given
only to those projects which have exhausted federal
assistance.
r Missourits Affordable ~ ousing Credit gives a state tax
credit of 55% of donation value to entities which donate
real estate or other services to non- profit sponsors who
develop affordable housing.
e Connecticut provides a state housing tax credit to
businesses contributing funds to non- profit housing programs
benefitting low and moderate- income people or families.
. Florida gives a 502 state tax credit for corporations
donating to community development projects ( including
housing) by non- profits, while Massachusetts has a similar
program for developers in blighted areas.
Oregon gives a 10- year state tax credit to lenders who do
low- income housing projects. The credit is not to exceed 4%
of the outstanding balance on the loan.
e On the demand side, many other states enable localities to
reduce local property taxes ( OR, PA) or reduce the state tax
burden of low- income elderly or disabled renters ( MD, 10)
Emit1? Pools
Equity pools are funds used to provide loans or grants * or
housing development or rehab, which also help reduce risk and
therefore secure further financing. Funds are derived from a
variety of sources, such as state reserves or fees, or private
lenders.
r Ohiots Development Loan Program makes available low- and
no- interest construction loans and bridge loans for rehab
and new construction of low- and moderate- income multi-
family and single family housing. Funding comes from state
unclaimed funds. '
The Rhode Island Housing Equity Pool serves as an equity
resource for developers who build affordable rental housing.
The pool was established by agency reserves, is funded by
corporations and lenders, and is used to purchase low- income
housing tax credits from developers. . .
Vermontfs Equity Fund in which investors ( usually banks)
invest in affordable housing projects ( targeted towards low-and
moderate- income residents) assisted by the LIHTC.
Jlousina Trust Funds
Unlike equity pools, housing trust funds are usually created .
by ordinance or legislation; thus, they are an institutionalized
way that governments can pledge a permanent pool of money to
target housing for a specific group of people.
Trust funds are active in P; rizona, ~ alifornia, Delaware,
Georgia, Illinois, Indiana, Kentucky, ~ aine, Maryland,
Michigan, Minnesota, ~ issouri, Nevada, New~ ampshire, New
Jersey, New York, North Carolina, Ohio, Oregon, Tennessee,
' Texas, Utah, Vermont and Washington.
Funding comes from avariety of sources, including
unclaimed deposits and interest, real estate transfer fees,
loans from other public funds, agency reserves, issues of
tax exempt bonds, and general fund appropriations.
SINGLE FAMILY HOMES
States have also instituted countless programs to benefit
homeowners, especially those with low- and moderate- incomes.
Mortaaae Credit Certificates for First- time Homebuvers
Mortgage credit certificates ( MCCs) can be issued by state
housing finance agencies to potential first- time homebuyers to
allow them to deduct part of their mortgage interest payments
from federal taxes. By reducing the tax burden, the credit
increases the amount of income available both to qualify for a
mortgage and to make payments.
Several states have a MCC program in place to benefit'
first- time homebuyers: Alabama, Colorado, Georgia, Hawaii,
Idaho, Indiana, Iowa, Massachusetts, ~ ichigan, Montana,
North Carolina, Oregon, Rhode Island, Texas, Vermont,
washington, and West Virginia.
Credits range between 15% and 35% of the mortgage interest
payments, with most being 20%. The remaining portion of
interest payments are usually eligible for tax write- offs
through itemized returns.
Many programs have eligibility caps on income and home
prices;, for example, Michigan's program caps income at
$ 36,000 ( or $ 42,000 for certain distressed areas) and home
sales prices at $ 80,000 for new homes and $ 60,000 for
existing homes.
a Those who benefit from the MCC programs are low- and
moderate- income first- time homebuyers, both families and
individuals.
F0or
Almost every state hassome program which is funded by the
sale of mortgage revenue bonds to assist first- time homebuyers to
purchase a home. The variety of kinds of assistance available is
significant, and reflects the flexible and creative responses
possible through state action.
Sources of financing in all of these state programs include
the sale of KRBs, but may also include:
corporations
e state appropriations
e agency revenues
recycled mortgage prepayments
targeted area bond money
shareholder equity ( for coops)
housing trust funds
a municipal funds
other real estate
Assistance comes through a number of vehicles. Most
programs provide low- interest loans for homebuyers, while other
assistance is throug- h:
monthly income assistance ( MN)
a level interest and principal payments over the life
of the mortgage ( NE)
fixed rate loans ( IL)
a downpayments as low as 5% and reduced points at
closing ( NJ)
loans which need no downpayment and no closing costs
(. NJ-)
low down- payment requirements ( DC, OR)
non- amortizing second mortgages to reduce up- front
costs and dispose of foreclosed inventory ( FL)
a payment of origination fees and the first year of
primary mortgage insurance ( NY)
Targeted recipients are ultimately low-, moderate- and very
low- income homebuyers. Other priority recipients include:
a unmarried heads of households ( SC, WA)
Vietnam veterans ( MA)
minority households ( MA)
physically disabled borrowers or co- borrowers ( MA)
homeowners who are in imminent danger of losing their
homes because of a permanent loss of income ( MD)
non- profit institutions who are involved in purchase
and rehab of distressed units ( CT)
builders, developers and sponsors of low- and
moderate- income housing ( NY)
Priority projects include:
those in distressed communities ( WI)
those in rural areas ( KY, SC)
homes which are not selling well ( MA)
projects which will be rehabbed with sweat equity
( NC)
those for rehab in Ifbuy it/ fix- itw programs ( MN, MA,
NJ, ME)
programs which dishose of RE0 properties ( properties .
owned by RTC, FHA or other federal and quasi- federal
entities through default) ( MI, MO, OK, TX)
Other players involved in these programs include:
state housing agencies
HUD
The Resolution Trust Corporation
Federal Home Loan Banks
localities
non- profit sponsors
private lenders
Some of these entities get involved in educating homeowners
by:
the developer or sponsor providing supportive
services ( FL)
finance and mortgage agencies conducting seminars on
first- time homebuyers program and on how to apply ( OH,
NY
e iocalities providing additional incentives, such as
site development/ improvement assistance and closin'a2 '
cost/ downpayment assistance, as well as home purchase
counselling ( VA, SC)
mortgage- agencies- di stributing written materials on
programs to potential homeowners ( NY)
State Insurers
Some states take a more active role in helping secure
financing for their target groups by:
underwriting lenders who take a chance on projects seen as
perhaps too risky for conventional financing, given
requirements on percentage of low- income housing produced
( NY, OH)
providing a pool insurance program for single family
mortgage loans ( NY)
insuring lenders against losses on below market rate loans
for single family homebuyers, underwriting the loans, and
servicing loans at no cost to lenders ( KY, PA)
Cooperation with Secondarv Markets
States have joined forces with secondary market p- lay- ers to
further secure sokces of money for low- income homebuyers thr~ cyh
flexible financing terms, provision of mortgage insurance, and
purchase of W s .
States team up with GE Mortgage Insurance Companies
( GEMICO) to provide mortgage insurance to help with
downpayment, up front costs and mortgage qualification Ear
first- time homebuyers. Lenders will allow a 95% loan- to-value
ratio because of the insurance and because Fannie Mae
agrees to purchase the loans. ( RI, PA, MI, NJ)
One specific Fannie Mae and GEMICO program is the
Community Homebuyer's Program, which promotes homeownership
for low- income people. Income qualifications, cash reserve
requirements, and credit history references are relaxed,
while GEMICO provides mortgage insurance and pays a portion
of a prepurchase inspection costs.
States, together with ~ annie Mae, lenders, FHA, mortgage
insurers and non- profits, offer affordable mortgages to
families through flexible terms by Fannie Mae ( unsecured
financing of closing costs, subsidized second mortgages) and
second mortgages provided by the state.
Fannie Mae purchases tax- exempt mortgage revenue bonds
issued by state housing finance agencies through negotiated
private placements.
Down~ awnent Assistance
As it is often the cash outlay for downpayments and closing
costs which prohibit people from buying a home, many states have
programs which lend assistance for these purposes.
These states include: Alabama, California, Delaware, Iowa,
Kentucky, Maryland, Massachusetts, Minnesota, New Hampshire,
North Dakota, Pennsylvania, Rhode Island, South Dakota and
Utah.
Assistance comes in the form of low- or no- interest loans
or second mortgage loans.
Funding comes from general obligation funds, agency
reserves, state appropriations, revolving loan pools,
Federal Home Loan Banks, or city funds.
Low- and moderate- income single family buyers are the
targeted group.
An example of a typical program: California's Housing
~ inance Agency administers their Matching Downpayment
Program, which provides deferred payment second loan funds
at 3% simple interest to cover closing costs and/ or increase
the downpayment. The payment of interest and principal can
be deferred up to 30 years or until the home is refinanced
or sold. Borrowers must meet low- income requirements and
must pay at least the minimum downpayment, which is matched
up to $ 5,000. In 1990, $ 115,797 was loaned to assist with
the purchase of 51 units.
Lease/ Purchase Prosrams
States are also helping renters build up equity with the
goal of purchasing their single family units, reinforcing the
original notion of " public housing as a bridge to self-
1 sufficien~ y.~ L ease/ purchase programs allow tenants to rent for three years, while they pay affordable rent rates and a small
additional premium, which gets banked and put towards a
I downpayment.
States involved are: New Jersey, Delaware.
I An example is Delaware, in which homes which were
purchased with HUD and state housing authority funds are
rented to low- income families for up to three years, with
30% of tenantst income collected for rent. Any rent
collected over $ 300 is placed in a savings account to be
credited towards downpayment and closing costs, while
I families learn the responsibilities of homeownership.
firsthand and benefit from support services.
APPENDIX E
Draft Legislation Submitted
to the Committee
by the City of Phoenix
I NOU- 25- 92 KD 16 : 12 CITY OF PHOENIX IGP FAX NO, 6025343544
AN ACT
PROVIDJNG FOR HOUSING ASSISTANCE BY CITIES AND TOWNS IN HOUSTNG
DEVELOPMENT AREAS; PRESCRIBING DEFINITIONS; PRESCRIBING
COMDITIONS, TERMS, PROCEDURES, CRITERIA, LIMITATIONS AND OTHER
REQUIREMENTS FOR HOUSING ASSISTANCE IN HOUSING DEVELOPMENT
AREAS; AMENDING TITLE 36, CHAPTER 1 2, ARIZONA REVISED $ TATUTES BY
ADDING ARTICLE 4.
Be it enacted by the Legislature of the State of Arizona:
Section 1. TITLE 36, CHAPTER 12, Arizona Revised Statutes is amended by
adding ARTXCLE 4 to read:
HOUSING ASSISTANCE IN HOUSING DEVELOPMENT AREAS
ARTICLE 1. GENERAL PROVISIONS
4 36- 1500. Le~ islativeF inding and Declaration of Public Necessify
It is found, determined and declared that :
( 1) There exist within municipalities of the State areas in serious need of
decent, safe, and sanitary housing, This shortage of housing is inimical to the safcty,
health, and welfare of the residents of this state and the sound growth of its
municipalities. The cost of financing the ownership and rehabilitation of housing in
such areas is a major factor affecting the ability of persons to obtain decent and safe
housing in such areas. In order to remedy housing shortages in such areas, it is
necessary to provide municipalities with powers to reduce the cost of financing the
acquisition and rehabilitation of such housing, in order to make the acquisition of
housing feasible for all persons and families residing or desiring to reside in such
areas of the municipalities of the state;
( 2) It is necessary that municipalities have the authority, either directly or
indirectly through pubfic corporations or qualified lending institutions. to assist the
development of housing in such areas, which assistance includes but is not limited to
financial assistance;
( 3) Areas without sufficient housing contribute to or cause unemployment,
limit the tax resources of municipalities while creating a greater demand for
governmental services and. in general, have a deleterious effect upon the public
health, safety, morals, and welfare of citizens in the municipalities of the state.
NOV- 25- 92 WED 16: 13 CITY OF PHOENIX IGP FAX NO, 6025343644
( 4) Providing such assistance will:
( A) Provide for and promote the public health, safety, and welfare of the
municipality;
( B) Reduce unemployment and encourage the increase of industrial and
cornmcrcial activities and economic development in such areas of the
municipality;
( C) Provide for the efficient and well- planned growth and development
of the municipalities, including the developmefit and maintenance of
stable housing areas, and the proper cooidhution of industrial facilities
with public services, transportation facilities, and residential
development, by providing an incentive for residential facilities wirhin
specified areas of the municipality;
@) Assist persons and families in acquiring and owning decent, safe, and
sanitary housing within such arcas of the municipalities;
( E) Promote the integration of families of varying cconornic means in
such areas of the municipalities: and
( F) Prcscrve and increase the tax base of such municipalities,
( 5) It is a valid public purpose of municipalities to assist in providing for the
aquisition, construction or rehabilitation of housing and other facilities incidental and
related thereto in areas which arc declared by the municipality to be housing
development areas, and public moneys may be expended for such purposes in such
areas.
In this article, unless the context otherwise requires, the following tams shall have the
meanings set forth below:
1. " Housing" means any structure suitable for residence by an individual or f d y .
2. " Housing Development Area" means an area within a municipality which is
declared by the governing body of such municipality to be in serious need of housing and is
declared to be in need of the expenditure of public funds in order to assist the provision of
houshg in such area
3. " Housing Development Plan" means a plan for the acquisition, clearance,
rcconstruction, rehabilitation, construction, rezoning or future use of a housing
Development area or housing development project.
I NOV- 25- 92 WED 16 : 13
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CITY OF PHOENIX IGP FAX NO, 6025343644
4, " Howing Development Project" means any work or undertaking to acquire real
property, structures or improvements in a housing development area, the acquisition of
which is necessary or incidental to assisting the development of housing in such area,
including clearing such areas by demolition or removal of existing buildings, structures,
streets, utilities or other improvements thereon and installing, constructing, or
reconsacting streets, utilities and site improvements essential to the preparation of sites for
the provision of housing, including the sale, lease or othw?; visc making available land in such
areas for residential, recreational, commercial, or public use or other use consistent with
residential activities, or activities incidental or related thereto, in accordance with a housing
development plan.
Housing development project also includes the preparation of a development plan, the
planning, surveying and other work incidental to a housing development project and the
preparation of all plans and arrangements for cattying out a housing dcve~ opment project.
5, " Local Governing Body" means the council or legislative body charged with
governing the municipality.
6. " Mluricipality" means any incorporated city or town,
7. " Real Property" includes all lands, including improvements and fixtures thereon,
and property of any nature appurtenant thereto, or used in connection therewith, and every
other estate, interest and right, legal or equitable, therein, including terms for years and
liens by way of judgment, mortgage or ot