Joint Legislative Study Committee on Housing Redevelopment: final report

              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

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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