What’s Missing From the “Affordable Housing” Conversation?

This past week, in Cincinnati, Facebook and Twitter were on fire with comments and conversation about a Cincinnati Enquirer article that revealed the Over-the-Rhine Community Council (OTRCC) is trying to put an end to 3CDC‘s monopoly on the development of City-owned vacant properties in OTR. I’ve been planning on writing about similar issues (specifically, my evolving thoughts on the implications of gentrification), but I’m putting that aside for a while longer to write a bit about the issues addressed in the article.

I’m going to try to be brief because, gosh, there is a whole lot to say and I’m not qualified to speak about most of it. I’m just going to speak as an “insider,” as someone who started working in OTR right about the time when 3CDC began their development and someone who has lived here for the past 6 years. And, also, as someone who has secured affordable housing in an increasingly-difficult urban real estate market. I’m the first to admit that there are many other residents who are more qualified than I am to speak about OTR’s housing situation and the specifics of housing subsidies. But I’m going to give it a shot anyway.

(A few nights ago, I wrote a longer, more comprehensive post about this issue, but decided to condense it before I posted it today. I wasn’t as successful as I’d hoped to be. Sorry!)

Here we go.

There are three really important questions missing from the conversation about housing in downtown Cincinnati. Let me draw out the conversation here and you can let me know if you see the void, too.

The conversation at-hand (and in the article) is about the region of Over-the-Rhine north of Liberty Street and whether or not 3CDC should have first dibs on the development of various properties that the city owns. One of the primary concerns is “affordable housing.” But let’s forgo the specifics for a moment and speak more broadly about the issue of urban housing, affordability, and what is currently at stake.

What does the term “affordable housing” actually mean? Well, according to the Federal Housing Authority (FHA), it means housing costs that do not exceed 30% of a household’s income. But although the term “affordable housing” is a very broad term that applies to people at all income levels, those who concern themselves with fighting for affordable housing are usually speaking on behalf of those who are most vulnerable to rising prices. Because, really, when your income rises above a certain amount–$150k a year, for example–you could essentially choose to live most anywhere you want and find something that would be considered “affordable.” Usually, the term “affordable housing” is used in conversations about housing that is subsidized with public money to make up the difference between market rate prices and what residents can actually afford. (A local organization, the Affordable Housing Advocates, has some great fact sheets posted on their website that help explain the nuts & bolts of how this works out.)

Let me (try to) explain how this works in numbers, using the example of eligibility on the Cincinnati Metropolitan Housing Authority (CMHA) website.

As best I understand it, nationwide, there are a few levels of qualifying income for HUD subsidized housing and they vary from 30-80% of the median family income (MFI) for their particular area. But, in Cincinnati, the vast majority of people qualifying for the available subsidized housing are between the 30-50% of MFI level. The MFI in Cincinnati is about $71k a year and the average family size in the US is currently hovering around 2.55 people. So, using CMHA’s guildelines, a qualifying Cincinnati household could make between $17k-35k a year*. A single earner making $17k a year would make just over $8 an hour, a little over minimum wage. According to the data found here, the average full-time worker at this income level has less than a high school education. Now, for $35k a year, a full-time worker would be paid about $16.5 an hour.

So, there is your average HUD-qualifying family.

* I should have clarified that, according to the CHMA guidelines, the baseline for qualification is based on a four-person family. You can see the CHMA site to see how the income amount is pro-rated based on family size. Technically, my income amounts for a 3-person family are off by a few thousand dollars a year, but not enough to invalidate my estimates.

When we hear conversations about cities and developers guaranteeing “affordable housing,” we are usually talking about housing that this kind of family (as well as those who fall economically below this scenario) can afford at 30% of their gross income. So, to get specific according to government standards of affordability, affordable housing for this family may fall anywhere between $425/month and $875/month. If the market rate of rental units in any given area rises above these amounts, the government can step in and subsidize the cost for the family by either providing discounted housing or by paying a Section 8 landlord the difference in the amounts. Cities can also force developers into contractual obligations to provide this subsidized housing.

Now, let’s explore the rest of the people in our city and what would be considered “affordable” for them.

If we divide the US population into fifths, the lowest-income 2/5 of the population fall into the HUD-qualifying category ($0-35k/year). The next 2/5 fall into the “about average” median income category (which is 60-150% of MFI or about $36-100k/year). Remember, the MFI in Cincinnati is $71k a year. So, in numbers, affordable housing for the average family in Cincinnati would be $1,775/month.

What can the top 20% of earners afford to pay for housing? Well, the top fifth of Cincinnati households earn about $101k a year or more. Using the lowest earners in this bracket as our example, this high-income family could afford at least $2500/month in housing costs.

How does this all translate into the cost of home ownership? At the highest end of the lowest 2/5 income bracket here, affordability translates–roughly–into payments on a <$100k mortgage (including taxes and other costs). In the middle 2/5 bracket, we’re talking about payments on a $100k-300k+ mortgage. And, in the top fifth percentile, the price can increase astronomically.

What does this all mean and why does it matter?
Let’s bring it back to Cincinnati and Over-the-Rhine specifically.
And I’ll try to wrap this up as quickly as I can.

What is currently available in market rate housing in Over-the-Rhine, Cincinnati?

For Rent (just a snapshot, obviously): http://www.trulia.com/for_rent/5427_nh/map_v

For Sale (again, a snapshot): http://www.trulia.com/for_sale/5427_nh/map_v

Unless you’re checking those links in the year 2020 and the market has either crashed or soared, you might be saying to yourself, “Hm. Over-the-Rhine still seems pretty affordable to me.”

Until you look at this: 3CDC’s available housing stock.
A quick search for available units under $300k yields only two condos with two-bedrooms, both around $250k. The rest of the options are studios and one-bedroom condos. Their site does not list apartment rental pricing (perhaps because the market moves so quickly or because so few units are actually available right now). And there are currently no single-family homes available. (Though their website lists them as priced from $290k.)

So, now, back to the article.
Why is the Over-the-Rhine community up in arms about 3CDC developing more of this housing north of Liberty? That’s actually a legitimate question seeing as 3CDC has done a fantastic job at increasing the economic viability of a few other areas of OTR. They are fiscally responsible, efficient, and historically-sensitive. And the overall safety, beauty, and quality of life in the neighborhood has undeniably improved. Anyone who claims otherwise is either delusional, has never been here, or was never here before 2005. But the OTRCC (You can read their letter to City Council here.) and other groups concerned with the housing situation in OTR see a problem and I think they’re on to something.

There are many properties sitting vacant and neglected in OTR, especially in the area north of Liberty St. And my understanding is that City Council is considering giving 3CDC a blanket permission to develop many of them however they see fit. But, 3CDC is not developing OTR for the actual, average resident of OTR (which has been, for the past few decades, a low income demographic). And they are not creating affordable housing for the other residents of Cincinnati who would like to move to OTR. They are developing OTR for the people who will buy those beautiful $300,000 condos you see on their website. The top fifth of the population. The $100k+ earners. The doctors, lawyers, and executives. The ones with .5 children or no children at all. Or the ones who have already raised their kids or retired early with their pockets full and sold the big family house in the suburbs and moved here for a new season of their lives.

You know the adage “if you build it, they will come?” Well, they built it. And, boy, they are coming in droves.

So, can you blame the rest of the community for wanting a piece of the action? Some of my neighbors have lived here since long before 3CDC incorporated. And they want access to the properties that the City of Cincinnati is poised, ready to hand-over to 3CDC for another manifest destiny-type of neighborhood overhaul. And they want the new developments and homes and shops and restaurants to look more like them.

So, it sounds like I agree with OTRCC, right?
Well, I do.
Sort of.

I think that 3CDC should start bowing-out of the development and let a more diverse group of individuals and businesses take ownership of some other regions of the neighborhood. And I think the City needs to find a way to release some of their holdings to responsible parties that don’t have multimillion dollar budgets. But when I hear the rally cry of OTRCC and I hear them say “we want more affordable housing,” I know that it’s far too difficult for a government to guarantee actual, market-rate affordability and that their only solution will be “subsidized housing.” And then I see the proposed “solution” to the problem, which is that the City will make 3CDC sign a contact that guarantees a certain percentage of the new housing is affordable for low-income residents, and I go—

“Wait, wait. Aren’t we missing something here!?”

 

So, tell me, what’s missing from the conversation about affordable housing?

I think there are three important questions we are not asking.

First-
What are the implications of an urban core with no affordable housing for the average median family? You know, the middle 2/5 of Cincinnati households with full-time wage earners who keep the economy afloat by bearing the brunt of the physical work, skilled labor, trades, and small, community-oriented businesses? Where is the average family going to go when 50% of the housing in OTR is subsidized for those below $35k and the rest is at a market price that is rising so rapidly that it will be unattainable in only a few years? And what about a family with more than 1 child? What will be available for them when anything not subsidized is either a one-bedroom, $150k condo or a $350k+ single-family home (like the ones 3CDC has already sold!)?

A common misconception is that middle-class families don’t want to live in the urban core. But this is simply not the case. Remember: if you build it, they will come. And if you don’t think that the most (economically) sustainable way to build an urban core is to build it for the hard-working middle-class, you are crazy. In January of last year, I wrote a bit about the possibility that urban revitalization in Cincinnati would force out the urban middle class. This issue is even more pressing now that vacant or undeveloped properties are at a premium (and held hostage by the City and by developers) and finished, rehabbed properties are unaffordable for the average median family.

There will always be subsidized housing in cities (even if not with public money) because good people will always speak for the ones who can’t speak for themselves. But there will not always be actual, affordable, pay-out-of-your-pocket housing for the rest of us. It’s those of us in the middle who will have to leave.

 

Second-
Does subsidized housing alleviate the burden of poverty for working families, or does it simply perpetuate it? Think of it this way: if you were currently living in Section 8 housing in an area like OTR, increasing your income by $20,000 a year could easily disqualify you for subsidized housing (along with other available goverment aid). This would push you into that middle-income no-man’s land of affordable housing and make it nearly impossible to afford your current neighborhood.

Basically, subsidized low-income housing is a trap. And it’s easy to understand why so many people get stuck there. Why would anyone finish high school, attend college, apply for a higher-paying job, or encourage a spouse to find employment when it could mean being stuck in the middle-class where no one is looking out for you and you don’t always have the means to look out for yourself? Losing a housing subsidy may force a family to relocate completely out of their neighborhood, away from friends, family, and a wealth of job and educational opportunities.

Please tell me we can come up with a better option than subsidies.

 

Third-
Why aren’t we diverting more support to increasing home ownership among the working poor and low income families, rather than providing supplemental rent support? After all, the benefits of home ownership on families, children, and communities have been touted since The American Dream was first envisioned. I understand that short-term and emergency housing is necessary for some. But, surely there are many among the “working poor” would would rather find a way into home ownership than continue renting. If you ask me (and I plan on writing about this eventually), a goalpost of “gentrification” should be the economic mobility of all residents. In other words, how can we create an urban core where families stuck in cycles of poverty aren’t just placated there, but are actually moved upward and into self-sufficiency, while still being able to live anywhere they want for as long as they want?

 

 

There are still hundreds of properties left in OTR (as well as in Pendleton, the West End, and Mt Auburn) that would be fantastic opportunities for middle-income residents to develop businesses and create family homes in the urban basin of Cincinnati. And there are many good people with great ideas who would gladly take on the task. But there seems be a deep chasm between the desire of those who would and the resources of those who can. And, realistically, why would developers like 3CDC sell a property (that they bought for next to nothing) to a middle-income earner at $20k (for them to develop or renovate) when they could just as easily develop it themselves and sell it for $600k to a wealthy retiree?

I would love to see a stronger urban middle-class in Cincinnati. I think it’s absolutely necessary for the positive movement in Cincinnati to continue. (Read this 2009 piece by Joel Kotkin for a nationwide perspective.)

That’s why I don’t want “more affordable housing.” Instead, I want more opportunities for the working- and middle-class to develop a homegrown, economically viable community of their own in the urban core. And I believe that, when that happens, the fluid movement of all residents between income levels and social strata will be possible. And this is what is truly missing from the conversation about housing in downtown Cincinnati.

Thanks to folks like 3CDC, OTR is now viable enough to be the perfect ground for an experiment in what would happen if the people who “would if they could” finally get to.

The City of Cincinnati and 3CDC are holding the cards for the next phase of development here. I’m excited/scared/curious to see what the next ten years will bring here in Over-the-Rhine. And I’m hoping folks like me find a way to stick around and see it all happen.