"Moving Forward Together" to revive housing

• John McCarron
• October 25, 2011

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The one-two punch of the foreclosure epidemic and Great Recession is teaching community development practitioners to build more effective partnerships, get closer to local conditions … and maybe even redefine what’s possible.

There’s a new reality out there, and its lessons are coming fast and hard.

“Building community is getting a lot harder,” said Cindy Holler, president of Mercy Housing Lakefront. She welcomed some 400 community development professionals – from bankers to neighborhood organizers, from contractors to foundation executives – to Mercy’s “Moving Forward Together” conference, held in Chicago on Oct. 19.

“Some of the best community work in housing has come from Chicago,” she said.  “But the world has changed.”

The nation is becoming more divided both economically and politically, she explained. “We’re losing our ability to get to the middle … community development is about negotiating and getting to the middle … moving across sectors and across organizational silos.”

Conference keynoter Mercedes Marquez, assistant HUD secretary for community planning and development, seconded Holler’s call for a deeper kind of “community engagement.” She observed that the complexity of structuring affordable housing – deals involving complex federal tax credits and multi-layered financing – tends to focus practitioners more on “the deal” and less on the neighborhood itself. 

“That’s a problem,” said Marquez, and she promised that within the Department of Housing and Urban Development, the same “technocratic” trend is being replaced by a less theoretical and “more of a practitioners view” to actually “help people get it done” at the local level.

Cuts = targeting
“We have an unbelievable lack of capacity” at the local level, Marquez said, caused in part by 20 years of a federal block grant system that doesn’t give cities and states sufficient wherewithal to develop in-house capacity to plan and, and especially to target areas where need is greatest.

Targeting is key going forward, she said, because the foreclosure crisis has made it clear that many cities, such as Detroit, “have to get more compact” and in some areas move to other land uses besides housing. Marquez conceded, however, that local officials often “don’t want to talk about that because it’s very difficult politically.”

Another reason for getting better at targeting, said Marquez, who once ran the housing department for the City of Los Angeles, is the expected budget bloodletting as Congress sets out to curb the federal deficit. 

“The dollars are shrinking,” she said, but “NSP shows that it [targeting] works.” She referred, of course, to the three-year-old Neighborhood Stabilization Program, the nationwide foreclosure purchase-and-rehab program managed in Chicago by Mercy Portfolio Services.

Rather than scatter NSP funds across all impacted neighborhoods, the city and Mercy Portfolio targeted blocks with sufficient other strengths – proximity to schools, say, or a new public library – so that rehab of a cluster of bank-owned properties would arrest overall neighborhood decay. 

“But it’s hard,” Marquez said of the upcoming budget flail. “So many of them [members of Congress] lack real knowledge about the votes they’re going to take and what they’re going to cut.”

“We are all in this together,” she said of the budget battle, “whether you’re a for-profit, a bank, a non-profit or in government. We will not survive the next round [of federal budget cuts] unless we hang together and learn each other’s language … and challenge one another on these very difficult issues of integration, of targeting, of leverage.”

Redefine “scale”
Next a panel of senior community development executives took up the question of what’s being learned – and what needs to happen next.

Susana Vasquez, executive director of LISC/Chicago, suggested community development practitioners may be asking too much of themselves and of their partners if they think they, by themselves, can produce neighborhood turnarounds. 

“We really need to redefine scale,” Vasquez said. “Change happens at the margins. If we worried about scale at the front end, no one would be working with us in an Englewood” or other high-poverty areas.

Vasquez previously headed NCP, which is redefining what success looks like in the face of widespread economic setback. The important question, Vasquez said, “is what, at the margin, can we change that might stimulate the private economy and bring more investment? Sometimes, it’s a single discreet investment that will begin to turn things around.”

Panel moderator Stephen Friedman, president of SB Friedman Development Advisors, observed that foreclosed and abandoned properties have become an “unavoidable” problem that, in some neighborhoods, afflicts 15 to 20 percent of the housing stock. What, he asked, does recent experience say about our best strategy?

Rehabs for rent
“It feels like we’re running faster and faster on the treadmill and we’re losing ground,” answered Ed Jacob, executive director of Neighborhood Housing Services of Chicago. “With NSP we rehab a home, get it sold, and now there’s two more vacancies on the block … so first of all, we’ve got to keep people in their homes.”

To that end, he praised a new effort by Mercy Portfolio to buy at deep discount troubled mortgages and negotiate a lower, more affordable, monthly payment with borrowers so they can stay in their homes (for an article about that, please click here).

Now that foreclosures are being driven by unemployment and job loss, Jacob explained, as opposed to the predatory lending that ignited the crisis, there’s a steady buildup of “shadow inventory” with some 18,000 vacant properties in Chicago alone. “So if we have 400 people here in the room,” Jacob quipped, “each one of us would have to take more than 40.”

He said rental must be a part of any effective rehab strategy. “Quite honestly, in neighborhoods where you see the most vacancies, there is no functioning mortgage market for home purchase.”

But large-scale rental of rehabbed bungalows and two-flats, Jacob cautioned, “creates a challenge on the property management side … so we’ll have to tap into expertise on the private side, including private individuals who maybe own a home on the block and would be willing to buy one down the street. But they’re going to need some training – how to find good tenants, how to manage property.”

The other panelists were: David Doig, president of Chicago Neighborhood Initiatives; Marc Jahr, president of the New York City Housing Development Corporation; and Reginald Jones, executive director of the Steans Family Foundation. Steans continues to make major investments in Chicago’s North Lawndale neighborhood, including a soon-to-be-announced $50 million community learning center.

The “Moving Forward Together” conference was a milestone on Mercy Housing’s campaign to address the foreclosure crisis in the Chicago/Milwaukee region by: building or saving 7,500 affordable homes, helping 2,000 families avoid foreclosure, and preventing displacement and homelessness for 20,000 people. Major campaign sponsors include the Pierce and Associates law firm, Bank of America, Chase, Citi, Enterprise Foundation, Housing Partnership Network, Northern Trust, MacArthur Foundation and Polk Bros. Foundation.  

It’s the (local) economy
Many agreed that worsening joblessness – and a lack of job readiness – is the emerging issue underlying other problems, including mortgage failures.  

But the employment problem is different for every neighborhood, Vasquez said, which is why LISC-supported Centers for Working Families (CWFs) are tailored differently in each of the 15 Chicago communities they serve.

“Fundamentally it’s about meeting folks where they’re at,” she explained. “So we’re working with our partners to address the skills gap. There are jobs out there, so it’s painful when residents can’t be connected to those jobs. Each neighborhood requires different kinds of resources and different kinds of support.”

More information: www.mercyhousing.org; chicagonsp.org; lisc-chicago.org

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