May/June Issue of Sustainable Communities

Sustainable Communities

TM

Vol 1, No 3 • May/June 2011 • www.p4sc.org • $12

Bridging the Financing Gap: Good news For housing, Community Development

IN THIS ISSUE

Urban agriculture: A tomato plant grows in Brooklyn.. . p. 36 Boston rebuilds transit, installs bike-sharing. . . . . . p. 42 Preview: Financing Sustainable Housing & CD Conference.p. 26 San Diego Unveils first Sustainable Communities Strategy. . . . . . . . . . . . . . . . . . . p. 32

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Contents MAY/JUNE 201 1

16 4

42

Departments

2 Letter from the Editor 4 Urban Planning & Design APA Conference Proceedings

6 Around the Nation

• Rhode Island • Washington • Texas • Connecticut • Illinois

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8 EPA & Sustainability

Features 10 Financing Housing &

Community Development:

On the Cover:

36 Urban Agriculture:

Assessing the financial landscape with Andrew Ditton, as he steers Citibank’s community development group in a rapid resurgence as one of the largest players in housing and CD finance.

Spike in equity prices helps boost housing tax credit transactions, but demand for allocations exceeds supply in most states.

Find out why cities like Seattle, Detroit and New Orleans are rewriting zoning laws to make urban agriculture a significant part of the urban landscape.

42 Report from Boston: Restoration of Fairmount transit line spurs redevelopment, construction of new affordable housing. Plus, new bike sharing program coming this summer will help meet greenhouse gas reduction goals.

Community development financial institutions are poised for new growth, despite the high profile failure of ShoreBank.

New Markets Tax Credit: Advocates gear up to fight for extension to help encourage investment in job-producing ventures.

32 San Diego: The public comment period is open for the San Diego region’s 2050 Regional Transportation Plan, the first in the state to incorporate the requirements of California’s “anti-sprawl” legislation, SB 375.

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Housing Outlook:

Bridging the Finance Gap Good News for Housing & Community Development After some bad years, capital markets are perking up and money is flowing for affordable housing and community development. In our special section, we tell you why things are improving, who’s looking for deals, and how to get your deals done. Get the low down on housing tax credit equity, New Markets Tax Credits and the promising new prospects for Community Development Financial Institutions. Section starts on p. 16.

PLUS, a preview of the nation’s only conference on Financing Sustainable Housing & Community Development on p. 26.

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The gap between demand and supply of affordable rental housing is likely to remain “staggeringly high” for a long time, according to the Joint Center for Housing Studies of Harvard University.

MaY/JUNE 2011 • Sustainable Communities

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Sustainable Communities

Letter from the Editor

TM

Vol 1, No 3 • May/June 2011 • www.p4sc.org

Big Noise from Washington

Sustainable Communities Magazine 6i-2

By Andre Shashaty

J

ust when the swaggering new majority in the House of Representatives had quieted down a bit, the Washington crowd is singing a new tune: Elimination or emasculation of federal income tax credits that are crucial to community development and sustainability.

I don’t call on our readers to contact their legislators very often, but this time, that’s exactly what you need to do – before this crazy idea gathers too much steam.

As we report in this issue, federal tax credits for affordable housing and job creating business and real estate ventures in lowincome districts make a huge difference to thousands of American communities. Other tax credits encourage investment in renewable energy generation, preservation of historic structures and other important things.

The talk about repealing tax credits has a superficial appeal. Yes, the tax code is too complex. And yes, it’s simpler and more equitable to reduce tax rates across the board rather than give tax credits to a select few industries and a small number of investors in those industries.

But in our adversarial way of governing ourselves, where long-term planning is anathema, tax credits are the only politically feasible way to have any kind of national community development, energy and industrial policy. They are the only tool we have to encourage investment and reinvestment in the future of our communities and to provide for basic needs like affordable housing.

The low-income housing tax credit, for one example, has been the only substantial federal commitment to affordable rental housing production for 25 years now. If it were abolished or devalued, it’s 99% certain there would be nothing to replace it.

Let’s have a debate over what tax credits and industry-specific “tax loopholes” should be continued and which should be ended. But tell your legislators that it makes no sense to trash them all, especially the ones that help make our communities more environmentally, socially and economically sustainable.

What’s more, in the current economic climate, it would be insane to terminate credits that produce jobs. Government spending reductions are already acting as a drag on the economy, so this is not the time to eliminate tax credits.

Meanwhile, it’s worth celebrating some good news. First, the battle of the budget did not turn out too badly. Final appropriations for fiscal 2011, which ends Sept. 30, include a modest reduction in funding for HUD’s sustainable communities planning and research programs. But in the political circus that was Congress this winter, that’s actually a vote of confidence.

Even better, the flow of private capital for housing and community development is picking up. The last few months have seen a strong inflow of investment capital for affordable housing tax credits, which will help offset cuts in state and federal housing subsidies. Investment activity for New Markets Tax Credits remains healthy. Finally, $3 billion in new federally-guaranteed bond financing authority will soon be available for community development.

There’s hope yet that even the most right wing politicians can be persuaded of the wisdom of investing in projects with long-term community and economic benefits, especially when they involve private capital joined with a public purpose.

Editor and Publisher Andre Shashaty, andre@p4sc.org Office & Member Services Manager Carol Yee, carol@p4sc.org Art Director Kay Marshall, kay.marshall@earthlink.net Advertising & Conference Sales Manager Wendy Chaney, wendy@p4sc.org Assistant Editor Megan Truxillo, megan@p4sc.org Board of Directors Rev. Betty Pagett, Community Acceptance Strategist Todd Sears, Vice President of Finance, Herman & Kittle Properties Patrick Sheridan, Senior Vice President for Housing Development, Volunteers of America Dianne Spaulding, Executive Director, Non-Profit Housing Association of Northern California Leadership Advisory Board Richard Baron, Chairman and CEO, McCormack Baron Salazar Doug Bibby, President, National Multi Housing Council Henry Cisneros, Executive Chairman, CityView; former secretary, U.S. Dept of Housing and Urban Development F. Barton Harvey, Former chairman and CEO, Enterprise Community Partners William C. Kelly, Jr., President, Stewards of Affordable Housing for the Future (SAHF) Kerry Mazzoni, public policy consultant, former state legislator and former California Secretary of Education Nicolas P. Retsinas, Director, Joint Center for Housing Studies, Harvard University Caleb Roope, President/CEO, The Pacific Companies Mitchell Silver, PP, AICP Director Department of City Planning for Raleigh, N.C. Sustainable Communities Magazine is published by Partnership for Sustainable Communities (“PSC”) is a private nonprofit organization incorporated in California. It is not affiliated with the United States federal interagency “Partnership for Sustainable Communities,” which is a venture between HUD, DOT and EPA. PSC is not supported by government funding. It depends entirely on membership dues and charitable donations to cover its costs. To make a donation, go to www.p4sc.org and click on the “donate now” button at the top of your screen in the green bar on the left. To join our cause, click on “become a member” also in the green bar.

900 Fifth Ave, Suite 201, San Rafael, CA 94901 415 453 2100 ext 302 www.P4SC.org Printed on SFI Certified 10% Recylced Paper with vegetable and/or soy based inks.

At Least 30% Certified Forest Content

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Sustainable Communities • MAY/JUNE 2011

Bridge the Financing Gap DON’T MISS THE ONLY CONFERENCE ON “FINANCING SUSTAINABLE HOUSING & COMMUNITY DEVELOPMENT” Get practical ideas that will help you survive the current hardships and expert advice to help you prepare for what’s coming next with three subject tracks of moderated panel discussions with great speakers, lively interaction and plenty of time for discussion: • Emerging opportunities for infill, mixeduse, and transit-oriented development • New strategies for affordable housing development & asset management • Cities & Sustainability: The new economics of land use, transportation & development

Learn how to find financing and make the numbers work for sustainable development and green building in challenging times....

And enjoy all that San Francisco and Union Square have to offer.

September 19-20, 2011 Marriott San Francisco at Union Square Sustainable development is the new paradigm in more and more communities, but how do we get there in an era of financing shortages and government funding cuts? Find out at the ONLY conference on Financing Sustainable Housing & Community Development. The conference will reveal new strategies for cities and developers to work together to get deals done by tapping new funding sources and finding new ways to collaborate.

Register NOW to lock in Early Bird Savings.

Go to www.p4sc.org Provide your email and postal address and we will send you the Conference Program detailing sessions & speakers as well as a FREE issue of Sustainable Communities magazine.

Name & Title: Organization: Street address, City, State, Zip code:

Email address:

Return by fax to: 415 453-4200 Or mail to: PSC, 900 Fifth Ave., Suite 201 San Rafael, CA 94901

PLUS, Financing Sustainability Workshops These are small interactive discussions with active sources of debt, equity and grants or soft money where you can find out about deals that are going forward NOW, and ask questions about your own transactions. ®

The San Francisco Conference on Financing Sustainable Housing & Community Development is hosted by The Partnership for Sustainable Communities, a nonprofit based in San Rafael, Calif.

Gold Level Sponsor: Reznick Group is a top 20 national accounting, tax and business advisory firm with exceptional depth of knowledge in real estate and tax credit services. www.reznickgroup.com Silver Sponsor: Gateway Planning Group Other sponsors: Local Government Commission Low-Income Investment Fund Nonprofit Housing Association of Northern California For information on sponsorships, Contact Andre Shashaty by email at “andre@p4sc.org”

U R B A N & RE G IO N A L P L A N N I N G

APA Conference Proceedings Loyola professor warns about building in the wrong places

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Making his first address after becoming president of the American Planning Association, Mitchell Silver, AICP, PP, emphasized the need for planners to help lead

Photo: Joe Szurszewski

ven if global warming was not a problem, American communities would still suffer massive losses from natural disasters because of our unwise practices of building in the wrong places, according to one of the speakers at the American Planning Association’s 2011 National Planning Conference this spring.

Robert Verchick is professor of law at Loyola University of New Orleans. The following account of his presentation at the planning conference is excerpted from proceedings of the conference. It was written by Joseph A. MacDonald, Senior Research Associate at APA.

America’s communities toward a more “just and sustainable future.” He urged APA members to cultivate and inspire the next generation of planning leaders. Silver is Chief Planning & Economic Development Officer for the City of Raleigh.

According to Verchick, disasters have been more prevalent in recent years than in previous recorded history: Pakistan’s floods, Russia’s wildfires, Japan’s earthquake and tsunami, and countless others.

Sustainable Communities • MAY/JUNE 2011

For Verchick, all of these disasters are backlit by New Orleans and Hurricane Katrina. He contemplates daily the relationship among climate, environment, and community.

Verchick says the United States loses more money to disasters than other country in the world except Japan, and losses in the U.S. tend to double, or even triple, every 10 years. But the fault lies not with nature and changing climate, but rather humans’ decisions to build where they shouldn’t and to destroy or remove natural environmental features, such as dunes, wetlands, and marshes that protect us.

Over the next hundred years, climate change will only compound the problems humans have created for themselves through increasing temperatures, changing precipitation patterns, rising sea levels, and more frequent extreme events. Despite the dire reality, Verchick offered three mantras to aid governments at all levels as they plan ahead: Go Green, Be Fair, and Keep Safe.

Verchick charged communities to “Go Green,” to go out and preserve and

protect natural infrastructure (soft armoring, green infrastructure) — the services that nature provides that protect us from harm.

According to Verchick, disasters are not social equalizers — they are amplifiers of social injustice. Hazard = Exposure + Vulnerability. Even though exposure may be the same across racial and socioeconomic groups, tremendous variations in wealth, assets, sophistication, insurance coverage, and other factors leads to tremendous variation in vulnerability.

Verchick offered the example of a new resource through Oxfam and researcher Susan Cutter that geospatially quantifies vulnerability and climate change in the U.S. (http://adapt.oxfamamerica.org).

The map shows where high risk and high vulnerability coincide, highlighting areas where states should concentrate their resources and efforts.

To illustrate how communities can “Keep Safe,” Verchick referenced the Opening Keynote Address by Michael Sandel about justice and the prevalence of cost-benefit analysis in policy-making and decision making. However, the problem with cost-benefit analysis is that it falls apart when you consider events that are very low in probability but very high impact (when things go terribly wrong). Examples include the anticipated 300-year tsunami along the Oregon Coast and the BP Deepwater Horizon oil spill disaster. ❧

APA’s 2011 National Planning Conference in Boston drew more than 5,000 people for a comprehensive program of seminars and field trips. To read about other speakers and sessions, go to www.planning.org/conference

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A RO U N D THE N ATIO N

2 4 1 5

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be piped beneath bridge decks to melt accumulated ice on the surface and reduce the need for road salt. The water could also be piped to nearby buildings to satisfy heating or hot water needs, similar to geothermal heat pumps. It could even be converted to steam to turn a turbine in a small, traditional power plant.

Perhaps the most futuristic idea the URI team has considered is to completely replace asphalt roadways with roadways made of large, durable electronic blocks that contain photovoltaic cells, LED lights and sensors. The blocks can generate electricity, illuminate the roadway lanes in interchangeable configurations, and provide early warning of the need for maintenance.

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Rhode Island

©Michael

Salerno, courtesy URI.

Harnessing Solar Energy from Roads The heat radiating off roadways has long been a factor in explaining why city temperatures are often considerably warmer than nearby suburban or rural areas. Now a team of engineering researchers from the University of Rhode Island is examining methods of

URI student Andrew Correia and Professor K. Wayne Lee conduct a laboratory experiment to measure the solar energy generated by a patch of asphalt.

harvesting that solar energy to melt ice, power streetlights, illuminate signs, heat buildings and potentially use it for

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many other purposes.

“We have mile after mile of asphalt pavement around the country, and in the summer it absorbs a great deal of heat, warming the roads up to 140 degrees or more,” said K. Wayne Lee, URI professor of civil and environmental engineering and the leader of the joint project. “If we can harvest that heat, we can use it for our daily use, save on fossil fuels, and reduce global warming.”

The URI team has identified four potential approaches, from simple to complex, and they are pursuing research projects designed to make each of them a reality.

One of the simplest ideas is to wrap flexible photovoltaic cells around the top of Jersey barriers dividing highways to provide electricity to power streetlights and illuminate road signs.

The photovoltaic cells could also be embedded in the roadway between the Jersey barrier and the adjacent rumble strip.

Another practical approach to harvesting solar energy from pavement is to embed water filled pipes beneath the asphalt and allow the sun to warm the water. The heated water could then

Sustainable Communities • MAY/JUNE 2011

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Washington

Seattle deemed “platinum city” for walkability Thanks to its Pedestrian Master Plan, walkability initiatives and pedestrian safety efforts, the City of Seattle has been designated a platinum-level Walk Friendly Community by the Pedestrian and Bicycle Information Center.

Walk Friendly Communities, sponsored by the US Department of Transportation’s Federal Highway Administration and FedEx, is a national program that recognizes cities for their commitment to walkability and pedestrian safety.

Seattle is among eleven municipalities recognized in the inaugural round of Walk Friendly Communities, and was the only one to receive a platinum-level designation. In evaluating Seattle’s application, the reviewers were especially impressed with: • The clear establishment of goals and measurable performance indicators in Seattle’s Pedestrian Master Plan; • Seattle’s exemplary neighborhood traffic calming program; • Seattle’s Right-of-Way Improvements Manual; and

not address many contemporary issues facing the city such as sustainability and climate change.

The process of developing the plan includes extensive citizen participation. The Plan Framework adopted this spring is the second of three phases, after a vision was laid out and before a detailed plan ▲ Pedestrians enjoy the Pike Place Market in is written. downtown Seattle.

The Preferred Growth Scenario is a map accompanying • The city’s celebration of physical acthe Plan Framework that sets out, tivity through the Celebrate Summer conceptually, how Austin should grow Streets program. in the future. In general, the Preferred Among other cities recognized Growth Scenario favors concentrating were: Ann Arbor, Michigan, and Santa growth along Austin’s north-south axis Barbara, California, at the gold-level; to centers and mixed-use corridors to Charlottesville, Virginia, at the silverpreserve established neighborhoods level; and Austin, Texas, and Charlotte, and support a more robust public transNorth Carolina, at the bronze-level. portation network.

For more information visit www.

There is very limited development to walkfriendly.org the environmentally-sensitive west, and development to the east takes place in 3 compact, clustered patterns. This type of development helps to protect creeks Citizens visualize city of and rivers in the eastern part of the tomorrow study area, as well as existing farmland.

Citizens from all over the capitol city

Texas

of Texas have had a busy winter and spring meeting to share their ideas for what the city should look like in 2030.

Workshops and meetings of the Imagine Austin Citizens Advisory Task Force were held with the goal of creating a comprehensive plan for adoption by the end of the year.

The current Comprehensive Plan of record, the Austin Tomorrow Comprehensive Plan (ATCP), was developed during the 1970s and adopted in 1979.

It has been amended numerous times through the adoption of neighborhood and transportation plans. In 2008, it was amended through a limited update that removed obsolete policies and replaced them with current ones. Even with this most recent update, the ATCP remains a product of its time and does

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Connecticut

Governor pushes housing construction Funding for affordable housing faces cuts in some states, but not Connecticut.

Gov. Dannel P. Malloy’s 2012 and 2013 budget actually increases aid to cities and towns, including aid for housing.

Malloy is proposing several measures to bolster housing assistance, but the most ambitious part of the plan is an additional $130 million for affordable and supportive housing construction.

The governor also wants to invest a total of $1 billion to improve the state’s aging transportation infrastructure.

Gov. Malloy’s proposal is the most ambitious capital housing investment

agenda since the late 1980s. The Governor understands that there is a direct connection between housing development, jobs, economic activity and opportunity,” said Howard Rifkin, the interim director of The Partnership for Strong Communities, a Connecticut advocacy group.

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Illinois

Illinois Receives $454 Million of Florida’s Rejected High-Speed Rail Dollars Florida’s rejection of $2 billion in federal high-speed rail funds opened the door for other states to receive additional funding and fast track implementation of their own high-speed projects.

Illinois is among the top recipients of the rejected funds, receiving $186 million for track and other improvements on the Chicago to St. Louis Corridor and an additional $268 million to purchase 48 new passenger rail cars and 7 locomotives that will be equipped to travel at high speeds.

“Illinois is committed to building an integrated, regional high-speed rail network and this investment in rail cars will continue to advance this goal,” said Illinois Governor Patt Quinn. “As the hub of the Midwest’s high-speed rail system, we will continue to utilize federal and state dollars to create jobs, ensuring that fast, reliable and clean rail transportation is a reality and continuing our economic recovery.”

Recipients of Florida’s rejected funds include 15 states and Amtrak. Top recipients include: • Amtrak- North Eastern Corridor (NEC) Improvements – $450 million • New York – NEC Harold Interlocking Amtrak Bypass Routes – $295 million • Michigan – Kalamazoo-Dearborn Service Development – $196.5 million • California – Central Valley Construction Project Extension – $300 million.

For details visit www.dot.gov. ❧

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E PA & S U S TA I N A B I L IT Y

EPA Charts Steady Course as Resource For Making Communities More Sustainable

T

he U.S. Environmental Protection Agency catches heat for its role as a regulatory agency but it plays a less well-known role in helping cities and towns to make themselves more sustainable.

The EPA established its Office of Sustainable Communities in 1996. It started its annual New Partners for Smart Growth conference in 1997.

“We were the one and only federal office that cared about environmental effects of the built environment, the only one pushing smart growth,” said John Frece, director of the office. Much has changed since then.

Under the Obama Administration, the EPA became part of the federal interagency partnership for sustainable communities along with the federal housing and transportation departments. Together, all three agencies have tweaked their programs and worked on specific projects to further a common set of principles about community “livability.”

While EPA remains an agency with substantial regulatory power, including

its new and very controversial greenhouse gas regulatory effort, Frece’s operation is about encouraging progress.

“The agency does not tell city officials how they must grow,” Frece said. “It gives guidance to communities that want to grow in a different way,” he added.

Frece reports “a huge increase in demand for smart growth and green building approaches. We think this issue, which in 1996 was a fringe issue, has become a mainstream issue.”

Changing the conversation EPA tries to create a dialog about new ideas for community development, housing and transportation by hosting an annual conference, making awards for achievements in smart growth and issuing publications on policy issues.

The EPA cosponsors the New Partners for Smart Growth Conference with the Local Government Commission based in Sacramento, CA. The 11th Annual New Partners for Smart Growth

What EPA offers on smart growth • National Award for Smart Growth Achievement • Sustainable Communities Building Blocks Program: One-day, targeted technical assistance to give communities tools to implement smart growth development approaches.

• Greening America’s Capitals: Technical assistance to help state capital cities envision and implement more sustainable communities.

• Smart Growth Implementation Assistance: Technical assistance for localities that want to incorporate smart growth techniques into their future development.

• Smart Growth Implementation Assistance for Coastal Communities (EPA and NOAA): Technical assistance through Sea Grant universities to help communities develop in ways that meet environmental and other goals.

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Sustainable Communities • MAY/JUNE 2011

▲ John Frece

Conference will be held February 2-4, 2012 in San Diego, CA. [Most of the presentations from the 2011 conference can be downloaded from the event’s web site at http://www.newpartners. org/] In one study titled Market Acceptance of Smart Growth, the EPA compared resale prices for single-family houses and townhouses in smart growth developments with units in conventional developments that are equivalent in terms of size, age, amenities, and location. The report finds that not only do smart growth developments enjoy market acceptance as evidenced by stability in prices over time, and in some cases, enjoyed greater resale appreciation than did their conventional suburban counterparts.

The EPA also helped the Jonathan Rose Companies compile and analyze data on the energy use associated with a range of development approaches. The study, Location Efficiency and Housing Type – Boiling it Down to BTUs, contrasts

▲ Data on the applications for federal funding programs to support planning and development to make communities more sustainable shows that demand far exceeds supply. For example, there were more than 1500 applications for a transportation program called TIGER, but there was only enough money to fund 51 of them.

energy use in conventional, automobiledependent locations with more locationefficient, transit-oriented locations; multifamily housing construction with singlefamily detached and attached houses; and conventional cars and homes with their energy-efficient counterparts (e.g., Energy Star homes and hybrid cars).

EPA provides technical assistance to communities that want to grow in ways that are more environmentally sound.

A primary technical assistance effort is the Building Blocks program, in which selected local governments receive hands-on training in how to make their communities more sustainable.

The EPA uses the term “smart growth” to describe the approach to planning and development it espouses, but Frece says it is just as concerned about helping cities that are not growing. In places like Cleveland and Fresno, EPA is trying to find ways to help revitalize downtown areas and increase density to make better use of existing infrastructure.

Frece’s office also exerts an influence over rulemaking for major EPA programs, like financial assistance for water and wastewater infrastructure. It advocates for making these programs more reflective of the livability principles that are the core of the federal interagency partnership for sustainable communities.

Frece’s office tries to influence local government and private sector policies

of Governments (SANDAG). The California Department of Transportation has decided to take the EPA’s tool, add more California-specific data and re-calibrate it for adoption statewide.

Frece said he is hopeful that the EPA’s approach will be adopted by the Institute of Transportation Engineers and included in its Trip Generation Handbook at some point.

One of the most important functions of the EPA is to finance clean up of brownfields, which allows for redevelopment to occur.

This year, it expanded that effort to include financing land use planning for regions that include brownfield clean up sites.

EPA is providing assistance to 23 communities to facilitate community involvement in developing an areawide plan for brownfields assessment, cleanup and subsequent reuse. The pilot program recipients will each receive up to approximately $175,000 in grant funding and/or direct technical assistance from the Agency.

EPA is piloting this area-wide planning approach to community brownfield challenges, which recognizes that revitalization of the area surrounding the brownfield sites is critical to the successful reuse of the property.

The agency received 153 applications for $26.5 million but could only make 23 awards with the $3.8 million that was available. ❧

and practices that affect the built and natural environment.

For example, the EPA is working to influence a decisionmaking process that affects almost every real estate development in every American city of any size. It is the method used by traffic engineers to estimate how much more traffic will be generated by a proposed development.

Frece said EPA is trying to change the assumption now in use that says the number of car trips generated by developments on infill locations is the same as the number generated by construction on undeveloped sites (greenfields) that are not part of an existing neighborhood.

“We don’t believe that to be true.

We believe Infill near transit will generate fewer trips,” he said.

In May, EPA D3G has over 16 years of Affordable Housing was wrapping experience with every HUD eld ofce in the country. up its beta testWe provide nationwide expertise in the following: ing of its software tool for • Capital Needs Assessments • Environmental Studies differentiating • Energy Audits & Green CNA the number of • Construction Estimation trips based on • Accessibility Compliance the location of a project. The Contact us to see how we can help you EPA’s tool has complete your next project. been adopted by the San DiRob Hazelton, President • www.d3g.biz • 804.358.2020 ego Association

MaY/JUNE 2011 • Sustainable Communities

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Bridging the Financing Gap:

Good News for Housing and CD From survival to expansion:

Capital Flows Pick Up Steam A

vailability of affordable housing plays a crucial role in making communities sustainable, but piecing together financing for low-cost homes got a lot harder in the last few years. The outlook improved dramatically in 2011, and 2012 could be even better, assuming that Congress doesn’t spoil the party.

The mainstay of affordable housing finance, the lowincome housing tax credit program, went through one of the roughest patches in its 25 year history recently. The tax credit program depends on a steady flow of capital from private companies that have taxable gains and want to invest in new affordable housing projects to obtain tax credits.

After a steady uptick in the prices investors were willing pay per dollar of tax credit benefit, equity capital was so plentiful and easy to come by that almost any project could get a substantial equity investment. The market weakened as the recession took hold, and in 2009, it dropped precipitously. The flow of investment began to pick up in 2010. This year, it promises to come close to its previous highs.

The federal New Markets Tax Credit program is also seeing renewed investor interest. This credit is used to attract private investment for job-creating business and real estate ventures in low-income areas.

Debt financing for affordable housing is becoming more readily available after the real estate lending woes of the last two years. The Federal Housing Administration has seen a huge demand for loans insured under its programs. It has initiated many changes in its programs to make them more responsive to demand. Among the changes is a new process for handling applications for projects using low-income housing tax credits to help speed up processing times.

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Sustainable Communities • MAY/JUNE 2011

Commercial banks have continued to make some loans for certain affordable housing projects because of their obligations under the Community Reinvestment Act. With interest rates remaining low and banks regaining confidence in their ability to make good loans, the outlook continues to improve.

The biggest threat to housing and community development finance comes from cuts in direct budgeted expenditures at the federal and state level. In Congress, the battle to reduce the federal deficit has already resulted in cuts in housing and community development programs, with the likelihood of more to come.

In many state capitols, budget deficits are an even bigger threat. In California, Gov. Jerry Brown has proposed to eliminate an important source of funding for affordable housing. The plan, which was still being debated at press time, was to abolish redevelopment agencies and use the property tax revenue they have accumulated for education rather than development. State law specifies that a portion of this money be used for affordable housing projects. Abolishing the agencies might mean that all or part —continued on page 12

Bridging the Financing Gap:

Good News for Housing and CD

Investors bid up housing tax credit prices;

Projects See Substantial Increase In Equity Investment Activity W

hat a difference a year makes when it comes to raising capital from the sale of federal low-income housing tax credits. Investors have returned to the market and pricing has rebounded to up to $1 for each dollar of tax benefit for solid deals in major metro markets on either coast.

“There has been a dramatic change in the trajectory of the market over the past year” said one tax credit syndicator. Investors were demanding yields of 12% or 13% on tax credit investments in 2010, but they are now accepting yields around 6% to 7%. On a typical to-be-constructed tax credit project, that equates to about 97 cents per dollar of tax credit.

The rise in prices has been rapid. Another syndicator said the average price per dollar of tax ▲ Drakes Way, Larkspur, CA, was developed by EAH Housing credits had risen 25% in just one month. A third dealmaker said he had recently closed a transaction at 70 cents per dollar of tax credits and had very shape. New investors are coming in and old ones who had quickly thereafter had to offer $1.01 per credit dollar for anstopped investing are coming back,” said Ronne Thielen, manother project. He said the $1.01 bid turned out to be too low. aging director, affordable housing for Centerline Capital Group.

“The equity market has recovered and is in pretty good Sponsors of affordable housing projects have good rea-

CAPITAL FLOWS PICK UP STEAM —From page 10

of the housing money would get reprogrammed for other purposes.

Back at the federal level, the battle over the fiscal 2012 budget will intensify over the summer and into the fall. Budget cuts for housing and community development will be back on the table.

But the biggest potential threat will come if the current movement for reforming the tax code picks up steam in the run-up to the 2012 Congressional and presidential elections.

Since affordable housing finance is so dependent on the tax code, the idea of tax reform gives lobbyists nightmares.

Two things could happen, and neither one is good for housing and community development.

Congress could vote to eliminate all the current tax credits

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Sustainable Communities • MAY/JUNE 2011

the feds offer for various investments, including housing and economic development. There’s less than a 50/50 chance of that, though, given the number of lobbyists fighting to preserve all the credits in the current tax code.

Much more likely is the lowering of the marginal corporate tax rates. If that happens, the housing and new markets tax credits will become less attractive to investors, as they will have less need to shelter income from taxes. That change could have almost as much impact as abolishing them completely.

Advocates hope the election cycle will keep Washington politicians too busy to pass tax reform until 2013.

In the meantime, the next two years will probably see a good supply of equity capital and a reasonable amount of debt at low interest rates. ❧

Glen Rock Apartments, Asheville, North Carolina Glen Rock Apartments is the residential component of Glen Rock Depot, a new mixeduse community development located in the emerging River Arts District of Asheville, North Carolina. Serving as a linchpin in the city’s efforts to redevelop its riverfront, Glen Rock Depot provides 60 units of affordable workforce housing along with street-level commercial space designed and built to obtain LEED certification. Each unit has solarheated hot water and Energy Star appliances.

Amenities include a large interior courtyard with trees and playground, streamside paths, and three levels of community space including fitness center, computer center, interior tot lot, and large gathering space with full kitchen. Glen Rock Depot was developed by Mountain Housing Opportunities. The residential portion of the project was financed with a conventional mortgage, state and local funds, and a $6.6 million equity investment from Community Affordable Housing Equity Corporation’s Community Equity Fund XIII Limited Partnership.

son to celebrate the renewed interest from investors, since it helps make more projects feasible. However, prices differ greatly depending on the location of one’s development. The highest prices of $1 or more per tax credit are only available for projects in major metro areas served by major banks which need to invest to win regulatory points under the Community Reinvestment Act (CRA). In areas without competition from CRA-motivated banks, prices are substantially lower.

In the major metro areas of the east and west coast, prices are higher than for projects in other locations, said Thielen.

▲ The San Remo Apartments, a 65-unit family property in Hesperia, CA developed by Palm Desert Development Company with an equity investment from Centerline Capital Group

She said prices were in the “high 90s” for projects in Los Angeles and around $1 in San Francisco. They are in the low 70s to high 80s elsewhere, she added. (All pricing estimates are as of early May. It was impossible to predict if they would continue to accelerate at the same rate into the summer.)

Centerline has gone over $10 billion in cumulative equity raised for tax credit projects. It recently closed its “CCP 38” fund, which raised $119 million in investments, $19 million more than was originally planned. The investors included seven insurance companies and one small bank. The fund is investing nationally.

The closing of the fund represents a comeback for the company. “ We have been open about the fact that we had to recapitalize,” said Thielen. In addition to recapitalizing, she said the firm sold off some of the non-equity operations it had acquired in years past and beefed up its asset management operations.

In New York state, a project in Syracuse was getting 75 cents per dollar of tax credits while one in New York City could get $1.05, said Andrew Ditton, who heads up Citi Community Capital.

Citi has boosted its activity in tax credit investing dramatically in the past year, Ditton said. He pointed out that while prices are rising, there is a lot more discipline in the market, thanks to the increasing presence of insurance companies and other companies, such as Google, that are not subject to CRA. “They are nowhere near as complacent about terms as CRA investors,” Ditton said. “They are focused on what they

MaY/JUNE 2011 • Sustainable Communities

>> 13

in, not where they are investing,” he added. >> areIninvesting the Southeast, Community Affordable Housing Equity Corporation (CAHEC) has paid anywhere from 72 cents (for a rural rehab transaction) to 87 cents per dollar of credit for an urban, new construction project. CAHEC is a nonprofit regional equity syndicator headquartered in Raleigh.

Tax credit projects depend heavily on “soft” financing where there is no fixed repayment schedule. The two federal programs that provide most of that kind of financing are HOME and CDBG. Both programs have faced budget cuts backs. Increased equity pricing will fill some of that gap, but developers may have to defer more of their development fees or seek additional sources of funds. In the end, projects will be tighter from an underwriting standpoint and some developers may have trouble getting sources and uses to balance out for the application, said Dana S. Boole, CAHEC President and CEO. Boole sees continued strong investor interest in tax credits. His only concern is that there might not be enough projects to meet investor demand.

What investors want A key variable in pricing of tax credit projects is whether they are in an area where multiple banks need to make more investments under the CRA. In New York City, for example, 151 banks might potentially get CRA credit by invest-

ing in a project there.

Other factors include: • Good real estate fundamentals, such as a high area median income and a lack of competitive projects • The sponsor’s track record and financial strength • The amount of financial support from the local government where the project is located.

Some syndicators, including Enterprise and National Equity Fund, also give priority to projects that address the needs of underserved population groups or that have a special impact on a city or neighborhood. Enterprise also layers on a preference for projects that are built to high standards of energy and water efficiency.

The view from Washington The tax credit program has enjoyed strong bipartisan support in Congress ever since it was first enacted in 1986. Affordable housing lobbyists are working hard to educate new members of the House of Representatives, mostly Republicans, on the benefits of the program in an era of budget cutting.

They report that they are getting a fair hearing and are optimistic they can win two improvements in the program proposed by the Obama Administration this year. One proposal is to allow some units in tax credit projects to be rented to people earning up to 80% of the median income for the —continued on page 22

Tax Credit ALLOCATIONS: Demand Exceeds Supply BY UP TO 3 TO 1

▲

14

Early results from the 2011 tax credit allocation process showed that demand for tax credits is exceeding the supply by as much as three to one in several large states.

In Virginia, the housing development authority reported that in its first 2011 tax credit allocation round, it received 67 applications for about $42.8 million. That’s more than three times the $13.5 million it has available.

The Ohio Housing Finance Agency (OHFA) announced the 2011 Housing Tax Credit Program recipients who will each receive a portion of $23.8 million in federal housing tax credits. Funding was awarded to 33 developments out of the 109 for which applications were submitted, requesting $86.6 mil-

Sustainable Communities • MAY/JUNE 2011

lion in total credits.

In Colorado, the housing and finance authority received 22 applications for Low Income Housing Tax Credits in the first allocation round of 2011. This is the highest number of requests received in a single round in the agency’s history. In total, applicants are seeking more than $23 million in credits.

Approximately $5.175 million in LIHTC is available for allocation in Round One. In California, the odds of success were a little better. The state’s Tax Credit Allocation Committee received 103 applications for 9% credits in its first 2011 allocation round. It anticipated making 53 awards in June.

The first round of 2010 saw only

37 projects awarded credits. The increase in awardees is due to the fact that “we have a little more credit available, but also because the projects are requesting less credit and leveraging more public resources,” said William Pavao, director of the California Tax Credit Allocation Committee Credits per unit have declined a lot, probably because scoring encourages people to bring in other sources, he added.

Pavao noted that the California state tax credit is undersubscribed. He said the committee would substitute state credits for federal credits in order to use the excess. “It is in the public interest to get those state credits in play,” he said.

Wolff Waters Place La Quinta, CA

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Talk to us about your neighborhood. Go to www.citicommunitycapital.com or email askciticommunitycapital@citi.com

© 2011 Citigroup Global Markets Inc. Member SIPC. Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.

Bridging the Financing Gap:

Good News for Housing and CD BACK IN THE BLACK:

Citi Rebounds From Down Years, Resumes Major Housing, CD Role hen the financial services empire that is Citigroup suffered the worst of the recession, the institution’s housing and community development programs shrunk to a fraction of their former size. But Citigroup is back in the black, and its affordable housing and development programs are roaring ahead once again.

As co-head and managing director of Citi Community Capital for 11 years. Andrew Ditton watched his department shrink, losing more than one-third of his staff. Now, his operation is expanding rapidly once again. But this time, Ditton says, he hopes there is a durable new discipline in the financing markets, and he is looking to federal financial regulators to help make that a reality.

Few bankers know affordable housing and community development better than Ditton. From 1984 to 1997, he was the executive vice president, chief credit officer, and chief operating officer of LISC, a nonprofit that supports affordable housing and community development nationwide.

At Citi, he and his co-manager Hal Kuykendall, preside over a wide range of financial services, offering to meet most or all the financial needs of almost any housing or community development project.

But even the bank’s size and scope of services did not save it from the impact of the recession. “We were very quiet in 08 and 09. Like many of the big banks, certainly those under stress, we contracted in all kinds of ways and reduced the size of our balance sheet.” Federal regulators wanted major lenders to shrink, he said, so his operation and every other credit extending Citi business that used the balance sheet had to shrink.

Citi Community Capital went from 180 to 110 people, loan originations dropped dramatically, and equity investment in low-income housing tax credits stopped completely.

Things started to improve in the third quarter of 09, as Citi began rethinking business strategy.

In 2010, Citi began to hire again, and now has a staff of about 160. “We have gone through a volatile time, but have come out of it with a better business strategy, a more integrated product line and a stronger operational infrastructure,” said Ditton.

16

Sustainable Communities • MAY/JUNE 2011

The community capital operation did $5.6 billion in total volume in 2010, including $3.1 billion in lending and $2.5 billion in investments. In 2010, the group financed over 40,000 affordable housing units. The numbers include $600 million in equity investment in low-income housing tax credit projects.

It is on track to do a similar amount of business this year. This compares to about $2 billion per year during the recession.

Photo: paula Vlodkowsky

W

▲ Andrew Ditton

more than 1,200 properties in 48 states and the Virgin Islands, comprising more than 146,000 units of affordable housing, and was buying projects at a rate of 70 to 100 per year.

“That’s all changed, there is no guaranteed market. All of that has gone away,” said Ditton. As a result, he said, investment terms are more conservative.

Another key factor in the resurgence of tax credit investing is the Community Reinvestment Act, which requires banks to invest in low-income neighborhoods within their retail banking service areas. The CRA has been a consistent driver of bank investment in tax credits.

Now, part of the increase in capital flows is coming from insurance companies and other non-banking corporations that are not governed by CRA. Ditton applauded this trend, saying these kinds of investors bring a healthy discipline to the market. ▲ New York City works hard to provide housing for low-, moderate- and middleDitton is also hoping to see changes in income households, like Elliott Chelsea on West 25th Street and 9th Avenue the CRA. The primary improvement would in Manhattan. The $65 million development will provide apartments affordable be to broaden the current geographic defor people earning from 50 percent to 195 percent of the area median income. lineation of where a bank needs to invest to Artimus Construction is the developer. Citi Community Capital arranged the get credit for meeting its CRA obligations. financing and is the Freddie Mac lender and made the construction loan.

Under current law, the definition is fairly narrow. This creates distortions in the tax The mainstay of the group’s business is project financcredit investment market, Ditton explained. It means that ing, primarily for affordable housing using low-income housmajor cities served by a large number of big banks enjoy an ing tax credits. It typically provides equity investments as avalanche of CRA-motivated investment, while rural areas well as construction and/or permanent mortgage financing and smaller towns and cities with fewer banks see very little and can be the one-stop shop for most of a project’s financbenefit from the law. The complexity of tax credit transacing needs. tions makes the concentration of investment in major marThe group makes loans to Community Development kets even more extreme.

Financial Institutions which in turn lend to transit-oriented Federal banking regulators are considering a way to level development, charter schools and community health centhe playing field by loosening up the correlation between ters. It also lends to small businesses. where you get CRA credit for making investments and where Ditton does not expect to revisit the lofty heights of you have bank branches. In other words, a New York City bank 2007 due to both political and economic factors. now receives CRA credit only for investing in projects within In 2007, people would buy LIHTC deals in any location, the city limits. Under the proposed change, the bank would and the pricing difference was marginal. Most investors paid be able to get credit for investments in a broader geographic over $1 for credits anywhere area, possibly as large as the entire state of New York.

This was attributable to the sponsors of guaranteed Ditton is rooting for the regulators to implement such a funds, Ditton said. These funds used their balance sheets change. “People would flood money into areas that are unto offer investors a low, guaranteed rate of return, and they derserved now,” he said. “That would bring a leveling to the drove the market by paying high prices and competing agcurrent price disparities, which would be very positive for gressively for deals. One of the biggest players in the field the tax credit program,” he said. was SunAmerica, a subsidiary of insurance giant AIG, one The proposed change raises interesting political issues. of the companies most widely blamed for the implosion of In the wake of the mortgage market collapse, the American financial markets at the recession’s start.

Enterprise Institute and other groups and politicians said —continued on page 46 In 2008, SunAmerica boasted that it had invested in MaY/JUNE 2011 • Sustainable Communities

17

Bridging the Financing Gap:

Good News for Housing and CD

CDFIs emerge from political, economic upheavals…

With New Capital to Finance Community Development

By Edward Roberts

I

n the face of attacks on federal spending for domestic programs, a brutal recession, and tighter credit for almost all real estate lending, Community Development Financial Institutions (CDFIs) may be poised for a major step forward.

CDFIs are a key source of lending and investment for the kinds of projects that make communities more sustainable. Although they have had federal government support since 1994, they are getting an important boost this year.

Not only are direct federal appropriations still flowing without severe cuts, but CDFIs are about to receive a substantial infusion of federally guaranteed bond financing.

The Small Business Jobs Act of 2010 included a provision which allows the Department of the Treasury ▲ Employees of Hallmark Community Solutions, which is changing to guarantee bonds issued for economic or community its name to Hello Housing, express their views on the importance development. The law allows the department to guaranof housing. The organization has used financing from Clearinghouse tee up to $1 billion per year in taxable bond authority for CDFI to provide housing for low-income people with disabilities.

2011, 2012 and 2013, with bond terms of up to 30 years.

If Treasury can issue the Mark Pinsky, president of Opportunity Finance Network, which implementing regulations fast has 183 CDFIs as members. enough, the 2011 authority for CDFIs emerged from the recession in better shape than $1 billion in guarantees could be many regular commercial banks, partly because they work deployed to finance projects in primarily in low-income or distressed areas in their normal roughly a year’s time. The financing course of business. In other words, they were well suited to would be available on a competitive dealing with the kinds of challenging situations that caught basis, and the hope is the rules will other lenders unprepared. provide maximum flexibility.

“They were proactive and confronted problem loans,” said This bonding authority is in Pinsky. The CDFI’s experience in dealing with credit problems addition to the long-standing proshowed that problems in the housing mortgage business gengrams operated by the Treasury’s erally could have been managed and did not need to lead to CDFI Program, which came through Mark Pinsky massive foreclosures. Another lesson is that government polithe recent fiscal year 2011 budget cies encouraging lending to low-income households were not battle with a $227 million appropriation (For details, see box). at fault for the mortgage meltdown. “There is an effort to con Leaders of the CDFI industry say the money will go a long the American public into thinking lending to low income comway to help them achieve their mandate of providing capital munities caused the crisis. That’s nonsense,” Pinsky said. for underserved communities and people.

Some CDFIs are depository institutions, which raise capital “This bond program is transformational. We think it has from individual depositors. For example, 200 credit unions tremendous potential and are eager to get it going,” said

18

Sustainable Communities • MAY/JUNE 2011

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been recognized as CDFIs, according to the National >> have Federation of Community Development Credit Unions. Other CDFIs make loans using capital they obtain from larger financial institutions, including banks that have a Community Reinvestment Act mandate to invest in low-income areas but lack the expertise on their staff.

What CDFIs finance CDFIs finance a wide range of business ventures and real estate projects that benefit underserved places and people.

The most common areas of focus include job creation, economic development, affordable housing, charter schools and daycare facilities.

CDFIs are the entities that carry out the federal New Markets Tax Credit (NMTC) program, which is administered by the federal CDFI Fund.

By the Department of the Treasury’s definition, a CDFI does not have to be a nonprofit, and many of the organizations that undertake NMTC projects are subsidiaries of banks or real estate companies.

However, a large subset of CDFIs are mission-driven, notfor-profit organizations. For example, San Francisco’s Low-

Income Investment Fund (LIIF) describes itself as providing “the fundamental supports for low-income people to more fully participate in the American economy. “ LIIF brings capital and technical expertise to distressed communities. It says its programs “form a comprehensive approach to community development based on a vision for healthy communities – green, economically vibrant places, where people live, learn and grow to their full potential.”

The $600 million Community Development Financial In-

Treasury Supports CDFIs The CDFI Fund was created for the purpose of promoting economic revitalization and community development through investment in and assistance to community development financial institutions (CDFIs). The CDFI Fund was established by the Riegle Community Development and Regulatory Improvement Act of 1994, as a bipartisan initiative.

The CDFI Fund achieves its purpose by promoting access to capital and local economic growth in the following ways: 1. through its CDFI Program by directly investing in, supporting and training CDFIs that provide loans, investments, financial services and technical assistance to underserved populations and communities; 2. through its New Markets Tax Credit (NMTC) Program by providing an allocation of tax credits to community development entities (CDEs) which enable them to attract investment from the private-sector and reinvest these amounts in low-income communities; 3. through its Bank Enterprise Award (BEA) Program by providing an incentive to banks to invest in their communities and in other CDFIs; 4. and through its Native Initiatives, by taking action to provide financial assistance, technical assistance, and training to Native CDFIs and other Native entities proposing to become or create Native CDFIs. Since its creation, the CDFI Fund has awarded $1.11 billion to community development organizations and financial institutions; it has awarded allocations of New Markets Tax Credits which will attract private-sector investments totaling $26 billion, including $1 billion of special allocation authority to be used for the recovery and redevelopment of the Gulf Opportunity Zone.

20

Sustainable Communities • MAY/JUNE 2011

stitution uses its balance sheet and unsecured capital it borrows from other institutions to provide capital, primarily debt financing.

Many years ago, LIIF was focused on affordable housing. It has been expanding its activities for the past ten years under the leadership of Nancy O. Andrews, President and CEO, to help finance all these things:

• Affordable Housing • Child Care facilities • Charter schools • Retrofits to make buildings more energy efficient • Fresh food outlets in underserved communities.

• Transit-Oriented Development Operating on the East Coast (New York, Washington, DC,

>>

CDFIs Show Resilience Despite High Profile Failure The community banking and reinvestment world suffered a shock last year when Chicago’s ShoreBank failed and closed its doors for good. But don’t jump to conclusions. Experts say the community development financing industry as a whole remains quite healthy despite the long economic slump and credit crunch.

“The community development financial institution (CDFI) industry is stronger than ever and its future seems bright,” said Mark Pinsky, President & CEO of Opportunity Finance Network, the national CDFI network.

The failure of ShoreBank was distressing because of the pioneering role the institution played in showing that banks could invest safely in low-income neighborhoods and make a decent return in the process.

It was founded in 1973, when many banks engaged in “redlining,” which referred to the practice of designating entire low-income neighborhoods as areas where they refused to make loans.

Founded by Milton Davis, James Fletcher, Mary Houghton, and Ron Grzywinski, ShoreBank went the opposite direction, specializing in community investment in Chicago and other cities.

Pinsky says the bank’s failure had to do with its condition as a depository institution, and does not reflect on the general wisdom of lending to borrowers in low-income areas.

“Nondepository CDFIs — notably CDFI loan funds — are thriving as lenders,” he said. “Anchored by strong capital positions (capital ratios routinely north of 15%), they were able to act conservatively early in the credit crisis, writing off questionable loans and marking to market. Their balance sheets could handle it.”

He said that some key measures of portfolio quality (charge offs and portfolio at risk) deteriorated in late 2008 but stabilized quickly. He said new investment into CDFIs increased sharply in 2010.

For CDFI loan funds, banks and government have committed more than $1.5 billion in new debt. The CDFI Fund,

Ron Grzywinsky

a unique federal resource, continues to gain support and increased funding.

Shorebank’s Successor The assets of ShoreBank were taken over by Urban Partnership Bank, which promises to carry on the failed bank’s community development mission. The new bank promises to “work together with individuals, small businesses, nonprofits, foundations, and faith-based organizations in distressed and underserved urban communities in Chicago, Cleveland, and Detroit to deliver quality financial services that often cannot be obtained elsewhere.”

Urban Partnership Bank says it wants to “build vibrant urban neighborhoods and to promote economic and environmental sustainability in urban neighborhoods” in those cities.

“The takeover essentially relaunched Urban Partnership as an outsourced social conscience for major banks that put up the equity, including Goldman Sachs Group, Wells Fargo & Co. and JPMorgan Chase,” according to The Chicago Sun-Times, The new bank has $1.3 billion in assets, about what ShoreBank recorded in 2003 before it overemphasized real estate development like many other lenders, the newspaper reported.

MaY/JUNE 2011 • Sustainable Communities

21

Housing and CD

Boston) as well as California now, LIIF >> and believes all those things are crucial to

According to the firm, “Community development lending must be profitable improving the quality of life in low-income in order to be sustained. As with concommunities. ventional lenders, we carefully evaluate Andrews champions a holistic vision each applicant’s ability to repay the loan. of human development, in which buildings Unlike traditional lenders, we do not have and neighborhoods are a way to organize predefined loan programs. We analyze and structure the full array of services reeach loan application individually. Every quired to make a difference in the lives of loan we make benefits the community in people and families. a measurable way. “ In other words, it’s not enough to build Based in Lake Forest, Calif., Clearingaffordable housing. People must also have, house says it recently became the first early child care services, high quality, high non-depository CDFI to be able to borrow performing schools, fresh food and health from a Federal Home Loan Bank. It said sevices. the achievement would “open the doors” “If you have that more holistic apfor other CDFIs throughout the country to proach, you think of the work we do at benefit from this new and most valuable the physical community revitalization source of liquidity. ▲ As the leader of one of the level as one part of a larger coordination The firm is active in the New Markets nation’s most successful CDFIs, of community and human development.”

Tax Credit program. It received a 2010 Nancy Andrews believes that Andrews acknowledged the difficulty allocation of $35,000,000 to finance community development requires of implementing holistic approaches but Mixed-use (housing, commercial, or retail) a comprehensive approach. Her says it’s the responsible thing to do. “We that will create new construction and organization, the Low-Income are beginning to see a lot of research evipermanent jobs in “critically underserved Investment Fund, helps local dence that tells us we cannot think onemarkets with significant poverty and unorganizations on the East and dimensionally. We have to be proactive employment levels throughout the State West coasts provide early child and aggressive in working collaboratively of California. “ care services, high quality schools, across the silos.”

The CDFI has made a practice of fresh food and health services, as LIIF’s newest venture is the (San financing housing for very low-income well as affordable housing.

Francisco) Bay Area Transit-Oriented individuals with developmental disAffordable Housing (TOAH) Fund. Develabilities. For example, it recently funded opers can now access financing for affordable housing and $1.2 million to Hallmark Community Solutions (HCS) in vital community services near public transit hubs through Hayward, California for the development of a facility to the $50 million fund. be operated as a crisis living home for very low-income While the members of the Opportunity Finance Network individuals with developmental disabilities. The innovative and LIIF have very clear social goals, other CDFIs have their loan structure of this project exemplifies the unique fundroots in the financial services industry and try to serve lowing capabilities of Clearinghouse CDFI, according to the income people and neighborhoods while still making a profit. organization. The project carries a 186% loan-to-value raFor example, Clearinghouse CDFI prides itself on being tio, mitigated by a lease assurance from the local regional well capitalized and profitable while it makes loans that crecenter. This unique financing structure facilitates commuate jobs, provide affordable housing and foster economic nity development that would otherwise be unfeasible with growth in low-income and distressed communities. traditional lenders. ❧

PROJECTS ENJOY SUBSTANTIAL INFUSIONS OF EQUITY —From page 14

area. Under current law, all the units for which a tax credit is claimed must be rented to people earning no more than 60% of the median income. This change would increase the number of potential tenants from which a project could draw and allow sponsors to generate slightly more rental income.

A second change would allow for an increase in the

22

Sustainable Communities • MAY/JUNE 2011

tax credits available to sell to investors for projects that involve preserving federally-assisted apartments for use as affordable housing. There is also a proposal to extend a law set to expire at the end of next year that provides for the amount of tax credits provided to a project to be fixed instead of floating. ❧

Bridging the Financing Gap:

Good News for Housing and CD

Job-producing tax credits awarded

NMTC Users Lobby for Extension U

nless Congress sees fit to extend it, a program that has generated at least $18 billion to finance revitalization of declining cities and towns and job creation in low-income neighborhoods could be heading for extinction.

The New Markets Tax Credit Program (NMTC) was enacted during the Clinton Administration, but the 2011 round of funding is the last one currently authorized by law.

The political fate of the program is a hot topic among its users. Congress is starting a long debate over “tax reform” that could include elimination of some or all tax credits, or corporate tax rate reductions that would undermine the value of credits that remain on the books.

While that debate is likely to continue through 2012 and even 2013, the uninterrupted continuation of the New Markets program requires Congress to vote to extend it this year.

The battle is on to convince Congress to do ▲ Rehabillitation of 470 Main Street in Fitchburg, Mass. was financed using that. “All indications are that the NMTC is work- new markets tax credits. ing,” according to the New Markets Tax Credit there are so many new members of Congress, few of whom are Coalition [http://nmtccoalition.org/]. familiar with it,” said Peter Sargent, director of capital developTo date, the NMTC has raised more than $18 billion in ment of the Massachusetts Housing Investment Corporation.

Qualified Equity Investments for investment in low-income The key to building political support is to show the procommunities and nearly 300 community development entities gram’s value in preserving and creating jobs, he added.

(CDEs) are using the credit to support a wide variety of comThere is bipartisan support for the program, said Gary Permunity and economic development initiatives. low, CPA. He pointed out that the lead supporter in the Senate These range from an investment by a faith-based CDE in is Sen. Olympia Snow, a moderate Republican. a new childcare facility on the west side of Chicago, to the “We have pretty strong support but there is a lot of work creation of the first new supermarket and shopping center to do with the new Congress,” he said. in Southeast Washington, DC in many years, to the establishPerlow is co-managing principal of Reznick Group’s Baltiment of a new aerospace facility in rural Oklahoma, and to more office and heads up the firm’s National New Market Tax financing a solar manufacturing facility that created 1,500 Credit (NMTC) Practice Group. new ‘green’ jobs in a low income community outside of Albuquerque, New Mexico.

What credits finance According to the CDFI Fund, which runs the program for the Treasury Department, NMTC investments have helped to The main objective of the program is to create jobs and support the development or rehabilitation of over 68 million generate economic activity in low-income census tracts. Most square feet of real estate in low-income communities, creating of the projects it finances are commercial real estate develop210,000 construction jobs and helping to create or maintain ments or business start ups or expansions. over 45,000 full-time equivalent jobs through 2007.

Recent trends include an increasing focus on the kinds of “It’s incumbent on all the parties involved in new markets mixed-use projects that cities are encouraging to help revitalto be proactive in selling this program in Washington because

MaY/JUNE 2011 • Sustainable Communities

>> 23

downtown areas and create more walkable and transit>> ize friendly town centers.

At least 20% of the revenue from any credit-financed real estate must come from commercial space, so the program is not used for projects that are 100% housing. However, mixeduse real estate has become more prevalent, said Perlow.

Cities view mixed use as a good way to redevelop infill sites. Investors like it because rental housing is considered less risky than commercial real estate.

NMTC investments may be used to finance a wide variety of activities, including loans to or equity investments in businesses or real estate projects.

All NMTC investments must be made in low-income communities, which are generally defined as census tracts with a poverty rate of 20 percent or greater, or with a median family income at or below 80 percent of the area median family income. However, over two-thirds of NMTC investments have been made in census tracts with a poverty rate of 30 percent or greater or with a median family income at or below 60 percent of the area median family income.

The program requires that financing be provided on advantageous terms. In the 2010 round, almost all the allocatees indicated that 100 percent of their investment dollars would be made either in the form of equity, equity equivalent financ-

ing, or debt that is at least 50 percent below market and/or is characterized by at least five concessionary features; with all of the remaining allocatees committing to providing debt that is at least 33 percent below market and/or characterized by at least four concessionary features. Such features include, among other things, subordinated debt, reduced origination fees, higher than standard loan-to-value ratios, lower than standard debt service coverage ratios, non-traditional collateral, and longer than standard amortization periods.

Examples of financing Massachusetts Housing Investment Corporation (MHIC) uses the tax credit throughout that state for construction, acquisition and permanent loans for real estate projects. MHIC was founded in 1990 by a consortium of banks and other corporate investors to fill a critical gap in meeting the credit needs of affordable housing developers and owners who couldn’t get financing for certain projects from traditional lenders. It also invests in low-income housing tax credit projects.

MHIC received a $63 million NMTC allocation in the recently announced 2010 awards. Over the years, MHIC has used equity attracted by the NMTC to finance 46 projects, totaling $403 million in investment. One of the mixed-used projects is

New Markets Tax Credits Allocated; Total Allocations reach $29.5 billion On Feburary 24, 2011, the Community Development Financial Institutions Fund (CDFI Fund) announced that 99 community development entities had been selected to receive allocations of New Markets Tax Credits (NMTCs) through the 2010 round of the NMTC Program.

These 99 organizations are authorized to issue to their investors a combined total of $3.5 billion in equity for which NMTCs can be claimed. In the eight rounds to date, the CDFI Fund has made 594 allocation awards totaling $29.5 billion in tax credit authority, including $3 billion in Recovery Act awards and $1 billion that was specifically set aside for recovery and redevelopment in the wake of Hurricane Katrina.

Allocation awards range in size from $10 million to $77 million. Both the average and the median allocation award amounts are about $35 million.

How the program works The NMTC Program stimulates economic and community development and job creation in the nation’s low-income communities by attracting investment capital from the private sector.

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Sustainable Communities • MAY/JUNE 2011

The NMTC Program provides tax credits to investors who make “qualified equity investments” (QEIs) in investment vehicles called community development entities (CDEs). CDEs are required to invest the proceeds of the qualified equity investments in low-income communities.

Low-income communities are generally defined as those census tracts with poverty rates of greater than 20 percent and/ or median family incomes that are less than or equal to 80 percent of the area median family income.

The credit provided to the investor totals 39 percent of the investment in a CDE and is claimed over a sevenyear credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.

The program is administered by the CDFI Fund, which is a branch of the U.S. Department of the Treasury.

the rehabilitation of 470 Main Street, a historic structure in Fitchburg, a town hard hit by the foreclosure crisis.

The project sponsor is The Twin Cities Community Development Corporation (TCCDC), which also has its offices in the structure. The project created 31 high-quality, mixed-income apartment units in the upper four levels, of which eight units will be affordable for families earning between $25,100 and $38,700 per year. It maintains the existing 8,000 squarefoot TD Bank branch office; it also created space to enable the CDC to move its offices to the first floor and basement, providing expansion space for its Home Ownership and Small Business Centers.

MHIC financed this project in 2007 and 2009 with $11.65 million in New Markets and federal historic tax credits and a bridge loan against the sale of state historic tax credits. Completion of this project adds considerably to the revitalization of downtown Fitchburg by advancing the city’s strategy to increase residential uses and accompanying pedestrian traffic.

In recent years, an increasing number of city and state government agencies have begun to successfully apply for NMTC authority. In the 2010 round, both Chicago and New Mexico obtained tax credit authority.

The Chicago Development Fund, sponsored by the City

of Chicago, has an allocation of $18,000,000. It plans to use the authority to provide capital to industrial, commercial, community facility, and sustainability projects within lowincome communities in the City of Chicago. CDF particularly focuses on industrial retention and expansion within the city, extending retail development into underserved areas of the city, and developing educational, cultural, and social service resources in low-income neighborhoods. Financing products offered by CDF feature such attributes as below-market interest rates, higher than typical loan-to-value ratios, and/or subordinate debt for projects that require such benefits to become feasible.

Finance New Mexico, LLC, is a subsidiary of the New Mexico Finance Authority based in Santa Fe, N.M. It will use an allocation of $46,000,000 to offer senior debt and subordinated debt with a range of flexible terms and conditions to support the creation of quality jobs through investments in companies located in, or expanding to, the state’s rural, disadvantaged communities, and to projects located in distressed census tracts in Albuquerque, Las Cruces, and Santa Fe, New Mexico. Financing will offer aggressive pricing, longer periods of interest-only, higher loan-to-value ratios, and lower debt service requirements. ❧

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Bridge the Financing Gap Don’t Miss the Only Conference on

“Financing Sustainable Housing & Community Development”

Learn how to find financing and make the numbers work for sustainable development and green building in challenging times.... And enjoy all that San Francisco and Union Square have to offer.

September 19-20, 2011 Marriott Hotel San Francisco at Union Square

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Sustainable development is the new paradigm in more communities, but how do we get there in an era of financing shortages and government funding cuts? Find out at the ONLY conference on Financing Sustainable Housing & Community Development. The conference will reveal new strategies for cities and developers to work together to get deals done by tapping new funding sources and finding new ways to collaborate.

Sustainable Communities • MAY/JUNE 2011

CONFERENCE sPEAKERS

Get practical ideas that will help you survive the current hardships and expert advice to help you prepare for what’s coming next, with three subject tracks of moderated panel discussions, great speakers, lively interaction and plenty of time for discussion on: • Emerging opportunities for infill, mixed-use, and transit-oriented development • New strategies for affordable housing development & asset management • Cities & Sustainability: The new economics of land use, transportation & development

PLUS, Financing Sustainability Workshops These are small interactive discussions with active sources of debt, equity and grants or soft money where you can find out about deals that are going forward NOW, and ask questions about your own transactions.

PLUS, don’t miss these General Sessions...

Sprawl, Climate Change, Transportation and Housing: What’s in the first SB 375 Sustainable Communities Strategies, what comes next, and what it means for residential real estate and affordability.

The Sustainability Leadership Roundtable on: How to restore the political and financial feasibility of affordable housing as a key element of community sustainability. ®

The San Francisco Conference on Financing Sustainable Housing & Community Development is hosted by The Partnership for Sustainable Communities, a nonprofit based in San Rafael, CA. www.p4sc.org

Gold Level Sponsor: Reznick Group is a top 20 national accounting, tax and business advisory firm with exceptional depth of knowledge in real estate and tax credit services. www.reznickgroup.com

Silver Sponsor: Gateway Planning Group Other sponsors: Local Government Commission Low-Income Investment Fund Nonprofit Housing Association of Northern California

For information on sponsorship, contact: Andre Shashaty email: andre@p4sc.org Phone: 415-453-2100 ext 302

The following is a partial list of speakers at the San Francisco Conference on Financing Sustainable Housing & Community Development, set for Sept. 19-20, 2011 in San Francisco. For a complete list of speakers and sessions, please request a copy of the Conference Program, by sending an email to carol@p4sc.org.

Ophelia Basgal Regional Administrator, U.S. Dept. of Housing & Urban Development Ophelia Basgal is the Regional Administrator of the Department of Housing and Urban Development’s Region IX (Pacific/Hawaii).

She is a nationally recognized expert on housing and community development issues, having served 27 years as the executive director of the Housing Authority of the County of Alameda, California.

Prior to joining HUD, Ophelia was Vice President of Civic Partnership and Community Initiatives at the Pacific Gas and Electric Company.

Dana Bourland Vice President of Green Initiatives Enterprise Community Partners, Inc. Dana Bourland is vice president of green initiatives for Enterprise and leads environmental strategy for the national organization. She oversees all aspects of Enterprise’s national award-winning Green Communities program from strategic planning and program development to evalu-

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CONFERENCE sessions

ation and public policy advocacy, including the next generation of this initiative focused on greening all affordable housing within the next decade. Dana previously worked for the Maryland Department of Planning, where she implemented and collaborated with other state agencies and national organizations on Smart Growth-related policies.

Cathy Creswell Acting Director, CA Dept of Housing & Community Development Cathy Creswell serves as the Acting Director of the California Department of Housing and Community Development (HCD). Acting Director Creswell’s position includes oversight for administration of the Department’s housing finance, rehabilitation, and community development programs; the state’s housing policy, planning and code-setting processes, and regulating manufactured housing and mobilehome parks.

Cathy has been involved in housing and community development since 1979 and has worked for HCD in various roles since 1985; most recently, in 2001, being appointed as Deputy Director of the Division of Housing Policy Development.

Gary Downs Partner, Nixon Peabody

Gary P. Downs is a partner in Nixon Peabody LLP’s Affordable Housing practice group. Gary has a broad range of experience in capital market and real estate transactions, which include municipal finance

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Financing Sustainable Housing & Community Development: Practical content for tough times Opening Plenary Session

Sprawl, Climate Change, Transportation and Housing: What’s in the first SB 375 Sustainable Communities Strategies, what comes next, and what it means for residential real estate and affordability.

Implementation of anti-sprawl land use legislation has hit high gear in California, setting a precedent for other states, and creating a whole new playing field for local planning and community development. The new regional schemes promise to encourage more compact development, and with high speed rail and public transit development, a much less car-centered approach to how we plan and build communities. Will the plans lead to more affordable homes closer to transit and jobs, and less sprawl? Find out from this panel what the initial plans say, how they are being received by the public and politicians, and what they will mean to your communities and your projects.

Leadership Roundtable

How to restore the political and financial feasibility of affordable housing as a key element of community sustainability Affordable housing is a key part of community sustainability but the one-two punch of financing constraints and government budget cuts threaten to cut production. Our panel of experts looks at how our communities can meet the needs of a growing population before the next round of housing cost inflation and gentrification addressing questions like: •

•

• •

How to find new ways to finance development despite federal and state budget cuts.

Can coordinated planning for sustainable communities help reduce the costs of housing and transportation?

Are inclusionary zoning schemes ripe for a revival?

How to address public opposition to government affordable housing mandates and higher densities.

Conference Workshop Sessions (preliminary and subject to change)

Track I: Emerging opportunities for infill, mixed-use, and transitoriented development •

•

• • • • •

Mixed-use town centers – why cities want them and how developers are creating them Ride the rails: Acquisition & development strategies for a less car-centered society The new housing market: How to respond to changing demographics and tastes New models for public-private and inter-agency collaboration to get deals done Cutting costs per unit with higher density & reduced parking construction Financing for mixed-use, infill construction and revitalization How to react to looming threat of federal “tax reform”

Sustainable Communities • MAY/JUNE 2011

CONFERENCE sessions

Track II: New Strategies for affordable housing development & asset management •

•

•

• • •

California’s redevelopment agency “reform” and what it means for housing developers Filling the “soft money” gap: Alternatives to state and federal housing finance programs CDFIs take center stage with new capital for housing & community development How to win the competition for tax credits and get the highest equity pay-in Financing renewable energy systems and green retrofits Preservation, conversion and stabilization: Alternatives to new development

Track III: Cities & Sustainability: Practical tools for planning and community development • •

• • • • •

Housing Element requirements: proposed changes and what they mean The new economics of land use: Using planning and zoning to boost your economy and tax revenue Preserving/reusing older properties and foreclosed single-family homes How cities are tapping the economic potential in New Markets Tax Credits How to encourage infill development to revitalize neighborhoods Wringing cost out of your entitlement and design review processes Transit-oriented development and station area planning, including innovative ideas for preserving housing affordability BONUS SESSIONS ON FINANCING

Interactive deal-specific workshops with active providers of: • Housing tax credit equity • Soft money and grants • Long-term permanent loans NOTE: The sessions and topics to be covered are subject to change without notice. The schedule and list of speakers for each topic will be included in the Conference Program. To request a copy, email carol@p4sc.org Who should attend: • Real estate developers involved in housing, tax credit

matters such as general obligation, community facilities district, assessment district, single and multifamily, industrial development, tax allocation and certificate of participation issues. His real estate practice includes tax, joint venture, publicprivate partnerships, acquisition and disposition, land use, regulatory work, and complex financings. He is active in both HUD and rural housing development transactions.

Hasan Ikhrata Executive Director, Southern California Association of Governments Hasan Ikhrata has served as the Executive Director of the Southern California Association of Governments (SCAG) since January 2008. His responsibilities include implementing the policies of an 83-member Regional Council and directing day-to-day operations of the nation’s largest Metropolitan Planning Organization. Mr. Ikhrata has over 25 years of public and private sector experience in Transportation Planning in the Southern California region.

Tim Kemper Regional Managing Principal, Reznick Group

housing, commercial, mixed-use, infill and home building.

• Real estate consultants, lawyers, accountants • Financing providers • City, county & regional planners • Community development, housing and redevelopment officials • Architects • Land planners

Tim Kemper is the Managing Principal for the Reznick Group’s South Region including the Charlotte, Atlanta and Austin offices. He also leads the Real Estate Consulting Practice as well as the Renewable Energy practice. In his career, Mr. Kemper has been engaged in the underwriting for more than $1 bil-

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lion in renewable energy and real estate transactions. Reznick Group is a top 20 national accounting, tax and business advisory firm known for its depth of knowledge in real estate and tax credit services.

David Reznick Principal and Chairman, Reznick Group

David Reznick is well known throughout the affordable housing industry as a dynamic speaker who is as entertaining as he is informative.

He is co-founder and Chairman of the Board of Reznick Group, P.C. He often consults in the areas of tax analysis and the structuring of major real estate syndications, and his advice is sought frequently on policy issues related to real estate and affordable housing. He has testified before Congress on restructuring the Section 8 portfolio and is a widelyrespected expert on preservation of older assisted housing.

Andre Shashaty (Conference Chairman), President, Partnership for Sustainable Communities Andre Shashaty is President of the Partnership for Sustainable Communities and the Editor-in-Chief of Sustainable Communities magazine. He is an award-winning writer and editor, and a nationally known expert on urban affairs and real estate development. Prior to his work at PSC, Andre founded Affordable Housing Finance and Apartment Finance Today magazines and their related conferences.

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A great event in a great location: The new San Francisco Marriott Union Square hotel sits on the corner of Sutter and Powell (480 Sutter St.) and is just steps from world-class shopping, restaurants, bars, and the theater district.

The Union Square area is one of the largest collections of department stores, upscale boutiques, tourist trinket shops, art galleries, and salons in the United States, which continue to make Union Square a major tourist draw, and one of the world’s premier shopping districts. Grand hotels and small inns, as well as repertory, off-Broadway, and single-act theaters also contribute to the area’s dynamic, 24-hour character. www.marriott.com/hotels/travel/sfous-san-francisco-marriott-union-square/

Event Date: September 19-20, 2011 Make the connection for success at the conference that will help you achieve your goals in the new era of sustainable development and green building and enjoy all the excitement of San Francisco in the late summer.

REGISTER NOW AND SAVE! Early Bird rates expire soon.

To receive a Conference Program, Complete and fax back the form below.

OR, go to www.p4sc.org/magfree Or Call 415-453-2100 ext 302 Provide your email and postal address and we will send you the Conference Program detailing sessions & speakers as well as a FREE issue of Sustainable Communities magazine.

Name & Title: Organization: Street address, City, State, Zip code:

Email address:

Return by fax to: 415-453-4200 Or mail to: PSC, 900 Fifth Ave., Suite 201 San Rafael, CA 94901

Sustainable Communities • MAY/JUNE 2011

B OO K S & RE S O U R C E S

Sustainability in America’s Cities Edited by Matthew I. Slavin Published by Island Press, ©2011 City after U.S. city has jumped on board the “sustainability” bandwagon, striving to be the most livable, walkable, environmentally friendly city around.

As part of that effort, much has been written about what can and should be done to make cities sustainable. But according to Sustainability in America’s Cities’ editor and primary author, Matt Slavin, an information void exists regarding empirical evidence of “what programs and policies have been done, which have worked, and why they might work (or not work) better in some contexts and cities than others.” This void, according to Slavin, has left city planners thirsty for information on what other cities are doing successfully and how they might do the same.

The book attempts to fill this void through careful analysis of city-specific sustainability programs and policies in nine different areas: climate action planning, the role of the university, brownfield redevelopment, green building, transportation, clean energy, storm water management, urban forest restoration and food supplies. The author considers the cities detailed to have the best programs and policies in place in one on the nine areas, providing a “best practice” case study to readers.

Sustainability in America’s Cities, true to its promise, painstakingly details the history and actions taken by the cities analyzed. For planners interested in climate action plans, the detailed account of Portland, Oregon’s efforts to formulate a workable climate action plan since 1993 provides an important case study on what has worked in that region. However, cities without the progressive politics in place in Portland may be left wondering if they could do the same thing in their city – a fact that the author notes.

The account of brownfield redevelopment in Milwaukee, Wisconsin ends with a useful section titled, “lessons learned.” The section highlights several key lessons that emerged from Milwaukee’s efforts and that can be applied by other cities. Some of these lessons are quite obvious, “ensure that local government … is willing to play,” but others less so “offer early seed funding, such as EPA grants … to explore sustainability and to help incorporate it throughout the planning and development process.”

Overall, Sustainability in America’s Cities provides an incredibly detailed account of the sustainability efforts in several major U.S. cities, providing a wealth of information to city planners interested in the efforts of these particular cities.

About the Editor: Matthew Slavin is founder and Principal of Sustaingrüp, developing clean energy technologies and sustainable building and aligning business and government leadership, goals and strategy to create a more sustainable future. His publications on energy, climate change and sustainability have been featured in leading professional journals and metropolitan newspapers. ❧

Hot Off the Press: New Books on Sustainability Stephen J. Coyle (foreword by Andres Duany), Sustainable and Resilient Communities: A Comprehensive Action Plan for Towns, Cities, and Regions (2011) – A step-by-step guidebook for urban planners and designers explaining how to create and implement an actionable plan for making neighborhoods, communities and regions more environmentally healthy, resource-conserving and economically resilient.

David Tracy, Urban Agriculture: Ideas and Designs for the New Food Revolution (2011) – This book offers detailed ideas and designs to help readers take part in the urban agriculture movement in their own backyards, rooftops or windowsills.

L. Hunter Lovins & Boyd Cohen, Climate Capitalism: Capitalism in the Age of Climate Change (2011) – In it the authors argue, through in-depth case studies of successful businesses, NGOs and municipalities, that the best route to rebuilding our economy, our cities, and our job markets, as well as assuring national security, is by embracing a low-carbon future, including renewables, carbon markets and new technologies.

Bill McKibben, Eaarth: Making a Life on a Tough New Planet (2011) – The author delivers the bleak message that it is too late to stop global warming, analyzing the current and future effects of our carbon-fueled economy. However, he offers a cautiously optimistic prescription for moving forward on our altered planet.

Go to www.p4sc.org to purchase these books and many more.

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California implements SB 375

San Diegans Debate Highways vs. Transit As Regional Planners Unveil First SC Strategy

By Megan Truxillo

The public comment period is open for the San Diego region’s 2050 Regional Transportation Plan, a 40-year plan for developing San Diego’s transportation infrastructure and accommodating an estimated 1.2 million additional ▲ SANDAG plans to keep 80 percent of new housing and job growth within the urban area depicted on this map.

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Sustainable Communities • MAY/JUNE 2011

residents.

ers with transportation options that reduce greenhouse gas emissions, and implement the Plan through incentives and collaboration.”

Of the $196 billion the area expects to spend on transportation over the next 40 years, 26 percent will fund highway expansion and improvement, and 46 percent of the money will fund mass transit. The remainder funds local street improvements, bicycle and pedestrian infrastructure, the smart growth incentive program and system and demand management measures.

The $196 billion figure is the estimated total amount needed to complete all of the projects in the plan. The money is expected to come 60 percent from local dollars, drawing on the area’s 1/2 cent sales tax, with the remaining coming from state and federal transportation dollars.

Funding is estimated based on current revenue and reasonably foreseeable future revenue.

Transportation Investments The draft plan forecasts no new highways in the future, but it does see the expansion of existing ones, including a controversial plan to expand Interstate 5 from La Jolla to Oceanside.

The highway expansion is the target of state legislation introduced by Senator Christine KehoeD, San Diego. The legislation, originally called the ‘transit first’ bill, would have required completion of planned mass transit projects in coastal communities before any freeway expansion could take place, effectively blocking the I-5 expansion.

Kehoe, however, had to soften the bill for it to pass Gary Gallegos Christine Kehoe Elyse Lowe through the Senate Transportation and Housing Committee: the bill in its current form allows freeway expansion and transit projects to be built he region is the first in the state to release its draft 2050 simultaneously.

Regional Transportation Plan (RTP) that includes its SusThe bill travels next to the Appropriations Committee. tainable Communities Strategy (SCS), a strategy mandated by The freeway expansion is also hugely unpopular with enCalifornia’s anti-sprawl legislation, Senate Bill 375. vironmental and public transit activists. The expansion could The Sustainable Communities Strategy sets out how, by cost as much as $ 4.4 billion dollars, diverting limited funds to connecting transportation and land use planning, San Diego freeway expansion over public transit, and travels through an will reduce greenhouse gas emissions 7 percent and 13 percent area with important scenic and natural resources. per capita by 2020 and 2035 respectively. Adoption of the “Massive, polluting and harmful highway projects are be2050 RTP is slated for October 2011 following the public coming shoved down the throats of communities that don’t want ment period. them,” Mike Bullock, chairman of the San Diego Sierra Club’s The draft 2050 RTP states its overall plan for building transportation committee told the SANDAG board in a public a sustainable San Diego succinctly: “The path toward living hearing. “Local control is being destroyed. This is big governmore sustainably is clear: focus housing and job growth in ment at its worst.” urbanized areas where there is existing transportation infraIncluding the freeway expansion in the 2050 RTP spurred structure, protect sensitive habitat and open space, invest in criticism from those who want to see less focus on freeways a transportation network that provides residents and workand more on mass transit: “If you put a lot of money into

T

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freeways and make it easier to drive,” Elyse Lowe, di>> your rector of the non-profit Move San Diego said, “and then do transit and think people are going to choose that, you’ve really disincentivized your transit system.”

For mass transit and alternative transportation, the draft

plan contains a number of new and expanded projects, including a massive interconnected network of bike trails, a trolley that travels beneath downtown San Diego, several new eastwest trolley lines, high-speed rapid bus routes, the reintroduction of streetcars and a double-tracked rail system that increases the number and frequency of Coaster and Sprinter trains.

Explore the Impacts of the Draft 2050 RTP Online

More Housing, Less Emissions

To help San Diego residents understand and take part in its planning process, SANDAG released an interactive website about the draft 2050 RTP, Envision 2050.

The website allows users to learn about the basics of the 2050 RTP and planning process and visually demonstrates the impacts of the proposed plan on the region.

Residents can also see where their transportation dollars are going year by year, split between operational and capital investments.

Most importantly, the site includes a comment page, making public comment easier than ever.

SANDAG says the increased investment in public transit and implementation of its Sustainable Community Strategy will help the region exceed the greenhouse gas emission reduction requirements set by the California Air Resources Board.

The SCS estimates a 14 percent reduction in GHG emissions by 2020, a 13 percent reduction by 2035 and a 9 percent reduction by 2050.

The SCS adopts a land use pattern to accommodate the estimated 388,000 new homes needed to serve the projected growth within the region, including all economic segments of the population. The SCS plans 80 percent of new homes and job growth within urban areas (see map).

Most of the new housing units are also proposed at

Visit Envision 2050 at www.envision2050sd.com

—continued on page 46

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Sustainable Communities • MAY/JUNE 2011

SCAG Maps Plan for Jobs, Recognizes LA for Transit Push T he focus was on jobs and economic recovery as well as sustainable development at the Southern California Association of Government’s Regional Conference & General Assembly in May. The association unveiled the draft Southern California Economic Recovery & Job Creation Strategy.

“The Plan was put together with the top economic experts in the South and proposes short and long tem actions to recover the 980,000 jobs lost since 2007,” said Wally Baker, Executive Director of the Southern California Leadership Council. “Southern California has 2.3 million jobs at stake and cannot afford to lose any more companies to Texas or neighboring states due to more favorable tax incentives. We must work with state leaders to preserve and attract new business investments to California,” he said.

“SCAG is committed to seeking public comment on the economic recovery plan discussed here today and then working with partners locally, in Sacramento and Washington DC to recover the 980,000 lost jobs and expand our key industries such as construction, goods movement logistics, entertainment, education, and manufacturing,” said Hasan Ikhrata, SCAG Executive Director.

SCAG also gave out its Compass Blueprint Recognition Awards at the conference.

The President’s Award for Excellence went to the City of Los Angeles and the Los Angeles County Metropolitan

Transportation Authority for a series of ambitious efforts to expand public transit in the city and county and to plan land use around the stations to encourage compact development and affordable housing. (The 30/10 Plan and the Sustainable Transit Communities Initiative). SCAG also recognized “America Fast Forward,” a bold effort by the city and spearheaded by LA Mayor Antonio Villaraigosa to get the U.S. Congress to provide bond financing that would vastly accelerate locally-funded transit expansion in LA and nationwide. Other awards went to the following: • Sustained Leadership – City of Fullerton (Fullerton Transportation Center Specific Plan) • Visionary Planning for Sustainability – City of West Hollywood (Climate Action Plan) • Visionary Planning for Mobility – City of Santa Ana (Transit Zoning Code) • Visionary Planning for Prosperity – City of San Bernardino (Sustainable San Bernardino Energy Efficiency Pilot Program) • Visionary Planning for Livability – City of Brawley (Downtown Specific Plan) The awards recognize local jurisdictions in their efforts to promote the principles of the Compass Blueprint Program, and provide them a region-wide showcase of the innovative plans they have undertaken. Compass Blueprint funding is offered by SCAG to help cities undertake such efforts. ❧

Incentives for Developers SB 375 Opens Door to Streamlined Environmental Reviews Potential relief from the California Environmental Quality Act (CEQA) requirements is the primary incentive for real estate developers to try to follow the SANDAG plan.

Generally, there are two types of projects for which CEQA requirements can be streamlined: residential/ mixed-use projects and transit priority projects.

For residential/mixed use projects consistent with the SCS land use designation, density, building intensity and other policies, the project still must complete an environmental review pursuant to CEQA, but will get to take advantage of portions of the environmental review done for the 2050 RTP and SCS. For example, environmental reviews would not be required to repeat growth inducing impacts analyses or greenhouse gas emissions analyses because those are included in the environmental review for the 2050 RTP and SCS. This streamlining can save developers thousands of dollars and time in environmental reviews.

For transit priority projects to take advantage of CEQA streamlining, projects must be: 1) 50 percent residential, 2) with a minimum density of 20 dwelling units per acre, and 3) be within a half-mile of a major transit stop or high-quality transit corridor. These projects may be analyzed under a new environmental document created by SB 375, called the Sustainable Communities Environmental Assessment (SCEA), or through an environmental review for which the content requirements have been reduced.

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Returning to our Agrarian Roots:

A renaissance in urban

By Megan Truxillo

F

rom Seattle to New Orleans, cities are rediscovering the economic and social benefits of agriculture as an integral part of the urban landscape.

The urban agriculture movement aims to shorten the distance from farm to plate, by weaving farms back into the communities where people live and work.

The benefits of urban agriculture are numerous, at the top of the list, as far as sustainable development goes, is shortening the distance that food must travel to reach consumers. The shorter the distance, the less fossil fuel burned, the fresher the food, the more food security and the more money staying within the community. On average 6-12 cents of every dollar spent on food, goes to transportation costs.

To real estate developers, urban agriculture or garden-

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Sustainable Communities • MAY/JUNE 2011

ing can add to the market appeal of a property. To city officials, in-town agriculture is a great way to create jobs and improve nutrition in lower-income areas. And in declining cities, urban agriculture is a good use of vacant and abandoned land.

Urban agriculture can also bring jobs and revenue to a community by creating a local food-based industry. Thanks to the “locavore” movement, made popular by Micheal Pollan’s bestseller Omnivore’s Dilemma, restaurants can charge a premium for local, organic products. City farm, an urban farm bordering the Cabrini Green neighborhood of Chicago primarily sells its produce to local restaurants.

Sepia, a high-end restaurant in Chicago features City Farm produce. The restaurant “favor[s] local artisan growers” and charges around $30 a plate for such dishes.

Brooklyn Grange Farm in New York produces forty varieties of tomatoes, salad greens, herbs, carrots, fennel, beets and many other varieties of produce on a one-acre rooftop. ▲

agriculture

after Hurricane Katrina, when far-sighted New Orleanians saw the potential to turn vacant lots into beautiful gardens.

NOLA Green Roots, a non-profit organization founded

by Joe Brock in New Orleans, manages several community gardens. The organization started with the Mid-City Community Garden, turning a once-abandoned lot in mid-city into a producer of mustard greens, carrots, tomatoes, herbs, beans and eggs. The bounty is offered to community-members at a fraction of the cost of supermarket produce.

In Queens, NY, Brooklyn Grange Farm operates a forprofit farm on a one-acre rooftop. Grange’s mission is to turn urban farming into a thriving and viable industry. The rooftop, over which Grange has a long-term lease, holds 1.2 million pounds of soil and hundreds of thousands of plants.

The produce is sold at farmstands and to local restaurants.

Rooftop farming, particularly in densely developed urban areas like New York, has the potential to take advantage of otherwise underutilized land in a city.

What is Urban Agriculture?

Photo courtesy Brooklyn Grange Farm, brooklyngrangefarm.com

Utilizing Urban Space The high cost of urban space is one of the predominant reasons agriculture has historically moved to rural and unpopulated areas. Urban agriculturalists have dealt with this, though, by creatively using unutilized or underutilized space in urban areas. The greatest potential for this new trend exists in cities with slow or no-growth, where vacant land is plentiful. But, even in thriving cities, unused spaces like rooftops provide prime real estate for urban farms and gardens.

Greening blighted city spaces is an important benefit of using vacant or abandoned land for agriculture. This serves aesthetic purposes but also can raise property values in the area. New Orleans saw an upswing of community gardening

Although, urban agriculture can mean a few garden plots, a community garden and chickens in the yard, it can also mean a real working farm within city limits, with goods sold locally and exported.

This March in Detroit, Hantz Farms, a subsidiary of Hantz Group, acquired 5 acres of blighted land around a warehouse in Detroit with the aim of operating a large commercial farm on the site. This property is the first acquisition, in what Hantz plans to be a large-scale conversion of blighted and abandoned land in the city to agricultural use.

If Hantz can overcome city roadblocks, the farm promises to create hundreds of jobs for the Detroit unemployed, offer local produce to a city that does not even have a single grocery store chain within the city limits and free up police, fire and city services from serving and patrolling nearly abandoned neighborhoods. In the meantime, Hantz is landscaping and cleaning up the land to demonstrate to the city the potential agricultural conversion has.

For the techies out there, urban agriculture can also mean an indoor “vertical farm.” A vertical farm at its simplest is a multi-story greenhouse. At its most high-tech, a vertical farm is a tightly controlled indoor farm, with water, humidity and nutrients precisely measured and sunlight excluded.

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Photo courtesy PlantLab

Or, the problem can simply be a failure to address agricultural use, leaving urban agriculturalists to wade through endless red tape to open a farm or community garden.

In Chicago, the city is in the process of remedying a zoning code that did not address agricultural uses within city limits. The lack of clarity hindered the development of community gardens and commercial farms because it meant extensive red tape to acquire the proper permits. The proposed zoning amendment would add commercial and community farming as allowed uses by right within certain zoning districts and provide specifics on allowed size and operations.

The proposed Hantz operation in Detroit has been at a standstill for the last two years while city officials determine how best to incorporate agricultural zoning into the city code. The current code does not address agricultural uses, although many small com▲ Plantlab hopes to decrease the distance from farm to plate by building vertical farms munity gardens operate, albeit adjacent to, below and on top of grocery stores, as depicted in this artist’s rendering. technically illegally.

The cities hangup stems in In the Netherlands, the Dutch research company Plantlab part from an existing law, Michigan’s ‘Right to Farm Act.’ The has been perfecting its version of the vertical farm for the law restricts the ability to bring a nuisance claim against an past ten years. In its research station, strawberries, yellow existing farm, leaving the city wary of allowing a large-scale peppers, basil and banana plants grow under LED bulbs. commercial farm into the city until proper zoning is in place.

Water trickles to plants as needed, and all excess water is San Francisco recently amended its zoning code to alrecycled. The facility uses no pesticides and 90 percent less low gardening in all parts of the city and to allow produce water than outdoor agriculture. and value added goods to be sold on site in all zoning areas By the end of this year, the company plans on building a but residential. The addition of on site sales is important four level commercial-sized vertical farm in the Netherlands. for the financial viability of small urban farms, which often The company envisions vertical farms occupying city space produce too little produce to sell to grocery stores or even next to shopping malls, supermarkets and grocery stores, at farmers markets. providing fresh produce that travels a very short distance.

Taking it a step further, Seattle’s comprehensive plan actually requires one community garden per 2,500 residents in an urban village or neighborhood. The zoning code in SeatZoning for Urban Agriculture tle is often cited as the most supportive of urban agriculture in the country. Like San Francisco’s code, gardening is alOne of the biggest hurdles facing urban agriculture is lowed by right in most parts of the city and sales are allowed restrictive land use and zoning laws. The problem can be an on site as well. Seattle’s code also supports keeping animals, outright restriction of agricultural uses within city limits, a result of years of creating non-mixed use communities and including chickens on urban properties. pushing agriculture outside of cities and suburban areas.

Many cities are rewriting general plans and zoning laws

>>

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Sustainable Communities • MAY/JUNE 2011

Photo courtesy SWA Group

Master Planned Community Incorporates 200 Acre Farm

▲ At The Farm at Bishop’s Bay, housing is clustered into a weave of farm belts that are maintained and harvested by the community.

For master planned communities, weaving community gardens or farms into the plan can increase the appeal of the community to homebuyers. In Wisconsin, the master-planned Community of Bishop’s Bay, 15 minutes outside Madison, will interweave 200 acres of farmland amongst the houses and other features of the community.

The entire community, roughly 800 acres, is a mixed-use community, and will include single-family homes, multi-family complexes, schools, a main street downtown and recreation areas. The community won the National Association of Home Builder’s 2011 “On the Boards Community of the Year,” for its innovative design.

“The design intent was to create a community within a community that integrates both natural features such as woodlands, prairies and agriculture landscape systems into a quilt work of development ‘patches’ or neighborhoods, respecting both the rolling Wisconsin landscape and local housing needs,” noted Sean O’Malley, principal of SWA Group, which did the site planning and landscape architecture.

The cities of Middleton and Westport, the towns the community straddles, required the planners to incorporate a 200 acre agricultural set aside into the project. But, instead of pushing the agricultural set aside to the outskirts of the area, the design team incorporated it as a selling feature of the community.

The farm is intended to put the community in context, since it is being planned in an agricultural area, but also was included in the design because it was something the team felt people wanted in their community, said O’Malley.

The result is The Farm at Bishop’s Bay. In it, houses are set in circular clusters, surrounded by farmland.

Homeowners in the area will pay homeowner’s fees to partially offset costs for operation of the farm and can take part in the farming and eating of the bounty. Also, local produce from the Farm may be sold at a farmers market in Bishops Bay town center, to the benefit of the homeowner association. Groundbreaking on the project is set for later this year, with a total build out of between five and ten years.

to embrace urban agriculture. However, even when a city decides to allow agricultural uses, there is still the question of how far to allow it to go. Not everyone likes the idea of a rooster crowing in their neighbor’s backyard, or a commercial farm taking over the vacant lot next to their property.

But adding urban agriculture to the zoning code is actually good for both advocates of urban agriculture and those that are less enthusiastic because the zoning code both allows

the use and restricts it at the same time.

When agricultural uses are added to the zoning code, it provides a place to define size limits, aesthetic rules and operational and safety requirements; providing rules and clarity for operators and for those that live within the vicinity of the operation. The San Francisco code, for example, requires compost units to be set back three feet from dwelling units and decks and fencing around a farm to be wood, ornamenMaY/JUNE 2011 • Sustainable Communities

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To learn more visit:

Photo courtesy Wikimedia

Brooklyn Grange Farm, brooklyngrangefarm.com City Farm, www.resourcecenterchicago.com Hantz Farms, www.hantzfarmsdetroit.com NOLA Green Roots, www.nolagreenroots.com Community of Bishop’s Bay, www.swagroup.com

▲ Slow Food Nation, a non-profit group dedicated to sustainable food production, created an edible, organic garden in front of San Francisco’s City Hall during the summer of 2008. The harvest was donated to local food banks.

tal or covered by plant material.

The restrictive nature of zoning is a source of discord within the agricultural movement in Chicago. According to

the Advocates for Urban Agriculture, a non-profit coalition of urban agriculture enthusiasts, some of its members feel the proposed zoning in Chicago is unduly restrictive of size, operation and placement. Despite this, the group overall supports the zoning as a first step to the introduction and expansion of urban agriculture in the city.

Like opening any business, having neighbors and the community on board is a crucial first step. Joe Brock of NOLA Green Roots says he does extensive community outreach before siting a garden, to ensure that the neighborhood is on board with the operation.

Hantz farm, in its quest to acquire property in nearly abandoned neighborhoods ran into an unforeseen problem: once individuals in the neighborhood knew a farm might go into it, they did not want to sell their properties -- supporting Hantz’s assertion that members of the Detroit community want agriculture within the city limits. ❧

Housing’s Networking Event of the Year

Honoring NHC’s 2011 Housing Persons of the Year

Thursday, June 23, 2011 National Building Museum 401 F Street, N.W. Washington, D.C. 5:30 p.m.

Cocktails 6:30 p.m.

Gala Program 7:00 p.m.

Dinner & Networking National Housing Conference

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Sustainable Communities • MAY/JUNE 2011

Sister Lillian Murphy, RSM CEO, Mercy Housing

Professor Nicolas P. Retsinas Senior Lecturer, Harvard Business School, Director Emeritus, Joint Center for Housing Studies

Visit the “Events” section at www.nhc.org for Gala tickets, sponsorship opportunities and more information

Harvard’s report shows:

Affordable Rental Shortage ‘Staggeringly High’

T

he gap between demand and supply of affordable rental housing has increased sharply in the last decade as renter income fell even further behind housing and utility cost increases. Now the Joint Center for Housing Studies of Harvard University says the shortage is likely to remain “staggeringly high” for a long time.

Rental markets are now tightening, with vacancy rates falling and rents climbing. With little new supply of multifamily units in the pipeline, rents could rise sharply as demand increases, Harvard says in America’s Rental Housing: Meeting Challenges, Building on Opportunities.

“With unemployment expected to remain high for the next few years and rental markets beginning to tighten, competition for affordable housing will likely intensify,” the report states. Based on demographic forces alone and assuming homeownership rates by age, race, and household type remain at 2010 levels, the Center estimates that the number of renter households could increase by 360,000 to 470,000 annually between 2010 and 2020, in line with growth over the past decade.

The report concludes that “it seems certain that—absent a dramatic expansion of federal assistance to help defray the costs of renting, or a shift in state and local land use and building regulations to allow expansion of modest, highdensity rental developments— affordability problems will remain at staggeringly high levels, if not worsen.”

The report reviews the familiar story of how foreclosures, low home prices and tight credit markets have made renting more attractive. While rental vacancies increased and rents were depressed for a brief time, both appear headed higher now.

“Even as the economy struggled to add jobs in late 2010, signs emerged

After a Sharp Drop in 2009, Rents in Large Apartment Properties Rebounded Across the Country in 2010

that rental markets were tightening. The indicators of a rebound for professionally managed apartments were especially strong, with MPF Research reporting a 1.7 percentage-point drop in vacancy rates and a 2.3 percentage point annualized increase in rents as of the fourth quarter of 2010,” according to Harvard.

The ingredients for a surge in demand may be present, the report added.

The recession has not only dampened the rate at which young adults form independent households, but also stalled the pace of immigration—both drivers of rental demand. When job growth regains momentum, the number of renter households could climb quickly.

Given the long lead times needed to develop new multifamily housing, a sharp increase in demand could quickly reduce vacancy rates and put upward pressure on rents. This would fuel the intense affordability pressures that lowincome renters already face, Harvard stated.

Both weak income gains and rising housing costs have contributed to a growth in the percentage of households who pay too high a percentage of income for rent, Harvard said. Over the past 30 years, the median renter income has generally risen during economic expansions but then given back any gains during subsequent recessions. Following the 2001 downturn, however, real renter incomes failed to rebound and now remain below their 1980 level. At the same time, real contract rents have climbed by more than 15 percent since 1980. After stagnating for nearly a decade following the 1980s building boom, rents rose steadily from the mid-1990s on.

And given that four out of five renters pay their own utility costs, the spike in energy prices since the start of the 2000s has also served to widen the gap between rent increases and renter income growth.

Moreover, housing affordability pres—continued on page 46

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Regional Focus:

Northeast

New Stations Bring New Development

By Bendix Anderson

BOSTON The new Talbot Avenue stop on the Fairmount Line won’t open for another year, but already the Levedo Building and its 24 new apartments are almost finished. Just a few years ago the site was a tangle of scrap metal and rusting automobiles.

“We have literally transformed a junk yard,” said Gail Latimore, executive director of Codman Square Neighborhood Development Corp.

The triangular building is one of more than a dozen developments planned around rebuilt transit stops linked to Boston’s main subway network.

Boston’s Fairmount Line is undergoing a remarkable expansion as train stations closed for more than 50 years are rebuilt and re-opened, sometimes in new locations, stretching south and west of downtown through the minority neighborhoods of Dorchester and Mattapan. At the same time, community developers are partnering with housing, environmental, and transit agencies on the federal, state, and local level plan to build hundreds of government-subsidized affordable apartments.

The new stations Workers are already building train platforms for three of the four stations scheduled to re-open along the Fairmount Line in 2013, at a total cost of $139 million. A fifth station is planned for the near future. Another two inner-city stations that never closed have already been fixed up and the entire line will soon benefit from more frequent train service and cheaper fares that match the cost of a ride on the rest of Boston’s “T” subway system.

Community groups are also planning a “greenway” of linked parks, playgrounds, and bicycle paths that will run from downtown Boston to the end of the Fairmount Line.

Local and state transit agencies will pick up most of the tab. The Massachusetts Department of Transportation and the Massachusetts Bay Transportation Authority committed $143 million to redevelopment on the Fairmount Line. The Federal Transit Administration also contributed $37.3 million from its urban capital grant programs, bringing the total cost to re-open the four stations to $180 million.

Housing and commercial development is booming around the planned transit stops. Local community development corporations (CDCs) are now building 103 government-subsidized affordable apartments, with another 629 units of affordable hous-

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Sustainable Communities • MAY/JUNE 2011

▲ Fairmount train pulling into newly reconstructed Uphams Corner station

ing in the works – and the transit stops aren’t even open yet.

Nearly all of these housing developments plan to use federal housing programs. Federal agencies are especially attentive to developments along the Fairmount Line now that the Boston metro area has won a federal Sustainable Communities pilot grants.

Three federal agencies lead the Partnership for Sustainable Communities: the Department of Housing and Urban Development, the Department of Transportation, and the Environmental Protection Agency.

Much of the federal funding spent along the Fairmount Line, such as low-income housing tax credits or community development block grants -- is administered by local agencies and officials. Fortunately local officials are strong supporters of the Fairmount Line. Boston Mayor Tom Menino has repeatedly lauded the massive transit project, and has given the Fairmount Line “top priority” in his transit plans.

Federal agencies also promise to focus what resources they control to help redevelopment. “We are creating a corridor-wide inventory of brownfields properties,” said Jessica Dominguez, project officer for EPA, which offers technical assistance grants to developers up to $100,000.

For this kind of decentralized process to work, a local community needs to have considerable energy already devoted to redevelopment. The wealth of community development organizations eager to take up the challenge and build is a major

factor that has helped redevelopment flourish along the Fairmount Line.

These same neighborhood groups worked for decades to revive the transit stops along the Fairmount Line.

A history of injustice The Fairmount Line once included 13 stations starting at South Station downtown and ending in the middle-class neighborhood of Fairmount on Boston’s Southern edge.

All but five of those stations closed in the 1950s. Diesel commuter trains ran express to Fairmount with only two stops along the way.

At those two stations, Uphams Cor▲ Boston Mayor Thomas Menino celebrates the opening of Dudley Village, which is near ner and Morton Street, ticket prices the Uphams Corner train station in north Dorchester. Developed by Dorchester Bay became several times the cost to Economic Development Corp., it has 50 rental units over 4 commercial spaces, with ride city buses and subways. The solar panels for the common areas, grey water retention in rain gardens, a central green trains did not necessarily even stop corridor, and a playground.

– inner city commuters were asked to stand on the train platform and highway project that transit officials largely adopted a “Indigo flag down the speeding locomotive as it approached.

Line” plan to revive the Fairmount Line proposed by neighborThe stations closed along the Fairmount Line as the neighhood groups. borhoods they served filled with African Americans, though This Indigo Line plan will link residents to jobs downtown, rail officials claimed the stations were closed because riderin addition to retail services and more jobs at a large shopping ship had declined. mall next to the Newmarket stop, now under construction on For decades afterwards, densely populated neighborhoods the revived Fairmount Line. along the Fairmount Line made do. A six-mile bus ride to downtown Boston could take an hour and a half.

New developments It wasn’t till federal officials demanded mass transit improvements to offset the air pollution linked to the Big Dig During the housing gold rush, these neighborhood groups

Fairmount Line Facts Population living within walking distance of the Fairmount Line: 90,000 Median income: $31,300 -- $17,000 below the state average Affordable housing units in development or predevelopment: 732 Affordable units completed or in construction: 103 Commercial space in development or pre-development: 155,600 square feet

struggled to keep plans for the Fairmount Line quiet. They did not want to create sharply rising housing prices and a land grab by speculators around the planned train stations.

“What we are worried about is complete displacement,” said Jeanne Dubois, executive director of the Dorchester Bay Economic Development Corp.

CDCs including Codman Square and Dorchester Bay bought properties throughout the housing boom and now have control of enough land to build another 629 housing units, in addition to the apartments already under construction.

This development should help repair the damage of the housing crash, which savaged the area. Two-thirds of the foreclosures in Boston were in neighborhoods near the Fairmount Line. CDCs have bought 26 foreclosed properties totaling 73 units of housing for redevelopment into stable, —continued on page 44

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Regional Focus:

Northeast

Bicycle Sharing Latest Step Towards Boston’s GHG reduction goals BOSTON– A newly updated climate action plan for this city calls for reducing citywide greenhouse gas emissions 25 percent by 2020 and incorporating the potential effects of climate change in all planning.

Mayor Thomas M. Menino also announced that Boston’s municipal operations have achieved a 9 percent reduction of greenhouse gas emissions, exceeding the 7% goal set in 2007.

The updated climate action plan, “A Climate of Progress,”is “ambitious, yet also actionable, and achievable,” said Jim Hunt, Chief of Environmental and Energy Services. “Working with businesses and residents we will further reduce energy consumption and costs, expand renewable energy installations, create good green jobs, and protect our planet for future generations. Together we are demonstrating the full benefits of sustainability.”

The city has already adopted the Stretch Energy Code requiring stricter energy efficiency regulations for all new buildings in the City of Boston. It has also passed an ordinance for solar energy projects in Boston that will make the process for obtaining solar permits more efficient and less costly.

The newest major step toward reducing GHG emission is

the launch of a citywide bicycle sharing program.

Menino signed a contract with Alta Bicycle Share to create a cutting-edge bike share system that will be called Hubway.

Over the summer, the city will oversee installation of 61 stations located across the entire city, incorporating over 600 bicycles. The official opening of the system is scheduled for this summer and locations will include Kenmore Square, Roxbury, the South End, the Longwood Medical area, Allston,

NEW STATIONS BRING NEW DEVELOPMENT —From page 43

affordable housing.

Most of this new housing will be restricted to low-income residents. For example, all 24 apartments at the Levedo Building will be affordable to low-income residents earning up to 60 percent of the area median income.

The real meaning of partnership Neighborhood groups continue to work closely together to advocate for the Fairmount Line.

For example, Dorchester Bay, one of the biggest CDCs in Boston, plans to start construction this year on $70 million in new affordable housing and commercial development -- all within two blocks of the proposed Columbia Road stop on the Fairmount Line. But construction has not yet started on the stop.

“Advocacy for the station is on hold,” according to the partnership of CDCs and agencies behind the Fairmount Line redevelopments.

Instead, groups like Dorchester Bay focus their considerable combined influence on winning approval for the planned

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Sustainable Communities • MAY/JUNE 2011

Cummins Highway station on the Fairmount Line, several neighborhoods away. Cummins Highway is one of the four stations scheduled to open in 2013. However construction has been held up by homeowners abutting the proposed train station.

At Quincy Heights, Dorchester Bay and its partner CDCs plan to start work on 129 units of scattered-site, affordable housing this year.

The CDCs will also start work on 259 Quincy Street, an $11.5 million, 24,000 square foot job training and youth arts program. They will also redevelop the old two-acre Pearl Meats meat-packing plants into new commercial development.

Dorchester Bay is certainly eager for the proposed Columbia Road stop to open to serve these developments and others that Dorchester Bay has already completed.

But even though they often compete for the same housing subsidies, the CDCs continue to work together to revive the Fairmount Line.

“We are waiting to pursue our Columbia Road stop until the funding is approved for Cummins Highway,” said Dorchester Bay’s DuBois. ❧

Brighton, the Back Bay and more. Hubway is a program under the city’s Boston Bikes Program that also includes measures like creating more bicycle lanes around town.

“Over the past four years, we have taken great strides toward making Boston a city that welcomes and encourages bicycling but this innovative bike share system may be the most significant step yet,” Mayor Menino said. “We have worked tirelessly to build the infrastructure necessary to support such a system and we are confident that there is no better time to make Hubway a reality. We have had the goal of going from worst to first, and with Hubway we’re nearly there.”

Hubway will be installed, maintained and operated by Alta Bicycle Share of Portland, Oregon. However, the equipment is a state-of-the-art, third generation, solar powered automated system developed by Public Bike System Company who runs the BIXI bike share program in Montreal.

Hubway will feature “swipe card” payments and will cost about $5 per day with free trips that are 30 minutes or less, and $85 annual memberships. Similar systems are located in Washington D.C., Montreal, London and Melbourne. The technology allows users to rent bikes from one station and return them at another across the city. Typically, there will be about 10 bikes available at each station.

Hubway is specifically designed to be fully regional and at full size, the system could reach as many as 5,000 bikes across Cambridge, Brookline and Somerville.

“Bike Share will transform the region,” said Marc Draisen, Executive Director of the Metropolitan Area Planning Council.

“It’s a completely new part of our transportation network, giving people a green and healthy way to get around, closing gaps in the MBTA, and providing the first and last mile connection that often prevents people from using transit. We’re excited to see Boston, Cambridge, Brookline, and Somerville working together to make Bike Share happen.”

“Through our ‘GreenDOT’ policy initiative and under the leadership of Governor Patrick and Lieutenant Governor Murray, MassDOT has demonstrated a strong commitment to healthy transportation options as essential to creating livable communities. This bike share system supports that commitment,” said MassDOT Secretary and CEO Jeffrey Mullan.

Hubway is completely funded by grants totaling $4.5 million including $3 million from the Federal Transit Administration (FTA), $450,000 from the Boston Public Health Commission (BPHC) and $250,000 from the Metropolitan Planning Organization’s Congestion Mitigation and Air Quality (CMAQ) grant program. ❧

Since 1896, Volunteers of America has believed that a safe and affordable home is the foundation for self-sufficiency.

Our nationwide portfolio includes large urban complexes and small rural developments, ranging from emergency shelter and transitional housing to permanent housing for seniors, families and special needs individuals, many who are among our most vulnerable citizens.

Visit www.VolunteersofAmerica.org to learn more about our housing initiatives and expertise.

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San Diegans Debate Highways vs. Transit —From page 34

higher densities that provide the greatest opportunity for affordable housing to be built. Additionally, a majority of the planned higher density is within one half-mile of existing or planned public transit.

SANDAG Executive Director Gary Gallegos said in an interview with KPBS that housing consumers are showing a clear preference for the kind of homes that help reduce emissions.He said, for example, that 20 years ago about 80 percent of homes being developed or planned were singlefamily, and only 20 percent were apartments and condos.

“Those numbers have flipped on us,” said Gallegos. “Today 80 percent of the homes being built and being planned for the future are multifamily housing.”

Incentives to Follow the Plan

On the ground land use decisions are still in the hands of local jurisdictions. So, to actually implement its SCS, SANDAG will provide information and funding to assist local jurisdictions. Funding programs to help local jurisdictions in the San Diego region implement the Sustainable Communities Strategy include:

•

TransNet Smart Growth Incentive Program: This provides funds to local jurisdictions engaged in smart growth planning and smart growth capital investments.

•

TransNet/Transportation Development Act Active Transportation Program: This provides funding for bicycle, pedestrian and traffic calming planning and capital improvement projects.

•

TransNet Environmental Mitigation Program: This provides funding for mitigating local and regional transportation projects, as well as additional funding for acquiring, managing and monitoring natural habitats in ways that support the region’s habitat conservation programs. ❧

A major limitation of SANDAG’s plan for a sustainable San Diego, is that SB 375 does not give California MPOs authority to actually require counties and cities to change land use or development patterns to fit the Sustainable Communities Strategy.

Affordable Rental Shortage ‘Staggeringly High’ —From page 41

sures are creeping up the income distribution. Over the past decade, the incidence of moderate cost burdens among renters in the lower-middle income quintile jumped from 32 percent to 41 percent. Renters in the middle income quintile saw an even larger increase, with the moderately burdened share more than doubling from 9 percent to 20 percent.

At present, the Low-Income Housing Tax Credit (LIHTC) program is nearly alone in replenishing the affordable stock, supporting both new construction and substantial rehabilitation of existing properties including older assisted developments.

From its inception in 1986 through 2007, the LIHTC program helped to develop 1.7 million affordable units, with roughly two-thirds newly constructed and one-third substantially renovated. The high-water mark for production through this program occurred in 2003–2005 when strong investor demand increased the market value of credits. During that period, LI-

HTC development reached more than 125,000 units annually, including about 80,000 new apartments.

In addition, Harvard says the private low-cost stock is rapidly disappearing. Of the 6.2 million vacant or for-rent units with rents below $400 in 1999, 11.9 percent were demolished by 2009. Upward filtering to higher rent ranges, conversions to seasonal or nonresidential use, and temporary removals because of abandonment added to the losses. On net, more than 28 percent of the 1999 low-cost stock was lost by 2009.

Smaller and older rental buildings, which account for high shares of affordable units, are especially vulnerable to loss. With a median age of 38 years, the rental housing stock is now older than it has ever been. As housing ages, owners must devote an increasing share of rents to maintenance and replacements of aging systems to maintain the structures in adequate condition. ❧

Defend Sustainability: Join PSC With budget battles raging in Washington, D.C. and many state capitols, the community sustainability movement faces severe setbacks.

If you care about making communities sustainable, now’s the time to act. Take a moment now to become a member of Partnership for Sustainable Communities®. Go to www.p4sc.org and click on “become a member” in the green bar at top, or call 415-453-2100 x 302.

You pay just $79 for an entire year. You will be supporting a good cause, and you will receive these practical tools you can use immediately to advance your organization’s goals:

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Sustainable Communities • MAY/JUNE 2011

• Receive six issues per year of Sustainable Communities magazine, the only magazine focused on planning and community development with sustainability in mind.

• Get access to our unique, 24/7 online Land Use Research Library • Free access to premium content on our web site • A free listing in our membership directory and • A 25% discount on The San Francisco Conference on Sustainable Housing and Community Development” slated for Sept. 19-20

Photo: Frank Domin

Transit-oriented, green project oversubscribed San Mateo, CA–Peninsula Station, a newly opened affordable housing project here, received over 1,300 applications for 68 apartments.

Peninsula Station was developed by MidPen Housing.

In addition to apartments, it has community gardens, a children’s outdoor play area, a fitness center and a computer lab as well as 2,000 square feet of street front commercial space. It is a model for the Grand Boulevard Initiative, which aims to transform El Camino Real into a vibrant, safe and welcoming place to live, work and play.

“With such close proximity to the Hillsdale Train station and within walking distance of the Hillsdale Mall and other major businesses, Peninsula Station helps achieve our vision of creating attractive, high-quality, transitoriented development that is well integrated with the surrounding community,” said San Mateo Mayor Jack Matthews.

“Peninsula Station is a tremendous model for infill de-

velopment, transforming a previously underutilized site in an integral part of their city into an environmentallyfriendly community where families can live, work, shop and play,” said Matthew O. Franklin, President of MidPen Housing.

Peninsula Station incorporated many sustainable design and development practices and was a 2011 recipient of the Green Building Award from Sustainable San Mateo County. Green features at Peninsula Station include a solar hot water system that preheats domestic hot water, a photovoltaic renewable energy system that provides at least 10% of electricity demand, energy efficient appliances and lighting throughout, and a storm water collection system that is used to water the outdoor plants.

Financing for the $33 million development was provided by the City of San Mateo, the County of San Mateo, Union Bank, Wells Fargo Bank, HEART of San Mateo County, California Community Reinvestment Corporation, Enterprise Foundation and the California Department of Housing and Community Development.

Citi rebounds from down years, Resumes Major Housing, CD ROLE —From page 17

CRA forced lenders to make bad loans to meet low-income lending mandates.

But Ditton believes the proposed regulatory change would broaden political support for CRA. “If you pitched it correctly, what we’re trying to do is make compliance with CRA easier and create more parity in benefits of CRA.” He said such a change would do away with “CRA oases and CRA deserts,” which benefit projects in big cities but leave hundreds more starved for capital. Politically, elimi-

nating disparities would mean broader support in Congress.

Finally, the change would improve underwriting and deal quality. Currently, Citi has to do all its tax credit lending and investing in only 62 CRA assessment areas where it has a retail presence. “It’s hard to carry out investment activity prudently when you are jamming it all into such small areas.”

With more consolidation of banks expected, the change will probably become more important in the future, Ditton concluded. ❧

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PA RTI N G S HOT S

Florida Lawmakers Seek Economic Growth

By Dismantling Land Use Planning Agency

L

awmakers in Florida appear determany other resources for the state. mined to roll back environmental Now, lawmakers are leaving little and planning laws in order to free doubt about the agency’s future role. up private businesses and real estate At press time, they were very close to developers to do as they please. The enacting a law that would fold the entire ostensible goal is to create jobs and agency into a new Department of Ecoeliminate the cost and delay of govnomic Opportunity. Reaction to this legernment planning and regulation. But islative action was still unfolding at press growth management advocates and time, but newspaper accounts suggest environmentalists say the move will be the intention was to get the state out of very costly in the long run. the planning business to a very substanUnder the leadership of Gov. Rick tial extent, maybe completely.

Scott, the same governor who rejected federal funding for high-speed rail line development, the state has been moving aggressively to stimulate economic development. The governor and lawmakers have apparently decided that a strong state role in directing what localities can do with their land is bad for the economy.

First, they took away most or all of the power of the state ▲ Florida State Capitol Building Department of Community Affairs to approve local land use Representative John Legg (R-Port actions and policies.

Richey), chair of the House Select ComAccording to the Eckstein Schecter mittee on Government Reorganization, law firm, this gives local governments said the Department of Economic Opfull control over fees they charge develportunity would be responsible for coopers and approval of land use planning ordinating the efficient delivery of serpolicies. vices and programs related to economic While some environmental groups development, workforce development, were okay with weakening what had community planning and development, been a very strong state role, the oppoand affordable housing. nents of state planning and regulation “It is essential that the State of have apparently moved very far, very Florida has a fully integrated, comprefast. hensive system that ensures the state’s How much power the Department goals and policies of economic developof Community Affairs would retain was ment, workforce development, comunclear, as it has or had many responsibilities, including planning how to manmunity planning and affordable housing age water, transportation, housing and are achieved,” he stated.

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Sustainable Communities • MAY/JUNE 2011

According to the Orlando Sentinel, the new agency “will absorb the assorted duties of three separate agencies, responsible for everything from affordable housing and growth management to community development programs, and unemployment compensation.”

A succession of initiatives by Florida lawmakers has environmentalists up in arms. All the measures have “the common theme of…a reduction in protection of Florida’s environmental resources. Any possible benefit to Florida’s economy is outweighed by the risk of harm,” said Audubon of Florida.

“We’re not only throwing the baby out with the bath water, we’re literally ripping the bathtub out of the floor and throwing that out the window, too,’’ said Charles Lee, a lobbyist for Audubon of Florida, in a conference call organized by nine conservation groups, as reported in the Miami Herald.

The groups contend that the system of state oversight of land use was put in place about 26 years ago in order “to control the rampant sprawl of strip malls and suburbs that left roads and schools overcrowded, plowed under wetlands and woods and strained water supplies,” The Herald reported.

Laura Reynolds, executive director of the Tropical Audubon Society of Miami-Dade, said the changes would essentially reverse “smart growth’’ efforts designed to steer more people into dense urban areas close to jobs and mass transit. Instead, she said, it would make it easier and cheaper to plow under rural and open land, according to The Herald. ❧

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