Covenants and Commoition for a Greenwich Village Landmark

This week, the New York Times's Real Estate section profiled the story of the vastly underutilized Northern Dispensary building at Christopher Street and Waverly Place in the heart of Greenwich Village. The Northern Dispensary, which was originally built to provide medical services to Manhattan in 1831(Edgar Allan Poe was a patient) and later became a dental clinic embroiled in controversy for refusing to treat an AIDS patient  in the 1980s, was purchased from the Archdiocese of New York by the late eccentric investor William Gottlieb. The Times reports that much of the difficulty developers will face in finding a buyer for the property- which is surrounded by bustling shops, trendy eateries, and graceful brownstones- stems from the building's strict deed restrictions that prohibit "any obscene performances on the premises or any obscene or pornographic purposes." Restrictions require that the property be used to serve the poor, cannot be used for commercial purposes, and that no abortions can take place on the premises. However, many of the "obscene" and "pornographic" prohibitions are vaguely defined or not elaborated at all.

Image Credit: NY Press 

What is a developer to do? By all accounts this attractive slice of Village real estate (and history) should be fetching top dollar, but the onerous nature of the restrictions leave the empty building's future unclear and the property nearly inalienable. The only hope for those looking to free the property from the restrictive covenant would be to have the restrictions lifted because the covenant violates public policy interests with its wide scope and open-ended duration. See, e.g., Davidson Bros., Inc. v. D. Katz & Sons, Inc., 643 A.2d 642 (N.J. Super. 1994) (holding covenant prohibiting building being used as discount grocery store in an area with high concentration of elderly and low-income residents to be invalid for policy reasons). However, unlike in the Katz case, it would be a much more difficult argument to assert that the Dispensary should be allowed to be developed into luxury condos or a commercial building to meet the demands of well-heeled neighbors or speculators. While a few people would be served by this development, it seems unlikely that such practices would have such widespread benefits to the community to make the appeal able to stand on firm public policy grounds in the effort to terminate, or even modify, the covenants. For now, the Gottlieb Real estate is "examining all options" and the triangular building will sit on Waverly Place waiting, as it has for more than two decades, for its next chapter to begin.

Drilling for Affordable Housing in the Keystone State?

Photo Credit: Becky Lettenberger (NPR) 

Earlier this month, the blog examined the oil industry's boom's effects on affordable housing in small towns such as Williston, N.D., where skyrocketing rents and limited housing stock have led to residents living in crowded motel rooms and trailers far from the oilfields. In recent months, a variety of Williston developers have created partnerships with local PHAs to address shortages. In other regions of the countries, states that have felt the housing squeeze from fracking have turned to special state funds derived from natural gas drilling to improve the availability of affordable housing options. In Towanda, a northeastern Pennsylvania borough that has become a center of activity amidst the drilling of the Marcellus Shale Formation, residents are displaced and newcomers dismayed by rents that have quintupled in the past four years. The Impact Fee Act, which created a fee based on the impact of each well drilled in Pennsylvania, has collected more than $200 million in fees since February 2012 and will be used to partially fund the creation of new and preservation of existing affordable housing in areas like Towanda. See 1 Pa. Cons. Stat. §13 (2012). The Pennsylvania Housing Finance Agency is combining $5M in Impact Act fees with money from the Pennsylvania Housing Affordability and Rehabilitation Enforcement Fund to develop affordable housing for residents below 50% of the median income in areas affected by fracking. The PHFA will be accepting housing proposals through June 7 and, according to a StateImpact report, the agency aims to "make a real, lasting and positive difference in people's quality of life" in many Pennsylvania boomtowns.

What Happened to the 'Dream Deferred'?

When searching for information that is useful to my entries, I usually scour news stories, podcasts, court documents, and policy briefs. I can safely say that I have never before turned to a playbill for inspiration but, as this blog could use a dash of culture, I see fit to highlight one of the finest depictions of gentrification, housing, and identity on stage- Bruce Norris's Pulitzer and Tony award-winning Clybourne Park. Norris's script picks up where Lorraine Hansberry's classic A Raisin in the Sun left off, with the African-American Younger family about to move to the all-white middle class Chicago neighborhood from which the play takes its name. However, the Act One's narrative continues from the perspective of the white neighbors whose racial animus and fears of block-busting are revealed when they petition the couple selling the home to reconsider their decision. The play's second act captures 21st century Clybourne Park, now a predominately black neighborhood that is experiencing gentrification personified by a white couple seeking to buy and tear down a house on the block. The white couple's efforts to receive approval of their plans from black neighbors who serve on the neighborhood association quickly spiral into a bitter argument about race, class, and the pivotal role that one's home, neighborhood, and neighbors often play in forming a sense of identity. During Act Two's argument, decades of resentment and misunderstanding on behalf of both parties exposes Walter Younger's (of A Raisin in the Sun) dream as, in the words of Langston Hughes, just sagging like a heavy load, about to explode even more than a half century after A Raisin in the Sun's debut. Arguments over racially restrictive covenants and institutionalized redlining may seem to be relics of the past, but the same themes are central to the contentious debate surrounding gentrification, redevelopment, and affordable housing policy as communities struggle to articulate their identities in times of flux. I highly recommend the play and, fellow Bostonians, try to catch it while the Speak Easy Stage Company puts in on at the Boston Center for the Arts's Stanford Calderwood Pavilion in the South End (extended through April 6)!

Photo Credit: Craig Schwartz 

For diehard housing law and policy wonks (I know you're out there!), the play should present a fresh and true snapshot of gentrification's pitfalls and opportunities for progressive, frank race and class-based dialogue. It's easy to imagine the (unseen and fictitious) policymakers of Clybourne Park's Chicago wrestling with the same issues as the homeowners in drafting policies and forming partnerships to address affordable housing, education, and infrastructure concerns amidst a gentrifying landscape. This should come as no surprise as A Raisin in the Sun was written with a keen awareness of the realities surrounding housing policy in the 1940s and 1950s. Lorraine Hansberry was partially inspired by the struggles of her own parents and other prospective African-American homeowners who attempted to purchase property in Chicago's all-white Washington Park. The Hansberrys' struggle to invalidate that neighborhood's racially restrictive covenant led to a Supreme Court decision allowing the covenant to be challenged again in court. See Hasnberry v. Lee, 311 U.S. 32 (1940). The case, now taught to many law students for its procedural issues, and the subsequent Shelley decision (SCOTUS holding that courts could not enforce racially restrictive covenants because that would involve discriminatory state action violative of the Fourteenth Amendment) were landmark steps toward the passing of the Fair Housing Act of 1968. See Shelley v. Kraemer, 334 U.S. 1 (1948). Through its depiction of people who could very easily be the gentrifiers or long-time residents on our blocks, Clybourne Park demonstrates that the long, difficult struggle for fair housing and the difficult questions posed by demographic shifts and gentrification are as real today as they were in 1959. 

Note: For those of you in Boston lucky enough to snag tickets, the Huntington Theatre Company is putting on A Raisin in the Sun through April 7. 

Dulling the Double Edged Sword of Gentrification

Photo Credit: NCinDC

It is almost impossible to have a discussion about gentrification without mention of the looming double edged sword. Sure, gentrification has its upsides- the return of businesses and investment brings capital to struggling neighborhoods, services such as schools and public safety response tend to improve, and the blocks of renovated houses make for attractive glossy spreads in the local lifestyle magazine's inevitable issue spotlighting "up-and-coming neighborhoods"- but these positives come at the expense of displacing poorer long-time residents who cannot afford higher rents and thus are excluded from the much-celebrated renaissance of the urban gentry. Gentrification has been called a plague, a problem, or a promise, and has led to endless urbanist hand-wringing from Greenpoint to the Echo Park. (Re)developers supporting gentrification and affordable housing housing advocates are understood to be foes but, in light of the never-ending waves of urban pioneers "discovering" (potentially the most laughable verb related to real estate) new hoods and the pressing need for more affordable housing options, policymakers are beginning to ask: "Can we have gentrification and affordability?"

Many residents who are feeling the affordability crunch on newly fashionable blocks may scoff at the question, but there is cause for anecdotal hope. In an interview with renowned urbanist Charles Leinberger, columnist Will Doig highlights the gentrification process of Albuquerque, N.M. and how the city created the Albuquerque Civic Trust. The Trust reinvests profits and increased property tax revenues from redevelopment into building and perserving affordable housing. Other examples of affordable housing efforts that have accompanied gentrification (and arguably would not have occurred without gentrification) include Portland's Interstate Alliance to End Displacement, which includes rental assistance, Real Estate Transfer Taxes (RETTs) to provide revenue for affordable housing creation that matches demand and Harlem Community Congregations, which works to acquire vacant land in rapidly redeveloping Upper Manhattan in order to construct affordable housing units. Even in Brooklyn's Park Slope, a pricy neighborhood long thought to be in the well-buffed clutches of Patagonia-clad couples pushing Maclaren prams, the Fifth Avenue Committee has partnered with the citywide public-private Community Preservation Corp. to build affordable housing, rehabilitate affordable units, and has defended tenants from eviction as part of the Displacement Free Zone campaign. Broadly speaking, strategies to reconcile gentrification and affordable housing have included inclusionary zoning (IZ), incentive zoning, RETTs, and, increasingly, community benefits agreements (CBAs) that legally require a developer to provide specific amenities and/or mitigations to a neighborhood to allay concerns related to gentrification.

On a more micro-level, community organizations in gentrifying hotspots like Portland's Alberta Arts District and Eckington and Bloomingdale in Washington, D.C. have initiated meaningful neighborhood dialogues between longtime residents and newcomers in an attempt to reduce friction and increase mutual understanding in these shared spaces. Gentrification may have its pitfalls, but the trend toward a more urban population and the "discovery" of new addresses by self-styled pioneers point to its endurance as a social and economic force. Efforts to bring developers and affordable housing advocates together may be the best way to encourage understanding between gentrifiers and long-time residents and reach solutions that allow economic diversity in the redeveloped, and often quite charming, sites of gentrification.

Note: Future posts will provide a more in-depth look at community based agreements and their relationshop to affordable housing. 

Boom Highlights Bust of Rural Affordable Housing

Image Credit: Bend Bulletin 

The urban/rural divide, so prevalent in discussions surrounding economic growth in developing countries, seems to have long since left its seat at the great panel of the affordable housing debate in the U.S. While HUD's Rural Housing and Economic Development division and the U.S. Department of Agriculture's Rural Development program's Section 515 subsidized nearly 500,000 rental units in rural areas, these buildings- mostly constructed during the 1970s- are in bad need of maintenance and cannot meet the increased demand for affordable housing outside of metropolitan regions. Section 515 housing is often located in areas disconnected to the capital and resources available to subsidized properties in cities and owners of Section 515 units cannot adequately address the quality control issues of their properties on the $500/month subsidy provided by the USDA. While inadequacies in rural affordable housing usually become apparent during financial strain, with larger numbers of rural renters considered "cost burdened" by housing expenses, the lack of affordable options is perhaps most acute in the current oil boomtowns like Williston, N.D. that dot the Upper Midwest.

Williston has become the media poster child for overnight success stories rising up from the dusty Great Plains. The population of the town, which is located near the confluence of the Yellowstone and Missouri Rivers in northwest North Dakota, has risen from 12,000 in 2000 to as high as an estimated 30,000 (including those living in temporary housing) at the end of last year. While the influx of people has sparked life into the area economy and service sector (unemployment was less than 1% last year), it has also led to concerns about a serious shortage of affordable housing and rising homelessness rates. The small North Dakota town, not previously a focus for housing and development agencies, is now commanding rapid attention.

Image Credit: Medill Energy 

Out-of-towners seeking high-paying oil field jobs have heightened demand for housing in the town and, consequently, Williston rents have skyrocketed in the past three years- in some cases, to five and six times there previous rates. In many cases, locals and those not employed in the oil industry have seen their wages increase but not nearly enough to cover mounting housing expenses. Those that can find a place to rent often have to share small, substandard units with several roommates. The national attention lavished on Williston and much of North Dakota in the wake of the economic boom turned to skepticism about the area's ability to provide adequate housing to its residents and, as a result, led to the construction of hundreds of new affordable housing units and the direction of funds from the HUD Housing Rehabilitation Program to preserve and maintain decades-old units. Meaningful coordination between the HUD Fargo Field Office, USDA, and the Dickinson/Williston Community Action Partnership is also developing new solutions to housing and social services shortages and preparing for future regional demographic shifts.

While boomtowns like Williston present unusual scenarios in which rural affordable housing shortages are revealed, it should not take skyrocketing rents and a vacuum of housing availability to turn housing advocates' attention toward rural areas. The affordable housing needs of America's urban communities and, increasingly, suburban and exurban areas, are extremely important but rural communities suffer from poverty and neglect that is often far from the sight of policymakers in urban locations. The lessons learned and inter-agency partnerships formed from Williston should serve as a future blueprint for managing affordable housing demands- and improving the quality of the supply- in those many areas beyond the beltways, bridges, and bike lanes.

Municipal Foreclosure Mediation Ordinances: Case Studies for Success?

Image Credit: Wikimedia Commons 

Vacant buildings and signs advertising home auctions are common sights in Springfield, a former industrial center (and birthplace of basketball) with a population of about 153,000 in Western Massachusetts. In many ways, small cities like Springfield have borne the brunt of the foreclosure crisis, with 165 foreclosure notices filed in the first quarter of 2012 alone. In response to this crisis, the City of Springfield enacted a Foreclosure Mediation Ordinance that requires any lenders who attempt to foreclose on owner-occupied residential properties to participate in a city-approved mediation program with the homeowners or face a $300-per-day fine. See Springfield, Mass. Rev. Ordinances ch. 7.60 (eff. Sept. 13, 2011). Springfield joins the small but growing number of municipalities that are turning away from more traditional statewide foreclosure regulation and passing ordinances or issuing administrative orders at the local levels in order to address foreclosure's negative effects on economic development. Since 2008, municipal mandatory foreclosure mediation ordinances have been enacted in four Rhode Island communities (Providence, Cranston, Warwick, and Warren) and Brookline, Mass. and voluntary mediation platforms, where the homeowner is notified of his or her eligibility but must affirmatively request mediation before being entered into the program, have been passed in Washington, D.C. and the City of St. Louis and St. Louis County, Mo. Additionally, Judges in Philadelphia, McLean County, Ill., and several Florida circuits have established mandatory judicial mediation programs through administrative orders. See e.g., Philadelphia Res. No. 080331. 

Supporters of these ordinances and administrative orders point to their 65-75% success rate in avoiding foreclosure and reaching an alternative that is mutually beneficial to the lender and borrower and view them as natural exercise of a municipality’s police power to ensure the community welfare, as foreclosures adversely affect the property tax bases of municipalities. However, opponents consider municipal ordinances to be encroachments on state power and believe that state legislatures should enact all programs related to foreclosure in order to promote uniformity throughout a particular state. See Rhode Island Cogeneration Assocs. v.City of E. Prov., 728 F.Supp. 828, 834, n. 12 (D. R.I. 1990). While the Springfield mediation program and its Rhode Island counterparts have survived legal challenges claiming the ordinances are pre-emptions of state power and violative of the Contracts Clause of the U.S. Constitution, a judge for the Eastern District of Missouri has granted the Missouri Bankers Association's request for temporary injunction on the St. Louis County ordinance until further court proceedings later this year. See Easthampton Sav. Bank v. City of Springfield, 874 F. Supp. 2d 25, 33 (D. Mass. 2012); Deutsche Bank Nat. Trust Co. v. Murphy, 2010 WL 2024917 (R.I. Super.). 

The vast majority of foreclosure mediation programs are still enacted at the state level- nearly two dozen states have implemented some form of voluntary or mandatory mediation scheme. However, a more localized approach to establishing foreclosure mediation programs may be more effective in stemming the tide of foreclosures in cities that were hit hard by the housing crisis but happen to be located in states that fared relatively well overall and therefore lack the political will to enforce mediation. Local foreclosure mediation programs may prove to be even more useful in the future, especially in nonjudicial states where foreclosure is a private matter that does not go through the courts.