Transit Oriented Development and Timely Payments

Image Credit: GTD Aquitaine 

Once again, Kaid Benfield has written a piece worthy of discussion and dissection. Recent research by the NRDC and the Center for Housing Technology has found that, when all other factors are controlled, residents of housing located near public transit and in walkable locations are substantially less likely to default on payments. The study is fascinating and can be accessed here with additional insight by Professor Benfield:

Homes Near Public Transit Are Less Likely to Go Into Default

Rolling the Dice on Foreclosure Mediation in Vegas

Image Credit: RRC Realty 

This blog has chronicled many of the legal efforts to hold lenders more accountable and enter into loan modifications and buyback programs with former mortgagors with an eye on accumulated procedural victories transforming into substantive change. This week, an NPR report on the state of the housing recovery in Las Vegas- the nation's former unofficial foreclosure capital- illustrates the potential for such substantive change. The story focused on the effect of Nevada's Assembly Bill 284 on reducing the number of homeowners in default on their mortgages amidst rebounding home values. The law, which forces banks to prove they have the legal right to foreclose on homes and requires bank workers to sign an affidavit that they have personal knowledge of a property’s document history, was partially responsible for the number of default notices issued in Nevada grinding to a near halt in the past eighteen months. In addition, the law also allowed many homeowners to remain in their homes and use the value of their home- increasing by the week in Vegas's newly hot market- to sell at price points where they can pay off their debts and avoid short sales and foreclosure. The report interviewed several such Nevadans who have avoided the auction block with the help of AB 284, including a woman who went from the brink of foreclosure to facing the rosy future of multiple offers for her Henderson home. While real estate, like Vegas itself, is never a sure bet, strong foreclosure prevention laws have helped level the playing field for mortgagors who were victims of the sandstorm of speculating that preceded the housing crisis. 

Monumental Month for Land Use at SCOTUS

While last week's Supreme Court decisions on affirmative action in higher education, the Voting Rights Act, and same-sex marriage garnered extensive media coverage, the Court's recently-concluded term also produced a historic (though less glamorous) ruling on property rights and land use in America. In Koontz v. St. Johns River Water Management District, the Court considered the question of what concessions a local government can elicit from a property owner who seeks to develop his or her land in a way that may cause wider environmental or public harm. See Sup. Ct. Docket No. 11-1447, 570 U.S. __ (2013). Though the Koontz case involved the respondent, a land-use agency, proposing that petitioner, a Florida landowner, develop only one acre of his nearly fifteen acre wetlands parcel and and (a) conserve the rest or (b) pay for contractors to make improvements to nearby government-owned wetlands in exchange for a special permit for construction on wetlands, the case focused on whether the department's conditions for permit approval violated the Takings Clause of the Fifth Amendment. The Court, in a majority opinion written by Justice Alito, appears to expand the definition of what constitutes a governmental taking of land beyond the physical takings of property that were addressed in the previous Nollan v. California Coastal Commission and Dolan v. City of Tigard decisions to include "extortionate demands that…[do not] take property but impermissibly burden the right not to have property taken without just compensation." See 483 U.S. 825 (1987); 512 U.S. 687 (1994).

Photo Credit: Andrew Weinstein 

The expansion of what amounts to a taking and therefore must be subject to constitutional scrutiny (the standard requires a nexus or relationship between the concession sought by the government and the harm to be avoided and proportionality between the concession and harm) represents a victory for landowners and developers. However, many conservation and smart growth advocates have expressed concern that the decision prevents local governments and planning agencies from, in the words of Justice Kagan's dissent, "impos[ing] ordinary financial obligations without triggering the protections of the Takings Clause." These advocates (as well as various legal scholars) worry that policies such as mitigation banks and requirements for developers to contribute to sewage systems would be placed in the same categories as takings and property easements demanded by local governments. As with many of the landmark cases decided by the Court this term, only time will reveal the ripple effects of the ruling. In the meantime, planners, land-use authorities, and developers will likely continue to debate where "financial obligations" that are the government's prerogative to impose end and takings requiring constitutional scrutiny begin.

Beckoning Smart Planning on Beacon Hill

Image Credit: MA Smart Growth Alliance 

Though visitors to Massachusetts often complain about the state's confusing streets patterns, the Commonwealth has remained remarkably resistant to suburban sprawl. In keeping with this spirit, the Massachusetts State House is entertaining an amendment to the state Zoning Act and Subdivision Control Law. See H.B. 1859, "An Act Promoting the Planning and Development of Sustainable Communities." The proposed bill, which was endorsed by the Department of Housing and Community Development, Massachusetts Alliance for Smart Growth, the Department of Public Health and others endorsed following a hearing on Beacon Hill last month, provides a statutory basis for site plan review, consolidates permitting, incorporates reduced requirements for variances, encourages Low Impact Development techniques, and a reformed master planning process. Most interestingly, the bill includes a community "opt-in" in which cities and towns that preserve open spaces in new developments and express commitment to environmentally sustainable projects will receive preferential consideration for funding from the state. David McCay and Brian Casaceli note in Mirick O'Connell's excellent "On Solid Ground" blog that the bill has a long journey to becoming law and follows the path of previous unsuccessful legislative attempts at land use reform but the current climate on Beacon Hill bodes well for a 21st century approach to planning and growing in the historic hub of the nation. 

Breaking the Fourth Wall: Week of June 16

Today we continue the weekly "Breaking the Fourth Wall" series that directs the blog's spotlight toward a particularly innovative or promising affordable housing project, luminary, or organization. 

In her recent piece on crowd funded real estate, Emily Badger profiled Fundrise, a Washington, D.C.-based initiative that serves as a "Kickstarter campaign that may improve neighborhoods." The fund essentially sells small shares of urban renewal projects to neighborhood residents and is making waves in real estate circles for its innovative approach to community development.

Image Credit: Fundriser 

A major bonus of Fundrise's crowd funding model is promoting local ownership of changes to the neighborhood. Real estate development often involves startling changes to urban landscapes. These decisions are usually made by investors who are disconnected from the neighborhood and have little stake in its trajectory. Crowd funding allows residents- even those who only have a small amount of capital to expend- to formulate pro-growth policies at a sustainable pace appropriate for the streets, corners, and squares of individual neighborhoods and not for sweeping redevelopment agendas. Without the developer middlemen, crowd funding presents the opportunity for residents to see (and be surrounded by)  the returns on their investments.

While many commentators express skepticism about the feasibility of Fundrise's future, crowd funding is an exciting alternative to the traditional development model of outside investors taking a gamble on neighborhoods in which they don't live. Whereas breakneck development often displaces longtime residents and prevents those without money from having any say in the future of the neighborhood, Fundrise's low threshold for community engagement might just lead to more inclusive and affordable neighborhoods that embrace change that puts locals first.

Where Do We Come From? Where Are We? Where Are We Going?: Snob Zoning and the Eternal Questions

In her new book, Snob Zones: Fear, Prejudice, and Real Estate (Beacon Press, May 2013), longtime New York Times real estate journalist Lisa Prevost examines the exclusionary zoning policies that have left our cities and towns increasingly segregated by income and have dealt some crushing blows to the affordable housing movement. The decisions of community officials to place onerous (sometimes four-acre) lot requirements and various setback provisions, have blocked the construction of multifamily, mixed-income, and cluster housing in tony suburbs and bucolic country hamlets alike. Prevost centers her coverage on the Northeast, which has been the site of efforts to keep affordable housing out of pricy towns in the name of "low density" or preserving "local character." See Southern Burlington County NAACP v. Twp. of Mount Laurel, 336 A.2d 713 (1975) (holding that a municipality must use its land use regulation to create a variety of housing choices and cannot use its powers for discriminatory purposes); Southern Burlington County NAACP v. Twp. of Mount Laurel, 456 A.2d 390 (1983) (holding that municipality's land use regulation must affirmatively afford the opportunity of low and moderate income housing). Decades after the Mount Laurel decisions, many communities continue to devise subtle zoning policies that result in socioeconomic homogeneity.

Image Credit: Seabord Properties 

Prevost and Princeton sociologist Douglas Massey posit that this segregation is leading to increased levels of income inequality and fearful misunderstanding of people in other economic classes. The conscious decisions of residents of individual municipalities to isolate themselves into groups of "people like us" is having a larger affect on the entire nation as people of different income levels rarely rub elbows or share postal codes. The effects of these decisions is felt in stratified civil society organizations and is still routinely litigated in courtrooms. Last year, the Connecticut Fair Housing Center brought a lawsuit against the the Housing Authority in the predominately white Litchfield County town of Winchester, alleging that the Authority's policies systematically discriminated against minority applicants to its Section 8 program by limiting program applications to residents of the already very white county. See Carter et al v. Hous. Auth. of the Town of Winchester (D. Conn., filed Aug. 1, 2012). The Litchfield example is just one of many court battles over the future of the makeup of American communities. The proliferation of snob zoning, thoughtfully explored in Ms. Prevost's book, has led to a lack of mobility for those seeking affordable housing options across the country and signals further troubling exclusionary decisions made by America's zoning boards.

Breaking the Fourth Wall, Hon: Week of June 9

Today we continue the weekly "Breaking the Fourth Wall" series that directs the blog's spotlight toward a particularly innovative or promising affordable housing project, luminary, or organization. 

Good Morning, Baltimore!

Like many of the interesting issues covered by this blog, today's Breaking the Fourth Wall post is inspired by Professor Kaid Benfield's article in the The Atlantic Cities and an informative public radio interview. The abandoned buildings in Baltimore, the often-overlooked gem overshadowed by other East Coast cities, are undergoing a remarkable transformation and the mayor's office has implemented its Vacants to Value program to encourage a diverse array of Baltimoreans to partake in the city's new chapter. Vacants to Value is unlike many other ambitious citywide redevelopment projects because it focuses on small scale development, small businesses, and smart growth to avoid the common gentrification pitfall of resident displacement.

Image Credit: Baltimore Sun 

Community Enterprise, Community Effort 

The crux of the Vacants to Value program is the encouragement of the purchase and subsequent rehabilitation of many of Baltimore's more than 16,000 blighted properties. In order to stave off the risk of large-scale developers buying properties and charging unaffordable rents, the program is sponsoring a series of community workshops. These workshops teach local residents about buying vacant properties in the hopes that locals will comprise the vast majority of new homeowners. The program is also aimed at facilitating the purchase of individual units in multifamily and mixed-income buildings and creating incentives for buyers to rent out rehabilitated units at affordable rates below market value (a pleasant surprise in an otherwise market-driven initiative). 

Restoring the Charm to "Charm City"

Baltimore is known to those who love it (and even to some of its detractors) as "Charm City" and the Vacant to Values program is committed to preserving the historic charm- think comely brick row houses and, yes, even formstone. Maryland offers impressive historic property tax credits, including a 20% credit for owner-occupied "certified historic structures", and many homeowners are using these credits to make improvements to formerly deserted neighborhoods. 

Banking on the Land Bank

Vacants to Value extends beyond the transformation of Baltimore's distressed buildings. In the unfortunate cases where abandoned properties have to be demolished, the program effectively establishes a land bank, with vacant lots to be used for greenbelts, public parks, and community gardens. Professor Benfield expresses reservations about the program's commitment to sustainability and the land bank element is the best opportunity for Vacants to Value to contribute to Baltimore's green future. 

Image Credit: Maryland Housing 

Though Vacants to Value is a program experiencing growing pains and many skeptics question the likelihood that program will be able remain committed to providing affordable and mixed-income housing in the face of market forces, it represents a conscientious citywide effort to create a more

livable community that can be accessed by residents of all income brackets. Baltimore is a city on the move that still retains a strong local flavor and hopefully Vacants to Value will provide the opportunity for those who stuck by Baltimore during tougher times to enjoy the city's charming new chapter.