Mayor’s Remarks on the State of Affordable Housing

Presented to the Cuyahoga Affordable Housing Alliance      11/3/03

 

 

While other issues in Cleveland many get more media attention, the inability of low income households to pay the cost of decent

housing is one of the most critical issues I confront daily as Mayor of Cleveland.  A few of the statistics complied by our Department

of Community Development for the Cleveland’s Consolidated Plan give a clear picture of the challenges we face:

 

      Poverty is clearly the primary reason for the inability of persons to afford decent housing. While market rents in Cleveland have been rising, they still rank among the lowest of any major American city. However, this is small consolation to the poorest in our community whose incomes have not been increasing at a level comparable to the cost of decent housing. 

 

The gap between what the poorest households can afford and the component costs of decent quality housing has been steadily widening.

Based on recent expense estimates from experienced non-profit housing groups, the cost of operating a basic rental unit (including

all utilities) would appear to be in the range of $350-400 a month, excluding debt service.  The amount of debt service (principal and

interest) on a rental unit can vary greatly.  But it is likely that the market rent needed to support a standard quality two or three bedroom

 

unit, in the absence of any subsidies, will be in excess of $500.  By comparison, a family of 4 at 50% of poverty level could afford

$230 a month for housing with 30% of its income.  A person working 40 hours a week at the minimum wage could afford $247 a month

paying 30 % of income for housing.  And, an unemployed single person would not be able to pay anything for housing.

 

Clearly the best solution to the problem of housing affordability is to assure that people have decent incomes.  Persons with good jobs

usually can afford quality housing.  Less than 2% of families earning more than 80% of area median income pay more than 30% of income

for rent. 

 

Thus, boosting incomes through job creation and job training has been a major focus of  my administration.  But that is a topic for

another day, and it is unrealistic to project that all persons can or will soon be lifted out of poverty.  For many persons, housing affordability

is an immediate need that  must be directly addressed.

 

The Need for Rental Subsidies

For those with the lowest incomes, using grant or low cost loan dollars to increase the supply of housing will not be able to make

monthly rents affordable.  Their incomes are too far below the actual monthly expense of operating decent housing. Under these

circumstances, only a monthly rental subsidy will make housing affordable, and realistically, it is only Federal housing programs that

have the capacity to provide ongoing monthly rental subsidy payments to significant numbers of households.  For this reason, a

key part of our community’s housing strategy in recent years has been to preserve and fully utilize every available rental subsidy.

 

 

 

Full Utilization of Public Housing Subsidies

Improved management at CMHA has been an essential part of this effort.  The days when thousands of Section 8 certificates went unused

and public housing units sat empty in spite of long waiting lists are fortunately behind us.  And, because of local policies mandating the

replacement of demolished public housing with real units, not vouchers, Cleveland has not seen the diminishing inventory of public

housing units that many other large cities are experiencing.

 

Preservation of HUD Project-Based Assistance

Another area where Cleveland has seen success in recent years has been in the efforts to preserve its HUD project-based

assisted housing.  While HUD policy at the national level has sought to encourage the “vouchering out” of HUD-subsidized

buildings - leading to a diminished supply of available units - local forces have banded together for some impressive victories.  Many of

you in this room (i.e. Mike Foley, Spencer Wells) have been instrumental in organizing tenant groups and generating Congressional

support for saving units. And among our most important allies has been the Cleveland HUD Office staff. While their efforts may not have

been fully appreciated at their Washington headquarters, 

 

Doug Shelby, Dennis Morton and their staff have been invaluable in structuring and advocating for the deals that have saved well over

1000 HUD-subsidized units originally slated for demolition. The proposed “vouchering out” of Longwood, Rainbow Terrace and Park

Village alone would have eliminated 45% of all the remaining project-based family units in Cleveland.

 

 I’m  sure many have you have visited Arbor Park Village, where the second of the three-phase replacement of Longwood Estates is

underway.  Equally impressive in its own way is the 485 unit Rainbow Terrace Apartment complex, where total renovation has just been

completed.  Its new computer center, being run in conjunction with

 

Tri-C, was recently recognized in a Harvard University publication as a national model for successfully engaging residents in educational

programming.  Another significant preservation project will be completed at the end of this year when Famicos Foundation completes

its rebuilding of the 75 unit Park Village Apartments in Hough. Less publicized, but equally important to the tenants whose housing

was preserved,  have been successful efforts at Regency Square,

 

Central Park Place and, most recently, Emeritus House.  And, a partnership between CMHA and Cleveland Housing Network is in the process of developing 100 new rent subsidized units in Hough, to replace the demolished NOAH/HOPE units.  Our most recent success came through a partnership with Cleveland Housing Network to take over ownership of the 89 family unit Erie Square Apartments.  The City has committed $500,000 to help restore the units.

The battle to preserve our existing stock of rent subsidized units is ongoing, and I can assure you that we will do whatever is necessary to enable residents in buildings such as the Carter Manor to also continue to be able to stay in their homes.

 

Housing Production Efforts

In addition to preserving rental housing subsidies, it is also essential to Cleveland’s future that we continue to produce additional housing units, including those that are most affordable to low income people.

I have established a goal of producing1500 new units each year, building upon the steadily increasing pace of housing development in Cleveland.  Our vision of a healthy, vibrant and growing city is one in which persons at all income levels have a range of attractive housing options in economically diverse neighborhoods.  During the past 12 years, over 4100 housing units have been newly constructed in Cleveland, with more than 43% being affordable to lower income persons.  During 2002, my first year in office, our primary subsidy vehicle, the Cleveland Housing Trust Fund, increased from $4 million to $10.2 million, with over 60% of the funds being allocated to affordable housing.  In 2003, over $5 million has been committed for affordable housing production through the Housing Trust Fund and a separate allocation for Cleveland Housing Network lease-purchase units.  I want to be very clear that my commitment to boost housing production in Cleveland includes a continued focus on affordable housing. It will also not come at the expense of our traditional housing rehabilitation efforts.  With 200,000 existing housing units in Cleveland, new construction will never be able to meet housing needs if adequate resources are not also available to preserve the existing residential stock through ongoing maintenance and rehabilitation..

Homeownership Opportunities

While any strategy for affordable low income housing must rely heavily on rental housing alternatives, we also believe that there are low income tenants for whom homeownership can be a realistic goal.  The Cleveland Housing Network, through its lease-purchase program, has led the nation is showing how very low income renters can achieve ownership of their units over time, while building the requisite homeownership skills.  With the annual support of the City, CHN now has 2000 lease-purchase units that are providing both the immediate benefit of high quality single family rental housing and the solution to many tenants’ long term homeownership goals. 

 

In Cleveland’s Homeownership Zone in the Central neighborhood, we have worked very closely with Council President Jackson to structure subsidies that will allow many of the 420 new houses being developed to be purchased by first-time homebuyers from the neighborhood, including former public housing residents.

 

Permanent Housing for the Homeless

Over the past decade, national advocates for the homeless have continually stated that the three most important needs of the homeless are housing, housing and housing.  For many of those in shelters, homelessness is an economic issue that can be addressed through the broader approaches to affordable housing.  However, many who find themselves on the street or in shelters have other issues that may prevent them from living productive independent lives without some additional temporary or ongoing support services.  We believe that such supports can be most effective when provided in the context of a stable permanent residential environment.  For that reason, a major emphasis of our community’s Office of Homeless Services has been on developing one of the most effective Shelter Plus Care operations in the country, with over 1000 formerly homeless persons with mental health, substance abuse or AIDS-related issues now living in rent subsidized private housing units and directly linked to support services.  

 

We have also been actively engaged with the efforts of the Housing First Initiative to expand the Supportive Housing concept in Cleveland.  Using successful models in Columbus, New York and Chicago, as well as some small local examples like the Kinsman Kare project in Mt. Pleasant, Housing First intends to significantly expand our supply of permanent housing that incorporates the services needed to allow long-term homeless persons achieve residential stability.  The City of Cleveland has committed $1.25 million to help get the initial projects started, and we are optimistic that Housing First will have units under development in 2004.

Conclusion

As with so many of the problems we face today, the biggest challenge in meeting our affordable housing needs is identifying sufficient resources. I’m sure you are aware from recent media reports that these are difficult financial times for the City of Cleveland.  City Council and my administration will be forced to make many agonizing choices over the next few months on how best to balance the City’s budget.  At the same time, the news from Washington has not been particularly encouraging.  We have lost community development resources because of the impact of the 2000 census on funding formulas, and with massive (and largely self-imposed) federal deficits looming far into the future, we assume that it will be a constant struggle to maintain what we now have.  The passage of the State Housing Trust Fund’s dedicated revenue source is the one relative positive note over the past year, and the many of you here who joined the fight for passage are to be congratulated.  At least we know that housing will not be suffering from the drastic cuts in state support that other critical areas such as mental health services are experiencing.

 

In spite of the challenging times we are facing, the City of Cleveland remains committed to working with your organizations and other community partners to identify the most effective strategies for addressing affordable housing needs and then maximizing the availability of resources to address those needs. 

 

A number of you are now engaged with us in an affordable housing planning process that is intended to define strategies, raise public awareness and hopefully identify new commitments of resources.  The foundations and business community representatives have indicated their willingness to participate in this process. I believe that this will be an unprecedented opportunity for all of us as a community to more forward toward the goals of ending homelessness and assuring that every resident can afford decent place to live.