We have a crisis in our community: People with limited financial resources cannot find affordable housing.
What are the indicators of this problem? The Housing Authority of Savannah, the agency responsible for public housing, operates 1,599 units which are rented for below market rates.
Their waiting lists are shocking: They have 5,842 applications waiting for access to one of the authority’s units and 9,752 applications waiting for housing vouchers which subsidize rent payments for private apartments.
An application can be an individual or a family.
Both waiting lists were closed early last year.
Furthermore, the Chatham-Savannah Authority for Homelessness, reports that more than 4,000 people in our county were homeless at some time during last year.
Of these, about 900 are considered chronic; they move from one temporary shelter to another and in and out of our homeless camps.
They have little or no hope of permanent housing. More than 150 homeless persons live outside permanently in 30 informal outdoor camps with no sanitary services.
Three basic causes
While all American cities seem to have a shortage of affordable housing, why is our housing deficit so severe?
First, our poverty rate of almost 27 percent is above the national average of about 14 percent. This means that a higher percent of our citizens cannot afford market rate housing than elsewhere.
Second, conditions unique to our market seem to reduce the supply of low-cost housing. Our city of less than 150,000 people welcomes more than 15,000 students each year, a good portion of whom live in private rentals.
Third, the growth of our hospitality business has spurred the conversion of private housing units into vacation rentals.
In the past two years we have lost more than 700 units in and around downtown to the tourist market.
Where is the private market?
Why does the private market not fill the void of affordable housing?
Unfortunately, the economics of this market does not offer adequate incentives for developers to invest in housing for low income people.
The costs of land, labor, materials, capital and building codes are not conducive to the construction of housing which would be affordable.
What then can be done? The Champlain Housing Trust (CHT) in Burlington, Vermont, provides insight into what may be accomplished when local government and nonprofit organizations work together solve the affordable housing challenge.
Partnerships and ideas
In 1984 the city government of Burlington invested public funds into two nonprofits.
The Burlington Community Land Trust focused on neighborhood improvement and expanding home ownership and the Lake Champlain Housing Development Corporation was dedicated to building rental housing in the surrounding suburbs and rural regions for low income people. In 2006 they merged to form the CHT.
The CHT now has 2,200 rental units and about 600 single family homes. All serve the low income community.
The rental prices are set to allow people with less than 60 percent of the median income to qualify.
The single family houses are purchased with down payments provided by CHT.
When sold, the sellers receive appreciation due to their improvements and 25 percent of any market gain. The rest goes back into the funds used to make that home affordable to the next buyer.
The city of Burlington initially invested $200,000 to fund the non-profits. CHT has advocated for a variety of capacity and capital sources over the years. The city of Burlington’s trust fund receives one penny for each $100 of property taxes collected. A state trust fund collects money from a tax on property transfers.
These funds provide both operating and capacity support to sustain and increase the supply of affordable housing. Further funding comes from federal capacity grants in additional to private contributions and foundation grants. CHT has also secured loans from city and state pension funds as well as public bonding for affordable housing.
CHT plans to add between 40 and 60 new housing units each year. They recently renovated local motels to house homeless people and have begun purchasing and rehabilitating aging properties for low income families.
In order to make home ownership and rent affordable, they install the most energy efficient home systems available.
Unlike many nonprofits, CHT’s properties are taxed. Since under state law, the properties must remain affordable in perpetuity, the value of the property is less than those which can be sold for full market value.
The state has discounted multifamily properties, or rentals, at 90 percent of appraisal; for owned properties, communities are able to set the value at between 60 percent and 70 percent of appraisal. This reflects the public investment and deed restriction on the properties.
The impact on Burlington’s homeless population has been significant. With a population of just under 45,000, Burlington’s last homeless count was 350. Similar programs throughout Vermont, a state with 625,000 people, has reduced its homeless population to 1,100 from 1,500 two years ago. This is about one-fourth of what we have in our city alone.
Officials at CHT worry about funding cuts anticipated in the Department of Housing and Urban Development’s (HUD) budget for fiscal year 2018. It’s possible, however, that reduced regulatory burdens could assist in the development of affordable housing – if Fair Housing laws are maintained, which is a question under the new Administration. But that won’t make up for lost funding for the most vulnerable.
More information about CHT can be initiate at Getahome.org
Kenneth Zapp, Ph.D, is professor emeritus, Metropolitan State University, and mentor, SCORE Savannah.