Shelterforce The journal of affordable housing and community building
Winter 2010 » Affordable Housing » February 07, 2011
Atlantas Pittsburgh Neighborhood: Building the Sustainable Urban Community
One Atlanta neighborhood's experience of the housing bubble and expected transit investment leads it to invest in a land trust and a vision based in sustainability. By Mtamanika Youngblood and Harold M. Barnette
The bursting American housing bubble is shattering long-standing assumptions about the role of housing as a driver of the national economy and as a basic source of wealth creation for families. The unprecedented nature of current housing market conditions, a frozen financial sector, and the uncertain direction of national housing policy makes things even more difficult. Yet with mounting foreclosures and job losses that are, in turn, producing growing numbers of families struggling to get or keep a roof over their heads, access to affordable shelter will only become more important in years to come.
There are ways to redefine affordable housing goals and urban revitalization methods in light of these current housing market realities. Those methods, however, require significant levels of innovation.
The challenges and opportunities in revitalizing the Pittsburgh neighborhood of Atlanta, and some of the directions the neighborhood is choosing to go in response, provide a good case in point, with implications for many other neighborhoods in similar positions.
Developed just after the Civil War, the historically African-American Pittsburgh neighborhood lies adjacent to a rail yard just south of Atlanta’s downtown and, in many ways, represents the leading edge of the nation’s ongoing housing meltdown. Named after its well-known Pennsylvania namesake for the permanent haze caused by belching locomotives and an encircling industrial landscape, Atlanta’s Pittsburgh, by the late 1960s, was suffering from the effects of white flight and Atlanta’s explosive suburban growth that led to wholesale out-migration by middle-class families. Despite characteristics that would be considered advantages in today’s world—being located near the downtown with access to important economic infrastructure—over the next 30 years Pittsburgh lost half of its population, and experienced a period of decline, disinvestment, impoverishment, and neglect.
But by the late 1990s Pittsburgh was starting to show signs of recovery. A new generation of young urbanites was beginning to return to the city core and to historic neighborhoods surrounding downtown. This had the desirable effect of attracting new neighborhood investment, but it also resulted in increased housing costs, higher taxes, and other economic effects, causing the displacement of long-term—usually African-
American—residents. Gentrification, the threat of resident displacement, and the need for organized grassroots advocacy sparked the creation in 1999 of the Pittsburgh Community Improvement Association (PCIA), the neighborhood’s now well-established community development corporation.
In 2006, at the height of the national housing bubble, Pittsburgh seemed to be enjoying a remarkable turnaround. House prices were escalating rapidly and a large number of new homes were being constructed on the neighborhood’s abundant vacant lots. The community appeared to be turning the corner and the area’s growth was seemingly assured.
In this environment, a 31-acre industrial site on the neighborhood’s south edge that bordered an abandoned rail line became available. The rail infrastructure it bordered was expected to become a segment of the proposed Atlanta BeltLine light rail system (see page 12), then in its earliest stage of planning. Recognizing that a mixed-use, transit-oriented development along Pittsburgh’s University Avenue—the neighborhood’s major vehicle corridor—could provide the development catalyst for permanent neighborhood transformation, the Annie E. Casey Foundation purchased the 31 acres as an economic development opportunity to connect with its Atlanta Civic Site investment in human development. To develop that site and work with PCIA to coordinate a plan for overall neighborhood revitalization, the foundation initiated a process that resulted in the formation of a nonprofit development company, Sustainable Neighborhood Development Strategies, Inc. (SNDSI).
All the organizations involved in planning Pittsburgh’s revival—PCIA, SNDSI, the Annie E. Casey Foundation, and its Civic Site program—realized that the successful revitalization of Pittsburgh hinged on two discrete functions: bricks and mortar development executed in concert with grass-roots community mobilization. PCIA was well established as a community force. The Civic Site decided to support the creation of SNDSI as an expertly staffed, well-funded community-based development organization to provide the additional force needed to drive large-scale community transformation. In 2009, PCIA and SNDSI entered into a formal joint venture agreement, forming the Partnership for the Preservation of Pittsburgh (PPoP), the entity that is officially responsible for implementing all programming related to the area’s redevelopment. Within the partnership, SNDSI is primarily responsible for planning, acquisition, retrofitting, and disposition of property. PCIA is primarily responsible for community outreach and education, creation and management of the community land trust, and ensuring that provisions set out in the community benefits agreement are realized.
By 2008, things were completely different in Atlanta and across the country. Pittsburgh had become a poster child in metro Atlanta for mortgage fraud, mortgage defaults, and foreclosure. According to a study conducted by the Annie E. Casey Foundation that compared foreclosure activity in Pittsburgh with the entire city of Atlanta, Pittsburgh exceeded comparable jurisdictions in every foreclosure category. At the time, about 40 percent of Pittsburgh mortgages were estimated to be underwater, and the study estimated that 50 to 75 percent of default notices resulted in a borrower losing the property. An alarmingly high share of foreclosed homes (31 percent) were essentially new construction—having been built in the previous five years—double the citywide figure. Many of the homes were clustered on the same blocks. The study concluded that these homes probably reflected widespread property flipping and sales fraud involving high-risk loans, loose underwriting, and inflated appraisals. Rampant speculation by unscrupulous investors appeared to be at the core of Pittsburgh’s housing collapse.
The high rates of default and foreclosure led to high rates of vacancy and abandonment. More than 50 percent of Pittsburgh’s 1,800 parcels were vacant, a problem so overwhelming it was hard to know where to begin with remediation. To deal with the extraordinary demands of planning and managing this kind of sprawling, scattered site project, SNDSI immediately began to develop the internal capacity to build a GIS platform and dynamic database that permits its staff to continuously monitor the physical condition, market status, and ownership particulars of every parcel in the Pittsburgh community. Through a detailed process of mapping and analysis, SNDSI staff, with support from consultants, determined that the acquisition, renovation, and occupation of at least 300 to 400 properties would be required to ensure stability and sustainable neighborhood growth. From that assessment, four goals were adopted to guide the revitalization effort:
- Acquisition, rehabilitation, and disposition of foreclosed and abandoned properties in targeted areas, returning them to market as affordable rentals or owner-occupied housing depending upon market conditions.
- Land banking acquired properties to allow for a comprehensive master planning and disposition strategy.
- Demolition of blighted structures to remove ruins posing public safety threats or providing harbor for criminal activities.
- Redevelopment of vacant lots to increase the inventory of affordable housing.
Creating the Pittsburgh CLT
Mindful of the role speculation plays in driving property prices and displacement only to set the stage for a devastating collapse, PPoP sought to identify institutional forms that could enhance community stability while preserving permanently the affordability of 300 to 400 distressed properties that it was planning to acquire and rehab. A nonprofit community land trust (CLT) seemed to be the perfect fit.
The vision for the Pittsburgh CLT was generated by community stakeholders who wanted to see “the construction of quality new homes, a variety of commercial services and retail outlets, clean and safe public spaces, high quality schools, and well maintained homes and buildings.” The CLT was originally conceived as a freestanding, nonprofit organization that would operate alongside PCIA, which was charged with facilitating its development. The CLT was to have an independent board with a majority of its members appointed by a fiscal agent. This arrangement would necessitate a third-party organization to perform administrative and fiscal duties for the CLT’s first three years of operation. It was anticipated that a team of consultants would perform the administrative and fiscal duties.
As the CLT concept was considered and discussed over time, it was determined that the independent approach would likely result in an unnecessary layer of bureaucracy that could well hamper the CLT’s prospects for success. A key concern was that reliance on consultants—intended to provide instant expertise for the fledgling organization—would prove expensive and more importantly, inhibit the CLT’s ability to develop internal capacities needed to ensure its long-term success. An analysis of available options resulted in a decision to instead structure the CLT as an operating subsidiary under PCIA’s existing nonprofit structure. The decision was based on a number of critical factors:
Established Operations. PCIA had an established base of operations including adequate existing office space, plus the organization enjoyed great visibility and legitimacy within the community, reducing the need for “start-up” efforts and expenses.
Effective Advocacy. By integrating the CLT into its already established organizing and education efforts, PCIA would be better positioned to advocate for “shared equity” homeownership to a population that might be highly skeptical of that idea coming from a less familiar source.
Leadership. The PCIA board of directors was strongly in support of the CLT, and expressed a willingness to alter its structure to accommodate CLT representation. Likewise, the PCIA executive director has been an enthusiastic advocate of the CLT.
Capacity Building. With a couple of additional staff positions, PCIA could effectively administer the CLT, avoiding consultant costs while building expertise and capacity within the organization to enhance long-term stability and performance.
The emergence of the Atlanta “central server” (see page 16) further supported the approach of developing the Pittsburgh CLT as a function of the local community development corporation, as the Atlanta Land Trust Collaborative could relieve PCIA of the need to address macro-level issues such as public policy advocacy, ground lease development, and procurement economies of scale. Instead, the Pittsburgh CLT could focus intensively on local property acquisition and rehabilitation, recruiting and screening of applicants, and community education.
The Green Imperative
Although Congress failed to act on a climate change bill in 2010, it is a safe bet that at some point legislation will have to address the problems of fossil fuel consumption and carbon emissions. While it may not be possible to know exactly what form legislative prescriptions may take, the likely consequence will be higher prices for energy and a greater emphasis on conservation. Basic costs of affordable shelter can be divided roughly into two categories. First there is the cost of land and structure—addressed by Pittsburgh through the community land trust. Then there are the operating costs—maintaining an environment that is comfortable and healthy within the budget constraints of a low- or moderate-income household. For years, the affordable housing industry has focused almost entirely on the cost of land and structure because those costs have been perceived as the greatest barriers. With the ongoing collapse of housing prices, however, it is possible that in the near future the dual burdens of asset costs and operating costs will be more equalized.
In fact, according to the “Unlocking Energy Efficiency In The U.S. Economy,” by McKinsey & Company, utility costs are already way too high as a percentage of income for families in need of affordable shelter. “While the average household spends about 5 percent of its income on energy bills, the average low-income household spends about 15 percent and some households on fixed incomes spend as much as 35 percent,” the authors write. “After home weatherization, the average spending for energy drops to 10 percent among low-income households and 21 percent for fixed-income households. These savings materially increase the household standard of living and can be put to other uses, including setting the thermostat to a more comfortable temperature, as well as for food, clothing, or education.”
According to a December 2009 article in The Wall Street Journal, 8 million American households (up from 6 million in 2008) got emergency utility bill assistance in 2009, and without a jobs-driven recovery, 9 to 10 million were expected to seek assistance in 2010. In addition, 12.5 million families nationwide were behind on their bills and at risk of being disconnected, owing utilities more than $3.4 billion. All this has led to a new, insidious long-term financial obligation—so-called “energy debt”—that is devastating to low-income households.
The Pittsburgh revitalization effort has therefore adopted rigorous engineering and building criteria to guide its construction activity, along with incorporating low-flow plumbing to reduce water demand. (According to the Atlanta Journal-Constitution, the city of Atlanta has the second highest water rates in the United States.)
Although revitalization with these standards will produce energy-efficient housing, waste reduction strategies, community gardens, and other technical fixes that provide households with the potential for real dollar savings, the achievement of truly sustainable results will likely depend upon permanent changes in household use patterns and behavior, not just the availability of technical improvements. For that reason, ongoing educational programs are being designed by PPoP that explain how lifestyle choices—when combined with technology improvements—maximize economic benefits from energy efficiency and resource conservation.
Pittsburgh: Ahead of the Curve?
In early 2008 it was assumed that Pittsburgh and other low-income communities suffering from the effects of foreclosure were anomalies—casualties of subprime lending. Housing experts, public officials, media talking heads, and leaders of finance all assured the public that the problem was “contained” to this lower segment. Obviously, the two years following have told a much different story. In retrospect, it appears that Pittsburgh may have just been ahead of the curve.
Having been among the first neighborhoods to hit bottom, Pittsburgh, with its terrific convergence of solid housing stock, downtown location, interstate access, scheduled transit investments, and proximity to the world’s busiest airport, is ideally situated to be a leader in implementing affordable solutions to the escalating housing crisis. Efforts to implement and refine the community land trust concept could bring new vigor to Pittsburgh’s affordable housing efforts. Combined with the emphasis on energy efficiency and resource conservation, and with an activist, community-based methodology, they could well blaze a new path for affordable housing success in this new century.
Mtamanika Youngblood is a nationally recognized expert in affordable housing as well as president and CEO of Sustainable Neighborhood Development Strategies, Inc.
Harold M. Barnette is a writer, developer, and consultant specializing in sustainable development strategies.
Published by the National Housing Institute