Program Expanding Neighborhood Investment in Rustbelt

October 31st, 2016

Southwest Solutions has partnered with the AFL-CIO to rehabilitate homes in Detroit.

Program Expanding Neighborhood Investment in Rustbelt

Corey Williams, Associated Press
October 30, 2016

A union-led effort that’s helping improve homes and create jobs in Detroit is being expanded to other rustbelt cities as part of a $2.1 billion effort to help communities struggling with aging neighborhoods, disinvestment and unemployment.

Most of the effort is being funded by the AFL-CIO Housing Investment Trust’s MidWest@Work Investment Strategy. The goal is to spur economic development while building and renovating houses in eight more cities, including Minneapolis, St. Louis, Cleveland and Pittsburgh.

About 90 projects are planned over the next five to seven years with no matching funds required from the cities, including about 60 multifamily housing units. The effort is an expansion of a $30 million neighborhood home-repair project that started last year in Detroit in partnership with the city, where nearly 40 percent of residents live in poverty.

“The cycle of despair in the urban centers of America’s Midwest is hard to break,” said Stephen Coyle, chief executive of the Housing Investment Trust. “Job loss leads to population loss, which leads to vacant and abandoned homes.”

Coyle said efforts to help need to focus on people as well as economic markets. A big part of that, he said, is preventing housing from falling into inhabitable disrepair. He said Detroit’s programs can serve as a model.

The goal in Detroit is to renovate as many as 300 single-family homes and other properties using union labor. Six houses have been bought from the city’s land bank so far. When finished, the homes will be sold by a nonprofit to low-income families.

Detroit has about 30,000 vacant houses and buildings because of the city’s massive population drop since the 1950s. The city has a separate program that has leveled more than 10,000 houses in the past two and a half years. The Detroit Land Bank Authority also is working with nonprofits and banks on programs to repair city-owned houses to bolster neighborhoods.

About $1.2 billion for the expanded, multi-city program will come from the Housing Investment Trust, which manages about $6 billion in assets for more than 390 investors that include union and public employee pension plans. Another $900,000 will come from various partnerships, including nonprofits and community development lending institutions.

Projects are getting started in St. Louis and St. Paul, Minnesota. Others are planned in Milwaukee, along with Columbus, Ohio, and Buffalo, New York. Supporters say more than 25,000 new jobs are expected to be created, including about 9,700 permanent and temporary construction jobs.

Details of specific projects in those cities haven’t been released by the Housing Investment Trust, which is already redeveloping a St. Paul office building into 134 affordable multifamily housing units.

“It’s absolutely, positively part of the recipe for the comeback of the Northeast in places like Buffalo,” said Jack Quinn, a former Republican New York congressman who is on the Housing Investment Trust’s board. “We’re beginning to turn the corner here. A project like this coming to Buffalo is a shot in the arm.”

Michigan Republican Gov. Rick Snyder supports the project’s investment in neighborhood revitalization in Detroit.

“The creation of new skilled-trades jobs will build on the success of Michigan’s economy and sustain skilled talent for the future,” he said.

In Detroit, houses are being acquired from the city’s Land Bank Authority by a nonprofit called Southwest Housing Solutions. The organization oversees the homes’ rehab, works with real estate firms to get the houses to market, and facilitates block grant subsidies to make them affordable to low-income buyers.

One home being rehabbed is on Wisconsin Street on Detroit’s northwest side, a few doors down from where Sam Dorsey has lived with his wife for about 40 years. The 85-year-old said rehabbing the house instead of tearing it down will help stabilize resale values of nearby homes.

“It will be a good investment for the people coming into the neighborhood,” the retired auto sales worker said. “It’s a stable community, and it’s going to be that way if the rest of us are able to keep up our properties and make sure the city lives up to its obligation to us.”

Initial concerns focused on the availability of union labor and any increased costs that might come with union workers, according to Southwest Housing Solutions Executive Director Timothy Thorland. But he said costs have been kept down, and the Building Trades Council, an umbrella organization for about two dozen unions, has been cooperative.

“Because we are historically a labor-based town, having the investment capital from the unions participating in the revitalization of neighborhoods is a nice story,” he said.

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