Apartments on the River

The following is yesterdays post from my blog on the Wausau Daily Herald website. On the right-hand side of the Citizen Wausau homepage screen, when this blog entry was highlighted, there was a comment apparantly not understanding my issues. The comment compared this to being in favor of the war in the middle east but not in favor of funding the war.

That is a bad analogy. The war is a government operation and funding it is also a government operation. This development is a PRIVATE DEVELOPMENT, being built by a private, FOR-PROFIT developer. This development, because part of it is affordable housing, will be getting state and federal funds. In addition, this development will only pay property taxes for about a quarter of its total value. With all of those other tax credits and subsidisies, my objection is to EVEN MORE government funding (this time at the local level) for a PRIVATE project. – Hello, is this thing on??? (LOL)

I said that I would try to get some multi-family myth-busting done as I had more time. Well, thanks to the never ending snow falls that still hasn’t happened. However, I still need to get this post done.

First – Affordable Housing. A couple of members of the city council stated they had called around and found a bunch of “Affordable Housing” units available. Really? Where? When the term “Affordable Housing” is used, what it really means is subsidized housing. Housing where the amount of rent paid directly by the tenant is a set percentage of income. And there is not nearly enough of this type of housing anywhere.

There are two types of affordable housing, housing built with tax subsidies and housing that accepts Section 8 vouchers. The difference is that subsidized housing is specific to that property. If you move from the property, you lose the subsidized rent. A Section 8 voucher is specific to the tenant. A tenant can move to a different property, and as long as the new property complies with Section 8’s requirements and the landlord accepts Section 8 payments, they get to keep the subsidized rent.

The waiting list for Section 8 in Marathon County is anywhere from 18 months to over 2 years. The vast majority of the subsidized housing in the Wausau area is actually owned and operated by the City of Wausau, through the Housing Authority. (The City of Wausau is Wausau’s largest residential landlord.) And there is a waiting list for these units as well. I have no idea who the council members called, but every “Affordable Housing” provider that I am aware of has a waiting list.

Second – Low-Income Housing Increases Crime. Wrong. What people who believe this probably think about are the Low Income “Projects” that can be found in many big cities. A more accurate statement would be POORLY MANAGED Low-Income Housing increases crime. That is a statement that I would agree with. The quality of a tenant, regardless of income is directly proportional to the quality of the property management.

As a matter of fact, if you look at trends in Affordable Housing, housing projects that basically look like low income housing and serve only low income tenants is becoming a thing of the past. Developers and Housing Authorities realize that if you treat low income people like second class citizens, grouping them all together in crappy housing, it becomes a self-fulfilling prophecy. Treat these people like they are unwanted crap, and over time, they turn into unwanted crap.

New Affordable Housing developments tend to be mixed housing. These are not “luxury” units, but are decent, mid-range market units. Some of the housing units have market rents with normal income tenants, and some of the housing units are subsidized. But the units all are of the same quality. So you mix low income with moderate income. You treat low income people like real people giving them decent quality housing.. you treat them like real people – not second class citizens and in return, you tend to get real people, people who take pride in their housing, their neighborhood, their community.

Third – Multi-Family Housing is not “Highest and Best Use” of Wausau’s blighted river-front property. I disagree. Commercial development for the immediate downtown area makes sense. But the farther you get from downtown, the less sense commercial development makes. It is not easy to navigate those streets, which is a primary issue for commercial development. Plus, parking ratios will kill you. Commercial properties require much more parking, which means you either need more parking garages, or a large amount of this nice river-front land gets turned into a parking lot. I have always thought that area was a great place for multi-family housing (I thought it would be more of a condo development because I didn’t think you would be able to get multi-family to cash flow).

I love the proposed project. I love the location. I love the type of development. I love that a good chunk of it is subsidized housing. The one and only thing that I don’t like about this development is that the City of Wausau insists at throwing money at a project that is already benefiting from a great deal of public development incentives. I understand by using TIF funds, that the money will be paid back using the increased value of this new development. But, as I stated at the city council meeting, TIF funds are designed to remove blight. However, even though this project will remove blight, it also has a high likely hood of moving blight. That removing the blight on the river in this manner will just create blight in other areas with some of Wausau’s existing older residential neighborhoods. Also, this is reported to be a nearly $6 million development. Can you honestly say that the nearly $200K in TIF funds is a make-it or break-it issue from the developer. Did the developer say that without that money, this doesn’t happen? I understanding using TIF funds to spur development, but… what if the development would happen anyway????

I do realize after doing a little math that maybe this wouldn’t proceed otherwise. A 40-unit building with a $6 Million price tag come out to $150,000 per unit. HOLY CRAP. A general rule of thumb when it comes to ballpark break-even rents is to subtract two zeros. In other words, a rental unit that costs $150,000 would need to generate $1,500 per month in rent to get a decent return. (NOTE: That is not a hard and fast fact, it is just a quick rule to see if you are in the ballpark.)

Although the council voted 6-6 on this issue, I did fear that some of those voting against it were doing so for the wrong reason. Some voted because there was no need for “affordable” housing units (there is). Some voted because low-income housing attracts crime (not necessarily true). Some voted because multi-family is not the best use of river-front property (I respectfully disagree).

So.. there is the situation as I see it… for what it’s worth.

Advertisements

About drrent

Wausau, Wisconsin Landlord, past president of the Wisconsin Apartment Association, Host of the Dr Rent Radio Show on WNRB-LP, 93.3 FM, Wausau, WI
This entry was posted in Affordable Housing, Crime, River Front, Section 8 and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s