On Kansas City’s West Side, a newly renovated red brick duplex charms its block with wrought-iron fencing and wood trim painted in olive and turquoise. Two families live there now.
Just three years ago this building sat vacant, reflecting the misfortune of rundown housing that dots much of the central city. Vagrants had ripped through three layers of sidewall to climb inside for shelter. More than once they had started fires.
The neighborhood can’t toast the federal government for this transformation, despite its long benevolence as the nation’s primary low-income housing developer.
Instead, the community has itself to thank.
Local development corporations, with extensive financing from private corporations, have come to the rescue of low-income housing as the federal government continues to curtail its funding and building.
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And Kansas City, more than nearly any other city in the country, has benefited from this shift. It ranks second in redeveloped units per capita, behind only Minneapolis, even while cities such as New York and Los Angeles have built more using this funding source.
“It’s brought some hope that we can make a dent in our affordable-housing problem,” said Colleen Hernandez, executive director of the Kansas City Neighborhood Alliance.
Kansas City faces a housing crisis. Roughly one-third of all households-about 62,000-occupy substandard or overcrowded conditions, or pay more than a third of their income for shelter.
In the last five years, though, 758 rental housing units have been built or are under construction for families struggling to earn half the metropolitan area’s $42,000 median income. These are found in renovated apartment buildings or newly constructed townhouses that are striking for not having trash littering the lawn or windows broken out.
This mass of 22 projects involved 10 community development corporations or housing agencies, such as the Westside Housing Organization, with the red brick duplex. They also used $23.5 million in grants from housing’s new main benefactor, the National Equity Fund, a nonprofit corporate investment fund for community-based housing.
Recently, the equity fund announced a larger commitment of $25 million in Kansas City to create 800 more units the next five years.
The fund and the development corporations have now become the principal vehicles for urban redevelopment in Kansas City. This direction represents the conviction that, because of government indifference, local groups must take the lead in removing blight from their neighborhoods.
“There’s no other agencies doing housing in the inner city on this scale,” said James Threatt, Kansas City assistant city manager.
Quality Heights, built in 1988, was one of the first developments in Kansas City to take advantage of the National Equity Fund.
Before then, HUD had the business of low-income housing to itself. Since the start of the Reagan administration, however, it has done much less. HUD’s overall budget has dropped 60 percent, from $61.9 billion in 1980 to $25.2 billion this year.
And in Kansas City, acting regional Administrator Elmer Binford reports, HUD has not contributed any money in the last decade for private developers to build or renovate low-income housing.
In HUD’s place, Congress paved the way for private sector involvement.
Its 1986 tax reform act established a low-income housing tax credit. Then the Local Initiatives Support Corp., a nonprofit group that advises community development agencies, created the National Equity Fund to entice housing investments from corporations in return for the direct tax break.
“The federal government has substantially bowed out of affordable housing,” said Jim White, Local Initiatives Support Corp. director in the area, “and the issues of housing-homelessness, neighborhood disintegration, affordability-are now clearly our issues.”
Here’s how the new partnerships work: the National Equity Fund puts up equity up front so a community development corporation has the financial backing to obtain a first mortgage. Usually the city government puts up enough to obtain a second mortgage, and sometimes philanthropic foundations contribute enough for a third mortgage.
All these mortgages serve to reduce up-front debt payments so rents can be kept low, like $200 or $300 a month instead of $500 or $600.
Kansas City profited from this new funding source immediately because, as a neighborhood-oriented city, it had well-organized housing groups in place. St. Louis, for example, did not, and so 10 times more units have been built in Kansas City than in St. Louis.
“It’s become the single most important source of production of low-income housing,” said Jim Gibson, a senior associate at the Urban Institute in Washington.