Stuck in Neutral

Before Hurricane Katrina hit, the “Big Four” public housing complexes in New Orleans—C.J. Peete, Lafitte, St. Bernard, and B.W. Cooper—were targeted for leveling by locals. Then Katrina drenched them. The irony is that while buildings all around the city are being torn down, these four structures, which total more than 5,000 units, remain standing.

“No one was suggesting these were the best places to live,” said Tom Murphy, a senior resident fellow with the Urban Land Institute. “I think people believed they were old before the storm. By the time you would do an extensive rehab, you might as well start over.”

Others see the same things. “These are old structures,” says Larry Schedler, a broker in New Orleans. “The numbers that I see about what it costs to renovate these deals is obscene. You could build Class A apartments for that.”

BIG TROUBLE: After Katrina drenched the Lafitte public housing complex (left), plans were made to provide new housing in the Treme community.

So, why are these buildings still standing? Simple. It's litigation. After the Housing Authority of New Orleans announced plans for a $681 million redevelopment of the buildings, residents filed a civil rights lawsuit. Their argument: HUD is violating their property and constitutional rights by planning to demolish the complexes without proper notice and while they still hold leases, according to The Times-Picayune in New Orleans. The legal organizations working with the residents didn't return calls from MULTI FAMILY EXECUTIVE.

HUD has given approval for the housing authority to partner with Providence Community Housing in New Orleans and Enterprise Community Partners in Washington, D.C., to replace Lafitte with mixed-income communities. “One of the goals is bring all 865 residents living in Lafitte back to the Treme community, though they may not be on the site,” says Donna White, a spokeswoman for HUD.

Meanwhile, HUD temporarily fixed some units in B.W. Cooper, which houses about 40 families. “We're doing that on an immediate basis because there's such a need,” White says.

The problem for the New Orleans Housing Authority, which is run by HUD, is that it can't begin building new housing until the suit is settled. “Out of respect for the courts, we're at a standstill,” White says.

SHORT FIX: HUD renovated some units in the B.W. Cooper complex.

HUD agrees with those who say the storm damage has made units in the four complexes far too expensive to repair. But ULI's Murphy also understands why the residents are frightened about losing their homes. For one thing, he says, housing is nearly impossible to find in the Crescent City after the storm. For another, many public housing residents may be feeling a sense of déjà vu after what happened at the St. Thomas projects, which were redeveloped under Hope VI.

“That was a really bad experience for affordable housing residents,” Murphy says. “Very few public housing residents ended up having opportunities to live in the new development. So, affordable housing advocates have a very skeptical view of this stuff.”

HUD knows this history, though, and White says the agency taking steps to ensure that residents aren't kicked out in the wake of a great tragedy like Katrina. “[HUD Secretary Alphonso Jackson] has promised all residents living in public housing that they will have the opportunity to come back to a unit,” she says. “That will either be a public housing unit or one that Section 8 can support [like a voucher].”

The condo craze has come full circle. Equity Residential, a REIT based in Chicago, bought back one of its properties, The Prime in Arlington, Va., and is on the verge of buying another property in New York from condo converters. “The assets were acquired [by others] with the intention of converting, but they decided to abort that mission,” says David J. Neithercut, Equity Residential's president and CEO. “In each of these instances, not a single unit had been sold.” —L.S.

A new Seattle public housing community offers a breath of fresh air—literally. High Point, Seattle Housing Authority's transformation of a former military worker site into affordable housing, will feature 35 units dubbed as “Breathe Easy Homes.” The units, geared toward asthmatic residents, feature moisture-proof foundations, high-quality ventilation systems, low-emission paint, and formaldehyde-free cabinets. To help minimize dust, residents are given mattress covers and high-efficiency vacuum cleaners. Plus, the University of Washington's School of Public Health will monitor the health of the children. —R.Z.A.

One apartment complex is St. Louis is going beyond just giving lip service to helping veterans. The Pavilion Apartments, owned by Palisades Financial, gives veterans as much as half off their rent in the first six months of a one-year lease. From six to 12 months, they get a 20 percent break, and after a year, they get a smaller percentage off. —L.S.

Everyone knows it's hard to add affordable housing stock in America's big cities. Chicago is trying a new tack: Turning former drug dens into affordable housing. The city wants to “improve our neighborhoods by removing blighted buildings and restoring them as affordable housing,” according to Mayor Richard M. Daley. —L.S.

And the most improved award goes to ... the Philadelphia Housing Authority. The Housing Authority Insurance Group, a national firm serving public housing authorities, has honored PHA as its most improved authority for its decline in insurance claims. PHA has reduced the number of personal injury and property claims from 105 per 1,000 units in 2002 to 35 per 1,000 in 2004. PHA attributes the low claim rate to enhanced landscaping, an aggressive property maintenance program, and its new, high-quality product. —R.Z.A.

Need a new tactic to ward off fierce NIMBYists? Just pass along this fact: On average, single-family homes located near multifamily communities actually appreciated at a higher rate than homes without multifamily neighbors, according to NAHB's analysis of the 2005 American Housing Survey data. There is some indication of slightly reduced appreciation rates close to the time the multifamily housing is first built. —R.Z.A.

APPRECIATION RATES FOR SINGLE-FAMILY HOMES

Source: 2005 American Housing Survey, U.S. Census Bureau and HUD

Q & A What is your favorite question to ask a potential employee during an interview?

A: “‘Where did you grow up, and how did that impact where you are and what you are doing today?' I ask this question to get deeper into a person's background and values rather than focus solely on business experience and credentials.” —Bob Landis, president, Lane Management

A: “‘When you're not working or looking for a job, how do you spend your free time?' I want to get to know the potential employee as a person. Who they are as a person will educate me about how they will be as an employee. ... I look for depth of character. My experience has led me to believe that people with depth make better employees and are more satisfied with their jobs.” —Julie Blank, director of asset management, Alliance Residential Co.

A: “Because our industry is an unusual amalgamation of talents, ‘How and why did you get involved in the affordable housing industry?' is one of my favorites. The answers tell me about this candidate's intention and passions and the way his or her mind works.” —Rebecca Clark, president, National Community Renaissance (formerly SoCal Housing)

Pedal to the Medla

Beep, beeeeeeep! That's the sound of an angry driver stuck in a traffic jam, quite possibly blaming the holdup at a nearby intersection on residents of a new apartment community. But that would be some misdirected anger: Data from the latest American Housing Survey nixes the common belief that new rental properties increase traffic congestion and parking problems.

Apartment households on average own 1 vehicle, compared with 2.1 vehicles for a single-family owner. And almost 27 percent of apartment households have no vehicle at all, while 73 percent of their single-family counterparts own at least two. These statistics show that multifamily housing is a smart option as the country looks for ways to house its growing population without exacerbating its traffic problems, says Mark Obrinsky, NMHC's vice president of research and chief economist. (The U.S. population is expected to grow by 68 million people in the next 20 years.)

Interestingly, the survey shows that even when single-family owners have access to public transportation, they are less likely to use it. Less than 12 percent of homeowners with access to public transportation use it at least once a week, compared with 30 percent of renters.

DRIVER'S SEAT

The average number of vehicles owned per household is greater for single family homes than apartments.

Source: NMHC tabulations of 2005 American Housing Survey data

Seal of Approval

The popular Energy Star label has long been associated with kitchen appliances and laundry machines. But now, high-rise residential buildings can earn the same gold star as part of a new national pilot program from the Environmental Protection Agency. The first building to get the label: 1212 MLK Apartments, a 54-unit affordable complex in the Bronx developed by Dunn Development Corp. and the nonprofit Beulah HDFC.

To qualify for the Energy Star label, a high-rise's energy consumption must be reduced by at least 20 percent compared to a typical code-compliant building (as shown through computer modeling). 1212 MLK Apartments features a wide-range of energy savings products including motion sensors on lights in corridors, stairwells, and common areas; low-E argon-filled glass in all windows; low-flow faucets and showerheads; and, of course, Energy Star appliances.

Participants' savings will be monitored via an ongoing three-year commissioned study. “Part of what attracted us to the Energy Star pilot program is its goal to figure out what works and what doesn't work,” says Martin Dunn, president and founder of Dunn Development, a Brooklyn, N.Y.-based firm. (The New York State Energy Research and Development Authority is implementing the program in its state.)

The pilot is expected to run through the end of 2007, at which time the EPA will decide whether to expand the pilot or roll out the program nationally, says David Lee, branch chief of the agency's Energy Star residential branch. An Energy Star program for single-family home and low-rise multifamily buildings was launched in 1995.

Blog Time

Urban Pacific Builders tackles the popular online forum.

Want to find out what's hot in the L.A. apartment market? Or why more big public builders are trying their hand at urban infill? Visit Urban Pacific Builders' blog spot at www.urbanpacific.blogspot.com, where managing partner Scott Choppin candidly shares his opinions on everything from current industry trends and new technologies to updates on company projects.

Yep, it looks like the technology-shy multifamily industry is slowly joining the world of bloggers. “It gives me the ability to talk about things I wouldn't be able to talk about anywhere else,” says Choppin, whose first blog entry appeared in July 2005. “I can respond to buyers, industry colleagues, the media, and myself.” And Choppin isn't afraid to get a little saucy now and then. “I use some salty language in there,” he says. “If you talk to me, occasionally salty language finds its way into my lexicon. That's who I am, and the blog is truly a reflection of who I am.”

The blog doesn't generate a huge number of responses, possibly because people lost interest due to large gaps between early entries, admits Choppin. He's the first to acknowledge that frequent updates are no easy task for a busy executive—but he's determined to find a little time. “I like having the blog as a unique characteristic of what we do,” he says. “We don't want to be perceived like every other residential builder out there.”

Mozaic

Los Angeles

Residents at the Mozaic, a high-end apartment community located in the heart of downtown Los Angeles, have the benefits of living the condominium lifestyle at a renter's price.

The Lincoln Property Co., a Dallas -based developer, built the 272-unit community to condominium specifications, so each apartment features its own washer and dryer, granite countertops and stainless steel appliances in the kitchen, floor-to-ceiling windows, and private balconies.

LUCKY BREAK: Residents at Mozaic enjoy condo-style finishes in Los Angelese for a renter's price.

Other amenities include dramatic courtyard fountains, a rooftop pool and barbeques, an Internet café with a coffee bar, a conference room, and a fitness center.

But the project's main lure is its location. Mozaic is adjacent to Los Angeles' main transportation hub, Union Station. It's also within walking distance to City Hall, Chinatown, and Little Tokyo. The transit-oriented development is minutes away from entertainment and sports venues, such as the Staples Center and Disney Concert Hall.

Reg Delponte, senior vice president of the Lincoln Property, believes the project will entice commuters and those who use the trains for work or leisure.

The apartment even caught the eye of national homebuilder Standard Pacific Homes. The builder hoped to convert the apartment community into a for-sale condominium development, but the deal fell through and went back into the hands of Lincoln Property, who now currently manages the property.

Mozaic was built on a 2.8-acre infill site, which was formerly Union Station's extended parking lot. The modern, contemporary-themed community features floor plans ranging in size from 644 square feet to 1,460 square feet, and monthly rents go from $1,400 to $2,500. The project opened in October 2006.