The Affordable Housing Disaster

How a cozy alliance of government bureaucrats and nonprofit developers spends tens of millions of dollars building almost no housing for the poor

On May 16, 1998, the Federal government blew up the 576 apartments of the Geneva Towers public housing development, located in San Francisco's Visitacion Valley neighborhood. The dramatic implosion, broadcast on live television, symbolized what had long been recognized as a national public-policy failure: the cramming of poor people into high-rise public housing monoliths that became unlivable because of bad management and crime engendered by concentrated poverty.

The supposed cure for Geneva Towers also followed a national trend. To replace these two massive, crumbling, 20-story apartment towers, the federal and city governments entered partnerships with nonprofit developers, who were to build so-called "low-rise" developments -- two- and three-story complexes that would be less isolated from the neighborhoods around them and, therefore, easier to police than the towers that preceded them.

Two and a half years after the Geneva Towers failure fell in on itself, however, the proposed replacement for the towers has become its own kind of disaster:

  • Public records show that the government will ultimately spend $80 million on the three low-rise housing projects meant to replace Geneva Towers, making them some of the most expensive apartments built recently in the Bay Area. Upon completion, the average unit in one of these projects for poor people will have cost significantly more to build than a luxury loft of similar size.
  • The projects are millions of dollars over budget, more than a year behind schedule, and plagued by design and construction flaws.
  • Even as the projects have stumbled, the city has been called upon to repeatedly bail the two nonprofit developers managing them out of financial trouble, to the tune of millions of dollars.
  • Then again, the projects have raised conflict of interest questions, as city and federal officials have spun through the revolving door, drawing salaries from the very nonprofit development operations that the officials helped choose and fund.
  • And even when they are completed, the new projects will not be affordable to most of the poor people they were meant to serve. Because of high cost, construction delays and other reasons, very few of the 1,500 tenants evicted from Geneva Towers with promises of new public housing will be able to inhabit the public housing supposedly built to serve them.

During the last 10 years, as San Francisco was in increasingly dire need of cheap apartments, the nonprofit developers that the city chooses, almost exclusively, to build affordable housing have managed to complete just 350 units a year.

The failure to build low-income housing is not a money problem; a combination of federal grants and tax credits, local development fees, and municipal bonding authority have the city awash in affordable housing funds.

The affordable housing logjam is not a reflection of a space problem. Governmental studies have identified numerous sites in San Francisco that would support the construction of thousands upon thousands of units of affordable housing.

The problems endemic to building affordable housing in San Francisco are complex, but most of them seem to connect to an entrenched housing bureaucracy, a network of government agencies and favored nonprofit corporations allied in "public-private partnerships" that are studded with apparent conflicts of interest and seem consistently to labor long to produce housing mice.

Geneva Towers was a failure as a public housing project. What happened after Geneva Towers was blown up is a depressing case study in how San Francisco's affordable housing program serves housing bureaucrats rather than poor people who need homes.

The U.S. Department of Housing and Urban Development subsidized private investors to build Geneva Towers in the mid-1960s. It also subsidized rents for the impoverished tenants, 80 percent of whom were African-American. Through the years, HUD also loaned the not-so-impoverished landlords tens of millions of dollars for improvements to the towers, which the landlords duly failed to make.

With almost no maintenance being performed, the towers gradually fell apart. When the ventilation system stopped working, San Francisco's Department of Public Health put a happy face on the situation, saying the dead air was a good thing, because it kept tons of asbestos dust in the complex from finding its way into children's noses. When scalding water started to rise in toilet bowls, burning unsuspecting butts, tenants did not know whether to laugh, or stop paying rent.

In 1991, HUD kicked out the owners of the complex, who had reneged on paying back government loans, and hired a local property management firm, which promptly set about emptying the toxic towers of people, seemingly by any means necessary. Being a day late with the rent, or even sassing the managers, suddenly became grounds for instant eviction. There was no due process, and no appeal; federal property is not covered by local tenant law.

Two-hundred eighty apartments were speedily made vacant in this draconian manner. The Geneva Towers Tenants Association attempted to stop the evictions, with wide support from many sectors of the community. The association's grassroots struggle was featured on the MacNeil-Lehrer Newshour and 20/20 national news shows. HUD was mightily embarrassed. It summarily evicted the tenant leaders.

With the opposition leadership essentially guillotined, HUD unveiled a plan to demolish the towers and build replacement units (even if those units would offer housing for just half the number of people served by Geneva Towers). The agency signed a contract with the city promising that the former residents -- excluding the evicted ones -- would be able to return to the new housing and, eventually, own it.

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