White proposed an ordnance that would have required all contractors doing work in Houston to register with the city.  The proposal would have also required contractors to obtain at least $1 million in property damage and liability insurance coverage.  This would have been the thinnest of consumer protections.  But even it proved too much for those who have insisted that contractors should be able to operate free of any meaningful regulation and consumer protection laws.

The Houston Chronicle characterized White’s withdrawal of the ordnance as “a rare defeat for White, who pushed for the measure in the wake of Hurricane Ike as a protection for consumers against poor or fraudulent roofing companies.”

“White appeared visibly frustrated last week as most council members spoke against the measure, saying repeatedly the city needed to do something to give homeowners recourse in case they were defrauded,” the Chronicle reported.

The Houston action comes in the wake of recommendations of the Texas Sunset Advisory Commission to abolish the Texas Residential Construction Commission (TRCC).  The Sunset staff report on the TRCC concludes, “current regulation of the residential construction industry is fundamentally flawed and does more harm than good.”

I agree with the Sunset staff recommendation.

The TRCC was pushed into being in 2003 by some in the Texas home building industry who wanted to hinder efforts by homeowners from taking builders to court over shoddy building practices.  Essentially all the TRCC does, once a contractor causes a problem, is mandate the homeowner submit to a long and drawn out state review, inspection and mediation process. The agency is designed to discourage homeowners from taking contractors to court to enforce their contract.

The upshot of all this is Texas homeowners are on their own with no meaningful state or local protections to help them deal with contractors who don’t do what they promise.  The absence of consumer protection is a special problem for the poor and the elderly.  The poor and the elderly often lack skills and resources to attract competing contractors to bid on their homes in the wake of a disaster, evaluate contractor’s credentials and references and, when necessary, fight with contractors to get the repairs done right.

Texas needs a state law defining licensing and insurance requirements for all contractors.  Texas also needs a true regulatory agency with a clear mission of protecting the public; an agency designed to ensure that only qualified persons can be licensed.  Instead of being a hurdle for consumers to overcome after they have been victimized by a crooked contractor, a new state agency needs to prevent unscrupulous contractors from doing business in Texas.

The building and construction lobby has blocked meaningful homeowner protections at the state level and has left homeowners worse than nothing in the form of the Texas Residential Construction Commission.  Now that same lobby has demonstrated its power over the Houston City Council by blocking even Mayor White’s weak proposed consumer protections.

Shame on them and shame on us for letting them get away with this.  It is past time for the Texas Legislature to do right and protect Texas homeowners.

It is thus timely that a conference of the topic is coming up September 20 in Dallas.

Revitalizing Nuisance Properties Summit
Saturday, September 20, 2008

PURPOSE OF SUMMIT:
To consider “best practices” and develop effective ways to turn nuisance properties into productive assets.

TOPICS INCLUDE:

• Economic and Social Impact of Blighted and Abandoned Homes
• Strategies to Deal with Nuisance Problems
• Transforming Blighted Properties into Assets
• National Best Practices in  Addressing Vacant/Abandoned Properties

TIME: 8:30a.m. – 3:00 p.m.

LOCATION: Bill J. Priest Institute, Dallas, TX

PLANNING COMMITTEE MEMBERS:
Theresa Canales, Builders of Hope CDC
Melva Franklin, West Dallas Weed and Seed
Byron Gibson, Congresswoman Eddie Bernice Johnson’s Office
Marsha Griggs, Community Prosecutor
Norman Henry, Builders of Hope CDC
Cyndy Lutz, Habitat for Humanity
Judy Mays, University of Texas, Dallas
Regina Nobles, West Dallas Faith Coalition
Heather Way, University of Texas School of Law
Registration info coming soon!

For further information or to be included on the registration invite list, contact Candace Gray at 214-275-7510 or cgray@candacegray.biz or Norman Henry at 214-920-9850 or nhenry@buildersofhopecdc.com

Let’s take a step back and focus on the big picture of housing assistance using this chart I have prepared based on data in a recent HUD research report.

Since it is 107 degrees outside today I decided to stay in and read the latest HUD report and chart some of the data to get the housing assistance overview.

HUD has released the fourth in a series of reports providing information on the size, composition, and quality of the U.S. Department of Housing and Urban Development (HUD)-assisted housing stock and the characteristics of its occupants.

In the chart above, income-eligible renters are those households that would qualify for admission to assisted housing because their income is within the HUD-determined income limit of 50 percent or less of median family income for their area, adjusted for family size  In HUD terminology, these households are “very-low-income renters” and are eligible for assisted housing based on income alone.  The chart shows how the groups relate to one another.  “Worst case needs” means renters who do not receive federal assistance, who have incomes below 50 percent of median family income in their area, as adjusted by HUD, and who pay more than half their income for rent and utilities or live in severely substandard housing.

Referring to the chart, let’s start at the top.

There are 33,604,000 renter households in the US.  About 49 percent of those renter huseholds are within the HUD-determined income limit of 50 percent or less of median family income for their area, adjusted for family size.  That is 16,577,000 households.

HUD subsidized housing is home for about one-quarter of all the income eligible households (4,280,000).  Three quarters of the income eligible households do not live in HUD subsidized housing. Of the 12,297,000 households eligible but not receiving HUD housing, about 42 percent (5,116,000) have “Worst case housing needs.”  Worst case needs” means renters who do not receive federal assistance, who have incomes below 50 percent of median family income in their area, as adjusted by HUD, and who pay more than half their income for rent and utilities or live in severely substandard housing.

Turning back to the 4,280,000 who do live in HUD subsidized housing, 1,094,000 (26 percent) live in public housing.  HUD describes public housing…

Public housing consists of housing developments owned by local Public Housing Authorities or Indian Housing Authorities; HUD makes payments to the authorities to cover the development, rehabilitation, and operating costs of the housing units.  Housing units in these developments are then rented to selected low-income families and individuals at below-market rents.  Because the HUD payments cover the development and maintenance of the project, public housing is referred to as project based.  The amount of rent low-income families pay is generally a fraction (30 percent) of their income.  New tenants can select from vacant and available units owned and operated by the local authorities  Tenants must live in units owned by the local housing authority.

1,800,000 (42 percent) have Section 8 rent vouchers.

The Section 8 Housing Choice Voucher Program involves selected low-income households searching for housing units of their choice in the private rental market.  After the housing unit is located and approved by the local housing authority, a subsidy payment is made to the private-sector landlord on behalf of the tenant household.  The program is designed so that the out-of-pocket amount that tenants pay is 30 percent of the household’s income, if the housing unit rents for less than the Fair Market Rent (FMR) established by HUD for the area and household size.  Families are given the choice of renting units that are more expensive, but tenants then pay 30 percent of their income plus the difference between the higher rent and the payment standard.  Because the payment is made on behalf of the tenant and the payment follows the tenant household if the household decides to move, Section 8 housing is referred to as tenant based.

1,385,000 (32 percent) live in privately owned, project-based, HUD subsidized housing.

The third program category consists of privately owned projects containing housing units that are rented to low-income households at subsidized rents.  HUD provided assistance to encourage the development of affordable housing.  Because the HUD payments are made for the development and maintenance of the project, assistance is referred to as project based.  The following HUD programs are included in this third category: rent supplements, Section 221(d)(3) Below Market Interest Rate, Section 202 Supportive Housing for the Elderly, Section 236 Mortgage Assistance, Section 8 New Construction, Substantial Rehabilitation, Moderate Rehabilitation, and some other smaller programs.  Data on tenants in privately owned housing may not be altogether comparable with data on public housing tenants or voucher recipients.  The public housing and voucher programs are deeply subsidized, with nearly all tenants paying income-based tenant rents.  Only about three-fourths of the households in privately owned housing pay income-based tenant rents.  The other tenants pay rents that do not vary by income; the project is subsidized through initial financing and the rents are uniformly reduced for all tenants.  As a consequence, about one-fourth of tenants in privately owned housing may pay differing proportions of their income for rent and also may differ in other characteristics from the other assisted tenants.

These assisted households represent 13 percent of total US renters.

That is the big picture of housing assistance.

New Habitat for Humanity home next door to condemned house.

The problem posed by abandoned, derelict housing where cities have failed to follow through on code violations extends beyond multifamily housing to include single family homes. The Texas Legislature needs to act to give community organizations the power to clean up neighborhoods when cities fail to act.

Back on July 30 I blogged about a proposal several of us have offered to the Texas Legislature to allow community based nonprofit groups to go to court to force derelict apartment developments in receivership.  In response to my blog, Heather Way of the University of Texas Law School (and a Texas Houser Award winner) sent me some photos documenting the problem created by single family houses with repeated code violations in Dallas.  The City of Dallas has failed to follow through to force owners of houses with multiple code violations to be repaired or torn down.  As a result, the quality of life of residents of these communities is adversely affected and community revitalization efforts are being thwarted.

Note the numerous code enforcement notices posted on this house, to no avail.

Consider the problem that Habitat for Humanity faces when they build a new home in a neighborhood filled with abandoned houses with multiple bright red code violation stickers nailed to the front doors.  One or two new houses in a neighborhood cannot overcome the blighting effect of these wrecked houses.  Empty, unsecured houses attract squatters, drug dealers and pose a fire and safety hazard the would not be tolerated by the City in wealthier Dallas neighborhoods.

The City of Dallas lobbyist told a working group empaneled by Texas Senate Intergovernmental Relations Chairman Royce West last month that the problem with non compliant multifamily properties was due to a funding shortage facing major Texas cities.  While I am sure Dallas is facing a funding shortfall, this is really not a very convincing explanation.  The City carries out a lot of functions and sets priorities for its spending.  The truth is that safeguarding the health and safety the predominately low income and minority residents of these neighborhoods just does not get sufficient priority with the City of Dallas. We need to see this for what it is — a legacy of the racism that has long caused the City to ignore the quality of life in minority neighborhoods.

The City of Dallas has not allocated sufficient resources to bring receivership actions against absentee owners of single family houses.

When a city government fails to act to protect the welfare of its citizens, the Texas Legislature needs to step in to find someone who can and will.  Our suggestion is to permit community based nonprofit organizations to go to court and force properties with multiple code violations into receivership. Once the nonprofit owns the property it can repair or demolish the house.

Thanks to the leadership of the Houston Chronicle a light has been shined on the ongoing problem in Houston with derelict multifamily housing.  Last month two children were killed there when a staircase at one of the dilapidated apartments broke loose and crushed them.  In Houston, the city government has begun to take some tentative first steps to address the problem of massively substandard apartment projects.

The residents of low income neighborhoods have lived with the problem of non-compliant substandard housing for far too long.  It it time to get serious and give communities the tools they need to take their fate into their own hands.

A staircase fell at a Houston apartment complex killing two children. Click the picture to watch video.

It happened again last night.

More kids were hurt, this time killed, in the slum apartments the city of Houston tolerates in the Southwest section of the city.

It should not have happened.  The City of Houston has long known about the deplorable living conditions in this area.  The Houston Chronicle has splashed it over the front page of the paper in feature stories in recent months.

Last night a stairway collapsed at the Westwood Fountains apartments killing two boys, ages 10 and 4.

This week’s story is almost too sad to read.

You may want to watch this video of conditions in these apartments.  Keep in mind this is not a uniqe situation.  These type of grave heath and safety problems are widespread and are not being addressed by the City of Houston.

So what needs to be done?

1) Send the City building inspectors out right now to sweep through the apartments in this area, and ultimately through the entire city, and give landlords no more than 24 hours to fix major health and safety issues.

2) Establish a division in the Houston City Attorney’s office with adequate staff to take landlords to court who ignore orders from building inspectors to repair apartments.  Seek jail time for landlords who willfully violate repair orders.

3) Condemn and demolish at city expense the worst apartments and provide the tenants relocation assistance.

4) Establish a tenant relocation fund to relocate tenants from apartments that threaten their health and safety while repairs are made.

5) The City of Houston should pass an ordnance licensing landlords, collect a fee and use the proceeds to conduct regular inspections.

6) Establish and publicize a phone number to allow tenants to call and file complaints anonymously so they do not have to fear retaliation from their landlords. Pass an anti-retaliation ordnance protecting tenants who file complaints.

7) Establish a Mayor’s Task Force to investigate the extreme levels of racial and economic segregation present in the City of Houston and come up with a plan to breakup concentrations of poverty and substandard living conditions.

8 )  Establish a fair housing counseling and “Moving to Opportunity” program in Houston to overcome the segregation of Katrina evacuees created by the temporary housing program in these Southwest Houston apartments.

9)  Seek funding from the federal government to provide rent vouchers allowing the relocation of Katrina and Rita evacuees from the segregated southwest Houston apartments they were located in immediately following the hurricanes.

10) Houston needs new and better apartments to replace these slum apartments.  Congress needs to give Texas the flexibility to award additional Low Income Housing Tax Credits (a 160 percent increase) to developers who agree to rent up to one-third of their apartments to very low-income families. This way, the state can adjust the credits to produce apartments with deeper subsidies that rent to families earning between roughly $18,000 and $26,000 a year.

11) The Texas Legislature needs to pass a law allowing community based nonprofit organizations to force apartments with serious and repeated code violations into receivership so that responsible new owners can take over the apartments and get them torn down or completely rehabilitated.

12) The Texas Legislature should pass a law allowing residents in apartments with serious health and saftey violations to withold their rent and place it in a court approved escrow fund until the code violations are addressed.

Apartmentratings.com review of TDHCA funded LIHTC apartments

Low income tenants are seldom consulted about the quality of housing that the government builds for them.

I have long thought this to be a serious flaw in affordable housing. Without the active involvement of consumers how can we expect the housing to be designed to meet their needs?  Without asking the tenants, how can we evaluate whether the apartments are well managed and maintained?

Affordable housing is not a competitive market commodity like market rate housing. Low income families have few choices as to where to live.  The government and developers of affordable housing work together to provide a limited supply that will, by virtue of its scarcity, be guaranteed to be in great demand by low income renters.  There are at least six needy low income families for every subsidized rental housing unit in Texas.  So, all sorts of less that great housing can and is created as affordable housing and ends up being fully occupied.  So how are we to differentiate in subsidizing good from bad affordable housing without talking to the tenants?

The recent popularity and growth of apartment rating web sites promises one opportunity for a consumer voice in affordable housing developments.  I recently reviewed two of the most popular sites: apartmentratings.com and apartmentreviews.net.

Both fall short in being a consistently accurate and useful consumer rating tool.

I wanted to see if I could use the consumer ratings on these web sites to draw conclusions about the quality of apartments funded by the Texas Department of Housing and Community Affairs (TDHCA) under the Low Income Housing Tax Credit (LIHTC) program.  I specifically wanted to see if I could determine whether the subsidized housing units rated better or worse than private non-subsidized apartments.

Both sites report the number of ratings that have been written by tenants and former tenants and the percentage that rate an apartment development favorably.  But when I checked the listings for LIHTC funded apartments in San Antonio and Austin I discovered only about 20 percent of them had been rated by tenants.  Further, of those that were listed, a number had only a single tenant rating.  This is problematic because of bias introduced the anonymous and by the highly idiosyncratic nature of the ratings.

[ASIDE: One property that managed to attract several ratings was the Wurtzbach Manor Apartments (rating page pictured above).  It stands out as fairly unique in the number and degree of negative ratings it received.  Only one of seven ratings was favorable. Now before the NIMBYs who are reading this try to use it as evidence of inherent problems in LIHTC developments note that a comparison of the handful of LIHTC apartments with meaningful ratings with private funded apartment developments in Austin and San Antonio suggests that the LIHTC units are generally rated better that private apartments.  The problem, as I noted earlier, is that very few have ratings.]

Setting aside the Wurtzbach Manor case, you have to wonder if some of the posts that are most negative were not written by tenants who have an ax to grind with management over an issue that they are not disclosing or whether the postings are made by competing leasing agents hoping to steer would be tenants away from their competitors.  Likewise, some of the glowing reviews are almost surely written by the management staff of apartments posing as tenants.  So you really need several reviews written over an extended period to get a sense about the real situation in the development. Very few apartments have that depth of reviews.

So these on-line consumer reviews are of little use at this point in figuring out the difference between a good and a bad development from a consumer’s perspective.  But these services are new and may evolve into something useful in the future. It would behoove government agency compliance monitors to read the reviews to identify individual cases where bad management practices may be occurring however.

For now I am left hoping that smart government housing agencies may someday implement a good tenant survey system to gain insights into what works and what does not work for the clients of subsidized affordable housing developments. Basing compliance evaluations of affordable housing developments on narrow record keeping and financial standards misses the critical factor – whether the housing development is enhancing the lives of the families who call it home.

Watch John Henneberger’s testimony before the Texas Seante International Relations and Trade Committee on substandard rural housing.  Read my written testimony presented to the committee.

On June 17 I presented invited testimony before the Texas Senate Committee on International Relations and Trade on the committee interim charge:

Review state and local policies relating to development and growth in rural and unincorporated regions of the state. Work with housing advocates, county organizations and appropriate officials to assess the proliferation of substandard housing in rural and unincorporated areas.

Rural substandard housing and blight receives far less attention than these conditions do in urban areas. Low rural population densities have the effect of masking this type of blighted housing.

Increasingly, Texas has seen a proliferation of low density, blighted residential developments in the far exurban areas of Texas major cities. When urban housing costs get too high the poor are forced into exurban areas. The poor pay a significant price for moving out of urban areas. They are further from affordable health care and public services. The lack of public transportation increases their cost of living significantly. Taxpayers pay a price for providing the public infrastructure to accommodate this sprawling, low-density population of low income families.

When low income families move to  exurban and rural areas they must often create housing for themselves by buying or renting a parcel of land and acquiring some form of housing.  Most often that is a house they build for themselves as best they can afford or a mobile home.  Often times these mobile homes are old and in substandard condition.

Some in the building industry have argued that the application minimum housing standards in rural areas is undesirable because it will drive up the cost of housing, making it impossible for lower income families to be able to afford a home. Yet minimum building standards are just that. They set minimum levels of state standards to ensure the habitability of a residential structure. Minimum standards are not unnecessary frills. As a direct consequence of living in substandard housing people can and sometimes do die. The State’s interest in protecting the public by imposing and adequately enforcing minimum habitability standards should not end at the city limits.

Rural specific federal housing programs, administered by the United States Department of Agriculture’s Rural Housing Service, have sustained enormous cuts over last 20 years to the point where the programs are producing only a small number of new housing units in Texas each year.

These cuts have made maintaining Texas’ existing housing stock of rural rental housing in decent condition almost impossible. Landlords have increasingly turned to the state housing agency for assistance in rehabilitating and modernizing 30 year old plus apartment developments originally funded by the Rural Housing Service. But Texas state housing programs are massively oversubscribed, meaning that there is not enough money to meet anything but a small share of the rural housing maintenance needs.

Cuts in single-family construction subsidies at the federal level have virtually shut down the production of government subsidized owner occupied single-family housing across rural Texas with the notable exception of a few outstanding nonprofit organizations.

The principal cause of substandard rural housing is the inability of families to afford decent housing where they prefer to live. There is no painless answer to this problem. The need is for more funding to produce more affordable housing.  We strongly urge the Texas Legislature to increase state funding for the Texas Housing Trust Fund. This fund has been used to leverage private and federal dollars to fund rural rental housing. It is been especially effective in rural areas in establishing self-help, owner-builder housing programs under the highly successful Texas Bootstrap loan program.

I offered the following recommendations to the committee.

1. Extend to rural counties the local option to adopt building codes and to enforce those codes with local county inspectors in order to prevent the proliferation of substandard housing.
2. Expand the Economically Distressed Areas Program (EDAP) and provide adequate funding for the program to allow county governments to both prevent the proliferation of substandard rural housing developments and to access funds to extend public services to substandard rural developments.
3. Prohibit the resale and relocation of substandard manufactured housing units intended to be used for residential purposes.
4. Provide $50 million per year in funding for the Texas Housing Trust Fund to increase the supply of housing in both urban and rural Texas.

To read this story headlined “Operators of squalid apartments ignore the law to prey on the thousands of Houston’s poor desperate for shelter Life in places of last resort” is to be infuriated at the slumlords and the the City of Houston.

A Houston Chronicle analysis of city records shows that inspectors issued at least 2,300 citations to owners of about 300 Houston apartment buildings the past two years, alleging violations of health, building, fire or electrical codes – or for neighborhood “nuisances.” …

The citations are criminal complaints, heard in Municipal Court, that often follow one or more notices instructing owners to correct problems. One quarter of the citations the Chronicle reviewed alleged that owners failed to maintain structural standards requiring, for example, that stairways be safe and that floors and walls be sturdy enough to safely bear weight.

Despite this record of criminal citations it was April 2007 before the City of Houston acted to shut down the first offending apartment project. The City took action only after 240 citations were issued and “two months after two children were hospitalized with burn marks after being shocked by an unsecured electrical transformer there,” according to the Houston Chronicle story.

I daresay that the Houston Police Department would make a point to arrest an individual who had other types of criminal citations issued against him that had not been taken care of. But in this case an apartment owner is allowed to accumulate 240 violations while continuing to operate an apartment complex with human beings living in it in dangerous conditions before the city takes any action.

Please read this story and get angry.

Update…

Since writing this posting I see from a story in the Houston Chronicle yesterday that Houston Mayor Bill White has responded to the stories in the Houston Chronicle with a promise to increase enforcement against noncomplying apartment projects

The mayor’s office has announced that it plans to spend up to $1 million a year on additional inspections. According to the Chronicle:

The goal is to get the city’s apartment enforcement on a routine inspection cycle, especially at properties with the worst conditions, replacing a system that is inconsistent and driven largely by complaints.

Yet the point of the story was not that there were not enough inspections. Some of the apartment developments had as many as 300 citations against them. The point was that nothing was being done after a citation was issued. If the city is serious about cleaning up this problem it needs to get serious about enforcing the citations that its inspectors issue.

Nevertheless, congratulations to the Houston Chronicle and its team of reporters who worked on the story for getting the mayor’s attention.