\ ‘ AN EVALUATION OF ALTERNATIVE STRATEGIES IN HOUSING REHABILITATION ' Thesis for the Degree of M. U. P. MICHIGAN STATE UNIVERSITY LEON GUSTAVE SHILTON 1971 IIIIIIIIIIIIIIIIIIIIIIIIIII 1. r3“ _ g-..“ _ i. Y 293 00995 5869 L, . , - . F L mfgg n. -.,.i Late J .«m Univcmfty’ . ABSTRACT AN EVALUATION OF ALTERNATIVE STRATEGIES IN HOUSING REHABILITATION By Leon GusTave ShilTon The exisTence of marginal housing in The UniTed STaTes represenTs boTh a ThreaT and a poTenTial. If The housing sTock conTinues To decline, This condiTion will add To The frusTraTion of Those ThaT live in such housing and will deTracT from The viTaIiTy of our ciTies. If correcTive programs can be esTablished and implemenTed, This marginal housing rep- resenTs a source ThaT can be uTilized noT only To improve The housing sTock buT add To The social developmenT of The dwellers and The viTaIiTy of The ciTy. To esTablish such correcTive programs requires an analysis of The causes of marginal housing, The meThods of recording The Types and degree of This Type of housing, and The subsequenT framework of evaluaTion To decide, given predominanT value sysTems, among alTernaTives which may be applied. The four alTernaTives are To allow an area of marginal housing To conTinue To deTerioraTe,tTo rehabiliTaTe The residenTial sTrucTure in- Tensively in a shorT period of Time, To rehabiliTaTe The sTrucTure incre- menTalIy,Iér To demolish The sTrucTure and build anew. The purpose of This Thesis is To examine The causes of The marginal housing and To projecT a framework of analysis for deciding among The four alTernaTives. This framework is based on a cosT-benefiT analysis. There are Time caTegories of shorT, medium and long Term. The uniTs of analysis are in Terms of The occupanTs, The residenTial sTrucTure, The neighborhood, AN EVALUATION OF ALTERNATIVE STRATEGIES IN HOUSING REHABILITATION By LEON GUSTAVE SHILTON A THESIS SubmiTTed To Michigan STaTe UniversiTy in parTial fulfillmenT of The requiremenTs for The degree of MASTER lN URBAN PLANNING DeparTmenT of Urban Planning and Landscape ArchiTecTure I97I fl /. j? 7; ”,3 Vi] i"¢' * CopyrighT By LEON GUSTAVE SHILTON l97l AcknowledgemenTs If America is sowing her seeds of desTrucTion iT is because she is acTing Today wiThouT Thinking of Tomorrow. A role of The universiTy TradiTionaIIy has been To allow for The anTicipaTion of The fuTure. Those who criTicize The universiTy and scorn iTs efforTs are perhaps To be piTied because of Their lack of foresighT. To insTilI The need for Tempered reasoning as a way To prepare for Tomorrow has been a laudable aim of The School of Urban Planning. The auThor is indebTed To Professor Sanford Farness, who aT The criTical poinTs in Time, helped spawn new approaches To analyzing The problem of rehabiliTaTion in housing. This sTudy could noT have been done wiThouT his encompassing sensiTiviTy. Equally imporTanT was his rigorous evaluaTion of The resulTing analyses. The auThor also wishes To acknowledge The general conTribuTions of Professor Charles Barr for his conTinuing abiliTy To clearly define fundamenTal poinTs of analysis, and To Professor KeiTh Honey for his abiliTy To Thoroughly describe planning Today and iTs serious shorT— comings. The School's financial assisTance was also appreciaTed. Finally, The genesis of This sTudy is Traced To a spring day in a delighTful Townhouse backyard, no more Than l5 feeT by I5 feeT, in The hearT of WashingTon, D.C. where Two people could be as privaTe and TogeTher as They ever would wanT To be. TABLE OF CONTENTS I. A SUMMARY OF THE PROBLEM OF THE OLDER HOUSE IN THE UNITED STATES Physical Life Economic Life Social Life, AdminisTraTive Life. The Census of Housing. Urban Renewal - Model CiTies Surveys . Housing Code Surveys . DefiniTion of RehabiliTaTion . Summary. . . . II. THE ECONOMIC CONSTRAINTS AND THE FEDERAL ASSISTANCE PROGRAMS. High Income PresTige RehabiliTaTion. Middle Income RehabiliTaTion , Low Income RehabiliTaTion, Federal Programs , a. Federal Insurance Programs, b. SecTion 203 subsecTion (k). c. SecTion 220 (h) d. DirecT Federal Financial AssisTance Programs. e. SecTion 22l(d)(3) Below MarkeT lnTeresT RaTe Program. f. SecTion 22l(d)(3) RenT SupplemenT Program . g. SecTion 22l(h), RehabiliTaTion for Resale . h. SecTion 3I2 DirecT RehabiliTaTion Loan. 2I 25 . 26 . 29 . 34 . 37 . 37 . 38 . 4O . 4| . 4| . 42 . 44 . 45 i. SecTion Il5 DirecT RehabiliTaTion GranTs. j. DirecT Public RehabiliTaTion. k. Summary . III. A SUMMARY OF VARIOUS REHABILITATION PROJECTS. Upper Income, PresTige ProjecTs. a. The New York CiTy BrownsTone EfforTs. b. CenTral Philadelphia. c. Foggy BoTTom, WashingTon, D. C. d. Summary, PresTige ProjecTs. Middle Income ProjecTs . a. Brooklyn, New York. b. Summary, Middle Income ProjecTs . Low Income ProjecTs. a. The UnsTable ProjecT, Oueen Village, Philadelphia . b. BeTTer Living, lnc., RochesTer New York. c. Summary, Low Income ProjecTs. ChapTer Summary. IV. FOUR ALTERNATIVES . ConTinued DeTerioraTion. Summary. lncremenTaI RehabiliTaTion . Summary. . . . . Large Scale RehabiliTaTion . Summary. . 46 . 47 . 48 . 52 . 53 . 53 . 58 . 6| . 63 . 67 . 68 . 7O . 73 . 73 . 76 . 80 . 85 . 9| . 9| . 94 . 95 . 98 . 98 V. ReconsTrucTion . Summary. ChapTer Summary. THE POTENTIAL FOR SUCCESSFUL REHABILITATION PROGRAMS. .IOI .IOI .I04 .I09 Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure LIST OF FIGURES TiTle CaTegories of Housing Surveys . I950, DilapidaTed Dwelling UniTs, I960. SubsTandard Dwelling UniTs. ResidenTial Building Codes WiTh Housing Code VioIaTions . HypoTheTical DevelopmenT PoTenTial For PresTige High Income RehabiliTaTion UniTs . . . . . . . HypoTheTical DevelopmenT PoTenTiaI For Middle Income UniTs . . . . HypoTheTical IncremenTal RehabiliTaTion, Middle Income UniTs. HypoTheTicaI DevelopmenT PoTenTial For Low Income UniTs . HypoTheTical IncremenTal Family. InvesTmenT By Low Income SecTion 203(k) Home ImprovemenT Loans, MorTgages Insured . SecTion 220(h) RedevelopmenT Loans To I968. STaTus of 22l(d)(3) Program . STaTus of 22l(d)(3) RenT SupplemenT Program . SecTion 3|2 RehabiliTaTion Loan Program . SecTion II5 RehabiliTaTion GranT Program. PresTige RehabiliTaTion, ManhaTTan. PresTige RehabiliTaTion, Brooklyn PresTige RehabiliTaTion, Philadelphia Summary: PresTige ProjecTs Summary: Middle Income ProjecTs. vi Page IO . 28 . 32 . 33 . 35 . 36 . 39 . 40 . 42 . 43 . 46 . 46 . 55 . 56 . 6O . 63 . 70 Figure Figure Figure Figure Figure Figure 2I 22 23 24 25 26 Summary: Low Income ProjecTs . AlTernaTive: AlTernaTive: AlTernaTive: AlTernaTive: ConTrol lnsTiTuTions in Housing RehabiliTaTion. ConTinued Slum. lncremenTaI RehabiliTaTion. Large Scale RehabiliTaTion. ReconsTrucTion. vii . 80 . 92 . 97 .I00 .I03 .II2 ChapTer One: A Summary of The Problem of The Older House in The UniTed STaTes In The year I970, an esTimaTed one-Third of The counTry's housing sTock will be over forTy years old.1 These older sTrucTures range from The Mansard-roofed VicTorian homes of Cape May PoinT, New Jersey, The esTaTe homes of The logging and railroad barons on SummiT STreeT in ST. Paul, MinnesoTa, To The eleven-fooT wide row homes in BalTimore and The Spanish homes of MonTerey, California. Included are The firsT auTomobiIe orienTed suburban houses and numerous homes on The urban fringe and in The small Towns across The counTry. The economic invesTmenT, The hisToric characTer and The diversiTy CDT These uniTs is obvious. The liTeraTure on urban problems is inun- daTed wiTh The phrases of "greying areas and deTerioraTion." The (Dider dwelling uniT has been ciTed repeaTedly boTh as a problem source 63nd as a poTenTial soluTion.2 The purpose of This Thesis is To evaluaTe The mechanisms and goals of various projecTs of rehabiliTaTing The older house. IT will describe The various aging processes, The means of assessing The condiTion of a house, describe various projecTs, hypofhesize The economic feasibiliTy of rehabiliTaTion, enumeraTe The federal programs and finally suggesT a value and goal TesTing maTrix in deTermining The desirabiliTy of wheTher To allow conTinued deTerioraTion, rehabiliTaTe or Tear down and sTarT anew. The aging dwelling is an enTiTy in a dynamic process. A house does noT simply grow old. IT is subjecT To numerous pressures, boTh physical and social. As an "arTifacT" in a human sysTem iT represenTs a focal poinT for The expression of various social and economic values.3 In The physical sysTem iT is subjecT To basic physical science laws. Various Terms have been used To describe The aging process. Because of The sug- gesTion ThaT a house physically "wears ouT" The Term deTerioraTion has been used To describe The physical aging. Because social sTers change and demand differenT physical and funcTionaI arrangemenTs, The Term 99; solescence has been used To describe The social aging of a house. The differenT caTegories under which a living uniT "ages" include economic, social, adminisTraTive, and physical. The main facTors which conTroI The economic life of a uniT include: a. morTgage life b. Tax depreciaTion c. Tax valuaTion Under social pressures The main facTors include: a. The life sTers of The inhabiTanTs as They pass Through differenT family sTages b. The life sTyles of The populaTion as a whole as They evolve in To differenT living arrangemenTs and requiremenTs, as reflecTed by changing cul- Tural values. Physical facTors which deTermine The raTe of aging for a sTrucTure include: a. inTernal aging, ThaT is mainly The weakening of The basic sheITer uniT over Time. b. exTernal influences such as The climaTe, pollu- TanTs, and percussive effecTs of Traffic. From Time To Time, cerTain adminisTraTive decisions are made as To whaT sTandards should apply To a house for cerTain governmenT and pri~ vaTe secTor acTion. If These sTandards are noT conTinualIy revised or do noT reflecT a careful analysis of remaining uTiliTy of The uniT, The effecT of These sTandards is To impose an adminisTraTive consTrainT, which may acTually decrease or increase The uTiliTy and acceleraTe The aging process of a living uniT. The inTer-relaTionship of The above facTors is complex; any aTTempT To ciTe or explain one wiThouT relaTing iT To The oTher is noT accuraTe. Physical Life The mosT obvious facTor is ThaT of The acTual physical aging. In a sTudy of housing sTrucTures builT beTween l9|7 and I938 in San Fran- cisco, ArThur D. LiTTIe concluded ThaT The residenTial sTrucTures Tended To show pronounced physical aging afTer The I8Th year; The criTeria and evaluaTion of The sTudy were noT enumeraTed.” One can hypoThesize a lisT of facTors which could alTer The I8Th year as a significanT year, such as qualiTy of iniTial consTrucTion, Type of maTerials and climaTe. If a residenTial sTrucTure is divided inTo Two caTegories, The sTrucTure iTself consisTing of The load bearing elemenTs, walls, and roof, and Then iTs uTiliTies and equipmenT, a more logical sequence of aging can be hypoThesized. For examples, depending upon climaTe, The replacemenT of a roof, a main sTrucTural elemenT, will follow one re- placemenT cycle. The replacemenT of The main heaTing uniT, because of wear, will follow anoTher. BoTh are replaced because of deTerioraTion. DifferenT living sTyles, however, may require The replacemenT of equipmenT or modificaTion of The sTrucTure, even Though They are sTruc- Turally sound. The building has noT deTerioraTed To The poinT of need— ing replacemenT, buT raTher has become obsoIeTe. In The various rehabi- liTaTion projecTs To be reviewed in ChapTer Three iT was noT uncommon To sTrip a house To iTs main elemenTs To find a sTrucTurally sound shell, roof and floors even Though iT was over eighTy years old. These sTruc- Tures, however, only had cold waTer and a coal furnace, boTh unaccepT- able now. Obviously a physical sTrucTure has a basic life, buT how iT is mainTained will appreciably exTend or decrease iTs life. An oak beam which has been sealed by a plasTer wall will IasT longer Than one which has been exposed To rain because of a defecTive roof. More elusive facTors are vibraTions from Traffic, air Traffic, shock waves, exposure To The sun, and humidiTy, and insecTs. This IisT does noT inTend To be comprehensive. A wooden sTrucTure noT exposed To IighT and venTilaTion in a humid climaTe is likely To deTerioraTe fasTer Than one which is. The effecTs of smog have been shown on house poinTs and sidings; The acid or akaline naTure has deTerious effecTs on brick and morTar. Because of The range of variaTions in consTrucTion and The effecT of exTernal facTors, iT is noT possible To predicT physical aging. In addiTion To The LiTTle sTudy, anoTher housing experT has also noTed The beginning of pronounced deTerioraTion afTer The second decade.5 AT besT, This Two-decade rule can only be used as a guide. Economic Life OTher pressures which mark The obsolescence and deTerioraTion of a living uniT are Tax laws and financing. Economically The life of a sTruc- Ture, regardless of iTs physical characTerisTics, is esTablished by Tax laws and morTgaging. The impacT of federal TaxaTion varies wiTh The asTuTeness of The single home-owner; and iT is subsTanTial on Those who develop and renT residenTial complexes. The NaTionaI Commission on Urban Problems noTes ThaT major Tax feaTures favoring The real esTaTe invesTor are as follows: AcceleraTed depreciaTion formulas: an invesT- menT in real esTaTe can be recovered Tax free by depreciaTion deducTions which in The case of new con- sTrucTion can be Taken aT a raTe which recovers Two- Thirds To‘Three-fourThs of The depreciable cosT in The firsT half of The useful life of The building and more Than 40 percenT of The cosT in The firsT quarTer of The useful life. AbiIiTy To depreciaTe The enTire building cosT, including The parT financed by morTgage; since depre- ciaTion deducTions are compuTed on The whole building cosT alThough The invesTor's equiTy inTeresT is a modesT fracTion of The ToTal invesTmenT, The Tax-free capiTaI recovery may be furTher enhanced relaTive To The owner's equiTy invesTmenT ..... Gain and loss TreaTmenT: When renTal real esTaTe is sold aT a loss, The loss may be fully deducTable as an ordinary loss from ordinary income; when sold aT a gain, The gain may qualify for The favorable capiTal gain TreaTmenT. l LimiTed recapTure rules: Unlike TransacTions in mach- inery and equipmenT, gain on which is Taxable as ordinary income To The exTenT of depreciaTion previously Taken, real esTaTe sales are subjecT To very limiTed recapTure, so ThaT all gains, regardless of prior depreciaTion Taken, are capi- Tal afTer a lO-year holding period. DefermenT of gain: Tax on The gain arising from sale or exchange of real esTaTe may be posTponed by various forms of insTallmenT or deferred paymenT sale... Repair and mainTenance: The owner of real esTaTe may someTimes build up The value of his properTy by judicious repair and mainTenance expendiTures which qualify as currenle deducTible expense alThough They more Than compensaTe for physical deTerioraTion and obsolescence. (On The oTher hand, ouTlays which would hardly be reflecTed in The value of some slum properTies may be TreaTed as nondeducTible capiTal ex- pendiTure.)6 Through This sysTem of TaxaTion, The "economic" life of a sTrucTure is considerable less Than ThaT of The physical life. IT is mosT advan— Tageous To sell properTy no laTer Than Ten years afTer acquiring iT. One of The mosT clearly esTablished invesTmenT responses, To The federal income Tax law is The careful and generally quick Timing of The Turnover of properTies once The invesTor has skimmed off The cream of depreciaTion deducTion.7 The commission furTher noTes: ...The rapid Turnover syndrome is noT limiTed To luxury aparTmenTs or financial disTricT office buildings. A re— cenT descripTion of slum properTy invesTmenT acTiviTies indicaTes ThaT They follow differenT paTTerns ...[which] include (I) repeaTed rounds of ownership To resTore depreciable basis, (2) preoccupaTion wiTh The creaTion of quick capiTal gains Through The conversion of older properTy for overcrowding, higher revenues and sub- sequenT deTerioraTion, and (3) rapid Turnover due To con- cenTraTion of depreciaTion allowances in The early years...8 For The single home, a general rule is ThaT a house for income Tax 9 This figure nearly corresponds depreciaTion benefiTs lasT 33 years. To The second economic facTor: The morTgage life. Based on morTgage flows, iT has been suggesTed ThaT a living uniT, primarily a house, has several morTgage lives, each decreasing in years, and for successively lower income dwellers. HypoTheTically, The firsT morTgage is 30 years for an upper middle income family. AfTer This 30 year period, a clusTer of facTors deTermine wheTher The house will be mainTained or allowed To deTerioraTe. The neighborhood, The condiTion of The house and The se- cond family characTerisTics will deTermine The lengTh of The second morTgage. Usually This morTgage is noT for The same lengTh of Time, buT shorTer Than The firsT. Social Life This clusTer of facTors incorporaTes The Third seT of forces, The social pressures: (I) The phase in a family's life as To iTs need or cerTain funcTional living arrangemenTs, (2) evolving social preferences boTh as To neighborhood characTerisTics and infernal living sTyles.10 Examples of These include The change of The American family from a Three-generaTion To a Two-generaTion family; The grandparenTs now live aparT. The dining room formaliTy someTimes is replaced by The coziness of The breakfasT room. Increased leisure has pOpularized The den or play room. Increased demands for privacy have alTered room arrangemenTs. The changes are numerous. In These cases older sTrucTures are rendered obsoleTe. In addiTion To The sTrucTural inadequacies, social preference ren- ders a sTrucTure obsoleTe because of IocaTion requiremenTs, presTige, neighborhood composiTion and expecTed level of neighborhood services. During a Two year period, l958-l959, one ouT of every five households in The UniTed STaTes moved. Half of These moved wiThin The same meTropoliTan 11 area. Such moving indicaTed a change in social preference, and The abi- liTy To meeT This preference. AdminisTraTive Life The final view on The aging dwelling is adminisTraTive. For each residenTial sTrucTure cerTain codes, guidelines and adminisTraTive pro— cesses govern. As a parT of an ever—changing regulaTory sysTem, These codes and adminisTraTive pracTices are periodic aTTemst To formalize currenT sTandards. A zoning code reflecTs The desire To mainTain or promoTe cerTain land uses; a building code prescribes accepTable levels of consTrucTion; and a housing code prescribes minimal condiTions of size, space and IighT. In The efforT To fosTer a higher qualiTy of living, however, These sTandards may unnecessarily cause older sTrucTures To become unaccepT- able. If These adminisTraTive rules are noT flexible enough They may discriminaTe againsT basically sound sTrucTures. The FHA, for example, had rules ThaT a house wiTh an inTerior room wiThouT windows could noT be insured for morTgages. The consequence of This ruling was ThaT in cerTain secTions of Brooklyn, New York, sTrucTures which were sTrucTu- rally sound would noT be financed. Because They could noT be financed, owners or prospecTive owners could noT easily mainTain Them. AfTer much prodding, FHA relaxed iTs rules and as a consequence monThly morT- gage paymenTs for one owner, as an example, dropped from $342 To $202.12 These four clusTers of facTors - economic, social, adminisTraTive and physical - are involved in The aging process of a house. The inTer- play of These forces is difficuIT To pinpoinT and describe in causal relaTionships. HypoTheTical exTremes will be used as an example. In The firsT case all condiTions are such ThaT "aging" was kepT To a mini- mum. A case like This may be: e. a sTrucTuraIly well builT uniT an inTerior design ThaT was adapTable To various life sTyles iT was locaTed in a sTable neighborhood iT was conTinually well mainTained land speculaTion was noT presenT In oTher siTuaTions, The aging forces are operaTing aT a maximum. Such a uniT may be characTerized as: a. b. sTrucTurally builT To minimum sTandards an inferior design ThaT was difficuIT To modify locaTed in a changing neighborhood subjecT To specu- laTion occupied by a succession of TenanTs ThaT did liTTle To mainTain The uniT Even Though These Two houses may have been builT in The same year one is older and more deTerioraTed and less suiTed for modern living Than The oTher. An inTegral seT of underlying quesTions in This sTudy is ThaT, given an aging sTrucTure: a. How are These forces measured, boTh independenle and combined? WhaT is The cumulaTive effecT of The four forces: eco- nomic, social, physical, and adminisTraTive? Is one of These forces more pronounced Than The oThers? Is iT possible To pinpoinT specific causes for The aging of The sTrucTure? Given ThaT The causes of aging are idenTified, whaT are The cosTs and benefiTs of: I. Allowing a sTrucTure To conTinue To deTerioraTe? IO 2. Tearing iT down and consTrucTing a new building? 3. RehabiliTaTing The aging sTrucTure gradually (incremenTalIy)? 4. RehabiliTaTing The aging sTrucTure inTen- sively wiThin a shorT period of Time? To assess housing qualiTy There exisTs divisions boTh in criTeria and in geographical scale. The Table below illusTraTes housing qualiTy measures: CATEGORIES OF HOUSING SURVEYS AGING FORCE GEOGRAPHICAL AREA NATIONAL METROPOLITAN NEIGHBORHOOD ECONOMIC Census Assessed Value Assessed ValuaTion Repair RaTes ConsTruc- Tion DaTa SOCIAL LimiTed LimiTed Hous- Urban Renewal and Census ing STudies Model CiTies sTudies DaTa ADMINISTRA- H.U.D. Housing Codes Housing Codes TIVE STandards Building Building Codes Codes PHYSICAL Census of Census of Census of Housing Housing Housing Urban Renewal and Model CiTies sTudies Figure One In acTualiTy The only working guides for measuring housing deTeriora- Tion are The Census of Housing, The local appraisals in Urban Renewal sTudies and local housing code enforcemenT surveys. The Census of Housing Any aTTempT To assess The condiTion of housing in The UniTed STaTes resTs on Two consideraTions: The mechanics of collecTing such informa- Tion; and The criTeria for assessmenT, which sTems from The uITimaTe purpose of such daTa. The UniTed STaTes shares wiTh The majoriTy of wesTern European counTries The difficulTy in assessing housing qualiTy.13 Only in The NeTherIands and Belgium are local and naTional criTeria one and The same and daTa flows boTh ways.1” Because of The wide geographical climaTological and sociological differences The feasibiliTy of one sTan- dard appraisal sysTem is unlikely in This counTry. As iT sTands now The naTional sysTem measures only physical sTrucTural characTerisTics. To deTermine The subsTandards condiTions which mighT indicaTe The need for rehabiliTaTion, The I940, I950, and I960 Census have evolved Through Three seTs of criTeria.15 In The I940 Census The working definiTion of "sTaTe of repairs" was spIiT inTo Two caTegories for all housing: "noT needing repairs and needing major repairs." For I950 and I960 The working concepT was "condiTion of sTrucTure." In I950 There were Two caTegories: "noT dilapadaTed" and "dilapadaTed." In I960 This concepT was broadened: "sound," "deTerioraTing," and "dilapadaTed." The confusion is apparenT in Trying To devise consisTenT criTeria among The subsequenT definiTions: I940 — "needing major repairs": when parTs of a sTrucTure such as roofs, walls, floors, or foundaTions required major repairs or replacemenTs. (The enumeraTor deTermined ThaT a condiTion was major if ThaT a defecT was neglecTed iT would creaTe a hazard.) I950 - "dilapadaTed": one or more serious deficiencies or was of consTrucTion ThaT iT provided inadequaTe sheITer or en- dangered safeTy; or iT had a combinaTion of minor deficiences such ThaT iT did noT provide againsT The elemenTs or was unsafe. I960 - "deTerioraTing": needing more repairs Than would be pro- vided during The course of regular mainTenance.16 In I940 a Tarpaper shack could have been classified as a sound dwelling uniT. The I950 Census lefT no room for counTing uniTs ThaT were noT compIeTely sound nor compleTer dilapadaTed.17 EnvironmenTal qualiTy, (i.e. infernal exposure To The sun, venTilaTion) or suiTabiliTy, (design of funcTional areas and Their relaTionship) are noT menTioned. The Census long range objecTives are based on criTeria evaluaTing sTrucTural condiTions and, in addiTion, The developmenT of measures of "neighborhood qualiTy," i.e. "presence of obnoxious odors, cerTain Types of indusTry, high Traffic densiTy, high land use densiTy, and The ave- rage quaIiTy of individual uniTs in a given area."18 ATTenTion has been devoTed To The raTe of improvemenTs in housing from I950 To I960, especially The raTe of improvemenT in dilapadaTed housing. DilapadaTed Dwelling UniTs, I950, 196019 Urban (I950) Rural (I950) OuTside Year ToTaI In SMSA's (I960) SMSA's (I960) I950 4,339,463 I,853,775 2,485,698 I960 4,00I,785 I,300,239 2,7OI,546 Fiqure Two (DilapadaTed dwelling uniTs losT beTween The decade, i.e. demolished or compleTely unfiT for habiTaTion.) 1,035,737 369,77l 665,966 (Dwelling uniTs ThaT have become dilapadaTed since I950; included I960 figures.) l,6I6,840 479,I56 l,l37,684 The Bureau of Census appraising The validiTy of These figures noTes The following: "The sTaTisTics are inaccuraTe. The I960 Census evalua- Tion program indicaTes ThaT dilapadaTed housing in The UniTed STaTes, as deTermined by The I960 Census is undersTaTed by aT leasT one—Third. Use of The I960 Census sTaTisTics grossly disTorTs esTimaTes of The Trend in dilapadaTed housing from I950 To I960. The sTaTisTics for blocks appear To be of very low accuracy. Comparison of The relaTive qualiTy of sTrucTu— ral condiTions of housing beTween ciTies may be subjecT To considerable error."20 For The quanTiTies of subsTandard housing, The figures reflecT a more realisTic appraisal. The Bureau noTes, however, ThaT because of The use of The condiTion of plumbing, a readily observable condiTion, as a criTeria for subsTandard, buT noT dilapadaTed, The general Trends are correcT.21 Excluding plumbing characTerisTics, however, There is evidence ThaT abouT one-fourTh of The uniTs which could be classified as subsTandard from The findings of one group of enumeraTors, would have been differenle classified according To The findings of anoTher group of enumeraTors.22 SubsTandard Dwelling UniTs23 (Including DilapadaTed) Urban (I950) Year ToTal . In SMSA's (I960) I950 II,695,650 6,39I,366 36.9% 22.2% I960 ll,407,565 3,443,289 I9.5% 9.8% Rural (I950) OuTside SMSA's (I960) I0,008,348 63.0% 5,262,730 34.I% SubsTandard uniTs are eiTher dilapadaTed or, major repairs, lacking one or more plumbing facil Figure Three in addiTion To needed iTies. IT is noT pos— sible To quanTify The number of subsTandard uniTs because of non-plumbing criTeria. PercenTages indicaTe percenTage for parTicuIar heading. Hence, for I950, Il,695,650 represenTed 36.9 percenT of The ToTaI housing sTock. The reliabiIiTy of The caTegory of subsTandard focuses on how mean- ingful is The criTeria based on plumbing faciliTies. "IT has been sTaTed ThaT The sTandard-subsTandard cIassificaTion may have To be abandoned or subsTanTially modified because of The widespread insTaIlaTion of plumb- ing faciliTies in housing ThaT in all oTher respecTs is of poor qualify. The conTenTion is ThaT The classifica- Tion is no longer a valid indicaTor of qualiTy of housing."2“ The Bureau, commenTing on The I950-I960 reducTion in subsTandard housing noTes Three possible reasons: I. NeT change in invenTory, The loss of uniTs Through demoliTion or changes and The addiTions of The period. 2. NeT changes in sTrucTural condiTions: uniTs upgraded versus uniTs allowed To deTerioraTe. 3. NeT change in plumbing faciliTies.25 The Bureau noTes ThaT The insTaIlaTion of plumbing faciliTies was The "single mosT imporTanT facTor in The decline of subsTandard" uniTs.26 WiTh These criTicisms The opTimism of Those who ciTe improvemenT is in quesTion. If, in facT, The number of dilapidaTed uniTs was under- esTimaTed by one-Third, Then There was a significanT increase in such uniTs for The decade. The increase becomes even more glaring, when iT is noTed ThaT approximaTely one-quarTer of dilapidaTed housing uniTs in I950 was removed from The housing sTock. Considering The dubious criTeria of plumbing, The validiTy of sub- sTandard Trends becomes quesTionable. Urban Renewal - Model CiTies Surveys One of The main ribs in The umbrella of Urban Renewal programs is ThaT of a deTailed physical evaluaTion of areas under consideraTion. AlThough The DeparTmenT of Housing and Urban DevelopmenT publishes sTan- dards for evaluaTion and demands compilaTions for iTs review, no naTionaI summaries have been published. Such an evaluaTion would appear To be a more definiTive sTaTemenT of housing. There are several guides and pub- IicaTions ThaT are used, buT a realisTic appraisal guide on rehabiliTaTion suggesTs a series of sTandards which could readily be quanTified. IT would noT be difficuIT To use HUD's guide, RehabiliTaTion Guide for Resi— denTiaI PrgperTies, as a yardsTick for exisTing properTies.27 IT is in- clusive, covering noT only sTrucTural condiTions, buT environmenTal fac- Tors, and equipmenT sTandards. In a sense if is a summaTion of exisTing building, housing and fire codes. IT aTTemst To coordinaTe naTional sTandards wiTh local sTandards. IT conTains major secTions on sTrucTure and walls, room sizes and layouT, minimum lighT and venTilaTion sTandards, saniTaTion faciliTies, fire proTecTion and mechanical equipmenT (in Terms of specificaTions). IT is an unexplored poTenTiaI. Housing Code Surveys AnoTher source of guides To local housing condiTions are local housing codes. The main elemenTs of The codes are The basic saniTary condiTions, physical condiTions of sTrucTures, space and occupancy sTandards and The provision of services. In an ideal siTuaTion, housing codes would reflecT minimal sTandards for The varying climaTes and social preferences. Be- cause of Their comprehensiveness, They would suggesT a valid wriTTen definiTion of housing sTandards. As noTed previously, The naTional guide by HUD is an aTTempT To mesh boTh. The serious disregard of housing codes is a possible indicaTion of The underesTimaTed proporTion of subsTandard housing. The minimum per- cenTage of housing in non-conformance wiTh a code was ThirTy-five percenT in a selecTed sTudy of code compliance in concenTraTion code enforcemenT areas in I968. RESIDENTIAL BUILDINGS WITH HOUSING CODE VIOLATIONS IN CONCENTRATED CODE ENFORCEMENT PROGRAM AREAS OF SELECTED U.S. CITIES, TOGETHER WITH YEARS OF WORKABLE PROGRAM CERTIFICATION.28 Number PercenT Years Workable CiTy UniTs VioIaTion Program in InspecTed Housing Code EffecT (I) (2) (3) San Francisco 2,2IO 85 I3 BaITimore, Md. 9,063 70 I3 Malden, Mass. I,|8I 5| 9 CincinnaTi, Ohio 3,499 82 I3 Mansfield, Ohio 580 90 5 Salem, Ore. 20I 98 6 LancasTer, Pa. 505 90 IO Philadelphia, Pa. 6,554 8| I3 Providence, R.|. 2,69I 49 I0 ChaTTanooga, Tenn. I,536 88 l2 ForT WorTh, Tex. I,640 54 l2 Grand Prairie, Tex. I,337 35 II Figure Four Sources: Col. 2 and 3 (sic), "CosTs and OTher EffecTs on Owners and TenanTs of Repairs under Housing Code EnforcemenT Programs." Prepared for NaTional Commission on Urban Problems by The BosTon Research Bureau, I968; col. 3 (sic), HUD Workable Program Office. AnoTher, albeiT exTreme, example of non-compliance wiTh codes and The exisTence of subsTandard housing was a specialized sTudy of new-law TenemenTs in New York.29 Five TenemenTs, buiIT from l902-I903, were inspecTed in I963, reporTedly afTer The various municipal agencies had confirmed code compliance in I960. Over half The aparTmenTs were in "fairly poor To very poor" condiTion. In 59 aparTmenTs, I3l9 vioIaTions were reporTed.3o The general observaTion was ThaT in boTh housekeeping and mainTenance, minimal sTandards were noT kepT. The sTrucTuraI cha— racTerisTics indicaTed a subsTanTial lack of repair, especially for dan— gerous iTems as loose and exposed elecTrical wires and saniTary faciliTies. In The ciTy of Philadelphia esTimaTes have been made ThaT The number of dwelling uniTs subsTanTially failing To comply wiTh local codes is Twice The number of subsTandard or dilapidaTed uniTs reporTed in cerTain Census TracTs.31 DefiniTion of RehabiliTaTion Assume ThaT an evaluaTion has been made of a residenTial sTrucTure, ThaT The chief causes of iTs deTerioraTion and obsolesence has been de- Termined, and ThaT plausible remedial sTeps can be insTiTuTed wiTh a reasonable anTicipaTion of success. The four likely alTernaTives of acTion are: a. Tear The building down and consTrucT a new one b. allow The sTrucTure To conTinue To deTerioraTe wiThouT any inpuT c. repair iT d. rehabiliTaTe iT The firsT Two courses of acTion are self-explanaTory. BuT whaT disTin- guishes repair and rehabiliTaTion? The Terms rehabiliTaTion, residenTial rehabiliTaTion, modernizaTion, repairs, and mainTenance have been used wiTh overlapping meanings. There is confusion beTween American inTerpreTaTions and Those of Europe. ModernizaTion is The European Term comparable To The American rehabili- TaTion. Their use of The word rehabiliTaTion connoTes whaT is implied by The American Term residenTial rehabiliTaTion.32 The variaTion in The adminisTraTive, economic, Technical definiTions is greaT. The DeparTmenT of Housing and Urban DevelopmenT defines if as: "RehabiliTaTion: The resToraTion of a reusable single or group of sTrucTures which overcomes deTerioraTion and provides a saTisfacTorily improved condiTion for residenTial purposes."33 An exTensive UniTed NaTions seminar of mainTenance and modernizaTion in Europe concluded, in economic Terms ThaT disTincTion beTween repair and rehabiliTaTion: "Repair: When an inpuT is made which mainTains a sTrucTures original value." "RehabiliTaTion: When in inpuT is made which raises The value of a sTrucTure."31+ The need for rehabiliTaTion sTems, The seminar noTed from Three Icauses: I. There is a noTiceabIe loss of an original funcTion. 2. There is a condiTion ThaT will cause a deTerioraTion of opporTuniTies for sound economic acTiviTy or a saTisfacTory living condiTion. 3. IT is generally sTrucTuraIly sound, buT has deTerio- raTed because of neglecT and mainTenance.35 Cause Two would encompass surrounding exTernaI condiTions, in effecT including a characTerisTic of residenTial rehabiliTaTion. While having a significanT bearing, The exTernal surroundings do noT immediaTer affecT The sTrucTure or iTs inside. The seminar also noTed ThaT Timing was an imporTanT facTor in eva- IuaTing The consequences of work compleTed on a sTrucTure. IT viewed as a conTinuum The range of work from minor repairs To rehabiliTaTion. There is a basic problem in relying on economic criTeria in differ- enTiaTing repairs versus rehabiliTaTion. In measuring improvemenTs, The Bureau of Census (ResidenTial AlTeraTion and Repairs, series C 50—69), relies basically on dollar caTegories and does noT use The word rehabil- iTaTion in idenTifying any improvemenTs. Based on dollar value iT is noT possible To say ThaT a repair is any improvemenT under $500 and any improvemenT over iT is rehabiliTaTion. IT will be assumed ThaT There is basic agreemenT on The defining concest of repair and rehabiliTaTion: a. repair: an inpuT which resTores buT does noT exceed or change The currenT economic value and uses and livabiliTy of a sTrucTure. b. rehabiliTaTion: an inpuT ThaT resTores a sTruc- Ture beyond currenT economic value and improves The livabiliTy of a sTrucTure. Examples of repairs would include: painTing, paTching a roof, re- pairing a heaTer, adding an elecTrical ouTleT, replacing a sTove. Examples of rehabiliTaTion would include: replacing a roof (paTch- ing a roof would noT add To The economic value of a sTrucTure, a new roof would), replacing a heaTer (again This would add To The value of The house), changing room sizes, replacing The enTire elecTrical sysTem, alTering a kiTchen as To boTh arrangemenT and appliances. RehabiliTaTion would noT include addiTions such as a new porch or room, because ThaT improvemenT is noT a resToraTion. The definiTion of rehabiliTaTion ThaT will guide The ThoughT in This analysis is as follows: 20 The modificaTion by consTrucTion in conformance wiTh currenT sTandards of compleTe sTrucTural elemenTs, lay- ouTs, and/or uTiliTy equipmenT exisTing wiThin a dwelling uniT. This definiTion does noT cover The aspecT of Time. A series of improvemenTs can occur over Time. Each In iTself cannoT be considered rehabiliTaTion p§£_§e, buT The overall sTeps lead To an increase in The livabiliTy and value of The sTrucTure. Self-help rehabiliTaTion pro- jecTs are characTerized by This series of sTeps or incremenTal approach. A furTher refinemenT To The definiTion Then would denoTe ThaT a pro- grammed series of repairs which add To The value of The sTrucTure and in- creases iTs livabiliTy can be considered as rehabiliTaTion. 2| SUMMARY To adequaTer prOpose a program To improve The living qualiTy of housing in This counTry, requires an undersTanding of The pressures and forces which "age" a residenTial sTrucTure. The forces are basic- ally of four caTegories: economic, social, physical and adminisTra- Tive. AssessmenTs of housing qualiTy are made on a differenTiaTed basis eiTher evaluaTing one of The main forces or measuring sTrucTures in- Tensively in a small geographic area. Hence, There are gaps in pro— ducing a comprehensive picTure of The sTaTe of housing in This counTry Today. Given a daTa base from which To generaTe correcTive programs, The exTremes in acTion are clear: Tear down and build anew, or allow a sTrucTure To conTinue To deTerioraTe. CorrecTive acTion beTween These exTremes is noT as clearly defined. The difference beTween repairs and rehabiliTaTion is essenTiaIIy based on The exTenT The improvemenT in- creases The IivabiliTy and value of The sTrucTure. The possibiliTy of correcTive acTion depends upon The exTenT ThaT The various aging forces can be curTaiIed. The economic force is a main one and has been used by The federal governmenT Through various mechanisms To improve The qualiTy of housing. The economic forces aT work and federal programs are deTailed in The nexT chapTer. 22 FOOTNOTES The esTimaTe was obTained by using The I960 base figure of all sTrucTures, adding yearly addiTions, and subTracTing The loss of uniTs given for The decade I950—I960. Sources: Glenn H. Beyer, Housing and SocieTy, MacMillan Co.: New York, I965, Table 4-I5, p. I46: SubcommiTTee on Housing and Urban Affairs U.S. SenaTe, Progress ReporT on Federal Housing and Urban De- velopmenT. WashingTon, D.C., I970, p. 6 (hence ciTed as E597 gress ReporT on Federal Housiflgj I970); U.S. Bureau of The Census, Census of Housing, ComponenTs of InvenTory Change, HC(4), ParT lA—I, Table 3, p. 46. SenaTor Charles H. Percy of Illinois: "We are alarmed because every day we see side by side wiTh new auTomobiles and slick skyscrapers block afTer block of wreTched slums where life iT- self is hollow hopeless...EvenTualIy, we will grow (Through The proposed NaTionaI Home Ownership FoundaTion AcT) To The poinT where we can make a sizeable impacT on The slum dweller. We are confidenT of ThaT." Source: SubcommiTTee on Housing and Urban Affairs, Housing LegisIaTion of I967, WashingTon, D.C. I967, parT I, p. I93. Hence ciTed as Housing LegisIaTion of I967. Ironi— cally, census figures indicaTe ThaT absoluTer and proporTionaTely in quanTiTy The worsT housing is in The rural areas. See Table One and fooTnoTe l4. PiTirim Sorokin, SocieTy, CulTure and PersonaliTy, New York, N.Y.: Cooper Square Publishing Co., I962. Sorokin presenTs a frame- work of analysis for concepTualizinq The various meanings given To objecTs. Harry B. Wolfe, "Models for CondiTion Aging of ResidenTial STruc- Tures," Journal of The American InsTiTuTe of Planners, vol. xxxiii, no. 3, (May I967), pp. l92—l95. William G. Grigsby, Housing MarkeTs and Public Policy, UniversiTy of Pennsylvania Press: Philadelphia, Penn., I963, p. 322. NaTional Commission on Urban Problems, Building The American CiTy, (9IsT Congress, lsT Session, House DocumenT no. 9I-34), WashingTon, D.C., U.S. GovernmenT PrinTing Office, p. 402. ibid., p. 403. ibid. GIenn H. Beyer, QB: ciT., p. I25. Glenn H. Beyer, 92, ciT., "Housing Design", ChapTer 8. ibid., p. 67. I4. 20. 2|. 22. 23. 24. 25. 26. 23 New York Times, January I2, I969, p. 73. Economic Commission for Europe, Urban Renewal Symposium, (held aT Geneva, June I96I), (UniTed NaTions: Geneva) I962, p. 20. ibid., p. 23. U.S. Bureau of The Census, Measuring The OuaIiTy of Housing, Working Paper No. 25, WashingTon D.C., I967, p. I. This monograph summarizes The findings of a concepTual and sTaTisTicaI review of The I960 Cen- sus. ibid., p. 3. Census of Housiflg, I950, vol. I, parT I, Table 7, p. I-4. Census of Housing, I960, ComponenTs of InvenTory Change, HC (4), ParT lA-l, Table I, pp. 26-27; Table 3, p. 46. The figures for dwelling uniTs ThaT have been dilapadaTed are arrived aT as follows: The loss of dilapadaTed uniTs from I950-6O (such as Through demoliTion) is sub- TracTed from The I950 figure. This new figure is Then subsTracTed from The I960 figure. The resuIT is The number of new dilapadaTed uniTs. Measurinnghe QualiTy of Housigg, 99, ciT., p. 6. ibid. ibid. \ "(A The procedure and sources are noTed in fooTnoTe I4. Measuring The Qualify of Housing, 92, £11,, p. I3. Also as parT of The reporT by The NaTional Commission on Urban Problems, Building The American CiTy, WashingTon, D.C., I968, exTensive invesTigaTion was conducTed on sTandards and compliance. Used as a background paper, buT noT publicly available aT The Time, was a paper by Oscar SuTermeisTer, AssisTanT DirecTor of The Commission STaff, "Inade- quacies and InconsisTencies in The DefiniTion of SubsTandard Hou- sing." The "Bible" and forerunner of surveys of measuring housing sTandards in The American Public HeaITh AssociaTion, An Appraisal MeThod for Measuring The QuaIiTy of Housing, New York, I945. Measuring The OualiTy of Housing, 92, ciT., p. l3. ibid. 27. 28. 29. 30. 3|. 32. 33. 34. 35. 24 U.S. DeparTmenT of Housing and Urban DevelopmenT, RehabiliTaTion Guide for ResidenTiaI ProperTies, U.S. GovernmenT PrinTing Office, HUD PG-50: WashingTon, D.C. I963. NaTional Commission on Urban Problems, 92, ciT., p. 283. Women's CiTy Club of New York, lnc., MainTaining DecenT Dwellings, New York, I963. ibid., p. I2. William G. Grigsby, 99, ciT., p. 253. Economic Commission for Europe, ManagemenT, MainTenance and Moder- nizaTion of Housing, (Seminar Warsaw, Poland, SepT. I968) (UniTed NaTions: New York, I969). Hence ciTed as ManagemenT, MainTenance. RehabiliTaTion Guide for ResidenTial ProperTies, QB: ciT. ManagemenT, MainTenance, 92: ciT., p. 4|. ibid. ChapTer Two: The Economic ConsTrainTs and The Federal AssisTance Programs The federal governmenT has Tended To rely solely on financial assisTance programs To curTail The aging process of residenTial sTruc- Tures and To improve The qualiTy of housing. Since The bulk of assis- Tance programs for rehabiliTaTion was developed in The mid-I960's if is sTiII Too early To comprehensively evaluaTe The impacT of These programs.1 One could hypoThesize ThaT The success of These programs will de- pend To a large degree in wheTher The economic sTraTegies included The channeling of The social and adminisTraTive forces. As an example, monies may be available buT cannoT be spenT because FHA may noT have redefined or relaxed cerTain rules. IT could be ThaT monies may be available buT local housing codes are noT sTrucTured To allow feasible rehabiliTaTion. 25 26 The purpose of This chapTer is To isolaTe The economic framework, To idenTify The economic facTors of rehabiliTaTion and To review various means employed in The federal assisTance programs. The economic cosTs and risks for high-income, middle-income, and low-income rehabiliTaTion will be delineaTed. Consider The vieWpoinT of The non-homeowner who underTakes a re- habiliTaTion projecT, and whose main goal is To achieve a reTurn equal or larger Than The invesTmenT. There are six main caTegories of cosT which musT be manipulaTed in order To achieve a saleable producT.2 These include: a. cosT of maTerials, capiTaI b. labor c. inTeresT on The iniTiaI funds for The capiTal and labor d. land and original sTrucTure cosT e. adminisTraTive fees, discounTs, insurance f. resulTing TaxaTion These six elemenTs are variously juggled for high-income, middle- income, and lower-income rehabiliTaTion. The charTs illusTraTe The basic risk-and-profiT facTor which de- Termines The likelihood of rehabiliTaTion. The horizonTaI axis repre- senTs The invesTmenT inTo a properTy; The verTicaI axis represenTs The "markeT value" of The properTy. The slanTed line represenTs when in- vesTmenT equals markeT value, i.e., price obTained on The markeT. High Income PresTige RehabiliTaTion lmpliciT are The assumpTions ThaT The acTual siTe value is high which represenTs an "anchor of invesTmenT"; and ThaT rehabiliTaTion is 27 done in a group or in a neighborhood characTerized by rehabiliTaTion efforTs or a poTenTial for rehabiliTaTion. The poTenTial for rehabiliTaTion will be explained laTer. The imporTanT facTor for This Type is ThaT The markeT— abiliTy of The projecT does noT occur unTil all improvemenTs are made. The projecT represenTs a major capiTal invesTmenT, wiTh The capiTal Tied up for The iniTial rehabiliTaTion phase unTil subsequenT release on The markeT. AlThough The wise rehabiliTaTion developer would work in areas ThaT would indicaTe a high degree of success for high-income projecTs, he is assuming a large risk.3 The characTer of his work is ThaT he will invesT a large amounT in boTh maTerial and labor To creaTe a unique producT. For his efforT he will be saTisfied wiTh noThing less Than an appreciable profiT. Because of This aTTiTude none of The six caTegories of cosT will significanle affecT his operaTion. He will pay Them and include Them in The ToTal amounT of The final selling price. His end producT is noT orienTed To a markeT sTrichy defined by income levels. In effecT, his markeT is open ended. A subsequenT descripTion of The rehabiliTaTion efforTs in New York CiTy in ChapTer Three will illusTraTe This poinT. <:--4> 28 HYPOTHETICAL DEVELOPMENT POTENTIAL FOR PRESTIGE, HIGH INCOME REHABILITATION UNITS ? V'i’ PROFIT 50,000 _ /’ // 40,000 P 30,000 20,000 I0,000 / I 1 l I I I0,000 20,000 30,000 40,000 50,000 l'--4D InvesTmenT overTime < II Value, markeT Figure Five 29 Middle Income RehabiliTaTion In conTrasT To The high-income rehabiliTaTion projecT developer, The middle-income rehabiliTaTor musT conTend wiTh a defined markeT in Terms of income levels and abiliTy To pay for housing. Because The developer musT program "backwards" from a selling price The manipula- Tion of The six cosTs caTegories becomes criTical. This marginal aspecT underscores The imporTance of comparing The alTernaTives of rehabiliTa- Tion, new consTrucTion on an "old" siTe, or new consTrucTion on a new siTe. For The developer building a new home in an ouTIying area There are noT exisTing negaTive social problems, simply because a communiTy has noT become esTablished. The building of a residenTial sTrucTure can be viewed basically as an economic problem, dependenT upon land cosT and uTiliTies. For The rehabiliTaTion developer, an aging neighborhood may re- presenT Two seTs of condiTions.‘+ The firsT is a blighTed neighborhood which once may have been a middle-income area buT has deTerioraTed To The poinT where if may be classified as a slum or marginal neighborhood. Assume iT represenTs a poTenTial for rehabiliTaTion because of iTs Io- caTion, or The physical qualiTy of iTs sTrucTures. The oTher seT of condiTions may be reflecTed in a neighborhood which is basically middle class buT because of familial changes and oTher facTors, The neighborhood has deTerioraTed. The children have lefT, buT The parenTs sTay on; perhaps They even feel Trapped. IT may be characTerized by The lack of in-migraTion of younger families wiTh children. 30 The firsT neighborhood represenTs a TheoreTical parallel To high- income rehabiliTaTion. The rehabiliTaTion developer musT Tie up capi— Tal for long periods of Time. There is a period when, if The projecT should sTop, he would be subjecT To loss. The difference beTween middle-income and high-income rehabiliTaTion is The consTrainTs for middle-income projecTs. The developer musT work These cosTs in order To achieve a profiT. As will be illusTraTed in ChapTer Three The pro— gramming of middle-income rehabiliTaTion becomes exTremely difficulT. In The second neighborhood, The base of occupanTs already exisTs. RehabiliTaTion may be The replacemenT of kiTchens or elecTrical sysTems or alTering room layouTs. RehabiliTaTion may be underTaken by an ouT- side developer or by The occupanTs Themselves. The developer will again work in order To achieve his profiT, while The owner-occupanT will sTrive To rehabiliTaTe in order To realize noT a profiT p§:_§§3 buT To add value To his house so ThaT if he were To sell iT he would noT ex- perience a loss on The improvemenTs. Because These owner-occupanT efforTs occur in a series of small sTeps, They are incremenTal. This incremenTal approach presenTs unique problems: a. The Time lag and segmenTed approach markeT value be- comes difficulT To define. b. in Terms of financing, The conTinuaI sTeps of small ouTlays presenTs adminisTraTive problems. c. pinpoinTing increased value for increasing Taxes becomes complex. The impacT of Urban Renewal upon middle-income rehabiliTaTion is 5 nebulous. Because of The already sTaTed marginal profiTabiliTy, The effecT of such renewal upon The value of land, and The prospecTs of in— 3| creased densiTy under alTered zoning may be negaTive Towards rehabili- TaTion. Depending upon The naTure of The renewal, also, There may be an aTTempT, if There are unique characTerisTics of The neighborhood, To make The rehabiliTaTion of a presTige naTure. 32 HYPOTHETICAL DEVELOPMENT POTENTIAL FOR MIDDLE-INCOME UNITS 30,000 + 25,000 -— PROFIT // 20,000 _.. I5,000 _. I0,000 — 5,000 — /. I l I I l 3 5,000 I0,000 I5,000 20,000 25,00 I“ InvesTmenT over Time < II Value, markeT Figure Six 33 HYPOTHETICAL INCREMENTAL REHABILITATION MIDDLE-INCOME UNITS p 35,000 30,000 25,000 20,000 I5,000 I0,000 5,000 " I I I I I ' I I 5,000 ‘ I0,000 -|5,000 20,000 25,000 30,000 35,350 I g InvesTmenT over Time Value, markeT > I — Upper limiTs of invesTmenT which could be ToleraTed in- crease Taxes Through increased valuaTion and lack of depreciaTion advanTages. B = Lower limiTs of invesTmenT needed in order To susTain value of uniT and noT suffer Too rapid a depreciaTion. Figure Seven 34 Low Income RehabiliTaTion The approaches suggesTed by middle-income rehabiliTaTion become more disTincT for low-income work: The rehabiliTaTion developer who underTakes a projecT in order To achieve a profiT; and The occupanT (who may be The owner) who rehabiliTaTes on his own. For The developer, low-income rehabiliTaTion imposes even more severe resTrainTs. The opporTuniTy for profiT is less and each of The six cosT caTegories can deTermine The profiT or loss on a projecT. The imporTance of The involvemenT of The occupanT is underscored by The facT ThaT iT has been esTimaTed ThaT There is Twice as much labor in a rehabiliTaTion projecT as There is in a new consTrucTion projecT. The cosT of labor has also increased proporTionaTely more Than The cosT of maTerials. Under The program of occupanT involvemenT or self-help, There are Two possibiliTies: The occupanT works alone or works wiTh a local organizaTion. Such organizaTions are noT aimed aT increasing The profiT poTen- Tial, buT aT encouraging possible local ownership. .Thus, wiTh The reducTion of labor cosT, possible financing relief, and Tax suspen- sions, The self-help or incremenTal rehabiliTaTion becomes a realisTic alTernaTive in economic Terms. ImpliciT in This concepT is The realizaTion ThaT There can be successive levels of improvemenT. The firsT aim is To provide a sTrucTure ThaT is clean and habiTable. Then work can proceed To modify and improve saniTary faciliTies, The kiTchen, room design and layouT, elecTrical feaTures, eTc. IT should be noTed ThaT There is no clear 35 HYPOTHETICAL DEVELOPMENT POTENTIAL FOR LOW-INCOME UNITS 25,000 - /// 20,000 - /// I5,000 -—- I0,000 5,000 l/ . . I I .fl 5,000 I0,000 I5,000 20,000 25,000 I-v--I> InvesTmenT over Time < ll Value, markeT Figure EighT 36 HYPOTHETICAL INCREMENTAL INVESTMENT BY LOW * INCOME FAMILY 25,000 20,000 l5,000 I0,000 5,000 if, 1 1 l I I .2,» 5,000 I0,000 I5,000 20,000 2 U1 ‘- (3 C) O I ‘——-—§ InvesTmenT over Time Value < II II Figure Nine .4. 37 arTiculaTion as To The official federal policy. On The one hand iT encourages minimum sTandards and official pro- cedures by sTaTing condiTions for accepTance of monies (wheTher loans or granTs), buT Then iT encourages innovaTion aT The local level Through self-help groups. Such innovaTion may include procedures conTrary To adminisTraTive procedures. The conTradicTion sTems from The desire To give money To improve housing and from The fear ThaT iT may noT be spenT wisely. The Types of money programs are enumeraTed in The following. Federal Programs Federal programs which can affecT rehabiliTaTion fall inTo Two caTegories: Those which encourage The flow of non-governmenTal capi- Tal by governmenT insurance, and Those which are direcT conTribuTions of governmenT money eiTher in loans or granTs To ciTies and individuals. The Federal Insurance Programs The mainsTay of The federal programs has been The TiTle I, Pro- perTy ImprovemenT Loan, passed as parT of The NaTional Housing AcT in I934, and since amended.6 This program insures properTy improvemenT loans up To $3,500 for a maximum of five years. For mulTi-family uniTs, The maximum is $l5,000 for seven years. FHA assumes IiabiIiTy of nineTy percenT of any one loan, and Ten percenT of all such loans for any approved financing insTiTuTion. These loans are unsecured and are noT subjecT To approval by FHA. Over finy percenT of The loans were for $I,OOO or less, anoTher 4O percenT were for $I,OOO To $3,000. Before This loan program The Three alTernaTives for properTy im- 38 provemenTs were: I. shorT-Term charge accounT crediT 2. morTgage financing - usually unamorTized bank loans due in five years and aT a raTe of Ten percenT 3. The cash and savings of The individual The program reached iTs peak in I954 and has since declined. The requiremenTs of The loans became more sTringenT in I954, and The number of loans accordingly dropped.7 The program originally was inTended To sTimulaTe acTiviTy and employmenT in The building indusTry. Because of iTs maximum loan limiTs, and The responsibiliTy of privaTe insTiTu- Tions To provide The capiTal, The properTy improvemenT program has had a limiTed effecT on inTensive rehabiliTaTion. There is no doubT ThaT iT has conTinuaIly upgraded general housing. IT can be considered com- plimenTary raTher Than as an inducemenT. SecTion 203 SubsecTion (k)8 The provisions of This secTion are designed primarily "To assisT major improvemenTs which are beyond pracTical reach of TiTIe I Terms and for which TiTIe l inTeresT raTes are Too high." The basic sTipu- laTions are as follows: I. A lien is required on The improved properTy. (TiTle l loans are unsecured) 2. IT musT be a one-To-four family dwelling ouT- side of an Urban Renewal area. 3. IT musT be limiTed To I0,000 for family uniT or To forTy-five percenT of ToTal value of such uniT in high cosT area. 4. The iniTial maximum inTeresT raTe was six per- cenT, and The FHA insurance premium is one-half 39 percenT. (For TiTle l loans, Through iTs sys- Tem of discounTing and inTeresT, The final in— TeresT on a loan approached Ten percenTl) There is a sTaTuTory limiT now. 5. The maximum Term for The loan is TwenTy years. This program has noT reached The level expecTed. Again This pro- gram relies on The willingness of financial lnsTiTuTions To release The capiTal supporTed by federal insurance. By requiring a lien, The loan becomes a hybrid; iT is noT a convenTional loan, nor is iT a morT- gage. The maximum of $I0,000 is subsTanTial To apply againsT an indi- vidual yeT as a "morTgage" iT is raTher small. The six percenT limiT represenTed a consTrainT in lighT of The currenT money markeT over The iniTial years and as of January I969, The raTe was 7-l/2 percenT. Sec. 203(k) Home ImprovemenT, Loans MorTgages Insured. Year Dwelling AmounT Insured UniTs (In Thousands) I96l 8 $ 25 I962 55l 2,925 I963 792 3,87l I964 4II 2,363 I965 335 l,907 I966 242 I,495 I967 I65 I,O72 I968 I37 9I7 Figure Ten From I96I To I966, a ToTal of 3,876 applicaTions were received; 2,203 were insured. A ToTal, Through I966, of $II,000 was necessary To cover defaulTed loans. The program Through I966 experienced a ToTaI operaTing loss of $425,000 because of adminisTraTive expenses and defaulTed loans. 4O SecTion 220(h)9 The sTrucTure and aim of This secTion is similar To ThaT of 203(k). The differences are ThaT loans: a. apply only To Urban Renewal areas b. apply To mulTi-family uniTs are a conTrol measure To see ThaT properTy improvemenT was consisTenT wiTh Urban Re- newal plans. C. Two adminisTraTive programs have been creaTed; one To handle loans for sTrucTures from one To eleven uniTs, The oTher To handle loans for sTruc- Tures over five uniTs. The same commenTary applies here as To 203(k) as To The reasons for iTs non-accepTance. One mighT also venTure ThaT There is The addiTional sTep of coordinaTion wiTh The various Urban Renewal agencies.1°The pau- ciTy also suggesTs The relaTive lack of middle-income rehabiliTaTion in Urban Renewal areas. Sec. 220(h) RedevelopmenT Loans, To I968 One To Eleven UniTs Cases UniTs AmounT (Full) ApplicaTions received 29 54 . ' CommiTmenTs issued 7 8 $35,650 MorTgages insured 5 6 26,l50 (There was a loss of $509,000 for adminisTraTive cosTs; no loans defaulTed Through I966.) Five or More UniTs Year Cases UniTs AmounT (000) I967 2| |,94l $26,907 I968 25 I,362 28,007 Figure Eleven 4| DirecT Federal Financial AssisTance Prggrams Financial assisTance works Through eiTher FNMA buying specially pro- grammed morTgages processed Through regular privaTe lending insTiTuTions or Through The direcT disTribuTion of funds from The Treasury under var- ious auThorizaTions. SecTion 22l(d)(3) Below MarkeT lnTeresT RaTe Program11 The goals are To assisT in meeTing The need of moderaTe income fami- lies for renTaI housing Through subsidized new consTrucTion or rehabili- TaTion; and To provide for The relocaTion for moderaTe income families displaced by governmenT acTion. The basic mechanism is Through The Three percenT morTgage funds dis- TribuTed To non—profiT, limiTed dividend or cooperaTive groups; The morT- gages are boughT by FNMA. The requiremenTs are as follows: I. Economic soundness is noT required, buT The projecT musT be an accepTable risk. 2. The working group musT noT be receiving oTher fede- ral assisTance. 3. There musT be a workable program in The area. 4. Minimum properTy sTandards are relaxed. 5. For non-profiT sponsors, The morTgages are backed IOO percenT; for limiTed dividend groups iT is 90 percenT. The rehabiliTaTion figure is ThaT of The cosT of The work, plus The value of The uniT before rehabiliTaTion. 6. The sTaTuTory limiT was and is Three percenT. 7. The insurance premium can be waived. 8. The maximum morTgage can be spread over forTy years. 9. The FNMA purchase fee and markeTing fee are waived. 42 While noT designed specifically for rehabiliTaTion, The program has supporTed a small number of projecTs. IT is noT anTicipaTed ThaT iT will proporTionaTely increase. By The Three percenT maximum on The in- TeresT, iT has been esTimaTed ThaT a final renT reducTion of 20 percenT is achieved. Obviously The program is designed only for socially orienTed groups for a final renTaI markeT. Homeownership is excluded. STaTus of 22l(d)(3) Program (As of SepT. 30, I966) ToTaI All ProjecTs RehabiliTaTion ProjecTs #-ProjecTs #-UniTs #-ProjecTs #-UniTs MorTgages Insured 372 49,374 3| 2,0Il CommiTmenTs OuTsTanding 8| 9,28I 9 755 ApplicaTions in Process 242 30,034 I6 466 ToTal of all MorTgages Insured up To I968 988 |26,787 Figure Twelve SecTion 22l(d)(3) RenT SupplemenT Program12 Whereas under The previous program governmenTal assisTance occured by The purchase of special morTgages, governmenTal assisTance occurs in This program firsT by insuring morTgages aT a near markeT raTe and Then by a renT supplemenT provided by FHA afTer consTrucTion. The goals are specifically To assisT low-income families and Those: displaced by governmenT acTion living in subsTandard housing disabled or handicapped age 62 or over QOU'O.) o... The housing musT be provided by privaTe non-profiT or limiTed dividend or cooperaTive sponsor. The financing and morTgages are provided by pri- vaTe insTiTuTions wiTh governmenT insuring The morTgages aT IOO or 90 43 percenT. TenanTs pay 25 percenT of household income. FHA iniTially made up The difference To a ToTal of $I40 per uniT (as of I966). There is a lease opTion feaTure which provides ThaT a poTenTiaI homeowner pays his required 25 percenT renT and any exTra he can pay goes inTo an escrow fund. When There is sufficienT down paymenT Then The TenanT has The opTion of morTgaging aT The currenT markeT raTes and purchasing The uniT. The criTeria for The morTgages To be insured are: l. The projecT musT be an accepTable risk. 2. For non-profiT, limiTed dividend and c00peraTive sponsors. 3. There musT be a workable program in The area. 4. Minimum properTy sTandards are relaxed. 5. Non-profiT sponsors are backed IOO percenT. LimiTed dividend sponsors are backed 90 percenT. 6. The iniTial inTeresT raTe was 6 percenT. As of January I969, The raTe was 7-I/2 percenT. 7. The insurance premium is 0.5 percenT of The ba- lance of The morTgage. 8. The maximum morTgage Term is 40 years. STaTus of 22l(d)(3) RenT SupplemenT Program (Dec. I966) STaTus ToTal All ProjecTs RehabiliTaTion ProjecTs #-ProjecTs #-UniTs #—ProjecTs #-UniTs Preliminary fund ReservaTion I23 I2,889 II 900 Formal Fund ReservaTion 25 2,972 4 335 Under ConTracT 3 345 l 22 CummulaTive ToTal To Dec. I968 400 44,844 Figure ThirTeen 44 The lack of rehabiliTaTion projecTs reflecTs more The complexiTy of organizaTion in deTerioraTing areas Than any consTrainTs wiThin The governmenT program. The program below suggesTs a less complex me- Thod for accomplishing The ends of The above program. SecTion 22l(h), RehabiliTaTion for Resale The goals of This program are "To encourage rehabiliTaTion of housing for low income families in sTable neighborhoods or To assisT in The improvemenT of a neighborhood Through rehabiliTaTion...To creaTe a sTable environmenT." The main mechanism is To provide a projecT morT- gage To a Sponsor. The limiT of The morTgage is The "as is" value plus The esTimaTed (by FHA) cosT of rehabiliTaTion. This morTgage will be aT The permissible below-markeT raTe. (IT remains aT The iniTial Three percenT as of April I969.) As each uniT is rehabiliTaTed, Then a morT— gage aT The same below-markeT inTeresT raTe can be released To The pros- pecTive owner. A poTenTial morTgagor musT have prescribed income, and he musT be an accepTable crediT risk. In addiTion, he musT be able To pay an iniTial $200 on accounT of The properTy. If The low-income family moves ouT, and is replaced by a higher income family, morTgage raTes are correspondingly increased. For The low—income family no insurance premium is collecTed; for higher income, There is an insurance premium. As of I970, 5,000 uniTs were under consideraTion for This program. SecTions 22l and 220 revolve around The concepT of indirecT govern- menTal financing. The inTegral parT is The morTgage and The consequenT adminisTraTive procedures. Under many secTions The role of The privaTe financial insTiTuTion is an imporTanT inTermediary. 45 SecTion 3l2 DirecT RehabiliTaTion Loan13 This program provides direcT federal loans To owners and TenanTs in federally aided Urban Renewal and concenTraTed code enforcemenT areas; or To TenanTs or owners who meeT cerTain sTipulaTions and are locaTed in an area which will be included in such a code enforcemenT or Urban Renewal area wiThin a "reasonable Time." The criTeria for The loans include: I. Loans are To assisT in making The properTy con— form To applicable code and requiremenTs and objecTives of The Urban Renewal plan. 2. Funds are noT available from oTher sources. 3. The loan musT be an accepTable risk. 4. The maximum Term is 20 years and The inTeresT raTe is Three percenT. 5. There are provisions To allow for refinancing an exisTing debT on a properTy, provided ThaT The new loan monThly paymenT does noT exceed 20 percenT of The applicanT's monThly income. 6. The loan may noT exceed The limiTs as provided under SecTion 220(h). (For single family, $|,OOO or 45 percenT of value of sTrucTure afTer improvemenT in high risk area.) In addiTion, There are TwenTy addiTionaI sTeps of coordinaTion beTween The local public agency, a financing insTiTuTion, and The applicanT. Principal IimiTaTions of The program include The exclusion of many aTTemst To refinance exisTing dest under This Ioan.1“ Admini- sTraTively, only an owner-dweller can converT exisTing debT under This loan. There is also The lack of adminisTraTive familiariTy wiTh The adminisTraTion of The TwenTy-sTep program. 46 SecTion 3I2 RehabiliTaTion Loan Program 3 Number of Number of AmounT (In DaTe Loans Dwelling UniTs Thousands) Dec. I965 l3 I3 $ 60 Dec. I966 649 9l6 3,l90 Dec. I967 2,666 4,l96 l4,l42 Dec. I968 6,563 ll,35l 38,220 15 TTgure‘FourTeen SecTion II5 DirecT RehabiliTaTion GranTs The purpose of This program is To provide an ouTrighT supplemenT To cover The difference beTween available financing and The expecTed cosT To make a sTrucTure habiTable. The granT is noT To exceed $l,500 or The needed sum To cover The full cosT, whichever is less. In effecT The granT is To insure ThaT available financing repaymenT does noT exceed TwenTy-five percenT of The monThly income of The dweller. The program only covers one or Two uniT sTrucTures. If The difference is Too greaT The granT cannoT be auThorized. Again The public agency is inTimaTely involved in The process, in- cluding selecTion of a conTracTor and in The preparaTion of bids. The program has been jusTified by The raTionale ThaT every granT made is one less family ThaT has To be relocaTed because of poor housing and subsequenT reconsTrucTion. SecTion II5 RehabiliTaTion GranT Program DaTe Number of GranTs AmounT (In Thousands) Dec. I965 9 $ l2 Dec. I966 l,999 2,784 Dec. I967 4,5l4 6,263 Dec. I968 8,6l7 l3,860 Figure FifTeen 47 DirecT Public RehabiliTaTion The various rehabiliTaTion work by housing agencies is noT wiThin The scope of This Thesis. In I966 There were approximaTely 30,000 uniTs in various phases of public housing rehabiliTaTion. 48 SUMMARY High-income rehabiliTaTion can be viewed in economic Terms as a purely speculaTive process. If an enTrepreneur, ThaT is The rehabi— liTaTion developer, wisely pinpoinTs a projecT in Terms of an area of poTenTial, he can realize a subsTanTiaI profiT. Because of'The long period of no reTurn during The rehabiliTaTion projecT, The possi- biliTy of failure and consequenT loss, The financing and sponsorship of such rehabiliTaTion is generaTed solely from The privaTe secTor. Federal programs would have no direcT impacT. Because of The consTrainTs of a defined markeT, The rehabiliTaTor for middleRIncome projecTs is working wiThin limiTs as To profiT and markeTabiIiTy. If he is To realize a profiT, he musT program his work such ThaT any of The six caTegories of cosTs are minimized. For The owner-occupanT in a middle-income rehabiliTaTion efforT, The chief goal is To realize aT leasT an increase in The value of his sTrucTure such ThaT he does noT incur a loss for The improvemenT, should he sell The sTrucTure. Working in smaller sTeps of improvemenT, The complexiTy of adminisTering, financing, and evaluaTing such "incremenTal" efforTs increases. The economic consTrainTs of low-income rehabiliTaTion are severe. Any change in The six cosT caTegories could cause a developmenT To be unprofiTable. The impacT of federal subsidies and inTeresT reducTion can significanTIy alTer The economic feasibiliTy of a low-income re- habiliTaTion projecT. Because rehabiliTaTion requires Twice as much labor as a new developmenT, self-help efforTs could subsTanTially alTer The ToTal cosT of a developmenT. 49 The federal assisTance programs have evolved along Two TracTs: a. federal prodding of privaTe morTgage and lending money Through assurance of federal insurance, b. ouTrighT release of federal monies in The forms of loans or granTs. Federal assisTance programs for rehabiliTaTion were developed in The mid—I960's. STaTisTically iT is Too early To evaluaTe The pro— grams. The iniTial adminisTraTive cosTs and The complexiTy of co- ordinaTion for The programs exTending eiTher federal loans and granTs have been noTed. While federal assisTance programs were esTablished rehabiliTaTion projecTs were occurring ThroughouT The counTry. A descripTion of These projecTs in Terms of high, middle, and low-income caTegories is found in The nexT chapTer. 50 FOOTNOTES SubcommiTTee on Housing and Urban Affairs, RehabiliTaTion Programs, WashingTon, D.C.; U.S. GovernmenT PrinTing Office, I967, hence ciTed as RehabiliTaTion Programs, I967. In addiTion, a review of The rehabiliTaTion programs for New York CiTy confirm The general Trends included in The federal review. See Measuring The ImpacT of New York CiTy's RehabiliTaTion Program, McKinsey and Company, lnc., I97I. Maurice D. Kilbridge, RoberT O'Block, and Paul V. TepliTz, Urban Analysis, BosTon, Mass.; Division of Research, GraduaTe School of Business AdminisTraTion, Harvard UniversiTy, I970, ChapTer 8, "The Housing Analyzer Model." This wriTer has basically summarized many of The cosTs involved. William W. Nash, ResidenTial RehabiliTaTion: PrivaTe ProfiTs and Public Purpose, New York, N.Y.: McGraw Hill Book Co., I959, pp. 45-46. Bernard J. Frieden, The FuTure of Old Neighborhoods, BosTon, Mass.; M.I.T., Press, I966, ChapTer One, "CommuniTy in Decline." Bernard J. Frieden, 92, ciT., concludes ThaT economically grey areas will improve only Through increased densiTies such as aparT- menT buildings. TiTle l, SecTion 2, of The NaTional Housing AcT, as amended, public law 73-479; 48 STaT. l246; I2 U.S.C. I703. Unless oTherwise noTed The following secTions are subsTanTiaTed in SubcommiTTee on Housing and Urban Affairs, RehabiliTaTion Programs, WashingTon, D.C.: U.S. GovernmenT PrinTing Office, I967; hence ciTed as RehabiliTaTion Pro- grams, I967. Figures and informaTion for changes since I967 come from SubcommiTTee on Housing and Urban Affairs, Progress ReporT on Federal Housing and Urban DevelopmenT Programs, March I970, Washing- Ton, C.D.: U.S. GovernmenT PrinTing Office, I970; hence ciTed as Progress ReporT, I970. The lack of meaningful guidelines, close supervision and follow-up are noTed in a criTical review of The program. The program was fosTering quesTionable work and pracTices. See: CompTroller Gene- ral, ProperTy ImprovemenT Loan Insurance Program, No. 2l8, ReporTs on AudiT of GovernmenT CorporaTion and Agencies. (Housing DocumenTs 47—2l9, 85Th Congress, lsT Session) WashingTon, D.C.: U.S. Govern- menT PrinTing Office, l957-58. SecTion 203, subsecTion (k) of The NaTional Housing AcT, as amended, Public Law 73-479; 48 STaT. l246. This provision was passed in The Housing AcT of I96l. 5| SecTion 220, subsecTion (h) of The NaTional Housing AcT, as amended, Public Law 73—479, 48 STaT. l246. Provision was passed as parT of The Housing AcT of l96l. Once The complexiTies are removed, This provision offers subsTan- Tial sources for rehabiliTaTion. IT has been shown ThaT for an individual carrying a monTth debT charge of $90, he can refinance for an addiTionaI $7,600 and sTiII have The same monThly charge. The poTenTial for middle income families is obvious. See Alfred W. Jarchow, 99, 911,, p. l25. SecTion 22l, subsecTion (d), paragraph (3) of The NaTional Housing AcT as amended. Public Law 73—479, 48 STaT. l246. Provision was passed as parT of The |96I Housing AcT. SecTion 22l, subsecTion (h) of The NaTional Housing AcT as amended. Public Law 73-479, 48 STaT. l246. "This program was added To The NaTional Housing AcT by The DemonsTraTion CiTies and MeTroooliTan DevelopmenT AcT of I966." SecTion 3l2, Housing AcT of I964, as amended, 88-560, 78 STaT. 769, 790; 42 U.S.C. I452 (b). Compare FooTnoTe 7. SecTion ll5 of TiTIe I, Housing AcT of I949, as amended, Public Law 8l-l7l; 63 STaT. 4|3, 4|4, 42 U.S.C. I450. "This provision was added by secTion IO6(a) of The Housing and Urban DevelopmenT AcT of I965. ChapTer Three: A Summary of Various RehabiliTaTion ProjecTs The examples of housing rehabiliTaTion over The lasT TwenTy years are marked by a diversiTy of physical, economic and social characTerisTics. There is no sTandard procedure in rehabiliTaTion. The purpose of This chapTer is To analyze "represenTaTive" projecTs which Typify The numerous rehabiliTaTion efforTs. To be examined are upper, middle, and low-income projecTs. The poinTs of focus will be on The: a. financing b. organizaTion of The rehabiliTaTor c. social composiTion of The new occupanTs d. physical characTerisTics of The sTrucTure e. meThod of rehabiliTaTion f. physical characTerisTics of The neighborhood area 52 53 UPPER INCOME, PRESTIGE PROJECTS The New York CiTy BrownsTone EfforTsl LocaTed ThroughouT New York CiTy and iTs boroughs are row homes of Three To four sTories, commonly known as brownsTones, Though The building maTerial varies widely. BuilT in The IaTe I9Th cenTury, The brownsTone epiTomized The sTable New York middle class. As The ciTy grew and experienced new influxes, The sTrucTures and neighborhoods experienced a gradual succession of TenanTs and increased diversiTy. IT is difficulT To pinpoinT whaT sTarTed The inner-ciTy renaissance, buT in The mid-l950's There was a slow awakening To The poTenTial of The brownsTone as a mode of living. The success of The revival is reflecTed in The rapid rise in The value of old brownsTones. A de- TerioraTed brownsTone which was sTrucTurally sound, buT needed rehabi- liTaTion could be boughT iniTially for $l5,000.00. RehabiliTaTed, iT will ncw sell for $I00,000.00 and more.2 In Terms of area, iT is noT a few blocks which are under consideraTion, buT hundreds of blocks.3 The success could be aTTribuTed To Two facTors: a desire by an ele- menT of The populaTion To mainTain a cerTain urban sTer of life which includes close proximiTy To The cenTral ciTy; and, an encouraging ciTy policy Towards rehabiliTaTion, which may include Tax abaTemenT for a period of nine years.“ For Those who could afford iT, The brownsTone was an alTernaTive To conTemporary buildings. The presTige houses were usually locaTed near major urban feaTures such as Lincoln CenTer, CenTral Park, or riverfronT siTes.5 For Those who did noT have The funds, The rehabi- liTaTion and conversion of a brownsTone represenTed a challenge. 54 Middle income families could purchase houses in poor condiTion in var— ious areas, usually noT in The middle of a slum, buT on a periphery, near a major Traffic arTery or Topographical feaTures and proceed To rehabiliTaTe.6 This spiriT of being a pioneer cannoT be overemphasized. Classes in The arT of resToring a brownsTone were given aT one local YWCA. The news media Traced The progress of various projecTs and nume- rous commenTaries ciTed The almosT cliquish naTure of Those who re- sTored brownsTones. WhaT usually occurs is ThaT a few "seed" houses are sTarTed by a highly moTivaTed enTrepreneur or family. If The area is in a favorable IocaTion, The idea caTches and in discreTe sTeps, blocks are improved up To The upper income, presTige level.7 There were several small such beginnings in Brooklyn, and in one area along covers I44 square blocks of rehabiliTaTed brownsTones. The cosT of rehabiliTaTion is aT leasT equal To The cosT of The houses before improvemenT. The supervision is eiTher by The owner or conTracTed ouT. Major repairs or renovaTions are conTracTed ouT. The ciTy has encouraged This process by publishing sTandards. The iniTial seed houses are self-financed. AfTer an area is "underway" Then convenTional morTgaging will assisT and FHA will also assisT.8 ThroughouT The various projecTs lisTed in The accompanying Table, FHA refused To assisT in seed projecTs. Since mosT of This housing is for The upper income, financing does noT presenT a problem. MarkeT condiTions will deTermine The relaTive availabiliTy of funds To be provided by The privaTe secTor. Since The masTer plan for ManhaTTan was only published in November REHABILITATION AREAS MANHATTAN CULTURAL CENTERS :/C B BUSINESSS FINANCE CENTERS SITTACT REHABILITATION AREAS MANHATTAN, NEW YORK CITY Figure SixTeen 56 REHABILITATION AREAS BROOKLYN E3 BUSINESS, FINANCE CENTERS P PARKS C CULTURAL CENTERS - E EDUCATIONAL CENTERS .. ' REHAB I L I TAT ION ~ AP EAS f/ V BROOKLYN ~§> 9442/" BROOKLYN, NEW YORK CITY, N.Y. Figure SevenTeen 57 of I970, iT is difficulT To assess how The brownsTone rehabiliTaTions are compleTely consisTenT wiTh overall developmenT proposals. There is exTensive rehabiliTaTion work underway in Greenwich Village and Upper ManhaTTan. Because of The magniTude of The enThusiasm, one mighT quesTion The value and place of formal plans. In ManhaTTan, for example, "brownsToners" have sTarTed rallying To insure ThaT zoning will pre- serve Their uniTs and prevenT The encouragemenT of The high-rise luxury uniTs.9 Again, because The plans are new, They have noT had an impacT in sTabilizing land uses in The changing areas. Obviously, The ciTy has adminisTraTively encouraged The process; how The rehabiliTaTion links wiTh physical developmenT is noT clear. There is no sysTemaTic rehabiliTaTion. The schemes range from compleTe resToraTion of The house To compleTely guTTing iT and fiTTing The shell in an ulTra-modern TreaTmenT. AlThough noT menTioned in The reviews, There may have been some advanTages To resToring The brown- sTone To override currenT code requiremenTs. Time for rehabiliTaTion will vary from uniT To uniT. 58 CenTral Philadelphia In conTrasT To New York, Philadelphia has had a definiTe cenTral ciTy plan since The early l950's. Spurred by Independence Mall, The resToraTion of Independence Hall and neighboring hisTorical siTes, SocieTy Hill and Penn CenTer, rehabiliTaTion has occurred ThroughouT The cenTral core area.10 Near FiTler Square, in The souThwesT quadranT of The cenTral ciTy, a privaTe developer had rehabiliTaTed, in The laTe l950's, abouT finy former servanTs'houses characTerized as bandboxes, which were locaTed behind The main execuTive houses. He boughT Them aT abouT $5,000.00, invesTed $8,000.00, and sold Them aT $l0,000.00 To $I5,000-$l6,000.00. He compleTer sTripped Them To The walls and joisTs of The basic floor and Then refinished Them. Young and middle-aged couples, usually childless, boughT or renTed Them. The area is characTerized by small sTreeTs which are noT parT of The main ciTy Traffic and a local one- block park is a communiTy focal poinT. The main financial and commer- cial cenTer is less Than seven blocks away. The developer experienced iniTial difficulTy in obTaining financing for The houses. BUT, as The markeTabiIiTy of The houses was shown, he was able To obTain morTgages covering half Their value from local savings and loans. In The souTheasT quadranT of The cenTral ciTy a large scale real- Tor, having access To ample funds, creaTed a revolving fund specifically for rehabiliTaTion. He boughT, in The laTe l950's, houses for $I,500.00 To $4,000.00 and Then launched an individualized "rehabiliTaTion sequence" for a prospecTive dweller. He arranged for The designs, arranged for a conTracTor, and Then provided subsequenT financing and morTgaging. 59 To furTher proTecT his invesTmenT he concenTraTed in Specific blocks and areas. On his own he boughT deTrimenTal land uses such as a lumbar yard and converTed Them To more harmonious land uses such as reTail sTores. In The same area, along CIinTon STreeT, anoTher deveIOper, in conjuncTion wiTh a conTracTor-rehabiIiTaTor, boughT dwellings aT abouT $I6,000.00 and spenT close To $2I,000.00 for improvemenTs. Because of his general repuTaTion, he was able To obTain morTgages iniTially co- vering 6O percenT of The value from local savings and loans. In his case, The Three—sTory houses are sTripped To The walls and basic floors, and Then refurbished. BoTh of These projecTs are wiThin Twelve blocks of The main commer- cial cenTer, Two hospiTals, and Independence Hall. WiThin Philadelphia's cenTral ciTy plan There were definiTe pro- visions for resTored or rehabiliTaTed housing. In This case, The ciTy encouraged, buT IiTTle else, The rehabiliTaTion of housing. (See fol- lowing schemaTic map.) I I .. ! I REHABILITATION AREAS PHILADELPHIA P PARKS C CULTURAL CENTERS SCHUYLKILL RIVER DELAWARE RIVER E3 BUSINESS CENTER IT HOSPITAL COMPLEXES fififififififiREHABILITATION CENTRAL CITY, PHILADELPHIA Figure EighTeen 6| Foggy BoTTom, WashingTon, D. C. Whereas a sympaTheTic governmenT can ease rehabiliTaTion efforTs, an indifferenT one can jeopardize a privaTe venTure.11 Two Teams, one amaTeur The oTher professional, Tackled a dilapa- daTed area of housing in WashingTon, C. D., The Foggy BoTTom area. The Teams seT ouT To gUT The sTrucTures and worked wiTh The shell of The Two-sTory row houses. Because a highway had been planned in The general area, The ciTy governmenT repeaTedly scoffed aT The idea ThaT area housing could be rehabiliTaTed. IT was only afTer The projecT was successful did The ciTy improve The level of services. The ciTy also caused furTher ire by raising The valuaTion of The improved houses for Taxing purposes. buT did noT change Those lefT unimproved. Those unimproved received increased markeT value because of The area im- provemenTs. Local financial insTiTuTions did noT release funds To assisT The rehabiliTaTors. Houses were boughT aT $2,000-$4,000.00, im- proved aT a cosT of $8,000-$9,000.00 and sold for $l5,000-$l6,000.00 (laTe l950's). They appealed To yOung childless couples. OTher areas in WashingTon, D. C. undergoing rehabiliTaTion are The GeorgeTown, DuponT Circles and SouTh CapiTaI Hill areas. 62 PresTige rehabiliTaTion is noT limiTed To The improvemenT of old housing uniTs. A film producer in Greenwich Village boughT an old bakery for $95,000.00 and spenT $I50,000 slowly improving iT inTo a residenTial uniT and working sTudio. He relied on privaTe financing. The characTerisTics of upper-income, presTige rehabiliTaTion are as follows: a. IT is concenTraTed in areas ThaT are geographically defined. wheTher by Topographical feaTures, parks or STreeT paTTerns. There is a sense of "place”. b. IT is in an area ThaT was formerly presTige or sTable middle-income neighborhood. c. IT is linked To major urban funcTions such as The urban core or iT is close To major links of Trans— porTaTion. The dwellers and/or buyers Tend To be: a. Young or middle-aged couples who are childless. b. Professionals or Those acTive in culTuraI or arTisTic acTiviTies of The ciTy. The lack of children and The unavailabiIiTy of public schools are noTed. In financing The Trend seems To be: a. CompleTe self-reliance in The iniTial sTages. b. Once an area has been "Typed" as successful, morTgages covering up To 60 percenT of The financing are possible. As To The Technique of rehabiliTaTion, There is: a. A compleTe sTripping of The uniT. b. Emphasis on compleTe resToraTion or modern design. 63 com+mcwz OL:m_6 060. mco+mczocm mm. 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Two oTher groups fiT info This caTegory: a neighborhood characTerized by an older populaTion which has raised iTs children, or a neighborhood characTerized by cerTain eThnic bonds or kinship. NEIGHBORHOOD-CITY: lniTial shorT Term benefiTs To The ciTy because of an increase in low labor supply. There is also less cosT because of lower code enforcemenT and services. 2. Medium Term: A. OCCUPANTS: The divergence beTween Those ThaT are saTis- fied wiTh minimal shelTer and Those ThaT aspire To higher levels becomes disTincT. For The former, There is conTinued saTisfacTion and for The ciTy iT represenTs The leasT cosT because They are localized. For The laTTer, The immediaTe cosTs are mounTing and The cosTs in Terms of Their abiliTy To adapT, an aTTribuTe, becomes real. The resulTing frusTraTions, accompanied by various menTal neuroses, and The dis- inTegraTion of The kinship bonds preclude posiTive acTion. UNIT: The posiTive benefiTs of allowing a uniT To deTerioraTe accrue especially in The forms of depre- ciaTion and real esTaTe speculaTion.15 NEIGHBORHOOD: The effecTs on The neighborhood begin To spread. WhaT is True for one uniT is compounded in The aggregaTe for The neighborhood. 94 D. CITY: The ciTy is encumbered wiTh service cosTs and The loss of capiTal aTTribuTed reflecTed in decreased valuaTions. In some areas There may be fewer cosTs, such as in providing cerTain levels in schools, buT overall cosTs counTeracT such savings. 3. Long Term: A. OCCUPANTS: The residual slum dweller finds conTinued saTisfacTion and for The ciTy This alTernaTive may be The mosT efficienT in handling him. For The dweller who once wanTed To aspire To a higher level, The effecTs of The slum are becoming irreversible and all posiTive aTTribuTes are losT. 8. UNIT: The uniT, having reached iTs minimal value, con- Tinues To provide economic rewards Through The process of conTinued ownership changes or morTgage changing. Tax advanTages sTill conTinue. C. NEIGHBORHOOD-CITY: There is conTinued services charges for The ciTy and in The long run, because of The dis- enfranchisemenT of The laTTer slum dwellers; The level of freedom and inTegriTy has been reduced. The con— Tinued exisTence of The slum is a minus facTor in The ciTy's imageabiliTy. lncremenTal RehabiliTaTion Under alTernaTive Two, There are The following assumpTions: a. ThaT The group which aspires To reach higher levels has been idenTified and rallied To Their improvemenT. Summary 95 ThaT a sTraTegy of having Them inpuT some of Their own labor in small sTeps which have been sysTemaTically ouTIined in The improvemenT of Their home has been de- vised. ThaT They are required To leave Their uniT only for shorT periods of Time To replace major sTrucTural ele- menTs. ThaT There is a high degree of before and afTer occu- pancy of The same seTs of dwelling uniTs. ShorT Term: A. OCCUPANTS: The occupanTs of The uniT are inTimaTely involved in The improvemenT of The sTrucTure. By This sense of parTicipaTion They begin To develop posiTive aTTribuTes abouT Themselves and Their ciTy. There musT be a developed and consisTenT frame of assisTance. UNIT: Because of The exisTing financial sysTem, There are difficulTies in obTaining financing. CurrenT Tax laws favor larger scale depreciaTion and Thus do noT favor "small sTeps of improvemenT." AlThough cerTain adminisTraTive feaTures are locked inTo The sysTem which do noT favor This Type of rehabiliTaTion, overall The iniTial capiTal invesTmenT is less.16 CITY: AlThough iT may cosT more in Terms of assisTance and counseling, This alTernaTive suggesTs an iniTial cosT much less To The ciTy Than The oThers. Also 96 because The TenanTs are noT required To move ouT of The uniT for more Than a week or so There is no "doubling" of faciliTies. Medium Term: A. Long OCCUPANTS: Depending upon The level of assisTance and The recepTiveness of The occupanTs, There will be a conTinued sense of improvemenT and self—esTeem. STRUCTURE-NEIGHBORHOOD: There is a leveling off of The cosTs and benefiTs of The economic rehabiliTaTion. There conTinues a posiTive accumulaTion of aTTribuTes, for The sTrucTure and The neighborhood. CITY: There is a reducTion in service charges for welfare and conTrol measures. Because no relocaTion was necessary, The ciTy benefiTs because There was no dispersion of The populaTion which requires assisTance. Term:‘ OCCUPANTS: There is a leveling off of The benefiTs from The involvemenT in improving The sTrucTure for The occupanTs, Though by Their conTinued sense of es- Teem and pride They may consider Themselves and Their children capable of improvemenT and responsibiliTy. UNIT: The deTerioraTing effecTs are beginning which musT be offseT by conTinued code enforcemenT and repairs.17 CITY: While This alTernaTive may have assisTed The occupanTs To become responsible ciTizens, if in effecT The aTTempT was To resTricT Them To cerTain areas, Then ooLLHI>+coze munch; . moZy I x mmeomHmeea I m m0m4m0 MUH>mmm I m ZCHE4BHAHm4mmm A4ezm2mmUZH um>HE4zmMBA4 4_H_mom "23w m:z_z ”23m m>_H_mOm "23$ NBHAHm4mw4EH x + mm4m 4 o weHAHm4mw4zH x + NEHAHm4mw4ZH x + AOOEUm 4 o QZ4Q ho .Q4> x o wfiHmOmBZH x + . Zoommmh x o mmHm m o .UDmEm m0 .Q4> x I mHmmZHM m o EmmB .mumOth MQOU m I mm4m m o mMH4mHm m I EMMBmm mqmm 4 + 0204 Hoomum m o BZMM Mm4mmUZH m o weHAHm4Bm4m4 4 o . AmBHmmme QMDZHBZOUV mmUH>mmm m o mmN4B m o mom4q m o m>_H_moa "23m m>_k_mom "23w m>_H_moq ”23m m>_F_moq ”23m NBHHHm4mU4EH x + wfiHmUMBZH x + _ W wmom qazHommz _ ho ZOHmmmmmHD OZ 4 + MBHAHm4MU4EH x + mUZ4BmHmm4 VBHMOMBZH x + m0 ZOHmmmmmHQ OZ m + MBHHHm4mw4EH x + AmeHmmmmzzo 4 + EmMB mBmOU mmHm m + Bzmm mm4mmUZH m + mHmmZHM m + ZDHDmZ ZOHB4BmOmmZ4MB mmmq 4 + mmm4m 4 + QZ4Q m0 MDQ4> 4 + wquHm4Bm4Q4 4 + 4mm4 Q4HBZMOZ4B Acomum 4 + .UDmBm m0 MDH4> 4 + EMMBmm mdmm 4 + 09 meomhmm Nm4DZOUmm 4 + mmm4m m I mmx48 m I mom4a m + doomom m I m>_H_mom "23m m>_k_moa ”23m 4_b_moq “23m NUZMHUHhmm x + MBHMDMEZH x + UZHAmmZDOU .Bmm>ZH NBHHHBD OZ m o mmMUU4 m + Emma BmHmm4 OZHZH4mB m I MBHHHm4mw4ZH x o mmeqmmm m + Bmomm %EHmOmBZH x + UZHUZ4ZHm m I 52mm m o mmDBUDmBm H45Hm40 mmzoq 4 + mHmmZHM H4BZMZ m + m0 :mmD MAmDOQ= OZ m + wH4HMMB4Z m + .MEmmO mom4q m + m0m4fl m + flH4Emm m + mom4A m I OZHZH4mB m + weHu ooommommOHmz BHZD . BZ4ADUUO 98 There has been no gain in The overall freedom of The ciTy. The ciTy sTill benefiTs from improved image- abiliTy. Large Scale RehabiliTaTion Under alTernaTive Three There are The following assumpTions: a. Summary ThaT a group which aspires To reach higher levels has been idenTified and ThaT They are willing To assume The responsibiliTies of owning or renTing a uniT properly. ThaT for periods of Time, aT a minimum of forTy days, The sTrucTures will noT be habiTable. ThaT There is noT necessarily a high degree of before and afTer occupancy of The same seTs of dwelling uniTs. ThaT a prOgram of responsible home ownership and mainTenance has noT been an inTegral parT of The program. (Therefore The long Term consequences have been omiTTed. Such consequences depend on, basically, The "sTake" ThaT The occupanTs have in Their sTrucTure.)18 l. ShorT Term: A. OCCUPANTS: There is a disrupTion in The life-sTyle of The occupanTs caused by relocaTion. Again posi— Tive aTTribuTes are zeroed ouT as They are forced To relocaTe, even Though They may reTurn To The same 99 seT of dwellings. There is The cosT of relocaTion which musT be borne by The ciTy. UNIT: There sTill is no summary conclusions as To The cosT of large scale rehabiliTaTion versus recon- sTrucTion. Evidence Tends To suggesT ThaT such re- habiliTaTion is less cosle. The difficulTy is ThaT The economic sysTem of financing is orienTed To re- consTrucTion.19 CITY: The ciTy musT bear The cosTs of relocaTion, The disrupTive effecTs of reconsTrucTion, in essence The doubling of faciliTies, and The secondary effecTs of dispersion. 2. Medium Term: A. OCCUPANTS: The chief advanTage of rehabiliTaTion, likewise reconsTrucTion, is ThaT There is The imme- diaTe percepTibIe difference in environmenT. This environmenTal impacT, if followed by successive coun- seling and assisTance programs, can increase The aTTribuTes of The occupanTs. LIMIT-NEIGHBORHOOD: There is immediaTe effecTs for The sTrucTure and The neighborhood. The lmageabiliTy is significanTIy increased, if The rehabiliTaTion em- phasized archiTecTural or hisToricaI gualiTies. CITY: There is immediaTe benefiTs for The ciTy in reduced social conTrol cosTs, and in iTs imageabiliTy. Laoun>+cmzh oL:m_m ZOHB4BHAHm4mmm MH4Um mwm4a um>HB4zmmBH4 mWfix ..x I mMBDmHmBB4 I 4 mm0m4mu MUH>mmm I m MBHQHm4m04EH x + Km4m 4 o WBHQHm4mU4ZH x + Hoomum 4 o ZDQmmmm x o mmHm m c .mumomzm mQOU m I mm4m m o AOCSUm m o mBHmmzmm OMDZHBZOU mmUH>mmm m o QZ4Q m0 .A4> 4 ..UDmBm m0 .A4> 4 mmH4mmm m 82mm mm4mmUZH m mmx4B m 00 wquHm4mo4zH x + weHmomezH x + mHmmsz m o Emmemm 44mm 4 + wquHm4em4o4 4 o mom4a m o 020 m>HeHmom ”26m wquHm4mo4zH x + memoo wquHeD 4 enm4mmozH m memoo 204949 nwmommz4me mmmq 4 + m eommm. wm4ozoomm 4 + m>HBHmOm "23m MBHAHm4m04EH x + ZOHB4DA4> x48 4 + mmHm m + Km4m m doomum m 02m AH4Bmm m + m>HBHmOm "ZDm Bzmm .UZH m mmN4B m ZOHB4HUmmme 4 mMH4mmm m ++I+ m>HBHm0m "ZDm NBHQHm4Bm4Q4 4 + NBHAHm4Bm 4 + mBA4mm m + ZDHQME M>HE4UMZ "ZDm wquHm4mo4zH x + meommmm onmmmmmHo 4 4944mm .mm4mqmz .mo24emHmm4 mo onmmmmmHo m 4H4emm mo mmoq m mom4q mo mmoq m m>HBHm0m "ZDm MBHAHm4mw4ZH x + Km4m ACOEUm mmBOQ m + 02m AH4Bmm m I H4mBsz "ZDm 52mm .UZH m UZHUZ4ZHM m mQ4HmMB4Z m mom4q m m>HB4wmz "23m MBHmUMBZH x ZOHB4UOAmm m MUZ4BmHmm4 m 82mm .02H m I 44.34% m .. 4:6sz 444242 m .. Emm Emom MBHU ooommommoamz BHZD 824443000 ReconsTrucTion IOI Long Term: A. OCCUPANTS: Depending upon The condiTions ciTed above, There will be a conTinued accumulaTion of aTTribuTes or a decline. LIMIT-NEIGHBORHOOD: The deTerioraTing effecTs will noT be as noTiceable as under incremenTaI rehabiliTaTion. CITY: The same reasoning applies for The ciTy as found under incremenTal rehabiliTaTion. The excepTion would be ThaT of rehabiliTaTion for hisTorical or archiTec- Tural reasons. There The asseTs under lmageabiliTy would offseT The negaTive facTors under freedom. Under alTernaTive four There are The following assumpTions: Summary 8. ThaT a group which aspires To reach higher levels has been idenTified, and ThaT They are willing To assume The responsibiliTies of owning or renTing a uniT pro- perly. ThaT There will be relocaTion while The siTes are cleared and reconsTrucTed. ThaT There is noT necessarily a high degree of before and afTer occupancy of The same sTrucTures. ThaT a program of responsible home ownership and mainTenance has noT been an inTegral parT of The pro- gram. (See PoinT g, under large scale rehabiliTaTion.) The main cosTs and benefiTs for reconsTrucTion are The same ThaT |02 apply To large—scale rehabiliTaTion, wiTh The following excepTions: A. LIMIT: There may be an iniTial lower cosT in recon- sTrucTion. NEIGHBORHOOD: The advanTages of imageabiliTy depend upon The characTer and sTyle of The new sTrucTures. CITY: The ciTy may face increased service cosTs and laTer aTTribuTe cosTs Through increased uTiliTies and services Through increased densiTies. o>_mI>+cozh mcsm_m mw:¥ I x mmeDmHmee4 I 4 mmom4mo moH>mmm I m oneoomemzoomm um>He4zmmeq4 m>HeHmom "22m 020a azmm .ozH m + mmH4mmm m o m>HeHmom "22m m>HeHmom "sow m>HeHmom "22m m>HeHmom "23m wquHm4mo4zH x + weHmomezH x + mm4mmozH x4e m + weHmomezH x + wquHm4mo4zH x + one4oq4> 4 + 92mm .mozH m + wquHm4em4o4 4 + zoommmm x + mmHm m + mmx4a m I wquHm4em 4 + smoo wquHeD 4 I 4444 m I Ax4ev mmmoo4 m + zaHoms w .mmz4me .mozH oz m + goomom m I one4Hommmmo 4 + 4944mm m + .Imeommmm wm4ozoomm 4 + ozm AH4emm m + mmH4mmm m + . 92mm .ozH m I m>He4omz "26m m>He4omz "22m m>HeHmom “22m m>HH4omz "26m mmHquHo4m mo =mms mqmooo= m I meommmm waHmomezH x I onmmmmmHo 4 I A oszoN 4 o zoommmm x I moz4emHmm4 ozHoz4sz m o wquHm4am 4 I Emma mo onmmmmmHo m I amoo AM o mHmmsz m I emomm 4H4emm mo mmoq m I oneoomemzoo 0 92mm .mozH m I mom4q mo mmoq m I 024 qH4emm m I . 92mm .ozH m + z one4ooqmm m I ; weHo ooommommonz _ 9H2: mez4moooo onen Ipmemon "mm |O4 SUMMARY In preparing a sTraTegy program To cope wiTh marginal and sub- sTandard housing in a neighborhood, The privaTe—public groups can choose from four alTernaTives: a. allow sTrucTures To conTinue To deTerioraTe. b. rehabiliTaTe Them slowly or incremenTally. c. rehabiliTaTe Them exTensively in a shorT period of Time. d. Tear Them down and build anew. The decision resTs upon how inclusive and for whaT period of Time The planner is scheduling his program. Finally, The decision resTs upon eiTher his own or a consensual value sysTem Will The economics rule or will rehabiliTaTion be used also To assisT The occupanTs and also improve The characTer (imageabiliTy) of The ciTy. This chapTer was an aTTempT To ouTline The main elemenTs of The cosTs and benefiTs of The various alTernaTives. IT did noT aTTempT To documenT The acTuaI cosTs. The cosTs of ciTies, boTh on The micro and macro level, are becoming more documenTed. There may be The possibiliTy ThaT one day The planner can argue ThaT iT may be wiser To underTake an uneconomical approach To rehab from The sTandpoinT of The builder be- cause iT will save The ciTy more money Than Trying To relocaTe a family and adminisTer addiTional assisTance programs. Or, conversely, The planner may capiTalize on The high profiT fac- Tor of presTige rehabiliTaTion by creaTing a snob area Through capiTal improvemenTs such as boundary highways, a park and a culTural cenTer and Then allow The privaTe builder To go inTo acTion. IO5 Given The American value sysTem based on economic value inTerpre- TaTions, The planner may be more effecTive if he can TranslaTe social values inTo economic cosTs and benefiTs. IO6 FOOTNOTES Several Typologies of The lower classes have been advanced. Each suggesTs ThaT There is a residue beyond The pracTicaI assisTance of currenT programs. See S. M. Miller, "The American Lower Class- es, A Typological Approach," New PerspecTives on PoverTy, Englewood Cliffs, N.J.: PrenTice Hall, I965, pp. 22—39. The concepT has Iaso been advanced by HerberT Gans in his various discussions of The "open end" and "dead-end" slums. NoTe also Marc Fried and Peggy Gleicher, "Some Sources of ResidenTial SaTisfacTion in an Urban Slum," Journal of The American InsTiTuTe of Planners, vol. 24, November |96I, pp. 305-3l5. The complexiTy of The problem is illusTraTed by Gordon E. Brown, ed. The MulTi—Problem Dilemma, MeTchuen, N.J.: The Scarecrow Press, I968: Alvin L. Schorr, Slums and Social SecuriTy, DeparT- menT of HeaITh, EducaTion and Welfare, WashingTon, D.C.: Govern— menT PrinTing Office, I963. Jewel Bellush and Murray HausknechT, (also ed.) "Public Housing, The ConTesz of Failure," Urban Renewal: People, PoliTics, and Planning, Garden CiTy, N.Y.: Anchor Books, I967. Theodore L. Cross, "PresenT CondiTions of Banking in The GheTTo,‘ CommiTTee on Banking and Currency, Financial lnsTiTuTions and The Urban Crisis, WashingTon, D.C.: GovernmenT PrinTing Office, I968, pp. 396-40l; CommiTTee on Banking and Currency, Financing of Inner CiTy Housing, WashingTon, D.C.: GovernmenT PrinTing Office, I969; noTe sTaTemenT by PresTon MarTin (Chairman, Federal Home Loan Board) pp. 237-24l. NoTe The adminisTraTive sTipulaTions for pros- pecTive morTgagers in ErnesT M. Fisher and Charles Rapkin, MuTual MorTgage Insurance Fund, New York, N.Y.: Columbia UniversiTy Press, I956, p. 9. See also Anne M. Turner and Susan G. BeeTle, A CiTizens Guide To HousingAProqrams in Philadelphia, Philadelphia, Pa.: Philadelphia Housing AssociaTion, I968, p. 72.; MarTin Anderson, The Federal Bulldozer, Cambridge, Mass.: M.I.T. Press, I964, Chap- Ter Four, "The Consequences"; ChesTer W. HarTmann, "A Rejoinder: Omissions in EvaluaTing RelocaTion EffecTiveness CiTed," in Urban Renewal: People, PoliTics and Planning, op. ciT., pp. 36l—365. A. H. Schaaf, QB: ciT. also A. H. Schaaf, "Economic FeasibiliTy Analysis for Urban Renewal Housing RehabiliTaTion, " Journal of The American InsTiTuTe of Planners, vol. xxxv, no. 6 (Nov. |96I), pp. 399—404; MarTin Anderson, 9g, ciT., ChapTer Nine; U.S. DepT. of Housing and Urban DevelopmenT, CosT, Time AssociaTed wiTh TenemenT RehabiliTaTion in ManhaTTan, New York CiTy, I968. Jerome RoThenberg, Economic EvaluaTion of Urban Renewal, WashingTon, D.C.: Brookings InsTiTuTion, I967, pp. 32-45; James C. T. Mao, "Efficiency in Public Urban Renewal ExpendiTures Through BenefiT-Cosf Analysis," Journal of The American InsTiTuTe of Planners, vol. xxxii, no. 2 (March I966), pp. 95-IO7. IO7 VicTor De Grazia, "RehabiliTaTion is NoT Working as a Resource for CommuniTy DevelopmenT," Journal of Housing, no. ll, December I969, pp. 622-625. In an analysis of an area considered for rehabiliTaTion, some of The reasons for noT improving The exTeriors of The uniTs was The "dislike of The neighbors" and noise and Traffic. IT should be noTed ThaT The residenTs were obviously conTenTed and The research- er was unseTTled by whaT appeared To be deTerioraTing condiTions. AIberT Rose, ProspecTs for RehabiliTaTion of Housing in CenTral ToronTo, ToronTo, OnTario: UniversiTy of ToronTo, I966. In an- oTher area, dissaTisfacTion was expressed wiTh The level of service and appearance of The neighborhood and The ciTizens welcomed The prospecT of assisTance; LippeTT Hill RehabiliTaTion Area, Provi- dence, R.l.: Providence RedevelopmenT Agency, I962. See Jerome RoThernberg, op, iT,; also Sidney Hook, ed., Human Values and Economic Policy, New York, N.Y.: New York UniversiTy Press, I967; K. William Kapp, The Social CosTs of PrivaTe EnTer- prise, Cambridge, Mass.: Harvard UniversiTy Press, I950. The main elemenTs of a cosT-benefiT analysis and bibliography are found in A. R. PresT and R. Turvey, "CosT BenefiT Analysis: A Survey," Economic Journal, vol. 75 (December I963), pp. 683-73I. Paul L. Niebanck and John B. Pope, ResidenTial RehabiliTaTion, Philadelphia, Pa.: UniversiTy of Pennsylvania, I968, p. 43; CosT and Time AssociaTed wiTh TenemenT RehabiliTaTion...gg, ciT., p. vii and p. viii. Changes over a five year period were recorded in ChesTer Rapkin and William G. Grigsby, The Demand for Housing and in Racially Mixed Areas, A STudy of The NaTure of Neighborhood Change, BerkleY Calif.; UniversiTy of California Press, I960. This dealT specific- ally wiTh racial changes and iTs applicaTions To oTher migraTion changes is quesTionable. Harry B. Wolfe, "Models for CondiTion Aging of ResidenTial STruc- Ture," Journal of The American InsTiTuTe of Planners, vol. xxxiii, no. 3 (May I967), pp. l92-I95; William G. Grigsby, Housing MarkeTs ...gp, gli,, pp. |O3—IIO. AdapTed from DownTown Lansing Plan, U.P. 8OI-A, Fall I966, School of Urban Planning and Landscape ArchiTecTure, Michigan STaTe Uni— versiTy. A neighborhood which epiTomizes such an eThnic condiTion is Charles- Town, BosTon, Mass., which reacTed negaTively aT firsT To rehabili- TaTing plans. See Langley CarleTon Keyes, Jr., The RehabiliTaTion Planning Game, Cambridge, Mass.: M.I.T. Press. A similar neighbor- hood which reacTed favorably To The firsT sTages of planning was ThaT of Grays Ferry, Philadelphia. See "CiTizen ParTicipaTion in Urban Renewal," Columbia Law Review, vol. 66 (March I966), pp. 505—6IO. IO8 Jerome RoThernberg, 92, ciT., p. 49. Paul L. Niebanck, 92: ciT. A. H. Schaaf, "Economic FeasibiliTy Analysis... , 92, ciT. The ramificaTion of This assumpTion involves The quesTion of renT versus ownership and The growing suggesTions for home ownership for The lower incomes. The McKinsey sTudy on The New York CiTy RehabiliTaTion program indicaTes ThaT afTer a cerTain poinT in exTensive rehabiliTaTion, iT is more economical To build anew Than rehabiliTaTe. McKinsey and Co., lnc., 92, gl:,, secTion Two. The reporT also confirms general impressions ThaT The rehabiliTaTion indusTry as such is noT organized and currenT financing procedures are noT orienTed for rehabiliTaTion. ChapTer Five: The PoTenTial for Successful RehabiliTaTion Programs WiTh The focus on employing rehabiliTaTion as a means of coping wiTh The marginal house, The problem of housing in The UniTed STaTes represenTs a series of currenT deficiencies: a. defining and idenTifying The sTaTe of The housing sTock. b. The lack of a comprehensive framework of analysis linking economic and social fac- Tors in correcTive sTraTegies. c. The ineffecTiveness of federal assisTance programs which rely solely on economic leverages, and The failure To clearly de— fine TreaTmenT of housing eiTher as an economic markeTing problem or as a welfare problem, or specific raTios Thereof. IO9 llO d. The fragmenTed adminisTraTive procedures and policies on The local and naTional level. In Trying To remedy These deficiencies, The planner musT accounT for The four main-sTream forces which age The house: a. physical aging b. economic c. social d. adminisTraTive As noTed in The firsT chapTer various groups Through rules, legis- laTion or oTher conTrols affecT These aging forces. The accompanying charT, INSTITUTIONS IN HOUSING REHABILITATION, enumeraTes The basic groups which affecT The sTaTe of housing. To insTiTuTe a program of rehabiliTaTion requires The following: a. an awareness of The poTenTial for success given The "sysTem" as iT is now. b. an appreciaTion of The poTenTial for success if exisTing conTrol groups and conTrols can be alTered. c. a consideraTion of how likely can These conTrol groups and conTrols be alTered. Assume for example, ThaT currenT depreciaTion schedules for Taxa- Tion purposes have been documenTed as a cause for significanle increasing The deTerioraTion of housing. If This is so, The quesTion Then becomes how much does presenT deTerioraTion increase, and subsequenle, whaT is The possibiliTy of changing This depreciaTion schedule. If, in facT, iT appears ThaT The likelihood of changing This schedule is nil, whaT oTher facTors are presenT and whaT are The possibiliTies of Their effecTs being alTered? In conTrasT To The previous analyTical frameworks in The previous chapTer, The accompanying charT is noT based on'a Time perspecTive. This auThor is assuming ThaT The majoriTy of These groups are working wiThin a shorT To medium Term perspecTive and The consequences of Their acTions are viewed only as To immediaTe effecTs. These conTrol groups are viewed Two ways: in Terms of Their geo- graphical area of influence and in Terms of Their OperaTion wiThin The sysTem. The charT is rudimenTary. One could hypoThesize a complex sub- sysTem by which a councilman reacTs To and inpuTs inTo. A union can be viewed as a complex organizaTion wiTh local, regional and naTional con- Trol and influence. Tax legislaTion perhaps epiTomizes The compromise of numerous economic pressure groups working boTh in WashingTon and ThroughouT The counTry. Finally, one can suggesT ThaT The resulTing procedures and allocaTion of benefiTs reflecTs The currenT value sysTem. To suggesT a change in values and change in prioriTies is perhaps The ulTimaTe soluTion, buT a soluTion which requires a level of undersTanding and organizaTion which may noT exisT now. By designaTing The various conTrol groups by geographic area, There is no aTTempT To suggesT a one-To-one relaTionship. Local groups noT only influence Their neighborhood buT also The ciTy. Conversely, naTionaI Tax legislaTion noT only affecTs The naTional economy as an aggregaTe, buT also affecTs The occupanT in The slum or rehabiliTaTion dwelling uniT. 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