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The Wall Street Journal.

Project Vision
August 18, 2006

By JULIA VITULLO-MARTIN

Public housing is urban government's largest orphan. It is an unloved recipient of tens of billions of dollars in funds, poured over decades by the federal government into housing projects in just about every city in the country. Neither the Republicans nor the Democrats want much to do with it anymore, and as a result physical plants are deteriorating while operating deficits soar. This failed experiment in government-financed, -built, -owned and -operated housing is over, yet the projects continue to house millions of Americans.

In the midst of this decay, however, is huge opportunity. Hundreds of old projects stand on valuable real estate, making them potential beneficiaries of the great urban comeback. But the authorities that own them must have the vision to see these prospects—and few do.

Take New York City. Its real-estate market is so robust that even sections like Morrisania in the South Bronx, once nominated by Jimmy Carter as the worst neighborhood in America, are again thriving. Since 1987, the city government has spent over $130 million on South Bronx restoration, with the result that hardworking households and small businesses have returned to the blocks once destroyed by arson and despair.

Yet looming high above the pretty new houses, retail corridors and well-tended parks are three of the ugliest buildings in New York: the immense Morrisania Air Rights public-housing projects, completed in 1981 on 5.38 acres constructed over the sunken roadway that leads to the George Washington Bridge. When asked if the New York City Housing Authority had any intention of freeing the neighborhood of these hulking monuments by tearing them down, a high-ranking NYCHA official said, "No. We're not Atlanta."

Precisely. NYCHA is trapped in old-style, mammoth public housing, proud that it has only demolished one major building since 1972. NYCHA oversees 2,691 residential buildings that are scattered throughout the five boroughs, including in many neighborhoods that are now doing well despite the projects in their midst. Manhattan's booming Upper West Side, where new residential construction routinely sells for $1,400 per square foot, has over 20 projects, worth hundreds of millions of dollars—not that NCYHA would dream of doing the market calculations.

Meanwhile the Atlanta Housing Authority, ranked in the early 1990s as the nation's fifth largest authority and the seventh most troubled, has been following the opposite course since 1996—demolishing its old projects and replacing them with attractive one- and two-family townhouses built in vernacular architecture.

But striking as the new houses are, they're not Atlanta's real innovation. "We are not making a nicer box," says Renée Glover, AHA's president and CEO. "We are intentionally creating a market-rate community with a seamless affordable component. We work with private-sector development partners who have knowhow, expertise and access to financial capital. Our projects are driven, owned and managed by the private sector."

Ms. Glover has been systematically demolishing the old projects, which she calls toxic, and replacing them with normal-looking neighborhoods, made up of 40% market-rate tenants and homeowners, 40% former public housing tenants who meet stringent new qualifications, and 20% low-income tenants.

All of her new housing is oversubscribed, a far cry from the situation when she took over as executive director of the AHA in September 1994. An assessment of the agency at that time showed that over half of AHA's apartments—some 5,000 units—were vacant. It had an uncollected rent rate of over 25%. Maintenance was abysmal, with the agency needing an average of 60 days to complete routine work orders. AHA scored an appalling 39 out of 100 under HUD's Public Housing Management Assessment Program. This was overseen by a "bloated and untrained employee force," in Ms. Glover's words, of about 1,300. Today, AHA's vacancy rate is below 1%, as is its uncollected rent rate. Routine work orders take 48 hours, and the backlog of 12,000 orders has been eliminated. It scored a perfect 100 in HUD's assessment. Its work force has been cut down to around 325 "well-trained and motivated professionals," says Ms. Glover.

To the naked eye, AHA's developments are indistinguishable from adjoining communities. Ms. Glover partnered with private developers, leveraging small amounts of government money with far larger sums of private investment. She demolished the downtown Techwood/Clark Howell Homes, two of the country's first public-housing projects, and built Centennial Place with $42.5 million in federal Hope VI revitalization funds and about $2 billion in private investment. (Hope VI was initiated by the first Bush administration, strongly supported by the Clinton administration, and opposed by the current administration.)

Similarly, she demolished the Perry Homes, three miles northwest of downtown Atlanta, and replaced them with what will be the AHA's largest development, the West Highlands project, which combines 570 apartments with an 18-hole, PGA-level golf course designed by Jack Nicklaus. She used $25 million in federal revitalization and demolition funds and $444 million in private investment.

AHA requires that all tenants between the ages of 18 and 65, except for the disabled, be employed, or be enrolled in job training or in school. "Residents must engage in an activity that will grow them out of the need for subsidy," says Ms. Glover. The result: Employment is way up (from 13% of residents in 1994 to 71% today) and crime is way down. Crime overall in Atlanta's public housing developments is down 76%, according to a Brookings Institution study released last year.

What's more, private development is springing up all around the former AHA projects, showing that private investment will readily enter once what Ms. Glover calls "residential brownfields" are removed. Centennial's neighborhood, which includes the Georgia Institute of Technology, Bell South headquarters, All Saints Church and should never have been a brownfield, is "on fire" today, says a developer. Retail and commercial services are springing up in an area that long had none. Though ferociously opposed by the Board of Education, Ms. Glover set up Atlanta's first charter school in 1997, Centennial Place Elementary, which now has some of the highest standardized test scores in the entire school system—even though it receives only 60% of the funding of regular public schools.

What AHA is doing is entirely different from previous reform efforts because AHA does not intend to "manage" better public housing—it's getting rid of public housing. For the sake of both public housing residents and their neighborhoods, let's hope that other big city authorities follow, starting with New York.

Ms. Vitullo-Martin is a senior fellow at the Manhattan Institute.

 

©2006 The Wall Street Journal

 


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