Keeping housing affordable is vital to future growth, Evansville officials says

But now that City Council has approved the sharp end of the stick—$1.7
million in riverboat money to kick off a land bank that could demolish up to 2,000 vacant and blighted structures through 2019 — some are worried about the G-word.

It’s gentrification, a big word that boils down to displacing the poor in favor of the rich. Most members of City Council couch their concerns in broader language intended to make the same point — but its meaning is the same, and it is unmistakable: The newly available empty lots had better be used for affordable housing — with the emphasis on “affordable.”

Otherwise, Mayor Lloyd Winnecke’s administration may not get funding for Year 2 — let alone Years 3 and4— of the land bank.

“We’re talking about clearing blight. At some point, we want to infill affordable housing back into these areas. It’s a two-fold process,” said 6th Ward Councilman Jim Brinkmeyer.

“It’s almost a problem that’s one in the same because you’re talking about clearing houses that only the poorest of our community can afford to (live) in — and when you clear those, then what kind of housing opportunities do people that are at the very bottom of our economic ladder have?”

Brinkmeyer acknowledged his concerns are similar to those of 4th Ward Councilwoman Connie Robinson, who publicly challenged Winnecke administration officials last month to say where low-income people would live if replacement homes were not affordable.

Land bank advocates say first that the homes will be affordable. Their more elaborate answer lies in proposals for tax credit-funded and federally subsidized affordable housing projects, mixed-income developments paid for by local employers, higher contributions to the city’s riverboat-funded Affordable Housing Trust Fund and property tax incentives to build on formerly blighted properties.

The intended result: a transformative mix of new affordable and market-rate housing that would improve neighborhoods where blighted structures are demolished if only by raising the value of remaining properties.

But none of that can happen without the demolitions paid for by the land bank’s riverboat dollars.

Winnecke administration officials intend for the land bank to acquire vacant structures that didn’t sell at recent Vanderburgh County tax sales and to tap the city’s federal grant-funded demolition program and purchased or donated blighted houses.

The plan is to demolish the vast majority of those and market the vacant land to for-profit and nonprofit developers. Narrow lots could be repurposed as side yards for adjacent property owners or given to the city parks department or water and sewer utility to help with combined sewer overflow-related issues.

The blight is choking development, if only because it is in the way.

Without the land bank’s years long demolition campaign, city officials say, virtually no new houses can be built in Evansville’s urban core beyond those the city subsidizes on formerly blighted properties in partnership with nonprofits Memorial Community Development, HOPE of Evansville, ECHO Housing Corp., Community Action Program of Evansville and Habitat for Humanity. That’s because the space is occupied by vacant and blighted structures to which code enforcers andpolice and fire agencies are forced to return again and again.

The city has identified an area of focus for the land bank program— west of U.S. 41 and south of Diamond Avenue, east of St. Joseph Avenue, north of the Ohio River and the Howell neighborhood on the lowerWest Side.

That’s where most of the blighted properties that don’t sell at tax sale are located, said metropolitan development director KelleyCoures, the city’s point man for the land bank project.

“This is where the problem is,” Coures said.

A GLIMPSE

Coures has a pointed rebuttal to concerns about gentrification: No one will be — can be— displaced by the land bank’s work.

“The houses we’re going to tear down are already vacant and abandoned,” he said. “You can’t displace somebody from a vacant house.”

Coures said the city’s commitment to affordable housing is amply demonstrated by other projects it has completed or has in the works.

The projects are not designed with rich people in mind.

City officials recently met with the NRP Group LLC, a company that specializes in low income tax credits, and HOPE of Evansville about a proposed 40-home second phase to 2013’s Homes of Evansville affordable housing tax credit project.

That project, a collaboration between NRP and HOPE, redeveloped 80 formerly blighted Downtown lots into 40 new homes rented on a lease-to-own basis to low- to moderate-income families. It was funded primarily by the sale of federal tax credits, a complex financing program that began in the 1980s.

Instead of granting an organization money to build affordable housing, the government gives them tax credits, which are a write-off for future tax bills. The organization sells those credits to investors for less than their true value, and the money from that sale pays for the bulk of the development. NRP sold $10 millionof tax credits to a private investment fund for $8.3 million, money that helped fund the 2013 project.

The way the proposed second phase’s 80 lots were acquired offers a glimpse of how city officials say the land bank will look in action.

Brownfields provided the lots in the Goosetown, Culver and Tepee communities over the past several years by acquiring them as vacant, dilapidated houses from the county after they failed to sell at tax sale. Brownfields demolished the blighted structures and worked to secure adjoining lots to create larger, buildable lots. That’s how NRPGroup and HOPE obtained all the land for the 2013 project, too.

Brownfields has for years funneled properties to HOPE, ECHO, CAPE, Habitat and Memorial in the same way for projects that the U.S. Department of Housing and Urban Development helps subsidize. HUD regulations require such properties be rented or owned for 15 years only by individuals or families who earn 80 percent or less of the area median income.

Nobody has to ask whether the AMI — $34,400 for an individual and $49,100 for a family of four in Evansville — are the wages of wealthy people.

It’s the same story with the NRP-HOPE tax credit project’s second phase.

Federal law dictates that the project’s residents, like the first phase project’s residents, also must be measurably low-to-moderate income. For at least the first 15 years, properties built with tax credits must be owned or leased by individuals who meet the 80 percent threshold.

Renters can then become buyers in a lease-to-purchase program. At the end of the 15-year “affordability period,” Homes of Evansville would sell the homes to their residents or on the open market.

“The way it works is, a lowi ncome person pays rent for 15 years, and a portion of that rental payment goes to an Individual Development Account that is  accumulated like a savings account,” Coures said. “And that person has themoney available at the end of the 15 years to buy the home.

“It’s away to bring the American dream to people who otherwise would not be able to afford it.”

NRP plans to apply to the Indiana Housing & Community Development Authority for tax credits for the proposed second phase, which could begin construction next year.

Although Coures said 2013’s first phase improved the quality of life in the area by adding “new housing, new lights on the street, new people,” available U.S. Census data offers no indication whether the project ushered in higher-income residents. Goosetown, Culver and Tepee are primarily within U.S. Census tracks 12 and 13, but the most recent median household income data dates to 2014. That’s the year people were moving into the first 40 homes.

It’s a moot point at any rate, Coures said.

The strings attached to tax dollars needed to bring housing to Evansville’s urban core preclude the possibility that gentrification could happen there.

“There is no way that that could happen,” Coures said.

At the same time, city officials hope some individuals and families with higher incomes buy their own lots in the area and build homes.

“HUD doesn’t want you to have all of your low-income housing clustered together,” Coures said. “HUD’s goal is mixed-income neighborhoods to eliminate what it calls ‘pockets of poverty.’ So you want mixed-income housing interspersed with affordable housing so that everyone lives in the same neighborhood. It’s what calms the neighborhood down. It’s what keeps the neighborhood stable. And it’s what keeps property values stable.”

‘VECTREN VILLAGE’

Mixed-income housing is the inspiration for another proposed local government-inspired housing development on land to be cleared by the land bank’s bulldozers.

City officials recently asked three major employers — Vectren Corp., Berry Plastics and Deaconess Hospital — to consider going into their own pockets to redevelop some of the land bank’s formerly blighted properties in Jacobsville. The local business giants could help build market-rate homes that could be occupied by some of their thousands of area employees and blended with affordable housing projects.

Coures envisions developments with names like Deaconess Village, Berry Place apartments and Vectren Village, places that would allow employees to walk to work while collectively saving gasoline and reducing their carbon footprints. They could also live near the city’s $15 million renovation of North Main Street, which began last week.

He said the idea is “still in the conceptual phase,” and Deaconess spokeswoman Ashley Johnson agreed.

“We’ve had a meeting where we said, ‘Hey, wouldn’t it be nice if we kind of all got together and talked about this?’” said Johnson, Coures’ contact at Deaconess. “Really, that’s as far as we’ve gotten.

“I think it’s going to be one of those, ‘We’re looking to the future, we want Evansville and this area to be strong, so we’re going toput our collective heads together and see what we can come up with.’” City officials see other potential answers when they look at the long-range picture.

Dangling a carrot in front of home buyers, they also want property tax incentives to induce the building of homes on formerly blighted property. The same incentives could create a revenue stream for the land bank.

Coures said he and the Southwestern Indiana Chamber intend to lobby local legislators for the creation of a “550-50 plan.”

A homebuyer who builds a new home on a formerly blighted property could get a five-year, 50 percent property tax break on the home. Half of the reduced property tax payment would help fund the land bank for five years.

Ultimately, Coures said, there has to be some kind of freebee — a tax break, a subsidy, a tax credit, a major employer’s contribution — to replace housing blight with new housing that’s affordable.

“You have to subsidize affordable units wherever you do them,” he said. “You have to either subsidize the rent people pay or you have to subsidize the construction of the unit — because poor peopl ecan’t afford to pay a market rate rent, and they can’t afford to purchase a home for the full cost of the property.”