10
Wednesday, August 20, 1975
University Daily Kansan
Local subsidized
By THERESE MENDENHALL
Kansas Staff Reporter
A couple in their 70s lived in their station wagon one January.
A family with nine children spent a summer in a tent at Lake Perrv.
A woman whose monthly income was $88
paid 60% of it for rent, not utilizing
utilities.
"She used to sit around with the fighters
and watch them play."
SITUATIONS SUCH AS these led several groups of townpeople to realize, late in the 1980s, that many Lawrence residents had to spend their nights indoors in the environments or living beyond their means.
The many families living in dwellings that were unsafe or unhealthy had no place else to go and so the city couldn't evict them to enforce its minimum housing standards.
"People were living in chicken coops," said Charles Saunders, professor of business and member of the first group of students who initiate a project to improve local housing.
Findlay, another member of the group, said many buildings called "home by dirt floors" and "dirt floors" and dirt floors. Findlay now works as a counselor for the Support Group of Michigan Officers.
"I THINK PEOPLE have a right to decent living quarters," she said. "Whether they are poor doesn't have anything to do with it."
A right to decent living quarters has never been a guaranteed element of any government policy, but has recognized the need and has made several attempts to assure a minimum housing standard for the American people. Some of these attempts have worked in favor of the residents.
Wood Creek . . . a failure as Hope Plaza
In August 1968, Ballard Community Center began work on a plan that was to produce in 1971 Lawrence's first federally subsidized housing project, Hope Plaza. Ballard is an organization that provides social services to needy local people.
BALLARD WASN'T THE only group worried about substandard housing. During the same summer, the League of Women Voters started a campaign to convince the city commission of the need for a housing agency responsible to the Lawrence city government. Later that year the Lawrence council appointed a five-member board of directors to determine the need for public housing, plan, construct or lease, and manage it.
LHA sponsored two projects: Edgewood Homes, a low-rent general occupancy project completed in the summer of 1972, and Babcock Place, a project for physically self-sufficient elderly persons, which was completed in the summer of 1973.
A fourth project, Pine Tree Townhouses, was built by a private developer through a federally subsidized program. It houses persons of moderate income.
THE BUILDING OF apartment projects like these is one approach the federal government has used to provide better housing for those who can't afford it. Three other Texas are housing Lawrence residents today. Are Hope Plaza funded financially in 1973.
Two laws are the source of these projects: The Housing Act of 1937 and the National Housing Act.
The earlier act creates a program for one type of subsidized housing called public housing. In this program, the federal government provides a project and gives it to a city government,
The city is responsible for managing it and meeting all operational expenses. The project survives as long as it is a workable commercial enterprise.
Although the Department of Housing and Urban Development (HUD) may give it financial assistance in cases when unforeseen expenses arise, the project receives no regular subsidy for operational expenses. Rents can be low because the project itself doesn't have to pay for the overheads associated with federal taxes. Edgewood and Babcock are public housing projects managed by the Lawrence Housing Authority.
HOPE PLAZA AND Pine Tree Townhouses were built under the other law.
housing has mixed results
section 238 of the National Housing Act of
1968. Although this program doesn't pay the principal on the mortgage for low-rent homes, it does provide the interest or some of the operating costs.
Initially, the Federal Housing Administration (FHA) insures a loan to any private sponsor that wants to build and oversee a project according to FHA guidelines. Hope Plaza and Pine Tree were built by private developers and then sold to the Federal National Mortgage Association (often called Fanny Mae), a federally supervised organization established to buy mortgages in the state. A private sponsor in each case was responsible for monthly mortgage payments to Fanny Mae.
BECAUSE FHA INSURES the mortgage 100 per cent, a private group needs no equity to have a project constructed. This provision makes the financing of the projects easier and so encourages private groups to start them.
The history of the housing that these two acts have produced for Lawrence residents begins in 1986 with a project whose failure to address itself is still a matter of controversy.
the representative wasn't surprised that the project was inadvent and told members of the Hope Plaza Corp. that other such projects, were falling, too.
Hope Plaza was hopeless from the start, according to several members of the local group that initiated the project. Construction on the project began in 1970. By early 1973, mortgage payments were so far behind that the project had to be sold.
Charles Saunders, the first president of the nonprofit Hope Plaza Corp., said that by the time construction of the project was finished, members of the corporation had completed more than 90% if the complex kept 100 per cent occupancy constant, it couldn't pay all its bills.
"HE ACKNOWLEDED there was nothing we could do about it and told us to
get back."
But Phil Lord, chief underwriter in the Topeka HUD office through which the project was administered, said Hope Plaza is one of the locations of occupancy and management problems.
He said that soo after tenants moved in, a representative of the Federal General Accounting Office came to Lawrence to check the project's budget. Saunders said
"We wouldn't have issued a commitment if our analysis hadn't shown that the problem was due to the model."
Lord said that as far as he knew, Hope
Plaza was the only such project that had failed.
CYNTHIA TURNER, second president of the Hope Plaza Corp., said that even though she had been a businessglad it had been built. She said Hope Plaza was Lawrence's first try at federal subsidized housing and she thought its success had made her successful housing projects that followed it.
Turner, codirector of Ballard Community Center, called the housing situation at that time.
So Ballard Center obtained the support of two other local organizations, the Jewish Community Center and the First United Methodist Church. The three groups formed an FHA-insured loan to build the low-rent project.
The $1,905,400 project was built on an 11-acre site at 25 N. Michigan St. When it was completed in mid-1971, the 128 units in its 22 buildings were to house a minimum of 400
SAUnderS SAID THE project was designed for middle- and low-income families and gave preference to persons who had special problems, such as disabbities and old age. A family was also a group related by marriage or blood.
According to FHA regulations, 20 per cent of the units could be rented to families who were eligible for an FHA subsidy. These families paid 25 per cent of their income a month for their rent, which ranged from $24 to $36, said Dick Benton, project manager. Medium-income families paid $80 to $90, and medium-income families paid $70 to $80, sets by the FHA, were $200 and more, Benton said. The management charged the maximum rents allowed by FHA.
For the next two years members of the Hope Plaza Corp. did their best to keep the project going. Lenore Findlay said occupancy was high at first. She said that as time passed, demand for the units increased and more were needed to students, who were low on the preferential list stated in the project's regulations. By the time the project was sold, she said, about 10 per cent of the tenants were students.
By March 1973, payment of the mortgage was so far behind that the mortgage holder, Fanny Mane, filed suit to collect the payment, forcing FHA to make good on its guarantee. The project was sold at a bid to the auction for Fanny Mane, who was the only bidder.
Fanny Mae operated the project for the rest of the year and then sold it to a private investor. The project became Wood Creek Apartments and rents increased to $115 to $160, an increase of as much as $100 for some units.
THE FHA PAID the project a monthly subsidy which was the difference between the rent received and the fair market rate for each unit.
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WHEN RENT INCREASED, most tenants couldn't afford to stay. But that by the time they arrived, finishing the construction of Edgewood Homes and Babcock Place, Turner said some of the tenants eventually moved into their new place. Some others moved back into the substandard
housing that had prompted Ballard Community Center to create Hope Plaza.
Members of Hope Plaza Corp. and FHA officials also don't agree on an explanation for the delay.
ARTHUR KATZ, PROFESSOR of social welfare, said that the federal subsidy had been inadequate and estimated that the FHA would have had to subsidize at least 40 per cent of the units, or twice as many as it currently subsidized, for the program to work.
Findlay said the corporation requested a six per cent subsidy from HUD but the corporation rejected it.
Katz said other problems were the isolated location of the project and the absence of public transportation. He also said that since no funding had been provided for social or recreational activities, the community was left with vandalism by juveniles had been a problem
"If you want to carry out a structure of housing for low-income people, you have to keep rents low," Katr said. "The only way to do that is through subsidies."
THE IDEA FOR the second subsidized housing project built in Lawrence originated about a same time, planning a campus playground in Jump Village League of Women Voters urged the City Commission to form a housing authority. After the Citizens Advisory Committee on a Workable Program studied the recoommunity's need for the Lawrence Housing Authority was created.
The LHA determined that Lawrence needed two low-wait housing projects, one on the east side of the city and one capuciny. Possible sites for both projects were discussed early in 1790. To pay for both projects, the LHA issued government-licensed land with federal funds paid nearly to the LHA.
Construction on Edgewood Homes, the general occupancy project, began in May 1971. The $2.2 million project, at 1600 W. 35th Street, included units. It opened in the summer of 1972.
The project is open to families only. A family is defined as a "group of persons regularly living together, related by blood, marriage or adoption, or a single person if he is elderly, disabled, handicapped or displaced families are given preference. Displaced families are displaced, elderly families or persons and finally, students.
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