A foray by HUD into telling small towns how best to use their land

Jess Zimbabwe's picture
Blogger
In April 2009, HUD Secretary Shaun Donovan spoke to the ULI Spring Council Forum in Atlanta; he stated that his administration's goal was "to put the UD back in HUD," and explained that HUD's over-reliance on housing solutions wasn't helping cities address their complex revitalization needs. Just over two years later, this small new funding program caught my eye on a list of new HUD announcements:

*** HUD HOPE VI – $0.5 million
Application Due: August 22, 2011
Eligible Entities: Local governments

HUD requests proposals for the HOPE VI Main Street Program. This program provide grants to small communities to assist in the rejuvenation of an historic or traditional central business district or "Main Street" area by replacing unused commercial space in buildings with affordable housing units. HUD encourages activities that actively promote sustainability through enhancing energy efficient measures.

Now, I suppose it would be fair to assume that a community who applies for this program has already studied the parcels and "Main Street" area in question and made a determination that housing would be a long-term better usage of the land than the existing commercial use, but it strikes me as exceeding the bounds of the federal government to make the presumption on behalf of eligible small communities that this land use change should be made. Indeed, the program is only open to communities with 50,000 or fewer residents, which describes communities that don't often have a surfeit of professional planning capacity to study a question like this before chasing federal funds. HUD could have made one of the eligibility criteria that the locality has a comprehensive plan or zoning in place that would support this dramatic land use change. By not doing so, this program seems to encourage the local funding recipient to enact a spot rezoning for the affected properties.

The stated objectives of the program are to: "Redevelop Main Street areas; Preserve historic or traditional architecture or design features in Main Street areas; Enhance economic development efforts in Main Street areas; and Provide affordable housing in Main Street areas." Of these goals, only the fourth (providing affordable housing) is clearly met by every allowable expenditure under the program. Replacing viable downtown commercial space with housing units seems like a questionable move towards "enhancing economic development"  and from the perspective of preserving historic and traditional architecture, rehabilitating older downtown buildings for re-use as housing is generally only preferable if the only alternative is to tear the obsolete structure down.

Especially in the current economic climate, which has created extreme volatility in many communities' retail, restaurant, office, and light manufacturing industries, I can see many communities being interested in the idea of using federal funds to address vacant storefronts through this program, but I'm not sure it's wise for them to do so. Hundreds of small downtowns are struggling now, but removing commercial space, breaking up what little retail continuity exists, and adding first floor residences that are bound to close themselves from the street seem like moves that will facilitate rather than stop the pattern of decline. Why not use this funding to promote developing additional affordable housing units on vacant land or land that is adjacent to existing downtowns? Predicating the funding on a local land use change from commercial to residential incentivizes short-term decision making, and leaves a lot of "UD" still left to do for struggling small downtowns.

I'm curious:

  • Do you know any communities who applied?
  • Can you think of smaller downtowns that would benefit from this program?
  • Do you think it's advisable to make such a dramatic land use shift?
  • Do you have examples of affordable housing in small downtowns that are located in formerly commercial space and contribute to the downtown's economic development?

I'll watch for the results of this funding and report back about the community(ies) that are awarded.

Jess Zimbabwe is the Executive Director of the ULI Daniel Rose Center for Public Leadership.

Comments

Comments

Unbelieveable

Why am I not surprised to see the Federal gov't offering money to a solution that probably isn't in the best interests of the local community? Funny how they say they want to take the focus off just housing as a solution, than offer HOUSING as the solution. This is why we need the Federal government to back off trying to solve every problem out there and stop creating ways to spend money they don't have...

I don't see what's so

I don't see what's so controversial about this. I can think of a community where this might work: Ypsilanti, MI. It's under 50,000 people and they have a Public Housing Authority that could assist with the HOPE VI application and administration. They have several old commercial buildings in three different downtowns. Many historic commercial buildings have been rehabed, but there are still buildings have been eyed for redevelopment by developers where the numbers just don't work. This grant, if won, could make some languishing projects work there and bring a long term affordable housing commitment to neighborhoods where the potential for gentrification exists. And it wouldn't take any rezoning to make a project happen, the City rezoned these areas to mixed-use districts along time ago. I don't know if any groups from Ypsilanti applied, but they'd be a perfect match for this grant.

There are a few other cities in Michigan that I can think of that might be good candidates as well.

Not a new program

This has been a part of the HOPE VI program since 2003, think the first grants were from 2004, so it has been around since then. It basically set aside up to five percent of each HOPE VI appropriation. The larger HOPE VI grants tended to be to large cities and the Main Street portion was aimed at small towns. There have probably been about 20 HOPE VI Main Street grants since 2004.

retail versus commercial; ground-floor versus above

Without knowing the specifics of the proposal, why is it assumed that residential units are necessarily taking over ground-floor (retail) space? I would think this sort of program would be more likely aimed at communities with vacant above-ground-floor office spaces. These spaces often go vacant or boarded up even in large cities with significant affordability problems. While I’m not familiar with the office market in many smaller cities, this program COULD be useful as additional residents would ideally patronize and further stabilize ground-floor retail/office uses. As such, I really don’t see it as much of a ‘threat’ to retail.

Jess Zimbabwe's picture
Blogger

great point.

That's an excellent point. I was assuming the entire property (including ground floor retail) would be converted to housing, but maybe--especially with a for-profit or nonprofit development partner-- only the upper floors become affordable housing.

Jess Zimbabwe, Executive Director
ULI Daniel Rose Center for Public Leadership in Land Use

El Dorado KS was awarded this grant 2 weeks ago

Two weeks ago this grant was awarded to El Dorado KS. I was very involved in this process. In our community of 13,000 this grant is huge! I think that before you criticize a opportunity such as this one that benefits small communities, you should read more about the grant and what it will and will not fund. This is for upper-story housing only. We are not turning retail space into housing. The two buildings that we successfully received this grant for have been vacant for about 40 years. The costs associated with bringing old buildings up to code is much more expensive than building a new building. This is why this grant is so meaningful to our community. One of the buildings that we are using this for was on the brink or being demolished. With this money as well as state and federal tax credits, we are able to save the beautiful building that is in the heart of our downtown.

This year, this grant was cut from a $4 million grant to a .5 million grant. I have spoke to several communities who received this in the past and the improvements to their downtowns that could have only been done with the assistance of this opportunity. Increasing downtown living in small communities like ours is very important. Most of our buildings in our downtown originally had housing in the upper floors. In the 50's and 60's many of these became vacant and deteriorated over the years, while the retail spaces have been occupied. In El Dorado, we are trying to restore these housing units. A downtown resident impacts the downtown economy 6 times more than a person who works in the downtown; and even more-so than a person who lives in the community, but does not live or work downtown.

I would be glad to answer any questions about our project and how important this grant is to our community. My phone number is 316-321-3088. www.eldoradomainstreet.org has pictures of the buildings that we will be restoring thanks to this grant. I have heard that this is the last year that HUD will offer this grant. There is a new grant that is not under HUD, called Choice Neighborhoods. It is very similar to HOPE VI Main Street and El Dorado will be pursuing that in the future in hopes of helping our other downtown buildings.
Lindsay Baines

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