#091 Jan/Feb 1997

Cincinnati Homeless Advocate Murdered

Cincinnati Homeless Advocate Murdered Last November 15th, 46 year old Stanley “Buddy” Gray was shot to death in the office of the Drop-Inn Center he founded in 1973, the Associated […]

Cincinnati Homeless Advocate Murdered

Last November 15th, 46 year old Stanley “Buddy” Gray was shot to death in the office of the Drop-Inn Center he founded in 1973, the Associated Press reported. Wilbur Worthen, a resident of the apartment building where Gray lived, was charged with the murder.

Gray was a confrontational advocate for the poor. His fights included holding at bay the gentrification of the Over-the-Rhine neighborhood – one of Cincinnati’s poorest – by buying abandoned buildings to rehabilitate.

Residents feared that for-profit developers, such as Thomas Denhart, who holds title to the largest block of buildings in the neighborhood, would soon be able to force them out, AP reported.

In December, Rental Information Quarterly, a publication of the Cleveland Tenants Organization, wrote “Many of [B]uddy’s supporters believe that the killing was in some way inspired by establishment efforts to regentrify the neighborhood. Posters had been going up all over the neighborhood which ominously and anonymously targeted [B]uddy.”

Whatever led to his death, hundreds of friends and residents mourn the loss of Buddy Gray and worry about their neighborhood’s future.

Too Much Demand – Too Little Money

California’s nonprofit housing developers see a marked increase in competition for scarce public and private funding, developable sites, and other limited resources, according to a report released last month by the California Coalition for Rural Housing Project (CCRHP). CCRHP found that while relationships remain mostly collegial and collaborative, many nonprofit developers feel there are too many groups competing for too little money.

More than four-fifths of the 74 organization that participated in the study indicated that competition in their service areas had increased in the past five years and would increase in the future, CCRHP reported. In contrast, only one third thought cooperation had increased during the same period, and over 60 percent said the number of housing nonprofits operating in their service areas had grown. Three-quarters, however, anticipated that this level could not be sustained and expected attrition among weaker groups.

To survive, the study found, many nonprofits have become increasingly opportunistic and entrepreneurial; a significant minority has already made strategic operational changes in development activities, staffing patterns, target populations, and service areas. The most common change was expansion of service area boundaries. These expansions, however, were cited by many nonprofits as a threat to their own financial viability.

Respondents identified four types of organizations contributing to increased competition: community-based development organizations formed to qualify for new federal housing funds; multi-purpose social service agencies moving into the housing area; large housing nonprofits regionalizing into other areas; and “captive” nonprofits sponsored and controlled by for-profit entities [see “Caveat Emptor” this issue].

The report includes recommendations for increasing cooperation and minimizing or eliminating competitive tensions. Copies are available for $10 from: CCRHP, 926 J Street, Suite 422, Sacramento, California 955814; 916-443-4448.

GAO Questions Portfolio Reengineering Assumptions

With HUD’s Portfolio Reengineering plan before Congress, a General Accounting Office (GAO) report reviewing the proposal has re-confirmed what many observers have noted: that the cost to the government of writing down mortgages and addressing deferred maintenance needs at reengineered properties would be high; that the risk to HUD of insurance losses resulting from defaults on loans would increase significantly if the Section 8 contracts were either not renewed or renewed at substantially lower funding levels; and that many Section 8 properties fail to provide physically and financially sound housing.

In its review of Portfolio Reengineering, GAO also questions some assumptions of a HUD-commissioned study of 558 properties in the Section 8 portfolio by Ernst & Young LLP. HUD attributes the differences between the two studies to methodologies used. GAO contends that, while the Ernst & Young study provides a generally reasonable framework for examining the results of portfolio reengineering, the study estimates substantially higher deferred maintenance needs than did property owners or managers and GAO’s contract appraisers. And lenders contacted by GAO reported that some of Ernst & Young’s financing assumptions may be more favorable than what would actually be available.

GAO finds that, although portfolio reengineering would eventually reduce Section 8 subsidy costs, costs would not decline immediately because contracts for below-market rent properties will generally expire earlier in the next 10 years than contracts for above-market rent properties. GAO concludes that if HUD is able, as it is now proposing, to reengineer contracts for above-market rent projects before they expire and to delay reengineering contracts for below-market rent properties, the Section 8 program’s costs would decrease faster.

GAO makes no specific recommendations to Congress but suggests that among the issues Congress should consider in assessing HUD’s portfolio reengineering proposal are whether above- or below-market rent properties should be subject to the proposal; whether rental assistance should be linked to tenants’ units after restructuring; and the extent to which the government should finance the costs of rehabilitation. GAO also notes the need to “deal with HUD’s problems in managing the insured Section 8 portfolio.”

A copy of the full report can be obtained from U.S. GAO, P.O. Box 6015, Gaithersburg, MD 20884-6015; 202-512-6000; TDD: 301-413-0006; fax: 301-258-4066. For more information on Portfolio Reengineering see this issue’s article on federal housing policy and Shelterforce #89.


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