#173 Spring 2013 — Redevelopment

Revitalization: Not Despite Us, But Because of Us

Low-income residents transform their complex into a community of choice through ownership—without importing higher-income neighbors

Courtesy of Regional Housing Legal Services

Mural implemented by Northside Coalition for Fair Housing.

community of choice: mural by Northside Coalition for Fair Housing

Mural implemented by Northside Coalition for Fair Housing. Courtesy of Regional Housing Legal Services

Affordable doesn’t mean low quality of living. It doesn’t mean we want any less for our children, or any less out of our lives. It just means we can’t afford market rate at this point in our lives.” — Trish Parker, North Side Properties resident; Northside Coalition for Fair Housing outreach liaison.

In a section of Pittsburgh’s North Side, neighbors know each other by name; they look out for each other and keep an eye on each other’s children. Residents participate in a barter system, have access to a crisis counselor, and can utilize a seemingly endless array of resources. Once home to many dilapidated buildings, overgrown lots, frequent drug traffic, violence, and prostitution, over the past decade and a half the neighborhood has experienced extensive repair and rehabilitation. Dozens of buildings have had major upgrades inside and out (new siding, new porches, and new lights). Abandoned lots have been cleared and new trees planted. Public stairs that had fallen into disrepair have been fixed up, reopening critical connections to public transit. And everywhere there are more lights and security cameras.

Though the neighborhood is still gap-toothed where some of the worst abandoned buildings have been torn down, it feels safe to the residents — safer than it has in years. The change, according to one long-term tenant, has been “humungous.”

The change occurred not despite the presence of low-income residents, but because of them.

Threatened Mass Evictions

North Side Properties (the Properties) is a 324-unit project-based Section 8 property scattered across four neighborhoods on Pittsburgh’s North Side. In May 1998, the owner (North Side Associates) issued notice to all of the residents of the Properties that they had three months to find a new place to live.

The evictions threatened to displace over 300 families — many with children. If the evictions had gone through as planned, most of the residents probably would have had to leave the neighborhood. At that time there were fewer than 30 units accepting Section 8 vouchers on the North Side. And even if those units had not already been occupied by other families, they were mostly one- and two-bedroom apartments, which would not be suitable for larger families.

The notice caught the residents off guard, especially those who remembered that a tenant cooperative had negotiated a purchase option 15 years earlier when the properties were sold by the Department of Housing and Urban Development (HUD). Although the Northside Tenants Reorganization Cooperative (NTR) had ceased to function, many of the residents had been counting on having that chance if it came down to it.

Trish Parker’s mother was one of those people. She’d planned to leave her home to her daughters. So when the notice came, Parker’s mom and others like her started to mobilize. They formed the Northside Coalition for Fair Housing (NCFH), an all-volunteer advocacy organization, determined to save their homes.

At first, the residents reached out to each other for information. They used their existing social networks to bring residents together to talk about their situation and their options. Then they started reaching out for help. The tenant leaders worked hard to learn the complex regulations that create and sustain Section 8 housing. They learned the ins and outs of the program and all the acronyms. They started building a network, in the neighborhood and around the city.

In this case the owner was opting out of the Section 8 program because it was being forced into the Mark-to-Market program, which was designed to address the problem of Section 8 properties with rents that were above the level that HUD had determined was “fair market rent” (FMR). The Mark-to-Market program was designed to lower the rents to FMR and restructure the HUD loans on the properties at the same time to allow the owner to keep operating the property with a smaller revenue stream. In this case, a number of factors drove up operating costs, including the fact that the Properties are scattered throughout four neighborhoods. The owner did not want to go through Mark-to-Market.

The tenants organized and got local officials to put pressure on the owner to keep the property in the Section 8 program, but they also reached out to legal experts who helped them identify an exception to the regulations that allowed the owner to avoid the Mark-to-Market program. That exception made North Side Associates willing to stay in the program, and it canceled the evictions.

A Strategy for Long-Term Stability

While stopping the evictions was a huge success, the residents knew that unless they acquired the Properties that they could face the same fight again in the future. By this time the HUD regulations that gave tenants a right of first refusal had been eliminated, so it was not a sure thing, but the tenants kept hope alive.

NCFH was given to understand that an owner of the general partner in North Side Associates, Tom Mistick, would be willing to sell if his exit fees would be covered, so NCFH gathered support from the Community Development Trust and made an offer of an exchange of shares in a Real Estate Investment Trust (REIT) that would have done that. It was refused. Undaunted, NCFH regrouped, gathering more supporters to its cause and funding commitments from the Urban Redevelopment Authority of Pittsburgh (URA), the Local Initiatives Support Corporation (LISC), and a congressional line item appropriation. NCFH made two more offers and had them both refused. This part of the process was long and sometimes frustrating.

But as NCFH made its multiple offers, it was also building a base of supporters: local elected officials, key people in city agencies, and members of other constituencies to which NCFH belonged (tenant organizing, women’s movement). Those supporters turned out to be key to NCFH’s eventual success.

Opportunity Knocks

Ultimately two pieces fell into place for NCFH.

First, North Side Associates had utilized a $7 million loan from the URA when it acquired the Properties from HUD in 1983. The loan was financed through a bond issuance. The owner’s payment structure was such that the bonds were repaid in 15 years, but the loan was amortized over a 30-year repayment period, which left a $7 million balance after the bonds were repaid. The loan was most likely structured this way to facilitate a purchase by the NTR cooperative (NTR could have assumed the remaining balance as part of its option price, and the loan could then have been forgiven by the URA). In 1999, the owner stopped making payments on this loan and the URA seemed prepared to forgive the balance. But NCFH and other city leaders advocated strongly (during the period of multiple offers to Tom Mistick) that the debt should be repaid and that the extra money should be collected to help support an eventual NCFH purchase of the Properties.

Second, in 2007, the owner entity was restructured. Effectively, the general partner of North Side Associates was one of several businesses all owned by the same family-owned holding company. That holding company was going through a “divorce”: the sons (Tom Mistick and Bob Mistick) were in the process of breaking up the different companies into individual ownership, with each brother trying to buy the other out. For a time there was significant concern that a new non-local owner might take control of the Properties. Then Bob Mistick approached the tenants to get their support for his effort to become general partner. As NCFH considered this request, Bob Mistick also raised an opportunity for NCFH to acquire an ownership interest in North Side Associates that would allow the tenants to preserve the long-term affordability and livability of their homes. All the networking they had done and all of the knowledge they had been amassing finally came into play.

In the process of seeking limited partner support for a change in the general partner, Bob Mistick had learned that many of the limited partners desired to sell their ownership interests. NCFH and Bob Mistick were able to negotiate NCFH’s purchase of a majority of the investor limited-partner shares, and the URA agreed to provide financing in the form of a $1.6 million forgivable loan. Although the funding ultimately came from HOME funds, the URA’s earlier promise to use the extra payments on the bond-financed loan to finance NCFH’s acquisition of North Side Properties helped NCFH make its case. NCFH was also able to enlist the support of numerous city officials and elected representatives. Finally, NCFH negotiated a plan with Bob Mistick to dramatically improve the physical condition of the Properties and to invest in crime prevention and resident services, and provided firm commitments to the URA to implement this plan.

Although the deal materialized relatively quickly once it got going, it was the result of years of determination and laying the groundwork. In addition to multiple attempts to buy the Properties in the past, NCFH had developed into a player with a number of constituencies in the city and region. In making this deal work, NCFH drew upon all of its constituencies. NCFH knew that to make the deal actually work “everyone had to think it was win-win.” NCFH’s executive director, Ronell Guy, says that to pull it together NCFH needed community partners and needed to prove that a Section 8 tenant coalition had the ability to manage over $1 million in assets. Over the years NCFH built alliances and garnered support from a range of constituencies — from tenants to local politicians, city officials, tenant organizations in other parts of the city and state, and members of the women’s movement. They used all of their resources to take the long road to a final deal.

Looking back over the entire process, Guy describes it as a long, hard process — but totally worth it. “When I know that seven public school teachers were raised in the Properties and they have same spirit and passion that is NCFH’s mantra, it makes it worth it. When residents invest in the Properties and in the community, NCFH and its mission can live forever.”

Guy is quick to give credit to her partners and supporters. Among the dozens of supporters who provided critical help along the way, she notes the special contributions of the City of Pittsburgh and URA and Regional Housing Legal Services (RHLS) attorney Bob Damewood. RHLS helped NCFH incorporate, negotiate a stop to the evictions, and learn housing development ownership and finance structures and ultimately helped them acquire their ownership interest in the Properties. (You can read more about the details of this process at www.rhls.org/ncfh.) RHLS’s work in this case provides an example of a way that legal service organizations can support comprehensive, community-based efforts to stabilize and improve neighborhoods in a way that benefits existing low-income residents. According to Guy, “If it wasn’t for RHLS we couldn’t do this.”

The Power of Ownership

As NCFH prepares to celebrate its 15th year, a lot has changed. Since April 2008, when after many years of dogged determination, NCFH was able to acquire a majority of the investor limited partner shares in North Side Associates, the residents have had a voice in how the Properties are maintained and are assured that they will not be threatened with wholesale eviction again.

NCFH’s position as a majority limited partner in North Side Associates has also given the new general partner (Bob Mistick) greater flexibility to invest in the long-term health of the Properties, as opposed to maximizing short-term partner distributions. During the first year NCFH had an ownership interest it received a distribution that helped capitalize the organization. Since that first year there have been very little by way of distributions, as all available cash has been put back into making improvements in the Properties. NCFH hopes to begin receiving distributions again in the near future, but the quality of life of the residents is its main priority.

“The owner wants to do well, the manager wants to do well, but most importantly we want the tenants to do well,” says Guy. “NCFH having an ownership interest in the Properties helped take money out of [the equation]. Now, the focus is: how do we create a more livable community and neighborhood for all of us?”

NCFH’s role with the Properties and with the residents is multifaceted. Despite the organization’s new role as an owner, NCFH maintains its advocacy roots — fighting, when it has to, with the manager about repairs or unjust evictions. But this role is now supplemented by several new roles that it has started playing in recent years.

As majority limited partner, NCFH is precluded from being involved in the day-to-day operations of the Properties, but it has final approval over major decisions affecting the long term affordability and viability of the Properties. In any event, NCFH would not want to play the role of “landlord” — extensive involvement with lease compliance and maintenance issues would put them at cross-purposes with their tenant advocacy goals. But as a limited partner NCFH is able to help direct reinvestment in the Properties.

In addition to its role as an owner, NCFH also works through a tenant-services contract with the Properties. Under that contract, NCFH provides tenant services that focus on quality of life issues and helping people understand their rights and responsibilities as tenants in the Properties. The impact of NCFH working in those two roles has been amazing.

Physical Improvements to the Properties

The physical condition of the Properties improved significantly shortly after ownership changed hands. Within the first year and a half, the HUD Real Estate Assessment Center (REAC) score was brought from a 60 (barely passing) to a 92 (high-performing). Recently, the Properties have been undergoing extensive renovations. Thanks in part to NCFH’s willingness to forgo distributions, the general partner is able and willing to improve units at turnover and completely rehabilitate obsolete units. Several units that were in bad condition have been demolished.

NCFH has also raised funds for its own projects, adding new life to the neighborhood with a new mural and a new 25-unit senior building.

Michelle Jackson, who has lived in the Properties for seven years, said the recent physical improvements have helped to dramatically change the mood in the neighborhood. In the winter it is dark by 5:30 p.m., but she doesn’t mind going to the store in the dark because the motion sensor lights on the outside of buildings belonging to the Properties make the streets feel safer. She’s also noticed a change in the activity on the streets — it is no longer common to see adults congregating on the street for extended periods of time.

Tenant Services

In addition to being an advocate and an owner, NCFH is also a tenant service provider. North Side Associates contracts with NCFH to provide resident engagement, education, and other administrative services. In this capacity, NCFH works closely with prospective tenants in order to make sure they understand their rights and responsibilities. Prospective tenants are required to come for an orientation session and receive housekeeping trainings.

North Side Associates has hired a team of constables to patrol the neighborhoods where the Properties are located. The constables write up incident reports and keep records relating to lease infractions. NCFH works with tenants to address the causes of lease infractions. NCFH isn’t afraid to back evictions of tenants who are engaging in harmful behavior and refuse to respond to its overtures. If an eviction can’t be avoided, NCFH works with the tenants to help them find a new place to live. Asia Howell, former NCFH tenant, says the requirements to be a tenant have become more rigorous. “NCFH raised the bar — you can’t live here if you don’t take care of yourself.”

For those tenants who do make the cut, NCFH provides extensive social services. NCFH provides family empowerment plans, which give a snapshot of the family situation, include goal setting, and then connect residents with resources to move toward their goals, which could be anything from parenting support to career planning or drug/alcohol treatment.

When NCFH first acquired its ownership interest, the neighborhoods were beset by violence. There were sometimes two or three funerals a week. It was overwhelming. NCFH created a safe space in its office and provided grief counseling services for adults and children, separately. Due in part to the work of NCFH and North Side Associates, the violence has diminished.

Now, NFCH spends more time serving as a resource for day-to-day challenges. People are free to come in and use a computer during NCFH business hours; tenants know that if they are running late getting home from work that they can send their kids to the NCFH offices and they will be looked after; NCFH staffers help residents to improve financial literacy and get their finances in order. NCFH hosts monthly workshops that double as social mixers and cover a huge range of topics, from budgeting to how buy insurance, relationship skills how to pick good schools for your children, or how (and when) to complete the Free Application for Federal Student Aid. They’ve also recently created a barter program, which helps tenants to exchange services to help each other.

If NCFH doesn’t have the resource someone needs, then it will connect them to another organization that can help. NCFH doesn’t just give out a list of numbers; it pre-screens all of its social service partners. NCFH has gotten substance abuse/mental health partners to agree to come to the neighborhood to do home visits or to conduct meetings at the NCFH offices so people don’t have to travel.

NCFH pays special attention to children, organizing two field trips a month for children and their parents. It is clear that the kids have been learning by example — one mother reported that her daughter’s teacher said she had never seen kids playing “meeting” until she encountered children from the Properties.

The Results: Building a Community of Choice

The changes in the Properties, the tenants, and the neighborhood are real. So why aren’t more properties having these results?

Guy argues that the kind of work that NCFH and North Side Associates are doing isn’t usually done because owners don’t see its immediate importance. “Other people don’t connect it to the bottom line, but it does connect to the bottom line because you do decrease your costs eventually.” In the last few years, the Properties have had significant decreases in lease violations (from 1/day to 10/month) and complaints from neighbors (5/month to 1/month) and rental payments have increased ($19K/month to $22K/month). There is also a waiting list of over 300 to get into the Properties (the list has been closed for two years).

As a tenant council, NCFH is uniquely able to engage tenants as peers. As an experienced advocacy organization, NCFH knows how and when to fight for better conditions for tenants. And, as an owner, NCFH is using its power to help shift the paradigm to focus on tenant needs and success, knowing that when tenants succeed, the Properties will succeed. The network that used to keep the neighborhood together when it was a safer and more mutually supportive place to live is slowly but surely being rebuilt. Howell cites herself as an example of the changes that can take place in an individual who is connected to and supported by community. While she was living in the Properties with a toddler, she finished her master’s degree. She has since moved on to become a homeowner — utilizing homeownership resources from NCFH.

NCFH’s work is ultimately very personal. According to Guy, its work to build the social fabric and make sure that people know each other personally changes people’s behavior and improves the type of tenants and neighbors they are. Trish Parker gets a lot of feedback from older residents who tell her that they are so very proud of where they are now and encourage them to keep doing what they are doing. They also encourage NCFH staffers to check in on particular people who may need help and also provide information and resources for new neighbors — adding more strands to the network. Now neighbors know each other and look out for each other in a way that they haven’t for at least a generation.

Those ties make the tenants stronger, the neighborhood livelier, and provide a key support in the long-term viability of the Properties. According to Guy, “Once you give people a little bit of power, help them understand the essences and nuances of the issues affecting the neighborhood, they are much better residents and tenants. Once people see the Properties as a resource for the community and understand there will be people living here after them, they start seeing the role they can play in helping to preserve the Properties.”

The successes described in this article were only possible because of the vision, hard work, dedication, and thousands of volunteer hours contributed by current and past NCFH staff and board members. Only a very small fraction of that work and sacrifice was able to be detailed in this article. To learn more about NCFH’s history visit https://www.northsidetenants.org/history.


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