The CP Edit: Public housing or profiteering?

As reported in these pages last week, the Lansing Housing Commission’s interim executive director, Doug Fleming, announced his intent to sell more than 200 units of scattered public housing jointly owned by the City of Lansing, the U.S. Department of Housing and Urban Affairs and the commission.

Fleming pitched the sale as part of a larger strategy to consolidate the public housing agency’s real estate portfolio in order to fund new investments in its four largest housing complexes: Hildebrandt, LaRoy Froh, South Washington and Mount Vernon. We question the wisdom of offloading the scattered sites by auctioning them off to the highest bidder, as Fleming proposes, and have several concerns that should be addressed by the LHC board and the Lansing City Council before they allow the plan to move forward.

The scattered-site concept arose more than 40 years ago in response to myriad problems associated with large-scale public housing projects, where concentrated poverty led to all manner of disorder and dysfunction. As it turns out, isolating society’s poorest families in the poorest neighborhoods was an exceptionally bad idea. The rise of scattered-site housing was intended to create opportunities for low-income families to live in better neighborhoods, for their children to enjoy safer surroundings and attend better schools, and to more fully participate in the quality of life and economic benefits that arise therefrom. The redevelopment of aging housing stock to create more affordable housing also has salutary effects on neighborhoods by reducing blight and increasing property values.

Fleming’s move to auction off the city’s scattered housing units appears to turn that philosophy on its head. In fact, Fleming told City Pulse he believes the scattered housing model is “outdated.” Noting that plenty of dense apartment complexes cater to “rich people,” Fleming asked: “Why not poor people, too?” We suspect his concern is motivated more by the financial and logistical challenges of managing far flung scattered-site housing units, but we are unpersuaded by his argument that integrating low-income families into middle class neighborhoods is an idea whose time has passed.

Fleming’s career prior to leading the LHC may provide additional clues that illuminate his perspective. Described as an “affordable housing expert” by Mayor Andy Schor when he was hired as the organization’s executive director, Fleming’s LinkedIn profile notes that he spent 15 years as an asset manager for Watermark Management Co., a limited dividend housing association with apparent investment interests in one or more affordable housing developments. Given this background, we can’t help wondering if Fleming’s agenda is more about dispensing with public real estate assets for the benefit of private investors than fulfilling the LHC’s mission to provide affordable housing for low-income residents of the city. We would be deeply concerned if his plan to auction off the scattered site properties to the highest bidder resulted in ownership by a national real estate investment conglomerate or an absentee slumlord for whom the profit motive is more important than providing safe and affordable housing.

Color us skeptical, but we can’t help wondering if Fleming’s agenda is more about profitizing public real estate assets for the benefit of private investors than fulfilling the LHC’s mission to provide affordable housing for low-income residents of the city. We would be deeply concerned if his plan to auction off the scattered-site properties to the highest bidder resulted in ownership by a real estate investment conglomerate like Watermark or an absentee slumlord for whom the profit motive is more important than providing safe and affordable housing.

We raise these concerns not to impugn Fleming or his motives, but to ensure that the disposition of the LHC’s scattered-site housing assets is conducted in the public interest, with appropriate transparency, with full disclosure of any potential conflicts of interest, and above all, with thoughtful consideration for the consequences to low-income families who may be left to fend for themselves in a housing market with a significant deficit of affordable housing. We encourage the LHC board and the Lansing City Council to examine best practices in other communities as part of their due diligence. The Grand Rapids Housing Commission, for example, plans to sell nine of its 24 scattered housing units this year. The agency will offer existing tenants the first right of refusal to purchase the property, then residents who are participants in the agency’s Family Self-Sufficiency program, and lastly nonprofit organizations that own and/or operate affordable housing programs. According to GRHC’s 2020 action plan, tenants who are ultimately displaced from any of the properties “will receive relocation assistance under the Uniform Relocation Act to help them move to a comparable safe, sanitary and affordable dwelling unit.” There is no mention of selling off properties to the highest bidder.

In Minneapolis, where the city’s public housing agency owns more than 600 scattered sites, a nonprofit subsidiary of the agency is being created to take over management of the sites, which will allow the nonprofit to leverage additional federal funds to help with the cost of renovations and ongoing maintenance of the properties.

If the sale of the LHC’s scattered sites is all but inevitable, we urge the LHC board to reconsider Fleming’s auction-to-the-highest-bidder approach and develop a plan to sell the properties to qualified tenants and nonprofit, affordable housing agencies with a bonafide commitment to providing quality housing and pathways to home ownership for the city’s low-income families. The Lansing City Council should make sure the LHC is committed to this approach rather than rubber stamping Fleming’s plan.