1059 Willamette: Affordable Housing? Affordable for Who?
Affordable housing is an issue that plagues most major cities across the United States. Especially as the effects from the COVID-19 pandemic seem to be unending, but what does affordable housing actually mean?
According to the U.S. Department of Housing and Urban Development, or HUD, for housing to be considered affordable, an occupant must not spend more than one-third of the household’s gross income on housing, including utilities. This percentage rate was set in 1981 and has not changed since.
This is “intended to ensure that households have enough money to pay for other non-discretionary costs.” Non-discretionary costs are items that an individual must purchase like housing and food.
Housing Authorities are the public corporations responsible for providing affordable housing to low- and moderate-income people. These bodies are appointed by local governments and also provide other types of subsidized housing.
Here in Lane County, the local housing authority is run by Homes for Good, formerly known as the Housing and Community Services Agency of Lane County. This agency provides services to residents including providing rental vouchers for Section 8 and assisting veterans, senior citizens, and those with disabilities to find and secure affordable housing.
They also partner with community organizations and nonprofits to build, finance, and develop new affordable housing. As a result, the housing agency owns and manages affordable housing in Lane County. Rent is paid directly to Homes for Good for these properties, which include multi-family properties and apartments.
The board is responsible for providing oversight and direction and setting up the standards and practices of the agency. In other words, they set the policies and procedures that the public housing authority must adhere to.
Homes for Good is run by a seven member board, five of those seats belong to the elected Lane County Commissioners, two are held by residents appointed by the board.
This seven member board directs the operations of the agency’s leadership teams. In 2013, the housing agency opened a new branch, a non-profit called the Homes for Good Foundation, aimed at providing stability and growth for students in the community through scholarships and reading programs.
According to their website, Homes for Good owns 864 public and assisted housing units and 150 units for people with special needs. They provide 3,098 Section 8 rental assistance vouchers, 236 veterans affairs supportive housing vouchers, and 80 Shelter Plus Care Vouchers. To support these services, the agency applies for federal and state grants and HUD funds, and works with local communities to develop new affordable housing.
In Eugene, Homes for Good is one of the partners involved in the affordable housing development occurring at 1059 Willamette.
In April 2020, as part of the Downtown Urban Renewal, the city of Eugene purchased the building from Lane Community College for $500,000 with funds received from the Federal Community Development Block Grant, or CDBG.
This stipulated that the site had to be used to provide housing in the form of apartments. It also stipulated that 51% of those units should be designated for those earning between 60 and 80 percent of the area median income.
The city sent out a request for proposals, an RFP, to develop the site on Nov. 19, 2020. The deadline for a response was Feb. 2, 2021.
Only one response was received and the city says on their FAQ page that when they asked the community “why,” they “learned that some had a lack of capacity to take on additional work. Others reported that they would be interested if the project had included the corner lot, but they were unable to acquire that parcel.”
The city decided to go through with the proposal sent by development team: deChase Miksis and Elden & Co.
They proposed a mixed income building, called the Montgomery, offering 66 units for affordable housing, and 63 units rented at market rate, a total of 129 new units overall.
As previously reported by Double Sided Media of those 66 affordable housing units there will be a total of:
- 65 studios rented at $980 a month
- 1 single bedroom rented at $1,050
- 10 of these units will be designated for victims of domestic abuse.
These rent rates are set at exactly 80 percent AMI, no less.
The market rate units will consist of 58 one-bedroom and five two-bedroom apartments with ranging rents starting at $1,050 up to $2,300 a month. The main floor will be rented to businesses with a federal funding requirement that there will be “good faith efforts to contract with businesses registered with the State of Oregon as Minority Business Enterprises or Women’s Business Enterprises.”
According to city estimates, in 2016, there was a surplus of roughly 3,700 units for individuals, or households, making between 60 and 80 percent AMI, representing only 10 percent of Eugene’s population. A deficit of 13,500 units are needed for those making less than 60 percent of AMI, or 32 percent of Eugene’s population.
The projected total cost is $29,045,132. To fund this project, the city will “transfer the land to the developers at no cost and would apply $1.1 million to cover pre-development costs.”
Community organizations wrote a letter to the city listing their concerns about the project submitted via email at the end of April. The next morning, Mayor Vinis reached out to one of the signers of the letter, Ibrahim Coulibaly, to ask why he didn’t speak to the city prior to signing the letter. Rico Perez, President of Community Alliance of Lane County, reported that Mayor Vinis called and asked him the same question.
To help aid a community discussion about the project, Coulibaly offered to set up a panel discussion with members of the city council, the developers, and a representative from Cornerstone Community Housing. He also invited both Zondie Zinke and Perez to participate.
As previously reported, according to Coulibaly, the developers backed out the night before the panel event was to be held and the city backed out the next morning.
Double Sided Media reached out to Laura Hammond to ask why and received a response on Sept. 17.
According to Communications and Engagement Manager Lindsay Selser of the Planning and Development Department, Mayor Vinis was never included to be a part of the panel discussion.
“Staff agreed to participate with the understanding that a representative from Cornerstone Community Housing had agreed to join in as well,” Selser said.
The day prior, the city learned that the representative never agreed and was on vacation. As such, the city canceled.
Coulibaly says that he spoke with the representative, Darcy Phillips, and received her commitment over the phone. She agreed to attend the meeting, telling Coulibaly she was going on vacation, but would have an intern prep for the meeting and to please forward the letter.
He said that he sent the letter from his NAACP email address, which he no longer has access to.
In an email the day before the meeting, Phillips stated that she never received a follow-up from Coulibaly regarding the letter, that she was on vacation, and didn’t have an intern ready either. Therefore, Cornerstone was not going to join the discussion.
The city maintains that they are not giving the developer $10 million as part of the development. The website also claims that the land has a negative value according to an outside appraisal performed by Duncan & Brown, even though Lane County tax appraises the value at $6.9 million.
Zondie Zinke, a community member who helped to write the letter of concern, asked to see the appraisal. The request was denied, citing ORS 192.345, which stipulates that appraisals of real estate prior to purchase are exempt from public records.
Exemptions from public records also include project appraisals. “Excluding appraisals obtained in the course of transactions involving an interest in real estate that is acquired, leased, rented, exchanged, transferred or otherwise disposed of as part of the project, but only after the transactions have closed and are concluded.”
However, public records law states that these records are excluded from public records unless the public interest requires disclosure in the particular instance.
In response to the letter, the city created a FAQ page with the intention of answering other questions raised by the community.
Specifically, the page says that the reason this project was not set up to provide affordable housing for less than 60 percent AMI stems from a few reasons:
“Most of the financial tools and subsidies we have to support housing development are only available for housing that is affordable to households with incomes at or below 60% of area median income (AMI). Most of these tools are competitive, which means that each proposed housing development is competing for the funds against other housing developments. The financial demand regularly exceeds the available funds. Additionally, there are few tools available to construct housing for moderate-income households that earn between 60% AMI and 80% AMI—yet those households have difficulty finding housing within their budget.”
The 1059 Willamette property is unique in that we had an opportunity to use a resource specific to this location – Downtown Urban Renewal funds. The proposed mixed-income housing project is an innovative use of local resources to create housing for people earning incomes at a level that makes it difficult to find housing that is affordable. This project is not using the limited federal and state resources that are available to lower-income housing, which will allow those resources to fund other housing projects in our community.”
Even so, the project was never intended to be for households making less than 60 percent. As a result. the letter asked that the city stop the project and to use the space to create a community housing/land-owned trust.
Those organizations that signed the latter asked for this community housing trust to include covenants that are pro-poor, pro-trans, pro-BIPOC, pro-disabled, and pro-houseless.
The letter also asked for funds to be reallocated from the new community safety initiative tax to achieve this goal with services focused on the needs of the community.
As written, a small portion of that tax is designated for emergency shelters, a day center, and after school programs. Instead, the letter asked that 90 percent of this tax be reserved to develop housing at 1059 Willamette for those experiencing poverty, members of targeted social classes, BIPOC, domestic violence survivors, and climate refugees. Especially, as even Homes for Good believes “that stable, safe and affordable housing is central to a good life.”
The community also wanted to know why rents were not calculated at the CDBG fair market values, and why rents begin at 80 percent AMI, therefore, not serving those making between 60 and 80 percent AMI as the RFP and CDBG guidelines originally called for.
The project proposal explains why rents were set up at 80 percent AMI and states”
“With the below-market rents at 80%, we are able to achieve returns required to secure equity for the project without needing additional gap funds from the City (above the property contribution and $1.1M) Note that if the below-market rents were set at CDBG fair market rent levels instead of 80% AMI, the project gap would increase by approximately $2M.”
The city also states that:
- Households at 80% of AMI are under-served. There are very few available housing options for households earning between 60% and 80% AMI. In most cases, they do not qualify for existing Affordable Housing options. It is difficult to find market-rate housing that is affordable, leaving many at this income level burdened by housing costs. The proposed Montgomery project will create 66 new housing units for this income range, expanding the supply of moderate-income housing.
- We have a flexible financial resource to help meet this under-served need. Affordable Housing projects, including mixed-income housing projects, face a financial gap due to the below-market rents. It costs more to construct the building than the revenue from rents can support. There are a number of Affordable Housing tools that can help close these gaps, but these tools require rents to be affordable to households earning 60% AMI and below. As described in Question 6. Why isn’t this project for households with incomes less than 60% Area Median Income?, most financial tools support housing for households at 60% of AMI. This project is using local financial tools that are not limited to closing the financial gap for Affordable Housing that is for households at or below 60% AMI. The city is using an innovative mix of financial tools to support a first-of-its kind housing project in Eugene. See Question 5. What is the City of Eugene contributing to this project? for a description of the financial resources proposed to support the project.
- Downtown Eugene has very little moderate-income housing. There are Affordable Housing projects in the downtown area—Aurora, West Town on 8th, Olive Plaza, and Market District Commons—that serve households at or below 60% AMI. There are student housing projects—Titan court and 13th and Olive—and market-rate housing — Broadway Place, High Street Terrace, Gordon Lofts, and the Tate. But there are few opportunities to find housing that is affordable for moderate-income households. This project will create an opportunity to diversify income levels in the downtown. The Montgomery will create an opportunity for individuals who work in downtown restaurants, stores, or hotels to live close to those jobs and have easy access to the transit network.
So, while it remains unclear if the city is giving the developer $10 million or not, it appears that this project development targets the needs of a specific demographic. A demographic they claim is underserved, lacks housing options, and may not qualify for existing affordable housing or assistance provided by Homes for Good.
Selser didn’t say why their participation in the panel discussion was contingent on Cornerstone’s participation except to say that Cornerstone “would help answer the questions about the needs the city is trying to address with this project development.”
According to the proposal submitted by deChase Miksis and Elden & Co., there will be plenty of services provided to its residents.
The six story apartment building will come with a grand total of 18 parking spaces, however, it is close to recent downtown upgrades providing direct access to the University and other locations on a bicycle, bus, or foot. The building will also offer a dog-run along with pet wash and grooming rooms.
Other services will focus on increasing “self-sufficiency by providing opportunities for networking, professional development, education, and asset building.” As it serves “a range of income levels,” the “staff will work to ensure a cohesive community where all residents are encouraged to connect, collaborate, and build on their own strengths.
The Montgomery Project plans to provide these services along with property management via a range of partners.
Resident Services will be provided for by Cornerstone Community Housing through their Healthy Homes Program.
“At 1059 Willamette, Cornerstone will provide services through the Healthy Homes program. This program is designed to support a variety of residents, ranging from young professionals just starting out to seniors who may be downsizing and ‘aging in place.’ Residents will enjoy easy access to alternative transportation options, services located downtown, and employment opportunities.”
According to the proposal, the intended demographic of this new affordable development is young, individual adults and seniors “aging in place” who annually gross $34,999 or more a year. Along with, possibly, five families consisting of one or two children as only five units of 129 total will have two bedrooms.
Darcy Phillips does seem uniquely qualified to answer questions about the needs the city is trying to address with this development. She is the Executive Director of Cornerstone Community Housing and the Board President of the Homes for Good Foundation.
Phillips also serves on Eugene’s Housing Policy Board, along with Homes for Good Real Estate Development Director Steve Ochs and Lane County Commissioner Joe Berney. Berney’s daughter in-law, Kayla, is employed by Cornerstone where she is the events and marketing director.
Cornerstone, according to the proposal, will help the property management team with marketing the apartments and commercial space, setting up a waiting list for the “affordable units,” and verifying income. This will ensure that applicants meet the required 80 percent AMI benchmark to qualify to live in the apartments.
The proposal estimates an annual gross effective income of $1.99 million in the first year and $3.4 million after the thirtieth. Eugene’s city council held another meeting on Oct. 20 to discuss the proposed terms of the project.
The terms have been updated to show that the property will be transferred to the team for $1 and $1.1 million in subsidies. The project qualifies for tax exemptions through MUPTE as reported previously. It also qualifies as an “opportunity zone” and the development team anticipates most of the investment to be funded through an opportunity zone fund with even more tax benefits.
Opportunity zones are defined by the IRS as “an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.” de Chase Miksis and Edlen & Co. are able to take advantage of this “economic tool” by creating both new development and jobs in Eugene.
These tax benefits may include tax deferral, reduction, and elimination if the funds are held in the investment for 10 or more years.
The new proposal approved by council increased the “affordability period” from 30 to 35 years. de Chase Miksis and Elden & Co expect a 10 year, 12 percent internal rate of return — a number that’s attractive to investors.
The city council voted on whether or not to enter into the transfer agreement during the meeting and the vote passed unanimously.
Affinity Management services, according to the proposal, will be responsible for the day-to-day operations and it states:
“Affinity has the experience and capacity to effectively manage the complexity and diversity of the reporting, financing, and compliance requirements of the ownership. We have managed affordable housing since our inception in 2003. Affinity has extensive experience managing various types of affordable housing. Our affordable portfolio has consisted of LIHTC, HOME financing, PSH units, PHB financed projects, Project-Based Section 8, B2H, HUD, farm worker housing, and low-barrier housing in addition to market rate units.”
However, according to online reviews, Affinity Management ranks poorly in customer service.
A Google review summary gives them 1.7 stars as the company has received countless complaints that management doesn’t answer phone calls, doesn’t respond to repairs in a timely manner, but is sure to collect rent.
Many of the recent complaints could be due to limited staffing. But it seems that the only customers giving Affinity Management a good score are from those who live in properties designed for high-end renters, housing for individuals making 100 to120 percent of AMI.
Also included in the list of other low-income housing options was WestTown on 8th Ave., a $20 million development completed in 2008. That project received city approved grant funds and tax credits and is also run by Homes for Good.
In 2018, a lawsuit was filed in Lane County for shoddy construction resulting in extensive water damage throughout the complex.
The developers of the WestTown on 8th apartments are no longer in business. One shut down the same year the project was completed after going bankrupt and the other dissolved in 2016.
These concerns leave many in the Eugene Community wondering, just who the city and county is creating affordable housing for. The underserved community or a selected demographic attracting new community members, seniors “aging in place,” developers, and their partners?
Double Sided Media reached out to both Darcy Phillips and eChase Miksis and Elden & Co. We did not receive a response.