Conversations with Advocates of Fair Growth
Overview | Conversations with Advocates of Fair Growth | Living on the Fenceline
Jane Graff
Jane Graff is executive director of Mercy Housing, a large non-profit that does affordable housing in a number of states around the country. Graff is responsible for their west coast operations. A former provider of affordable housing for the disabled, Graff has built affordable housing in both wealthy neighborhoods in Santa Barbara and in some o the poorest parts of the Tenderloin district of San Francisco. Wherever she does work, Graff says it is important to take seriously the concerns of the community in which you want to build affordable housing. While Not-In-My-Backyard ( NIMBY) concerns can slow projects down there are also times when local residents have good ideas about how a development can be shaped to fit into the community.
Many NIMBY concerns surround the fear that tenants who move into the new affordable units will engage in criminal activity. To allay these fears, Graff busses community members to some of the affordable units she has built elsewhere and permits them to talk with tenants and staff on their own to get a sense if the project is working. When they see the high quality of the projects she builds much of the opposition dissipates, she says.
Graff also makes it a point to tell opponents to her proposed projects that the screening procedures for tenants of affordable housing is often stricter than that done by most market-rate managers. Prospective tenants are visited in their current domicile, references are collected from landlords, and a credit history and criminal history is done. All this screening is not just for the benefit of the neighbors, she points out. It also protects the non-profit managers of the affordable housing by screening out tenants who may create problems.
Graff is limited in how much housing she can provide for the very poor because even if she can raise the money to build the housing she still has to cover management costs.
Interview
Steve Lerner (SDL): Tell me about what obstacles you have to affordable housing here in SF. Is there not a political consensus that affordable housing is a good thing here and does that not give you an advantage?
Jane Graff (JG): I think we have the same NIMBY issues in the Bay Area that others have but a lot of it plays out around traffic or congestion. In some places they will say that they don't want affordable housing because they already have too much. It will get as ugly as anything you have seen. The meetings are not as ugly when you get South of Market where the buildings are more industrial. You don't find the same kind of attitude because you are not trying to put multi-family units next to older residences. But you get the same screaming and hollering. The biggest difference is the political difference. You have to go through the public process and you are going to get beaten up in public meetings but at the end of the day you know you are going to win because the Board is going to vote for it. There is a real commitment that affordable housing groups such as Mercy respect the neighborhood and approach it in a manner that is going to be inclusive of their concerns. If you don't do that then you get yourself in trouble.
And then there is money that has been dedicated to affordable housing. There was a ballot measure in California and there is tax increment financing so we have some resources. There is some money in the in-lieu of fund and money that comes from the building of commercial office space although not much has been built in awhile. We also have a hotel tax on tourism. So there are a series of sources. We have our own set of hurdles to produce affordable housing but it is different than Atlanta or than any other state.
Most of the affordable housing in the Bay Area is on the east side. You go out to the west and there is not much. There have been some pretty ugly battles but compared to where is doesn't happen at all we do have advantages. In Berkley they did some affordable housing and then burned it down. That qualifies as pretty ugly.
SDL: Tell me about the work you do for Mercy. When you do affordable housing is it 100 percent affordable or are some of them mixed-income projects?
JG: We don't have any unrestricted or market rate units. Everything we have has an income restriction on it. Now, we have housing that I would say is mixed-income. Incomes may range from 20 percent AMI all the way to 110 percent AMI. That is a huge range. When people come in they are making 50 to 60 percent AMI and then as time goes on they start making money and they don't necessarily move out. So we achieve mixed-income organically. That is unique to a market like San Francisco. People come into affordable housing because they need to but once they have options and they become more economically stable they don't like going through the annual income recertification process. It pries into your personal life and people don't like it and there are rules people don't like. It is much more controlled. Our property managers' standards are higher than the standards of managers who run market-rate buildings. For-profit building managers want to touch [be involved with] the property the least number of times possible. That is what it is about. It is not really involved management People are left alone. So our clients will move out just to be left alone and so that our property managers aren't telling them that their kids are a pain.
SDL: Can you evict people who are making too much money?
JG: You can't evict this is the thing about the tax credit financing. At some point [when the income of residents goes up above the federal limit] we lose the property tax exemption on the tax credit unit. Most people leave because if they are making that much money they want to live in a bigger place. But some don't because then they have a lot more disposable income [if they stay in affordable housing] and they can use it on education or travel. When they move out it usually isn't to San Francisco but to some outlying place in the Bay Area. Everyone has a personal reason that they do what they do. There are no absolutes. But in San Francisco, even if you are making 80 percent AMI, you can't find affordable housing in the city. While in Omaha, if you are at 80 percent AMI, you can go out and find something in the marketplace that doesn't require annual income recertification. Our property managers do get in people's face through active management. You can't just have guests come and stay for a month. You have to ask permission from the property manager.
SDL: Tell me about Mercy. How long has it been around? And what is the scale.
JG: We operate all over the nation east to west but most of our developments are in the westabout 80 percent. We have a new acquisition in Chicago and Atlanta and we are working on some in Colorado and Arizona. But our biggest private portfolio is here in California. We have 15,000 units total and that includes our home ownership as well as everything we have done. We are the largest non-profit developer in the city of San Francisco. In California we have about 9,000 units and the bulk are in the Bay Area. I am responsible for all our operations in the West including Washington, Idaho, California. The rest of the country is another person who is based in Denver. It is different in other areas in that in some states you have to pay money back to a trust fund. In California you don't pay money back. Everything is deferred and rolled over for another 40 years and then another 40. That is the way it is done because no affordable housing would get built otherwise. In Washington if you are not paying your debt service payments then this is terrible so you have a public source that insists on charging you an interest rate and servicing debt.
In many markets the difference between the poor and the middle class is widening. Even if you get the money to build affordable housing you need rent subsidies just to manage the building. So let's say it costs $450 a month to manage a unit without any debt service but the tenant can't afford to pay that. So we can't develop anything unless we have rent subsidies because those who can afford to pay that amount can find a place in the market place. The average person in our housing is making $7.40 an hour for a family of four. What can they possibly afford? Hardly anything. So we have been eking out Section 8s in a variety of places.
SDL: Is this getting worse because there is less money for affordable housing?
JG: Absolutely. Housing prices are going up but the minimum wage has not. The difference is huge between the escalating cost of housing and the wages.
SDL: Are you saying that the difference between the very poor and some of the working class is widening and it is getting very difficult to serve the very poor who can't even afford the management costs?
JG: Right.
SDL: You can also argue that the affordable housing you are building is for firemen and police and teachers. Is it not easier to sell the idea that you should keep these people in a neighborhood than to argue that housing for the poor should be located there. Isn't it less threatening to hear that you are building an apartment for a fireman, policeman or teacher than it is that we are bringing in people who are really poor?
JG: If you are in a market like SF, a really hot market, what you are talking about has merit but it doesn't have merit in Seattle or anywhere else other than the two extreme coasts. I am not sure what is going on in Chicago. I don't know that market well enough to know. I can tell you it doesn't work anywhere else and the reason is that those markets really do soften and people we have to go out and market our tax credit financed units, which are meant to serve people at 60 percent of the AMI down to maybe 30 or 40 percent AMI. So you do a range from say 30 to 60 percent AMI and when you get in a soft market which almost everything is except here
SDL you are competing to find tenants.
JG: That is exactly right. And so you don't build affordable housing often times we do in markets where we know this is a problem like Phoenix with the same kind of amenities that you would build to be out there competing for the market-rate tenant. Here in SF the units are very nice but we are not trying to compete; we are not doing swimming pools and gymnasiums. We are focused more on space for kids and those kinds of thingsnot the guy who wants to work out and covered parking.
SDL: This suggests that in SF it doesn't make much sense to try to build for the higher affordable income levels at 80 percent AMI or abovethat your problem is more for people at the other end of the spectrum.
JG: In SF the problem is in both markets because we have very low income people who are desperately in need of housing and a pretty substantial homeless population that is very compelling. But we also have people between 60 and 100 percent AMI who are struggling as well as they look for a place to live. I am suggesting that that only is here. Any where else in the USA those between 60 to 100 percent AMI with maybe the exception of Manhattan they are not going to come live in our housing. That is the issue. Look what at what happened with the whole Eastlake thing in Atlanta.
SDL: That was a bold move doing the 50 percent approach. Another way to approach that was to see what had worked elsewhere.
JG: It is the same idea as the effort to put teachers with people who are very low. That is where the teacher/housing started. [People said]: "Oh this is going to be a wonderful role model and we will mix teachers in with low-income people and won't that be nirvana?"
SDL: Nirvana for whom?
JG: I don't know?
SDL: Where did they do that?
JG: I don't know if anyone has actually done it. They have talked about it. And there might be an isolated case but that was the role model. And they talk about getting cops back just because you need them in the city instead of having your whole police force living somewhere else.
SDL: One of the reasons I am looking at mixed-income developments is that if you look at the old approach of putting all the affordable housing it created high-density poverty and we have seen problems with that approach.
JG: But the fundamental difference [between what we do now and] the old is that in the old model everybody was desperately poor and there was no range. What was the average income in public housing: twenty percent AMI and below or something like that? That is a very different experiment than the low-income tax credit program in which literally people have a range of rents that they have to pay and they have to income qualify. Not only can they not make more than a certain amount of money; they also have to make at least a certain amount of money in order to pay that rent. So from day you don't get 100 percent of the units being very low. I'm sure [architect] Mike Pyotok talked about design and how design plays into it they were dismal [it was clear where the poor people lived] and they just assumed that environment has nothing to do with anything and of course environment has to do with everything. It makes a huge difference in terms of what happens in the apartment complex if it is designed well or badly.
SDL: Beyond design there is also the question of where it is located. Do you deliberately seek out a variety of different neighborhoods in order to scatter affordable housing. Is that part of the strategy or do you just put them where you can.
JG: In a city like San Francisco where land is largely unavailable you site where you can find property that is affordable and you can manage to get enough units on it. Now that doesn't suggest we would build anywhere but it isn't as deliberately scattered around as we would like it to be.
SDL: That's because of the cost of the land.
JG: That's right.
SDL: Elsewhere in your region how do you handle that? Do you see it as important to scatter affordable housing in middle class areas? Is there an effort to do that?
JG: Yes, absolutely there is an effort to do that and the way we do it is to get someone that we know or is a partner with us to give us land in a location where we wouldn't be able to afford it if we were not working with them. Let's look at Santa Barbara, which is a perfect example because there is nothing affordable in Santa Barbara. There hasn't been any affordable housing there in ages. We are working on a development in Santa Barbara right now and the only reason we can do it is that the Daughters of Charity one of the sponsors of Mercy Housing. (We are sponsored by 13 Congregations of Catholic Women.) They have a long-term commitment to stand behind us. The Daughters of Charity owned 23 acres so we are developing senior and family housing on that site. We love that. We think that is the greatest thing since sliced bread. We knew it would be a huge fight. The first people to jump in were the school district. They don't want the kids any more than the neighbors want the kids. A school administer stood up in a public meeting and said they didn't want affordable housing in their school district because it would mean more kids and it would be hard because these kids would have needs. Oh my, oh my they won't necessarily be kids coming out of upper-income housing. And they don't want to deal with it.
They play with it [explain their position] in terms of: more kids over-taxing the school district and over-powering classroom size. We usually get beyond their argument because it is a pretty horrible position to take as an educator. In fact it is disgusting. So it is great when we can come into these kind of neighborhoods but it isn't as deliberate as we would like it to be. We are looking at trying to meet need however we can meet it.
We built the first family housing in the Tenderloin in San Francisco. When we looked at the Tenderloin and asked: "Is this a place to put family housing?" Everyone said: "Absolutely not." The problem was that there were 4,000 children living in it. So it wasn't as if they weren't already there. There were families in the in SROs and studios crammed in. All these immigrant families were coming in because it was the only place they could afford to live and this was their neighborhood. So we decided that we need to find a way to make the Tenderloin more family friendly so we built housing for families in the there and it has made a huge difference. Now we have a Boys and Girls Club on our property and they operate a club for the neighborhood which has really begun to impact the neighborhood in a positive way. We still have all the problems with what goes on in the streets but there has been an effort to make that neighborhood much more friendly to families..
SDL: How actively do you engage the community when you do decide that it makes sense to build something in the Tenderloin or some wealthier neighborhood? You say that you are required in a way to be inclusive in your approach with the neighborhood.
JG: We would do it [be inclusive] anyway. Although we know we are going to get the votes at the end of the day they are not handed to you on a platter. And that is in San Francisco. You are not necessarily going to get the votes at the end of the day in any other location and in fact you can have some pretty significant battles. But we have taken the approach over the years that a lot of people are very afraid of what they don't know and they don't understand affordable housing. They have only seen bad things happen. So they are afraid. Our approach is that we need to be very respectful of the community and approach them in a manner that doesn't dismiss their concerns and fears. That would be incredibly disrespectful and we shouldn't do that.
When we identify a location we go through a whole series of significant meetings with the community and bring them together with us about what we are going to do and get them involved with us to whatever extent. Sometimes it is very design oriented and sometimes it is not. It depends what is happening. But it is a long, involved process. Sometimes we create a local committee that goes through the process with us every step of the way. It is laborious but it is very successful. We assume that the community probably has something significant to offer. Sometimes they can offer support and guidance that is good.
A perfect example of that is we did a deal in Oxnard where we did 65 units of family housing and next to it was an historic site. We bought a building that was called the Old Lying In Hospital where all the babies in Oxnard were born. It then became a drug treatment facility but it was this old historic adobe one-story building that had some nice architectural features. Our original intent was that we would bulldoze it. But when we got involved with the neighborhood there was a guy who lived down the street who was the head of their historic district and he didn't want us to bulldoze this building. So we went through a whole series of meetings and conversations and we agreed to preserve the building and to work it into the design. As a result we restored this building and it is really fabulous and it added a whole dimension to the development. It didn't reduce the number of units and it added a wonderful element and now we have an historic display there. And restoring the building brought a good deal of good will in the community. They were very involved in the project and it made it better than it ever would have been if we had done what we originally intended. So you cannot assume that you will not get some really good quality support and advice from the community. And that community is now our best supporter: the community loves us. It was as beneficial to us as to them. So we go through this community process and we have a full time staff person devoted to this process.
SDL: Do you get involved with the meetings also.
JG: Not as much as I used to. I used to do them all and I don't have to do it any more. But I have other miserable things I have to do.
SDL: This was a positive thing that happened but I want to get at some of the other fears and concerns of members of the community who think that if you bring in a bunch of low income residents into their neighborhood that it is going to reduce my property values and that crime is going to go up.
JG: Exactly.
SDL: How do you deal with those fears?
JG: It is called tenacity. You just outlast them. You never back away. You go through a series of meetings. You listen. You invite your opposition to meet with you in whatever form and format they want. You give them access to your properties [completed developments] and to residents and you take them on tours. We have often rented a bus, taken people around, allowed them access to residents and to talk to management without us being present. We give them free access. However they want to go through the process you keep them engaged. And you would be amazed that sometimes your most vocal opponent will come over and say: "I never believed you would do this and take the time." And you let them yell and scream. And they learn something. And people will change their mind. Some people you can never do anything and they will fight you to the end. But usually you will have enough people supporting you that it will work. It takes a long timeyears. Sometimes it is years because they can get at you in so many different ways. First you have your land use permits and then you have to go through your public financing. We had a deal here in the Mission on the corner of 16th and Church where we ended up going through13 public hearings because they appealed everything every step of the way. They appealed our building permit and everything they could and we ended up in front of some kind of public body 13 times. It took a couple of years to get through. Then we ended up negotiating an operating agreement because we were next to condos. We made an operating agreement with the condo association saying we would do certain things in our operations: not let kids bounce balls off this and that.
SDL: Do you negotiate over who gets to live there?
JG: Sometimes. That is also a big fear so bringing the management company into these meetings to explain how we do it and how we screen and sometimes that piece becomes a piece of negotiation and something you can give on or not give on.
SDL: Will you negotiate about how low an Average Median Income the tenants will have?
JG: No, most of that stuff Fair Housing is not on the table. What is probably on the table is to say that there is a screening criterion. When people ask how we know we are going to get good tenants, we say we do house visits and there are landlord tenant references. We go through a description of a very tight process that assures that we are really looking for good tenants. We want quality tenants not just because they are going to live next door to you but because they are going to live in our building. So we talk about that. We do a pretty rigorous screening anyway and most people don't realize that.
SDL: I can see the reason for doing careful screening because if you have tenants who create all kinds of problems the next group of community where you want to build affordable housing will hear about these problems and decide not to let you build..
JG: What it is really about is that people have a right to a quality place to live and we try to create an environment that will allow that for everyone. So if you get a bad tenant who is dealing drugs living next door to a family with a bunch of kids then this bad for the families and for other residents and we don't want that. So what we try to do is screen out people who are involved in that kind of [criminal] activity. We are talking about illegal activity. Any landlord is going to try to screen that out. It doesn't just have to do with poor people. You want a tenant who will respect the rights of everyone else.
SDL: It has been said that some of the screening done for affordable housing is more rigorous than that which is done for market-rate units.
JG: Your right we are subject to a very strict Fair Housing laws. Whatever criteria we lay across has to be carefully and equally applied across our group of [tenant] candidates. Whereas with market rate candidates if someone comes in [asking to rent a unit] and the owners don't like them that is it they just say: sorry it is not available. So ours is a different kind of screening. Now if it is a big complex and they are marketing aggressively because the market is soft they will take anybody just to fill it up. But if it is a tight market where they have choice, a non-regulated [market-rate] group will pick and choosethey will look at your job and say I would rather have this profession than that.
SDL: Or look at the tenant's criminal history.
JG: We can do checks on people's criminal background. And we won't take a who is in for some violent behavior. But the criteria are clear and we will aggressively make sure we are making the right selections.
SDL: You do that kind of screening on every client.
JG: In a market like San Francisco we are doing home visits and most of the time we are doing criminal history checks. Maybe some markets we are not. It depends. We certainly are doing credit checks and landlord references. And when we do the interview with the family every family member has to be there. You don't just interview the head of household. You do the whole group. It is not about one person living there it is about the family living there.
SDL: Do you expect that you will do fewer units than you have in the past? Is the trend downward in terms of what you are able to build?
JG: No, our organization is very committed to do as much housing as we can. And we are able to move our market focus based on where resources are available. We are national. We will probably do more acquisition of existing structures and try to preserve housing that has subsidies and if it were to be sold to a for profit market those subsidies would be lost. So we want to preserve these subsidies. We will do more of that in the next years and focus our new construction in markets where it is viable and wait until there is a shift in the market again [where it is not]. The market is cyclical. We have already shifted some of our market focus. It used to be that our main office in the Midwest was in Omaha be we shifted it to Chicago. We recognize that certain markets you can't do much in at this time. Certainly Chicago is a major market that needs development and we are looking at other East Coast markets where there is probably a need and resources. As a result, as an organization we won't do less housing.
SDL: How did you get involved in this work?
JG: I started with housing back in the late 1970s when I was working with the developmentally disabled. I went to graduate school at the University of Oregon in Public Affairs with a focus on housing for people with disabilities. At the time, as soon as disabled tenants were employed in any way they would lose all their benefits and their housing. The disabled were being And deinstitutionalized and there was no place to put them. I started in Minnesota on the disability community with people in group homes and as soon as we were able to get anybody employed they would lose their housing. I stayed in Oregon and started working with the Association or Retired Citizens of Oregon and created a non-profit called Specialized Housing in Oregon, which was specifically to develop community-based housing for people with disabilities that they could afford to live in.
We started using the HUD 202 program to do housing for people with developmental disabilities. We built small apartment complexes and mini group homes using the 202 program, which was started back in the late 1950s for senior housing. The program gave you a loan and rent subsidies and you could combine them and do senior housing. That turned into a capital grant over the years and still exists today. Then they split it off and said 202 would remain a program for senior housing and section 811 of the Housing Act would be used for the disabled. HUD gives you capital grants. It is the only direct loan program that HUD ever ran and still does. It gives you a capital grant and subsidies to the individual a subsidy for senior housing and for the disabled.
So I created this group and I learned housing on the back of a napkin. There wasn't any graduate school [on affordable housing] back them or computer that you could plug numbers into. It was pretty basic. That is how I got involved. The program we started still exists today and is for people with severe and other disabilities.
Then I moved to California and started working for Catholic Charities here in San Francisco, which had its own housing department. It had been dabbling in doing senior housing so I ran that department from 1980 to 1987. Then in 1987 I came here and started doing housing in the three counties of San Francisco, San Mateo, and Marin County. I was primarily working on senior housing but then the tax reform came in and we started doing tax credit transactions and I started to get into some family housing. I did that for six years with Catholic Charities and did some consulting also. Then Catholic Charities decided that we had amassed this sizeable portfolio and that it was kind of complicated and maybe we should look at a different structure. And at that point Mercy Housing, which had been around since 1981, had a small presence here in California. It was an organization dedicated to doing affordable housing and had backing by all these women's religious communities and it wanted to make a significant impact in the affordable housing world. Catholic Charities wanted out, Mercy was here but not doing a lot so we decided to pick up the whole department out of Catholic Charities and move it into Mercy Housing.
SDL: It was a merger.
JG: It was more like a take over. Catholic Charities is not doing housing. They are a social service organization and they do great work but they don't do housing. We still work with them but we do the housing and they do the services. In 1993 I became the president of Mercy Housing of California and since then my involvement has expanded to take on a bigger portion of the work of Mercy in several states. So it has been from the ground up learning to do this. Back in the days in Oregon I was buying a house for $40,000 and doing $20,000 of renovation. Now I feel like I could write that check myself. The difference in scale is pretty mind blowing.
SDL: Do you know any good affordable housing programs that are experimenting with mixed-income housing configurations?
JG: Carol Naughton, executive director of the East Lake Village Foundation, was the legal council for the Housing Authority in Atlanta. Tom Cousins, a major national developer, decided he wanted to do something for that community. There was a massive public housing development there in East Lake. I don't know whether they boarded it up or what. Not only was there this big disastrous public housing complex but it was next door to a major golf course that was in ruins because people would get accosted [robbed]on the greens. So Cousins said he would do a project that was half public housing and half market-rate housing and it is now up and running.
The golf course has this old beautiful clubhouse. Some major golf players played there previously. They restored the greens and the clubhouse to their former grandeur and they turned it into a private club that only corporations could buy into. And the people who were originally members could renew their membership. All the profits go to support this low-income housing effort next door. Half of the tenants are African-American and very poor and it is this big social experiment.
Cousins will tell you flat out: People said they wanted to give back. I'm giving people an opportunity to give back. I want people to come and live here. It will be a model. But people don't want to give back in that way. Right now it is about 35 percent occupancy. The split between affordable and market rate is 50/50, which is a very bold move very gutsy. They are looking to create interaction between social groups that is meaningful. They are looking for ways to bring people together.
One way that Naughton was trying to bridge the social and economic gap was through a weight loss program. The good news is that this initiative is financed well because Cousins is very well-to-do and he has put a big effort into this. His company does commercial mallsdestination malls where you come to do more than shop: you park and you get out and walk. They are very successful. There is one in Savannah.
You should talk to Carole because she is not only the one who is running this she also sat at the table with the Housing Authority and negotiated the deal. And then when they were looking for someone to run it they couldn't find anyone they liked so they came back to her. She had no intention of running it. It is big: something like 500 units. It is laid out over many acres so it is not dense like you would find here. But it is three story multi-family housing. It has been up about four years. This has totally transformed the area.
SDL: I went to see Patrick Kennedy's place in Berkley where he has 28 units of mixed-income affordable housing.
JG: We can do 28 units with our eyes closed in the Bay Area. And Kennedy takes people who are at 80 percent of the Average Median Income. Do you know how much that is? So what does that mean? It is not Atlanta where 80 percent AMI is a real number.