- (female announcer) Production funding for Behind the Headlines is made possible in part by the WKNO Production Fund, the WKNO Endowment Fund, and by viewers like you, thank you.

- The challenge of affordable housing in Memphis, tonight, on Behind the Headlines.

[intense orchestral music] I'm Eric Barnes with The Daily Memphian, thanks for joining us.

I'm joined tonight by Amy Schaftlein, she's executive director of United Housing.

Thanks for being here again.

- Thank you for having me.

- Ashley Cash is director of Housing Community Development for the City.

Thank you for being here.

- Thank you.

- Roshun Austin is CEO and president of The Works CDC.

Thanks for being here again.

- Thanks, Eric.

- Along with Bill Dries, reporter with The Daily Memphian.

We'll talk about challenges, like I said, at the top around affordable housing projects that all of you are working on or pursuing, and both government initiatives and private initiatives, and so on.

I want to start briefly with each of you, and I'll start with you, Roshun, what does affordable housing mean?

What does it not mean?

- Okay, so affordable housing is not the building.

Housing is housing.

Affordable housing refers to the people, who are gonna serve in the building.

And so families who have incomes that are 80% and below the median.

And I think that's always a misconception that affordable housing looks a certain way.

It shouldn't.

You shouldn't be able to tell it from the next house.

- And, you know, I'm old enough to remember when that was.

Well, that's public housing, and is it public housing or is that just?

- That's a totally different thing.

- Yeah.

- So public housing is serving families that are 30% and below, and it is owned by a agency that is a part of the federal government or mandated by the federal government, a housing authority in your local municipality.

Affordable housing is done, mostly by the private sector in the market.

They're building affordable housing.

- And I'll go to you, Amy, I think last time you were on the show is a couple years ago and we talked about, if I'm not wrong, and other people have talked about like 39,000, a need for 39,000 affordable housing units in the city, which is a daunting and huge number.

- Mm-hmm.

- For you, what does that mean with United Housing?

And again, what is affordable housing in the way you all pursue satisfying that need?

- Well, I think to Roshun's point, I think there's a continuum of affordable housing.

And United Housing sits on the, somebody who is renting, maybe they have come out of public housing into a rental situation and maybe now they're getting ready to move into home ownership, if that's what they want to do.

United Housing is there and that end of the spectrum.

So a lot of the times, they are making around 50 to 70,000 and they wanna have, fix their credit, or figure out how they need to start their journey to home ownership.

Whether that's budgeting, saving, how much do I need to save, what is down payment, what is equity?

You know, so we're teaching everybody from the start of how to be a homeowner to how do you maintain your home over time.

And so United Housing, I think, sits at this one part of the continuum of housing.

So we're not working with the public housing, not even necessarily with rental, more so somebody moving into home ownership as a wealth building tool.

- And Ashley, for Housing Community Development, which is a city agency, but there's federal money, I think there's state money, there's local money.

I mean, where do you all fit in, in this notion of, "Hey, here's what we view "as affordable housing and here's the ways in which we support it"?

- Yeah, so the City of Memphis, we receive federal entitlements to support housing activity, affordable housing, anything that's at that 80% or lower area median income.

And so from our perspective, we are looking to support all types of housing.

We typically don't work with public housing, that, as Roshun said, that's another entity.

But we're providing funds to help developers, to help nonprofit agencies to complete those housing units.

The City, we don't build houses.

We don't build the housing directly, but we do work within that spectrum.

And then I did wanna talk about, you know, the perception of affordable housing.

- Yeah, please.

- It's really for, there's affordability metric for all of us.

No matter what income bracket you are, there's a certain amount of house you can afford and then there's a certain amount that you know, you probably shouldn't go over.

And so we are wanting to look at and make sure that we are able to provide those housing units for individuals at all different income ranges.

In particular, the 80% and lower, but we're also starting to look at 81-120%.

These are individuals who are probably making just over, and the 80% area median income is about $51,000 if you're household of one.

And so they're probably just over that.

Housing units are still difficult, rent is still high for those individuals.

Mortgages are still unattainable.

And so we're trying to come into that space as well.

And then the last thing I'll say around perception, we've noticed we've done a lot of, had a lot of conversations in the community.

And you know, when people think of affordable housing, they think of someone who might not be doing enough.

They think of people who are maybe living on the streets, and there are people in those situations, but really, it can be a single mom.

It might be a senior, it might be a police officer, it might be a teacher, it might be a young couple starting out.

And so there are all different types of people, who benefit from affordable housing units.

And you know, that's something that we are working on in our community.

- Yeah, yeah, let me bring in Bill.

- If we put all that's going on on this front on a map, I think a lot of people might be surprised at just how much is going on, but there's so much more to do.

How difficult is it to scale affordable housing to where it needs to be?

- Yeah, yeah, I think, so often, when we talk about affordable housing, we don't really consider the market realities.

There are some things happening that are beyond any of our control.

And so you have an environment, where construction costs have increased, and a lot of that today is labor.

So we're seeing bids that were from last year to this year, twenty percent up in labor because of what's happening with some of the workforce.

- Can I interrupt?

Is that immigration and is that fear of crackdowns?

- That's a lot to do with that.

- A big Hispanic population.

- Yeah, and so we haven't really felt the tariffs or the threat of tariffs yet in terms of materials, but we are feeling a 20% bump in labor.

But the reality is, you know, we don't talk about, now less than 9% of new starts in homes are in the affordable range, 1400, 1500 square feet.

And realistically, if you talk about building a 1400 to 1500 square feet, your house just to go vertical, just the house itself, is somewhere between 190 and 210 to build it.

That's just real cost.

And so that is a challenge and, but we can't sell it for that.

That doesn't include any infrastructure, any holding costs.

And so you're talking over $200,000 to build a house that you won't be able to get that much out of it.

And the City, unfortunately, doesn't have as much entitlement funds as it had 20, 30 years ago.

It's like a sixth of what we used to get.

And then you're competing against a new market, debt coverage loans.

And so it's me and Amy and the City competing against BlackRock.

So debt coverage.

- Across the big - Yes.

- International Wall Street billion dollar firm.

- The mortgage industry is changing, but the way we're talking about affordable housing isn't changing.

And so they're able to go and buy 100,000 units in a, buy subdivisions, and they're doing it with debt coverage loans.

And so they need to maximize their revenue, so that they are covering their debt, servicing their debt, and they're able to maximize their profits for their shareholders.

And so we're competing against that.

- And I guess the reality is, too, it's really hard to build within the city of Memphis.

Infill development is really, really tough.

So over the last 20 years, like Roshun said, we have not seen the "starter home" being built within Shelby County.

Most of those starter homes are built in DeSoto County, Tipton, Fayette, and that's where people were going.

And there was not that product in our neighborhoods that are existing now.

And so when you try to go in and create those units, you're working in scattered sites sometimes.

You're working with, even if you have a nice little plot of acreage, you know, where are the utilities?

Is it still there?

Is there sewer taps?

You know, so there's all these things that we have to work through, and all of that costs a lot of money up front and it doesn't pencil out because there's an appraisal gap.

So that's, you know, that's where we need the government to come and help, but we also have bank partners that have been pretty good about helping as well.

But we still need a lot more investment, if you're talking about 40,000 units.

I mean, in Philadelphia, they just started a 30,000-unit, two-billion-dollar project.

I mean, that's what, we're talking about numbers with Bs that it's gonna take.

- And yeah, they're not building it one house at a time.

- No.

- So our environment in Memphis is that we are very focused on single-family detached for ownership.

And the reality is the financing for affordable housing across the nation, eighty percent of it is the tax credit.

It's the low income housing tax credit.

- Right.

- And to your point about vertical, we have some photos of the Lincoln Park project that you're doing that kind of illustrates that.

I don't know if we can show that now or not, but Ashley talk about the City's role in that gap to make it pencil out.

- Yeah, so scale is, you know, scale is something that we think about and talk about all the time, and how do you do that with limited resources?

If we have $3 million to give out and we know we've got a $30,000, excuse me, a 30,000-unit housing shortage, how far does that $3 million really go to knock that down?

And so some of the ways that we've been doing is we've had a lot of discussions with Amy, Roshun and others, around really housing issues, development issues and how the City can coordinate better, so that we may not be able to increase the level of funding, but there are hidden costs where we are paying, but we're not paying directly in a monetary way.

And so how do we coordinate better with our engineering department, with our public works, how are we working collectively to improve infrastructure, so that we know where, you know, building might happen in the future.

And or when developments in field is happening, how are we able to sort of work backwards to say, "Okay, we know y'all are building in Binghampton, "or we know you're building in the North Memphis area.

"What's the utilities look like there?

"What's the infrastructure and what's the programming process?"

So that on the developer side, they're not caught up within our process, our email system, and trying to figure it out, but we are a little bit better coordinated.

So I think those types of ways are ways that we can work together.

And then I think really working with our state as well and trying to just figure out how we can all collectively attack the affordable housing problem.

How can we look at the gaps holistically and figure out a better strategy to start to address.

- I mean, your predecessor of your job, Paul Young, now has a new job.

I can't remember the name.

I think it's mayor, that's right.

And you know, as long as we've been doing this show and covering these kinds of issues, people have talked about this.

The difficulty of building, the lack of coordination between, say blight remediation and code enforcement.

And what does it take to go beyond, you know, having the conversation about it and really moving things along at a fast rate, so that the government is enabling these things to happen as quickly as reasonably possible?

- Yeah, I think it takes coordination, but part of that coordination, it takes strong leadership.

So you need a strong mayor and strong leaders, who are going to really say, "Hey, this is what I want done.

"I want the public works department "and the housing department to work together.

I want the engineering and et cetera to work together."

I think Mayor Young has done a great job at that with Blight Zero that's been going on across the city, where they're doing.

- What is that program?

- Essentially, they are, I hate to use the word attacking, but attacking blight in an area, in a targeted area.

So going out, doing a sweep, demolishing any buildings that are on condemnation, doing weed sweeps, grass pickup, and really having a holistic approach to blight in an area.

So taking initiatives like that.

And then also with our new chief of development and infrastructure, I'm still working on the title, but John Zeanah is in this new role and I think that's really what the role is all about.

How do we strategically coordinate and make sure that there's a point person and people to work together.

- And we'll have John Zeanah on the show sometime in the coming weeks or months.

But yeah, I mean from y'all's point of view, I'm trying to cause problem, but I mean, I've just heard the story.

I've heard, I know you've talked about this over the years.

How do you, as people who are developers, essentially, I mean, you know, how do you navigate and where are your pain points and frustrations?

It may not just be with city government, might be with county government, might be the state, and or homeowner association.

I don't know, like where are those pain points and what can be done?

- Well, I mean I think to Ashley's point, coordinating, talking to each other, going cross departments in government, and that's not just city government, county government, state government, too.

But I think we can, you know, affordable housing is expensive.

If we can cut costs on the development side, utility hookups, public works, all these things, if we can cut costs there, not at the expense of construction because, again, we don't want affordable housing to look like affordable housing.

We want the same walls, the same energy efficiency, the same, you know, really safe, sound, secure, resilient home that you would build in Germantown to be built in our existing neighborhoods in the city, right?

So we don't wanna cut costs on the construction, but we can cut costs on developing infill lots, and we can do that with time.

So streamlining the process.

John Zeanah's worked a lot on that on zoning and code.

We can now three to six units are now in the residential code.

So that can help, you know, with some cutting some costs, especially on missing middle houses.

So those kinds of things I think can be really helpful.

- We go to Bill.

- All right, as I understand it, is United looking at 3D housing at this point?

- Yes, we have gone to Austin, Texas to visit ICON.

They are a 3D printed home company and we've picked out a couple of sites.

Some of them hadn't worked out, so we're still picking on the site.

But the reason for that is I think that there's many different ways we can build, and we've gotta start looking at different ways to build.

And I think that, you know, whether it's modular, manufactured, stick build, or 3D, there's a lot of promise I think in how these homes are built and then maintained over time.

So these walls are climate resilient, wind resistant, very energy efficient, metal roofs.

So these things aren't just flying off.

We have a lot of trees in the city and some of the major issues we see in our home repair program are roofs, you know?

So just making sure that when we build homes that they can last through generations.

If we're asking to build wealth through generations with home ownership, then we better make sure that that asset, the house, can be kept up over those generations.

- Right, right.

Roshun, what have you seen from Memphis Light, Gas and Water recently on things like hook ups?

Because as I understand it, at one point, it was an individual process for each unit that you had, right?

- It still is to some degree, but what, so we had a series of conversations.

One, I mean, some of the series led to John's job, Zeanah's job with developers, not just for nonprofit developers, but for-profit developers as well.

But MLG&W, what I have seen is some change in their policy.

So I really wanna talk about policy at all levels.

Their policy was from the 1990s and it was arbitrary.

An affordable house to them was $140,000.

I'm like, what year?

What is that from?

They needed to make those adjustments.

Some of it is just not necessarily MLG&W.

I think Director Cash mentioned some things about public works and other divisions of the City because we're dealing with MLG&W and electric, gas, water, but we need sewer.

The City Council is to blame for part of this.

July 21, they had an ordinance that moved, changed something.

So the developer was always responsible for the lines on our side.

We were never responsible, nor could we touch on the city side, but because.

- Responsible from the the street to the house, people say.

- Basically.

- And then the City's responsible running up down the.

- For the public infrastructure.

So now we get a 50% discount on the city's infrastructure, thanks.

So now for-profit developers now are charged 100% of that, but Amy and I can get a 50% discount.

How do I need a discount on public infrastructure because you've spent decades disinvesting in the communities where we're building.

And so it's those type of policies that I don't even think they understand they did that to us.

So you put another impediment in our way and then MLG&W is making some changes.

They're allowing us now to hire our own contractors and not their third party contractors to do the work.

With their approval and their design, they move much faster.

But the policy updates was the greatest thing that they could have done to bring us into this decade and not four decades ago.

- Ashley, I forgot my train of thought here, wasn't a very long train.

[panelists chuckling] Anyway, the change with the Land Bank that saw John Zeanah get the new post that he got, as I understand it, when you have vacant parcels now as opposed to going to the Land Bank, they will go somewhere else to actually look at a rapid, more rapid reuse of those sites.

- Yeah, that's a new program that was adopted by both the county and city, and I think it's Building Home is the program.

But essentially, all parcels within city or county ownership can go through this program.

And the intent there is to really streamline the process, so that if I'm a developer or if I'm a builder, I don't have to figure out what the Land Bank's process is.

I don't have to figure out what Memphis area, metropolitan Land Bank process, but there's one program, one point person or contact in order to get through that and get those lots back developed.

We're still working through the programmatic side.

So I would say on the legislative side, we've gotten made some progress, gotten those approvals.

But on the program delivery side, we're still working between the planning division and the housing division really to understand, like, what's a simplified application look like?

What's a process to vet and validate either developers or builders?

How can we support with some pre-development funds in that area?

And so I think those kinds of tools, just trying to think about, and we've come up with a couple of different tools in the recent years.

One is a middle income program that I was talking earlier about, where we're providing some funding for infrastructure and site work for projects that are 81-120%, because there is no subsidy for those types of projects.

And so they don't get built.

You get either an affordable unit or you get a $2,500 1-bedroom unit.

And so we're doing that.

And then also we've got a pre-development fund that we tested out last year really to try to address some of these challenges.

Once again, the issue is scale.

How do we scale up in order to be able to do more than a thousand units a year?

And we, that's the collective we, but then also, how are we able to make the case to say, "City, we really think y'all should be investing fifteen million dollars in housing."

Or, "HUD, how can you increase your allocation to the City so that we can do more?"

And so those are some of the areas that we to scale up.

- You mentioned Land Bank, I should clarify for people that those are primarily properties, where taxes weren't paid and they were ultimately taken back by the county, city.

- Right, or city.

- They sit in the Land Bank.

- They are-- - Often...Go ahead.

- I was gonna say they are, especially on the county Land Bank, but the City, we have different property, where it may have been an old project, some property has been donated.

- Gotcha.

- Maybe surplus land, those types of things.

- One thing we've kind of alluded to, but we've talked a lot about home ownership and building homes.

Where do apartments, where does renting fit into this?

- That's me, so I'm across the spectrum of affordable housing.

So Lincoln Park is for home ownership, but I am building a senior development at Frayser that's for very low-income seniors.

And I'm using a tool that affordable housing developers use across the nation, both nonprofit and for-profit.

And it's the chief way that affordable housing is built in the U.S., because up to 90% of units that are built, are built using the low income housing tax credit.

And so you're focused on families who have incomes that are 60% and below.

And so when I talk about market reality, let's talk about Memphis and income.

So we have an extreme poverty rate.

About a quarter of our residents live at or below poverty.

So the reality is they're not gonna be in home ownership today.

I'm not saying ever, but not today.

And but they deserve and we need to provide them with affordable, quality affordable housing units.

And so I'm doing multifamily in a old school at Northside Square, also targeting 80% and below.

I'm doing the 60% and below at Peachtree for focus on seniors 55 and above.

So my population and then some rentals that are scattered throughout neighborhoods.

- And we put a picture of Northside up there.

The old Northside High School and the redevelopment there.

There's some stigma sometimes with renting.

I mean, is if you know that you don't want renters or you don't want apartments, I mean, is that a thing I'm looking at?

I mean, is it a problem?

Is it a challenge with renters?

- I mean, historically, mostly single-family neighborhoods who find that their neighborhoods are becoming more rental, especially after the foreclosure crisis.

Yeah, there was that kind of stigma thing, but I don't, you know, I think there's a place for everybody who needs, you know, a roof.

And if you rent, that's how you do it.

And if you own, you own.

- Go ahead, yeah, yeah.

- Go ahead.

- I was gonna jump in and say, you know, people are at all different stages of life and so some people may wanna own, some people may not be ready to own, some seniors may wanna come out of ownership.

And so I think the stigma comes when you have a single-family house that's converted to a rental, and a home, a property owner that doesn't know what it takes to really maintain that house.

And so having, working through that on either the landlord side or property owner side, I think that's really where a lot of that stigma comes is the fear that my neighborhood is now gonna change or revert into something that I'm not looking forward to as it relates to rentals.

- Is there also, we just have a couple minutes left, but is there also a challenge, I mean, it's expensive to own a home, right?

- Sure.

- It's the taxes, the interest rates are higher than they've been for a number of years.

The roof, you got a problem, an appliance goes out.

I mean, how do you address that with people who are in a space where they've never owned a home before, where this could be a big purchase even with the kind of subsidy.

I mean, is there, I think you all do some amount of counseling, - We do.

- Maybe you do as well or something.

- We have a whole class that covers this from start to end with the home ownership.

But yeah, we make sure, again, when we're building the homes that they are of a quality house that you can maintain over time and they're not gonna, like, if something breaks, you know, the whole house goes flooded, you know.

We have to make sure that we are putting folks in decent safe places, so that they can maintain it over time.

But we do have all of that in our classes.

- Let me go back to Bill.

- Roshun, we showed a picture of Northside Square, the old Northside High School now has windows, looks great there.

But there's also a lot of work going on in the neighborhood around it to fill those gaps, where there used to be homes with new homes, home renovation as well.

Talk about what's happening in Klondike at large.

- Yeah, so the Klondike Neighborhood initiative, our partnership made up of four nonprofits control about 450 parcels in the neighborhood, which we bought in different ways on the open market over a couple years.

So we are doing the spectrum.

And so we have some units that are new construction along Watkins that are for sale, and they're market, so they're not targeting affordable.

We have a land trust that fix affordability for 90 years, what the state allows.

And so we have some rental and some homeowners that are members of the land trust and will benefit from the deed restrictions.

And so we're, it's quads, it's small multifamily, it's single family, it's what a neighborhood should look like.

It shouldn't be made up of one thing.

- That is all the time.

We can talk much more about all these issues and the complications, but thank you all very much for being here.

We mentioned MLGW, we have Doug McGowen and Ursula Madden from MLGW coming up in the next week or the week after.

Also Chandell Ryan from the Downtown Memphis Commission.

Porter-Leath, which got back to contract for Head Start, we'll have them on soon.

All those will be in the coming weeks.

Also, if you missed recent shows on Memphis-Shelby County Schools, you can get those at wkno.org or on The Daily Memphian, or just search for "Behind the Headlines" on YouTube.

You can also get this show if you missed any of today at all those places.

Thanks very much, and we'll see you next week.

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