Loeb Lab 6: It All Started with Housing

Teresa Brice’s (LF '06) LISC office was forced by economic necessity to shift its exclusive focus on building affordable housing to building sustainable communities. With a new light rail system as the armature, Brice has found she can get a lot more bang for the LISC buck and help her region grow more smartly.

When I began my Loeb fellowship, I had been working in the affordable housing sector for over 20 years.  I first worked as a Legal Aid attorney trying to keep people in their homes and apartments by preventing unjust foreclosures and evictions.  Subsequent to that, I founded a nonprofit that focused on developing affordable homeownership opportunities for low-income, first time homebuyers.  It wasn’t until I completed my fellowship that I began to see the issue of housing in the larger context of neighborhoods, economics, health and sustainable communities.

As an affordable housing developer, I had been pretty proud of the fact that we were helping improve our community one family at a time.  What I didn’t see was that by emphasizing the personal goal of homeownership, we were sacrificing the larger goals of smart growth: increased density, mix of uses and more transit options.  New homebuyers were moving away from the urban core to the fringes where land is cheaper and they could qualify for bigger houses or cheaper mortgages. They also had to spend more time and money driving to reach jobs and services and contributed to the drain of vitality from the cities. We were buying into the accepted wisdom in the Southwest that it is okay to “drive till you qualify.”

I was pleased that my first position after the Fellowship was as the executive director of the Phoenix office for LISC, a national Community Development Financial Institution known for providing financing for affordable housing projects across the country.  I thought it was a perfect match that played to my strengths (read: comfort zone) in a geography where housing was the primary economic driver.

But within a year of taking the job, the housing bubble burst and Arizona was one of the hardest hit markets, starting with all those new houses built on the exurban fringe that were sitting vacant.  No one was building any new housing; at one point, there were over 200,000 vacant housing units in the Phoenix metro area. We lost over 50% of all construction jobs, and the ripple effect on the economy from the loss of other real estate related jobs was devastating.  The nonprofit housing development sector was stalled and I couldn’t give money away to build affordable housing.

Then two significant things happened: nationally, LISC shifted its approach to focus on building sustainable communities, recognizing that housing alone was not sufficient to move people out of poverty.  Those of us in the field offices were encouraged to take a comprehensive approach to neighborhood revitalization by investing in 5 pillars of sustainability: 

  • real estate
  • increasing family income and wealth
  • stimulating economic development
  • improving access to quality education
  • supporting healthy environments and lifestyles. 

We were asked to find places in our communities where we could leverage existing assets.  It just so happened that, in December 2008, the light rail line opened in metro Phoenix.  This $1.4 billion infrastructure investment was begging to be leveraged. And that meant connecting housing to transit, creating jobs and walkable neighborhoods and promoting locally-owned businesses as economic development opportunities.

Of course, there were skeptics: those who said that residents living in a region designed for and defined by sprawl would never use transit.  But within the first year, our system was beating all the projections for ridership and is now ranked the 12th busiest in the nation.  The 20-mile corridor, the nation’s longest LRT at startup, represents 1/3 of the total projected system and runs through the urban heart of the 3 cities that it connects. It has brought opportunities for investment in neighborhoods that had been neglected in favor of building further and further into the desert and away from the urban core.

We at LISC embraced this new opportunity and, together with Raza Development Fund, made a $20 million lending commitment in 2011 that many thought could never be fully deployed.  Halfway through our 5-year commitment, we have jointly spent over $10 million for housing and community facilities, leveraging over $140 million in additional investment. Our partners have created over 800 units of affordable and workforce housing - a scale and density that is rare for our region - and are helping to build a sense of community around the light rail corridor.  In addition to the housing there are jobs being created as well as health centers and business centers and charter schools and open spaces. The light rail line that stretches from Phoenix, through Tempe and into Mesa will ultimately extend its reach south of downtown as well as into the West Valley for a total system of 60 miles by 2026.

In Mesa, Arizona, the city that anchors the east end of the light rail corridor, Mayor Scott Smith (who also happens to chair the U.S. Conference of Mayors this year) made the following observation:

Many of these urban developments were possible because Arizona's community banks and Community Development Financial Institutions stepped up to take a risk on urban development in Arizona by providing gap financing and creating innovative financing partnerships. And, these risks are paying off. Since traditional lenders have been skeptical about taking risks on lending for mixed-use urban developments in the Phoenix metropolitan area, the cities, developers, community groups, community banks and CDFIs didn't wait around for the loan capital to dislodge, instead they pooled their resources and made it happen.

Focusing our development along this corridor will provide benefits to everyone, whether or not they use the light rail.  Equitable transit-oriented development fosters healthy communities, reduces costs of living, provides better access to jobs and economic growth, allows for healthier lifestyles, reduces dependency on cars and results in improved air quality.  We are convinced that this is where opportunity and equity meet.  And that is why we say: “Our Future is on the Line.”

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