Trending
A recent Southern Alleghenies Planning & Development Commission study recommends creating subsidies for construction and rehabilitation of housing to bridge a gap between prices that area buyers and renters are willing to pay and the financing costs for housing projects.
Bridging that gap will help developers overcome a decadeslong increase in housing blight, while helping employers overcome recruiting troubles that stem from a lack of desirable housing in the area, according to Brandon Peters, SAPDC director of planning and community development.
Creating the subsidies will require cooperation among local and county governments, economic development agencies, banks, philanthropic organizations, employers and developers, according to the Alleghenies Ahead on Housing plan, which Peters discussed this week with the Altoona Planning Commission.
Housing in the region was long viewed as a resource that would "manage itself," states the introduction to the plan, which was created by CZB, a Maine-based consultant that also created a comprehensive plan several years ago for SAPDC.
That presumption was based on the "reasonable" expectation that blighted properties are "opportunities for investment, with good buyers emerging to fix them and return them to active use," that "tired-looking property" would change hands and be upgraded and that new housing needs would spur new development by builders who saw the opportunity, according to the introduction.
"(But) these long-held expectations have broken down in much of the region, or have become increasingly less likely, due to decades of soft demand, rooted primarily in population and household loss," the introduction states. "Low profitability and high risk -- owing to relatively low prices and rents -- have limited investments in housing for decades now ... not just investments by landlords, developers, real estate investors and banks, but the routine investments of typical homeowners in roofs, siding, bathrooms and the like."
That means that "a more proactive position on housing is needed," the introduction states.
It has become "widely accepted that -- except for certain types of luxury or recreational housing or one-off homebuilding -- the market cannot be expected to produce new or substantially rehabbed housing without some form of assistance to bring costs into line with what households in the region are willing to pay," the introduction states.
Action on housing is made especially necessary in the context of the modern understanding of economic development, which recognizes that "sufficient and attractive housing opportunities are ... an important factor -- perhaps even a precondition -- for successfully attracting and retaining skilled workers and the businesses and institutions that employ or serve (them)," the introduction states.
With a multiplicity of governmental jurisdictions in the area along with "numerous other public and private entities that have a hand in housing decisions" a strategy for solving the problem demands "a collection of tools," with "collaboration and coordination at multiple levels," according to the introduction.
Soft demand "is the central problem to solve," with "vacancy, blight and underinvestment" its key symptoms, according to the plan
The soft demand, which has resulted from people leaving the area and older people dying, has meant that housing here is highly affordable -- which of course has advantages, the plan states.
But it also leads to underinvestment.
The ideal for a "healthy" homeownership market is a home value to income ratio of 3 to 3.5, according to the study. That indicates "a balanced market where the typical household can afford the typical home."
A lower ratio indicates a deficiency of demand, compared to supply, according to the plan.
Blair County's ratio is 2.52 -- up from 2.24 in 2000, but still below the ideal.
The ideal for a healthy rental market is an actual-rent to affordable rent ratio of 1, according to the plan.
Blair County's ratio has improved to that ideal, from a less-than-ideal of 0.89 in 2000, according to the plan.
The plan proposes a host of subsidy "tools" for overcoming the soft demand that is at the heart of the problem and the high development risk that the soft demand has created.
Those include rental rehab subsidies; an "equity pool" for new rental or mixed-use developments; financial support for home upgrades; government acquisition, rehab and resale of existing homes; subsidies for infrastructure and amenities for new subdivisions; purchase commitments for new homes at "sufficient" prices; buy-back agreements for new home buyers; acquisition, demolition and land banking of obsolete and blighted homes; and strict enforcement of rental regulations.
The plan cites a hypothetical example for downtown Altoona in which an existing building on 11th Avenue is converted into eight apartments -- half one-, half two-bedroom -- for $1.8 million.
One scenario is without subsidies: the owner contributing 10% of the cost directly, along with a 15-year loan from an investor and a 30-year loan from the bank at lower interest.
Under that scenario, the one-bedroom apartments would need to rent at $1,950 a month, and the two-bedrooms would need to rent at $2,650 a month, according to the study.
To a developer, that project would "seem risky, and may scuttle attempts," according to the study.
Another scenario posits subsidies totaling $300,000 -- half from major local employers and a quarter each from Blair County and the city.
Under that scenario, rents would be $1,650 and $2,250.
Those would be "more in line with market willingness ... (while) elevating standards for housing in the downtown core," the study states.
Following the discussion of the study, the Planning Commission voted to recommend that City Council hire its author, CZB, to do Altoona's next comprehensive plan, citing the firm's housing expertise and familiarity with the area as factors in the decision.
Mirror Staff Writer William Kibler is at 814-949-7038.