Shifting Gears To Create More Affordable Housing

“Economy of scale is critical to our survival…and to ensuring that we fulfill our mission—the continued development of affordable housing in Little Haiti,” says David Harder, executive director of the Little Haiti Housing Association, Inc. (LHHA), in Miami. Over the past 3 years, market conditions have led this nonprofit group to shift its emphasis from housing rehabilitation to new construction.

Serving the Haitian community. “Our mission is to serve one particular area,” says Harder, “and we’re not going to dilute that mission. So, we’re looking to partner with other nonprofit, neighborhood-based organizations to produce more units at one time. Through economies of scale we can negotiate better contracts with architects, attorneys, and so on.”

LHHA was established in 1987. Its initial focus was the purchase, repair, and sale of existing homes to low-income families. LHHA serves a 3-square-mile area that is home to approximately 60,000 people, according to Harder. Roughly 80 percent of Little Haiti’s population is African American, and an estimated 85 percent of that population is Haitian. About 90 percent of those using LHHA’s services are Haitian and almost all earn less than 50 percent of the areawide median income.

Since its inception, LHHA has rehabilitated 59 single-family homes and a total of 76 units in three multifamily buildings. New construction includes 5 single-family homes and the 33-unit Forest Green Townhomes. In addition to housing production, LHHA also provides homeowner education and mortgage financing services.

Time for change. “The past 2 years have been a time of transition for us,” says Sam Diller, LHHA’s deputy executive director. During that time, LHHA disbanded its in-house construction team and began exploring partnerships as a way to better serve its constituents.

One of its first joint ventures was a partnership with Greater Miami Neighborhoods (GMN). GMN had purchased a 56-unit rental property in North Miami, an area just outside Little Haiti with a large Haitian population. The $4.2 million project required a gut rehabilitation. To keep rentals affordable, the two groups applied for a low-income housing tax credit.

The nature of building rehabilitation initially led LHHA to put together its own construction crew. This way, quality control was assured; also, as a result of strong interpersonal relationships, the team operated efficiently. However, local permitting procedures, which often left the crew waiting for a job to begin, and the ebb and flow of LHHA’s property procurement led to the team’s demise in December 2000.

To help handle future construction needs, LHHA is creating a limited-liability corporation with Al Townsel, Inc., a minority-owned, for-profit development company, and Miami-Dade Neighborhood Housing Services (NHS). Under the pending agreement, the developer will handle construction process management, LHHA will focus on construction financing, and Miami-Dade NHS will tackle mortgage financing. According to Diller, Miami-Dade NHS “has an existing partnership with local banks and access to $4 million in mortgages.” This new corporation, says Diller, will allow each organization “to do what it does best.”

Overcoming obstacles. Property acquisition within the Little Haiti area has never been easy for LHHA, according to Jacques Saint-Louis, the group’s housing director. Saint-Louis points to the inflated prices asked by some property owners as one obstacle.

A case in point is Sable Palms, a 500-unit complex that LHHA had once hoped to acquire. The Texas firm that bought the rental property for $3 million from FHA in the mid-1990s was asking $9 million for it at decade’s end. The building, on the outskirts of Little Haiti, has been purchased and rehabilitated by a private developer, notes Diller. “There’s a lot of gentrification going on there,” he says, “but I don’t think that’s [gentrification] going to affect us or move into our core area.”

Appraisals often pose problems for LHHA. The cost of property acquisition alone often approaches the appraised value, says Saint-Louis. His colleague, Diller, notes that LHHA still has a way to go before its work in Little Haiti impacts property values throughout the community.

A change in FHA’s bidding process for foreclosed properties also has limited LHHA’s ability to obtain homes for rehabilitation. At one point, nonprofits had the first opportunity to acquire foreclosures and, if the property were in a neighborhood deemed difficult to redevelop, FHA offered a 30-percent discount off the appraised value. In the late 1990s, FHA eliminated the nonprofits’ priority status and dropped the 30-percent discount.

Another obstacle to property acquisition is the local tax foreclosure process. Each year Miami-Dade County auctions off tax liens. The successful bidder then tries to collect the lien, plus interest, from the delinquent taxpayer. If the property owner refuses to pay, the property can be foreclosed. This approach has many shortcomings, says Saint-Louis. “It is almost impossible to get a clear title to the property,” he says. “You still have to satisfy liens, taxes, and fines. By the time you are done, the cost of gaining title exceeds the value of the land.”

“There are a lot of municipalities that take a different stance,” notes Harder. “They exercise eminent domain or pass another law that allows the municipality to take ownership and wipes away liens and fines. They’re willing to forgive taxes in order to return the property to productive status.” Although this is something Harder would like to see happen in Miami-Dade County, “the political environment here does not make that something we can focus on,” he says.

Time for a breakthrough. A 3-year effort on the part of LHHA to secure vacant properties “has finally come to fruition,” Diller notes. The Miami City Council recently passed a resolution to convey 17 properties to LHHA. The city’s legal department currently is reviewing the resolution to make sure there are no problems, he says. LHHA previously relied primarily on FHA foreclosures and direct purchase from private owners to obtain properties.

The availability of these properties is, in part, what has led to the switch from rehabilitation to new construction, says Saint-Louis. “We have many more houses in the pipeline than ever before,” he says. LHHA plans to erect 20 new single-family homes on the lots.

Building a neighborhood. One thing that has not changed over the years is LHHA’s insistence on homeowner education. Each individual purchasing a home through LHHA must take part in the Home Ownership Training program. This 6- to 8-week course, taught in Haitian Creole, focuses on shopping for a home, banking, credit (both credit cards and home loans), insurance, and home maintenance.

The primary goals of homeowner education, says Diller, are to maintain property values as well as to protect and stabilize quality of life in the community. To date, he notes, “not one family has run into trouble with their mortgage…. We have a zero percent default rate.”

A recent $15,000 grant from State Farm Insurance will allow LHHA to review and update its housing program’s curriculum and materials. “The intent will stay the same,” says Diller. “We just want to make the program stronger and more relevant.”

LHHA also intends to expand its homeownership program through its planned partnership with Miami-Dade Neighborhood Housing Services. LHHA will continue to offer training in Haitian Creole, and Miami-Dade NHS will use the curriculum to offer training in English and Spanish, adds Diller.

For families unable to qualify for ownership, LHHA works with them on budgeting so that they may eventually move into a home of their own. Noting that many Little Haiti residents spend as much as 70 percent of their income on rental housing, LHHA has made the rehabilitation and construction of rental units a priority. The group’s only current rental construction project will result in 14 units at 6601 NE Miami Place. “Unfortunately,” notes Saint-Louis, “we are landlocked in an urban core.” The housing director notes that LHHA’s efforts are limited by a lack of large enough tracts of land for multifamily housing.

More than just housing. LHHA’s housing program is just one part of “a holistic strategy for helping low-income people move up out of poverty and for improving our neighborhood,” according to the group’s organizational overview. Several other LHHA initiatives help further the group’s goals, such as the Little Haiti-Edison Federal Credit Union, a Reclamation Garden Project, and a Youth Art Program. Slated to open later this year is the Intel Computer Clubhouse. The clubhouse will familiarize youth with computers and technology and allow them to use high-end software to create dynamic and innovative projects with real-world applications. To date, LHHA has raised more than $340,000 to cover startup costs and the first 2 years of operation.

As it attempts to augment earlier successes, LHHA sees itself as a team builder. “We will continue to bring together groups and stakeholders to develop the services and initiatives needed to build our community,” says Harder.

For more information, contact: David Harder, Executive Director, Sam Diller, Deputy Executive Director, or Jacques Saint-Louis, Housing Director, Little Haiti Housing Association, 181 NE 82d Street, 2d Floor, Miami, Florida 33138, (305) 759–2542.