Property Grunt

Wednesday, August 12, 2009

Honky Trek: Scarsdale?

I was actually trying to find the political cartoon Honky Trek: White Flight by Berkely Breathed. But this will do.

In the past year I have done copious amounts of coverage on Scarsdale.

Scarsdale passes gas

SCARSDALE IS F**KED!: Scarsdale launches the charm offensive.

Queens or Scarsdale Part 2: The Answer

Queens or Scarsdale Part 3: The Final Countdown

However this new development is huge because it impacts the future of Scarsdale.

Westchester Adds Housing to Desegregation Pact


Westchester County entered into a landmark desegregation agreement on Monday that would compel it to create hundreds of houses and apartments for moderate-income people in overwhelmingly white communities and aggressively market them to nonwhites in Westchester and New York City.

The agreement, if ratified by the county’s Board of Legislators, would settle a lawsuit filed by an antidiscrimination group and could become a template for increased scrutiny of local governments’ housing policies by the Obama administration.

“This is consistent with the president’s desire to see a fully integrated society,” said Ron Sims, the deputy secretary of housing and urban development, which helped broker the settlement along with the Justice Department. “Until now, we tended to lay dormant. This is historic, because we are going to hold people’s feet to the fire.”

Now before you start calling me insensitive or evil, I want to get something very clear. I am pro affordable housing. In fact I took a class on the subject of affordable housing credits and was strongly considering getting into that part of the real estate industry because not only was it quite profitable, it was an area that would make a huge difference in people's lives. There is a gaping crevasse between the haves and have nots that keeps getting bigger and bigger. Affordable Housing is one of the tools to fill that gap.

Affordable Housing has the unfortunate stigma for bringing those elements to light. And it is going to be a cause for alarm. The reality is that affordable housing is about helping the people that are the backbone of America which are the teachers, firefighters, policer officers and sanitation workers. These are the people that run our communities and affordable housing will provide them homes they need.

However, the transition for Westchester particularly for places like Scarsdale is going to be quite rocky.

Below is my analysis.

The agreement calls for the county to spend more than $50 million of its own money, in addition to other funds, to build or acquire 750 homes or apartments, 630 of which must be provided in towns and villages where black residents constitute 3 percent or less of the population and Hispanic residents make up less than 7 percent. The 120 other spaces must meet different criteria for cost and ethnic concentration.

The county, one of the nation’s wealthiest suburbs, has seven years to complete the construction or acquisition of the affordable housing.

Seven years goes by very quickly. And with this deadline these areas are going to be hard pressed to come up with a plan that satisfies everyone.

Affordable housing is defined by a complex formula, but generally it is meant to help working families keep from spending more than a third of their gross income on housing. A family of four could make up to $53,000 as a tenant and up to $75,000 as an owner and still qualify.

There is no minimum income level, “but it’s not going to be no-income,” said Craig Gurian, executive director of the Anti-Discrimination Center, which filed the lawsuit. “This agreement is not focused on facilitating housing for the poorest of the poor.” The center is a nonprofit anti-bias advocacy and litigation group based in New York City.

The reason why there is no minimum is that could be used as a way implement steerage and redlining. For instance, in Scarsdale the only qualification is money. Which means you have to a lot of it. Without a minimum, Scarsdale can't use money as a barrier to entry.

Mr. Gurian said that while black and Hispanic residents have a disproportionate need for affordable housing, “this is an opportunity-creating agreement, not a guarantee” that the homes would go to minority members.

“Residential segregation underlies virtually every racial disparity in America, from education to jobs to the delivery of health care,” said Mr. Gurian.

No communities have been chosen to receive the homes, officials said. But according to the Anti-Discrimination Center, more than two dozen predominantly white towns or villages are eligible, including Bedford, Bronxville, Eastchester, Hastings-on-Hudson, Harrison, Larchmont, Mamaroneck, New Castle, Pelham Manor, Rye and Scarsdale.

I want to get something clear. There are black people in Scarsdale. However, from what I understand, it can be somewhat of a unique experience for young African American men. I will put it this way. They make sure they have their ID on them whenever they are out at night.

A federal monitor, James E. Johnson, has been appointed to ensure that the county abides by the settlement. Given that 120,000 acres in the county meet the criteria, the monitor “should have no difficulty making sure that Westchester ends its policy of allowing affordable housing to be off-limits in the most highly white neighborhoods in the county,” Mr. Gurian said.

Whoever owns those 120,000 is sitting on the catbird seat. Anyone who lives next to those acres is screwed. Anyone who knows those acres will milk their position for what it is worth. They will grab as many tax credits, grants and benefits they qualify. They will do everything they can squeeze out as much profit of those acres. They will sell those tax credits and they are also in a position of power when dealing with the town government. In fact if the town is smart they will take ownership of the land in order control the process as much as possible.

This affordable housing settlement is also a boon for real estate developers in Westchester, particularly those who have a ton of inventory that is sitting on the market. The smart real estate developer will do what they can to qualify for the Affordable Housing Settlement in order to sell off their inventory. This is especially bad for Scarsdale because there is real estate developer who has a condo development that specializes in Senior Housing. He also owns key buildings in the village and was planning to turn those into condos but with the housing crash, those plans are now put on hold. What do you think he is doing now? He is most likely switching gears and looking into affordable housing.

The lawsuit, filed under the federal False Claims Act, argued that when Westchester applied for federal Community Development Block Grants for affordable housing and other projects, county officials treated part of the application as boilerplate — lying when they claimed to have complied with mandates to encourage fair housing.

A Westchester official originally dismissed the suit as “garbage.” But the county was largely repudiated in February when Judge Denise L. Cote ruled in Federal District Court that between 2000 and 2006 it had misrepresented its efforts to desegregate overwhelmingly white communities when it applied for the federal housing funds.

Judge Cote concluded that Westchester had made little or no effort to find out where low-income housing was being placed, or to finance homes and apartments in communities that opposed affordable housing.

When you take money from Uncle Sugar, no strings are attached, just a very long detonation cord that will blow up in your face if you do not play by their rules. Awhile back I wrote about Scarsdale taking stimulus money it did not need.

Stimulated Scarsdale

I have not doubt that will also bite Scarsdale in the ass.

As part of Monday’s agreement, the county admitted that it has the authority to challenge zoning rules in villages and towns that in many cases implicitly discourage affordable housing by setting minimum lot sizes, discouraging higher-density developments or appropriating vacant property for other purposes. Westchester agreed to “take legal action to compel compliance if municipalities hinder or impede the county” in complying with the agreement.

It was unclear Monday to what extent localities could thwart the agreement, if any chose to do so. Mary Beth Murphy, the town supervisor of Somers, which is among the possible locales for new housing, said that while she was unaware of the agreement, “we certainly are committed to affordable housing and have amended our zoning legislation in recent years to create more opportunities.”

I do not envy the people who are part of these local governments. The next 7 years is going to be absolute hell. They are not only going to be heavily scrutinized by the federal government but they are also going to get a full body cavity by their constituents.

The agreement could spark challenges to suburban county governments across the country that have resisted pressure to undo decades of residential segregation.

Andrew J. Spano, the Westchester County executive, attributed the settlement to “a historic shift of philosophy” by federal housing officials. He said he had signed the agreement to avoid further litigation and possible penalties.

The county admitted no wrongdoing, attributed the judge’s ruling to a technicality and argued that since it had previously invested in affordable housing, “what is different is the locations where the housing must be built.”

“We are settling the lawsuit because we have no choice,” Mr. Spano said.

The suit by the Anti-Discrimination Center applied to towns and villages in Westchester. The federal government deals directly with the county’s larger cities, among them Yonkers, which nearly went bankrupt before capitulating in a housing segregation case that began in 1980 and dragged on for years. That city, which had concentrated public housing in its southwest, was forced to build on the east side, where more whites lived.

The agreement is subject to approval within 45 days by the county’s Board of Legislators, which is also required to approve a $32.9 million bond sale to help finance the housing. Without legislative approval, the litigation would resume and the county would be faced with having to prove at trial that it did not knowingly file false claims.

Spano has no choice but to settle. First of all money is tight and by settling they at least have some measure of control over the situation. Lawsuits are like fighting matches. The last thing you want to do is have it go to decision.

Most of the homes would be new construction, although some existing houses and apartments could qualify if the county made them permanently affordable.

As I stated before, an enterprising real estate developer can make a lot of money from this statement. Scarsdale is getting hit just as hard as the rest of the real estate market. They are sellers out there dying to get out. A smart real estate developer will buy out as many cheap houses they can find and create an assemblage. Knock them down and build multi-families. Where are they going to get the money? No worries. We are living in Obama's world. Uncle Sugar will provide milk money straight from the teet.

Of course expect outrage amongst Scarsdale residents who live in areas like Edgewood which is often referred to as the ghetto/Bronx/Harlem of Scarsdale. They are the most likely place where affordable housing will take root.

Now in this article they focus on these particular towns.

Bedford, Bronxville, Eastchester, Hastings-on-Hudson, Harrison, Larchmont, Mamaroneck, New Castle, Pelham Manor, Rye and Scarsdale.

They do not mention Edgemont? Why? Because it is part of the town of Greenburgh.

Look at the graphic below.

Because they are part of the town of Greenburgh. And there are areas of Greenburgh that already fit the qualifications of affordable housing. Yet, Edgemont is far enough away from those areas that it does not impact property values. Word of advice for you Edgemont kids. It might be in your best interest to shut the f**k up about saying you are from Scarsdale because it might attract unwanted attention.

As I stated before, this transition will not be smooth. There is going to be a lot of tension amongst these towns. Expect to hear a lot about this in the news. Especially a place like Rye. That community has a reputation of keeping to themselves, even if it means not enjoying their own public parks.The simple reason why people move to these towns is get away, and thre is no way I can say this without sounding like a douchebag, from certain elements. But that is the primary motivation of why people move to the suburbs. And honestly, it is not race thing. It is an economic thing.

There will be those who will join the white flight which will actually raise the property values in places like Edgemont because it will not be effected by the Affordable Housing program but will still retain its prominence.

I have no idea how this will effect the school systems. If the AT program does not pick up the pace, I would not be surprised that Scarsdale reverts back to Advanced Placement since it is already an established and it will be easier to implement in order to deal with the influx of new students.

There is also potential of further polarizing the residents of Scarsdale from their new neighbors. They might want to ensure their enclave status by taking measures that their children get a better education in the same institution that is shared by the affordable housing population. While being labeled as living in affordable housing could be a stigma. In other words, separate but equal. If it is ever proven that students from affordable housing are not given the same opportunities as their more richer brethren, Justice Soto-Mayor will lay the smack down when the case lands in the Supreme Court.

Or being part of affordable housing could actually a badge of honor and prove to be an advantage when applying to colleges.

I could go on and on with my analysis which may or may not come true. However there are two things that I know for sure. This will impact property values in Scarsdale and there will be an upward tick of white flight.