Cleaning Up the Park

Two months ago, the city of Brooklyn Park sent Victoria Hughes a letter saying it was going to tear down her apartment complex, the Courtyard. She and her two daughters would have to be out by August 1. No problem, though: There would be help with finding a place, moving, even a rent subsidy.

Since then Hughes says she's looked at every apartment on the list a rental counselor gave her and was turned down each time by rental agents who said her income had to be at least twice the rent. Her plight isn't unique. Enough of her fellow Courtyard tenants have called an emergency line run by Community Action of Suburban Hennepin (CASH) that the agency instituted a standard policy of referring them to Legal Aid. Attorneys say they're investigating the cases.

What worries Legal Aid and other low-income housing advocates isn't so much the Courtyard demolition--which by itself will knock down 126 largely sound, affordable apartments--but the fact that it is only the beginning of a much larger project in Brooklyn Park. By the time the city is done, close to 500 apartments could be eradicated from an already tight low-income housing market. Many more, thanks to refurbishment programs, would have substantially higher rents. And it would all be paid for with a newfangled form of public subsidy.

Stuck between the core city and more geographically and economically insulated suburbs like Maple Grove, Brooklyn Park has been working hard lately to reinvent itself. The suburb got caught up in a crime-and-property-values panic a few years ago and responded with the kind of multi-pronged strategy that's gotten popular in lots of places--more cops, new housing regulations, and public-private partnerships to redevelop commercial areas.

All this time, officials were pretty open about what they deemed the chief source of many of their problems: the comparatively low-rent apartment complexes built with city encouragement in the 1960s and '70s. Some of them had high vacancy rates; some were badly managed; most had rents low enough to attract people working the growing number of suburban poverty-level jobs. Not coincidentally, Brooklyn Park's minority population doubled in the 1980s, and most of the increase came from what city documents refer to as "densely populated" Zane Avenue, which features a corridor of rental complexes. Getting rid of some of that density became a top city priority.

Demolishing or rehabbing apartments costs money, and Brooklyn Park has always been a master at tax-increment financing. But TIF--which works by calculating how much more in taxes, say, a new office tower will bring in over an aging warehouse, and then borrowing money against those future revenues--didn't work too well for this kind of project. Sixties-vintage apartment buildings in Brooklyn Park are only worth so much; even with rehab, says city Deputy Community Development Director Scott Clark, their value wouldn't rise enough to cover the cost.

So Brooklyn Park came up with a novel idea. It would base its tax-increment calculations on value added over and above the value of the land only, which meant that just about any improvement to already existing buildings would constitute a big increase. That accounting trick required special approval from the Legislature, which this spring passed a bill establishing a "distressed housing district" in Brooklyn Park. "District" in this case didn't refer to a particular or contiguous parcel, but a collection of properties anywhere in the city with no geographic constraint; "distressed housing" meant not deteriorating buildings but simply any complex whose property value had declined more than 20 percent, or which had had high vacancy rates, over the past five years.

So far, only the Courtyard has been officially certified as part of the new TIF district. But a report the city submitted to the Legislature names four more targets, including Century Court, the 1,140-unit complex once owned by Marvin Wolfenson and Harvey Ratner of Target Center/Timberwolves fame. In all, close to 500 units (350 of them in Century Court alone) could be demolished under the plan, and almost 1,200 more would undergo "extensive rehab." And that's on top of five smaller rehab-and-demolition projects Brooklyn Park financed by itself, before the new TIF mechanism went through. (One building, according to a city document, was thus turned from "a prime environment for criminal behavior into a docile seniors complex.")

Clark says the city hasn't figured out how much the whole project is going to cost. At an estimated $16,000 per unit for rehabs, and up to $30,000 for demolition, the total should run upwards of $30 million. Most of that money is supposed to come from increased rents at the refurbished apartments, some of which would look out over newly created green space. Clark says all the units are expected to remain "affordable" by a loose Met Council standard that allows rents of up to almost $1,100.

For Brooklyn Park, says Clark, the project is a bottom-line necessity. "When you have a devaluation of buildings that continues, that can lead to increasing public-safety issues, and it can bleed over into other areas of the city. It can affect your community from a perception basis." Suburban housing advocates have a blunter assessment, though most are loath to voice it openly. "The city has a long history of trying to get rid of black people and poor people," says one, who refuses to be identified. "They've been doing it through the landlords and the police for a while. Now they're just taking away the housing."

Whatever the reason, chances are minimum-wage earners and others near the poverty line will find it harder to get a place to live in Brooklyn Park--and elsewhere, if the method catches on. Over the last few years officials in metro-area cities have been watching the statistics that show how much affordable housing each of them has: In 1995 Brooklyn Park, with some 24 percent of its units counted as affordable, sat right near the metro average. Minneapolis had 43 percent affordable units, and Minnetonka 6 percent. And while there's been much debate about encouraging places like Minnetonka to bring their numbers up, little has been made of the other possibility--that places like Brooklyn Park and Minneapolis could start bringing theirs down.

The latter scenario became quite a bit more likely when the Legislature approved Brooklyn Park's novel tax-increment financing scheme. All of a sudden, notes Drew Osterud of the Legal Services Advocacy Project, cities had a legal precedent for using a whole new set of accounting fictions: pretending that certain buildings didn't exist, and using that assumption to raise money to take them down. "Our greatest concern is what happens if this mechanism is going to be transferred to Minneapolis and St. Paul," she says. "It's a very attractive way for the city to come up with some more money. And we know they have lots of low-income buildings they'd like to get rid of."

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