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Razing Minneapolis

One afternoon a couple of months ago, a line of cars pulled up in front of the house at 3244 Chicago Avenue in south Minneapolis. A patch of day lilies was just about to bloom in front of the two-story, whitewashed stucco, built in 1901. In all, about a dozen people came to tour the house, which had been a low-income rental property for nearly a decade until the last tenant moved out in 1994. There were representatives of the mayor's office, the inspections department, the Minneapolis Public Housing Authority, the Minneapolis Community Development Agency, and Central neighborhood's housing committee. They gathered to settle a dispute that had flared up just days before when the neighborhood group learned that the house was to be sold by the MPHA to the MCDA for a dollar and then torn down. The lot would be sold to a developer, who would build a new, single-family home with a likely price tag no low-income buyer could hope to afford.

           Central's housing committee was upset--at being left out of the loop, and at the speed with which the MCDA seemed to be doing the deal. "Before we could say jack," one member says, "that great house in our neighborhood would've been ripped down and the lot cleared--snap, crackle, gone. So we sounded the alarm, got on the horn, and hauled everybody with a hand in it down for a look. We wanted proof that this house was indeed deserving of its death sentence."

           Taped onto the front window that day was a bright yellow sign: Hazard. Lead-based paint. Authorized persons only. But no one in the tour group could say whether or not the house had been legally condemned for lead contamination. Even Brian Olson couldn't remember whether his department--Environmental Health Services, which issues lead work orders--had inspected the house. And in fact, it hadn't: According to Bill Patterson at the MPHA, the agency had hung the sign after calling on a private firm to do a walk-through two years earlier. Soon afterward, the house was locked up for good. When the tour moved inside, Olson examined the windows, which are the main source of lead contamination in older houses. To his surprise, all the windows on the first floor had been treated with lead-proofing liners and painted. According to Olson, the interior of the house merited a clean bill of health.

           What the four Central residents on hand discovered inside was even more startling. Craig Anderson, who sits on the housing committee, had studied the "hit list" the MCDA had faxed over in May detailing seven about-to-be-wrecked houses in the neighborhood. Included with the addresses were rehab estimates for each house, ranging from just under $90,000 to twice that amount. In the case of 3244, the MCDA's price tag came to $97,982, or about a third more than MPHA had figured just two years earlier. Anderson thought the figure seemed wrong, so he took a slow walk through the house that day, looking for clues. The electricity was still on. The refrigerator was running. Lights worked. The furnace looked to be in operable condition. The walls and ceilings were newly treated. The floors downstairs had been refinished and were so clean you could see your reflection in the tongue-and-groove boards. For that matter, the entire place, except for an upstairs bathroom and the front porch, looked like it had already been renovated--recently.

           And for that matter, it had. According to Patterson, substantial rehab work was done just over a decade ago, with further public money spent in the past five years on cabinetry, painting, and code compliance. "Ninety-seven thousand dollars?" said Wizard Marks, another Central resident on the tour. "You must be joking. That house was just about move-in ready. We were shocked. Whoever did all the work had gone full-tilt boogie--new baseboards, new door frames. There was still masking tape up where the painting was done."

           "Those conclusions may be true," says Jerry Boardman, who directs the MCDA's housing division and who was also part of the tour. "But as far as that goes, this house in question was for us just another vacant property. Word was that 3244 had been empty a long time. And in those cases, we go in and we say, 'Hey, we've got to gut this place.' We don't care what it looks like." Vacant houses like this one are usually left to sit without heat, he adds, and in Minnesota winters that means plaster walls freeze and thaw, crack and crumble, and before you know it, they're on the floor. "That's one reason we believe it would cost too much to renovate them now--for more than they could ever sell it for on the market."

           But that kind of reasoning hasn't flown in Central. Since the first "hit list" of houses slated for demolition arrived, dozens of other properties that Public Housing is now trying to dump from its portfolio have come to the attention of neighborhoods like Central. In early June, a second memo came through identifying 40 more houses set to be transferred for a dollar to the MCDA. Just three weeks ago, an MPHA official disclosed that nearly 100 more are in the pipeline, with still others to follow. By next year, she concluded, over 150 residences that used to house low-income tenants in the inner city will have "finally outlived their usefulness." Is the MPHA still in the business of providing affordable rental housing for poor people in Minneapolis? "We are washing our hands of these properties," she said, "and will leave that call to the MCDA, the City Council, and the mayor's office. Our push now is to get, you know, poorer people into areas outside the city. I mean, places that aren't impacted."  

           More than one city official has in recent conversation--with and without irony, but always off the record--taken to calling these impacted places "hot zones." The hot zone, one might recall, was part of military parlance during the Vietnam War. It referred to villages with high concentrations of enemy sympathizers, places where "cleaning up" during a skirmish was especially risky. In Minneapolis, when those in urban planning talk about the hot zone, they are talking about the areas where high concentrations of poor people--especially minorities--live. People who are viewed, more and more, as standing in the way of progress, of making the city "viable" and "competitive" in the new economy.

           City planners have come to believe lately that social spending on the poor--particularly in the form of subsidized housing and welfare--is a big drag on the public purse: a bad fiscal investment, and therefore a bad social investment. To understand how that opinion is holding sway now, at 3244 Chicago and other public-housing properties in the hot zone, start with some background on the players and the new policies that are allowing them to shape a new city.

           In 1991, a local group called the Legal Aid Society of Minneapolis recruited 14 low-income tenants then living in Sumner Field and other public-housing projects on the city's north side to file a class-action lawsuit against HUD, which funnels millions in operation money to the MPHA every year. The MPHA, the City of Minneapolis, and the MCDA were also named as a defendants in what has become known as Hollman v. Cisneros. The gist of the complaints in Hollman was simple: The plaintiffs argued that the city of Minneapolis had habitually segregated low-income tenants in public housing ghettos in poverty-stricken or high-minority areas, thereby concentrating the poor and people of color and failing to give them "access" and "opportunities" outside the hot zone. Last April, after four years of bickering and bargaining over details, the parties came up with a 50-page out-of-court decree that solved some if not all of the grievances.

           In it, the MPHA agreed to shut down and dispose of 770 units, mainly on the north side but including dozens of other properties around town. This would be done in two phases, the first within three years, the second within five. Besides this mandated shut-down-and-sell frenzy, Hollman also required the MPHA to relocate certain tenants to "nonimpacted areas" where the poverty level is under 33.5 percent. According to Legal Aid attorneys, over 200 tenants have so far been evacuated as a result of this particular directive--often bearing rent-subsidy vouchers or certificates that landlords in the suburbs have been less than eager to accept. In the future, according to Chuck Lutz, who's in charge of the MPHA's post-Hollman doings, others may be moved into what he envisions as "residential nodes" linked to commercial strips in the city's far reaches and beyond--places apart from already-established residential areas, which would be one answer to the fuss some suburbs have raised about the resettlement of poor people in their parts. Most media publicity since Hollman came down has focused on the relocation of tenants from the Sumner Field housing projects, in part because many of the original plaintiffs in the suit lived there, and in part because the ongoing resettlement has left dozens of those tenants fed up and without affordable housing.

           What hasn't come to such public attention is the section in Hollman that falls under the heading "Deconcentration of Scattered Site Units." In it, the MPHA agreed to evaluate 129 of its 376 properties that sit in impacted areas with at least a 28.7 percent minority population. Many of these houses, according to the MPHA, were built before 1970 and likely required a good deal of "modernization," including lead abatement. They were all properties that the MPHA figured needed too much work to be worth it. The MPHA estimated that the review would cull out over 100 units located in minority-concentrated neighborhoods for "disposal." The agency consented to replace these units elsewhere, outside the zone, within two years. Moreover, HUD agreed that these tagged properties could be turned over to the MCDA or other nonprofit developers free of charge. The purpose? "To foster home ownership or similar public policies intended to ensure long term ownership of the premises and avoid the kind of absentee ownership which may lead to neglect." In all, the settlement was touted as a national model for giving "geographic choice" to public-housing tenants by spreading them out and into the suburbs.  

           In the year since Hollman came down, the MPHA has taken the decree and run with it. On the whole, the settlement is, as one city planning official said earlier this month, "really a beautiful idea"--one that dovetails nicely with the overall desire to demolish old properties in need of repair while at the same time "providing the chance to live elsewhere" to the former residents of those properties. The timing has worked out well for the MPHA, which took the liberty of calling in lead inspectors and vacating many of the houses in question while Hollman was in the works--in the expectation, says Lutz, that the final decree would call for their removal.

           Once Hollman sealed their fates, the question of what to do with all these scattered-site houses turned out to be quite easy. This spring, the MPHA decided to transfer the properties in question to an exclusive buyer: the MCDA, which is the wing of local government that shapes, funds, and oversees public development under the direction of the City Council and the mayor's office. Put simply, the MCDA carries out what local planners want. It did the deal on City Center. It was involved in Calhoun Square, Gaviidae Common, and Nicollet Island's historic-home restorations. It did the deal on Lourdes Square, a fancy condo complex on the riverfront, on the Orpheum Theatre, on the Target Center. Besides such high-visibility projects, the MCDA offers below-market-rate loans to home buyers who meet certain strict criteria. It also gives money to nonprofit developers under a program called HOPE III for the purpose of rehabbing select houses. The MCDA's funding comes from federal grants, state agencies, and some private investments; because these sources are, without dispute, dwindling and may dry up in the near future, the MCDA has been busy coming up with new ways to generate the revenue it runs on.

           One of these ways, it appears now, is by setting itself up as the sole bidder on hot zone properties the MPHA is trying to dump. By this strategy, the MCDA stands not only to profit by tearing the houses down and selling off the lots at market prices--in some cases for upwards of $15,000--but also to have a controlling say in what the map of Minneapolis will look like in the future.

           The agency's hope, of course, is that the new houses built in place of the old low-income properties will help Minneapolis become a place where, as the MCDA's manager of housing development, Earl Pettiford, puts it, "a decent person can buy real estate, build a nest egg, and have all those things they talk about on TV."

           That's not to say that most Central residents are all in favor of keeping low-income housing in the neighborhood. As a rule, they aren't. Their objection, voiced in the weeks since the Chicago Avenue tour, is that the MPHA-MCDA alliance is trying to pull a fast one, and in the MCDA's haste to get lots cleared, it has targeted valuable properties with lots of life left in them: old houses, yes, but ones the housing committee wants to save by rehabbing and selling them off to private buyers.

           "What a waste," one housing committee member said of the MCDA's plans after the tour, "and what a reckless strategy. We have always believed that the inner city doesn't have to be destroyed in order to save it. We do agree that some of these MPHA houses ought to come down. But in this grab bag, others which are perfectly sound, and which were purchased using public money, rehabbed and inspected and now scheduled to be torn down using public money, and will be replaced by new housing paid for in part by public money--those are the ones we're against losing. This search-and-destroy mission of the MCDA's is setting sights on places with a lot of public cash already poured into them. They could become great homes with a bit more work. Also, we don't believe the MCDA's estimates on rehab for them--those numbers seem designed as a big fiction."  

           That view is gaining real support around Central. Robert VanNelson, who currently sits on the housing committee, has worked off and on as a independent contractor for various St. Paul nonprofits over the years. He has, as another neighborhood resident describes it, "been around the block and across the street more than most, and knows which numbers make sense." VanNelson took a long look at the MCDA's rehab numbers on 3244 Chicago and several others on the hit list. Those estimates, he said after the tour, seemed "rather inflated." Since the MCDA didn't provide a cost breakdown for the estimates, he adds, it's hard to say "what the real narratives behind their estimates are. Without detailed specs, we can only guess. And I'd guess, from what I've seen, that the house on Chicago, and probably others like it, could be renovated and saved for a much lower price. But that possibility doesn't appear to be in keeping with the big picture."

           Part of the MCDA's high price tag seems to be a result of the funding source that the agency has chosen to base its bottom lines on. The federally funded HOPE III program has awarded tens of thousands of dollars in recent years to the MCDA to spread around among nonprofit developers for the rehabbing of properties in the city. But the answer as to whether or not this source will continue is up in the air. Another program the MCDA's used in the past, the Rehabilitation Incentive Fund, has been curtailed recently, a move that may foretell cuts in other programs like HOPE III. In the past, part of the RIF funds were earmarked for new construction in "poverty-concentrated" areas. But in a memo sent out earlier this year to prospective RIF applicants, MCDA Executive Director Rebecca Yanisch spelled out a change in that policy: Whereas last year, the agency expressed a "preference" for new construction in nonimpacted neighborhoods, this year that preference has turned into a requirement. What this means is clear enough, and in keeping with the new post-Hollman principles: When the MCDA gives out RIF money for new low-income housing from now on, it must be used outside the hot zone. Any new construction for low-income residents inside the zone must now rely on other kinds of money--which, at least in the public sector these days, is pretty scarce.

           As for rehab projects in the hot zone, some are indeed financed by both HOPE III and RIF, though those limited funds come attached to what the MCDA itself calls "pretty strict standards." Like RIF, the HOPE III standards often call for expensive and arguably unnecessary work that in turn causes the bottom line to escalate, at times wildly. These were the standards the MCDA used to assess dozens of the MPHA scattered-site houses it wants to buy. The agency has claimed that HOPE III's criteria "ties its hands in these matters" and must be followed to the letter. By that argument, what ends up happening is plain math: Take a house like 3244 Chicago. It's already been vacated, which makes it subject to even more rigid guidelines than one that's still occupied. It's been sitting empty and unheated--by the MPHA's own choice--for a couple of years. By HOPE III guidelines, mechanicals like the furnace and water heater are likely to be replaced even if they're relatively new. Same goes for a plaster ceiling and walls. According to Pettiford, roofs are always replaced. (Contractors generally agree that a well-built roof lasts for 20 to 25 years.) Windows must be double hung with storms and screens, which is a fairly rare set-up in most older houses in Central. The list goes on.

           What you end up with, says VanNelson, "is a whole bunch of often gratuitous work that just makes you shake your head. And add to that the facts behind years of rumors about rehab contractors who work on MCDA projects. It's been said often, and we've watched it in action on many older homes around here, that there's a real gravy train going on, with contractors themselves inflating their estimates. The idea, I suppose, is that the MCDA has deep pockets lined with public money, so all their bids may come in high and the MCDA has no choice but to pick one. Added up, it can make costs go right through the roof." This, combined with the HOPE III-required work, can cause estimates to come in thousands of dollars higher than actually are necessary to make a house sound. This, says Central's housing committee, is what happened at 3244 Chicago. In the end, what that bottom line does is lend weight to the MCDA's argument that the cost of renovating MPHA houses could never pay off.  

           "See, we're backed into a corner as far as flexibility on these," says the MCDA's Pettiford. It's his belief that "such high costs tell us, 'Isn't it better to just take them down and start afresh?'" Then, too, there's what around Central has come to be known as "The Liability Line." Delivered by the MCDA, it goes something like this: We must also keep in mind the possibility of being sued by those who buy houses that have passed through our hands. If something should go wrong--a wall crumbles, the furnace blows up--we're open to liability troubles. "What we want to avoid with these houses," Pettiford points out, "is any chance of that happening. If we were to rehab these houses, or pass them along to another developer to do, we may be setting ourselves up. It's something we worry about." Perhaps fueling that worry is an incident Pettiford remembers well and mentions often: a family who'd moved into a house rehabbed under the MCDA's auspices a few years ago watched the plaster ceiling cave in on their Thanksgiving turkey. Taking control of all these MPHA houses, arriving at inflated renovation estimates, and then tearing them down is a low-risk way to insure against future litigation from such episodes.

           It should be emphasized, the MCDA's concerns aside, that dozens of houses in Central have been rehabbed according to reasonable guidelines much less restrictive than HOPE III's--a source which is, again, only one option among many still available for financing.

           These litigation worries extend beyond rehabbed houses falling apart. In the past few years, the City of Minneapolis has paid out tens of thousands of dollars to settle suits brought by residents claiming to have been poisoned by lead contamination while living in both public housing and in housing owned by private landlords licensed by the city. In the aftermath of those cases, the MCDA and City Council alike have expressed great concern about the possibility of being socked again, this time by those in former MPHA houses should they be saved and sold off to private buyers. One way to avoid liability is by relying on Environmental Health Services, or the Public Housing Authority itself, to come in and condemn the places where poor people live for lead contamination--all in the name of protecting public health.

           In Minnesota, the guidelines for condemning lead-tainted properties are left up to local inspection departments to work out and implement at their own discretion. In Minneapolis, inspectors are granted the authority to condemn by handing out work orders that must be complied with by a landlord before a property can once again be occupied. In Central neighborhood, according to a survey carried out two years ago, over 70 percent of the housing stock contains lead-based paint. Not surprisingly, many of those properties are rented by poor people, and so it is poor people who often find themselves evicted as a result of lead condemnations--at a higher rate than any other tenants in the city.

           "What you've got to remember about these condemnations," says Ed Petsche, who heads up a lead-safety program on the south side and assists families who've been forced to vacate, "is that the whole process is triggered by a child becoming sick. And the children who are being screened for poisoning are, almost as a rule, kids from poorer families as part of WIC and other screenings at clinics designed to serve low-income clients. There's mandatory reporting of their results to Environmental Services--it's required.

           "So connect the dots: low-income kids are the ones who, by virtue of public health testing, are being evicted, and the houses they live in are being shut down. This should be a very last resort. It's my suspicion--and I hope it's wrong--that the city may be using these well-intentioned testing programs as a means to--how should I say it? Well, as an absurd way to displace poor families." This past February, Petsche sent out letters to lead-safety specialists in Philadelphia, Los Angeles, Albany, and other cities across the county, spelling out condemnation policies here in Minneapolis and asking them how abatement orders are handled in their areas. He got immediate responses, mainly, he says, "from people who didn't think they were reading my letter right."

           What Petsche determined, based on the information sent back by his many contacts, is that Minneapolis appears to be the only metro area in the U.S. that chooses to evict low-income families from housing tagged for lead contamination. One of those contacts, Dick Tobin, who works in Philadelphia's health department, remembers Petsche's letter well. "It was remarkable," he says, "in that Minneapolis seems to be one of the few, if not the only, cities where getting a kid testing positive for lead essentially means getting the kid's family kicked out of their home. What we've found is that when this happens, their next stop may very well be an Amana refrigerator box. That's sticky territory, so we don't do it."  

           But in Minneapolis, such evictions now seem to be commonplace. And lead-condemned houses sit by the dozens, vacant and boarded up for years, with bright yellow signs in the windows. By the time the MCDA comes in as a bidder, the condition of the properties--which have often been vandalized for salvageable parts--may be so bad that "a bottom feeder," as Pettiford has characterized his agency, is the only buyer who wants them. Even if they haven't been ransacked, the MCDA's Boardman says the agency has lately taken to stripping the lead-condemned houses it acquires of any booty that could be warehoused or sold to salvage outlets--buffets, fireplace mantles, doors, woodwork--at times, he adds, even before the places are sized up for renovation by the agency's staff.

           The most attractive deal in the MCDA's eyes these days is one with private money on the table, and which holds the promise of a cash flow into the agency. And the Greater Minneapolis Metropolitan Housing Corporation--which requires many cleared lots for its new home construction business--has become what Pettiford calls "our developer of choice" inside the hot zone. GMMHC (pronounced "gimmick") has become the city's sweetheart in part because it has private money.

           When GMMHC--the largest new home developer in the city, nonprofit or not--comes to the table, it brings along several persuasive arguments. First, it brings the promise that it will build 100 new single-family homes in the inner city annually until the year 2000, under a much touted plan called Century Homes. All these homes will sell for at least $80,000, a price tag that ensures middle-class buyers and which will add roughly $2,000 to the tax rolls each year. Second, GMMHC brings to this program a sizable pool of money donated by private corporate foundations--Cargill, Honeywell, NSP, Minnegasco, Dayton's--with no strings attached; this is a crucial point, since it means that unlike, say, Hope III-funded homes, Century Homes don't carry the condition that they be sold to low or moderate-income buyers. Anyone with enough money can move into them. Third, as an added plus, GMMHC claims that the single-family homes it builds will reduce urban crime. "If we could get crime and danger solved in this city's worst parts," GMMHC head Carolyn Olson said a few weeks ago, "a lot more people would move in and invest. Drug dealers don't like our houses. If they could be made to go away instead of just circling around, our houses--with our homeowners in them--are a way to do that." Fourth, in the big picture, GMMHC offers its owner-occupied homes as a means to help the MCDA "stabilize" impacted neighborhoods, something the Hollman decree set out as a priority. (The underlying assumption, of course, is that renters tend to "destabilize" neighborhoods.) Another appealing point, one which the MCDA likes for its income-generating possibilities, is that many buyers of GMMHC houses arrange their mortgages through the MCDA's loan department.

           In return, GMMHC asks the MCDA to match what it raises in the private sector to finance the gap between construction costs and the sale prices on its Century Homes. It's a request the agency has been eager to fill lately, given that such a deal cuts down on public spending in poor neighborhoods and invites higher-income buyers to settle in them. Although the MCDA, says Pettiford, hasn't yet studied how much the lot at 3244 Chicago might sell for, it sits on a corner across from the Laura Ingalls Wilder school, on a commuter route, and near Powderhorn Park--a prime location. A deal for a GMMHC house on this lot would be, in the MCDA's view, an investment with great return.

           The agency has come to believe, along with GMMHC, that new home construction in "impacted" areas boosts the business climate. As Pettiford sees it, "GMMHC primes the pumps" for private contractors and investors to follow, in the end "[relieving] the city of its current burdens by turning impacted areas into lucrative markets...where private builders will start coming in the door." And remember, he adds, "that when we clear vacant and boarded houses--sometimes, yes, for GMMHC construction--we're eliminating an opportunity to use them as a harbor for criminal activity. All in all, what we're doing is shifting responsibilities. It's win-win. Everybody wins."

           Everybody, that is, except those caught on scorched earth, like many of the clients of Kirk Hill at the Minnesota Tenants Union. Hill appears to be one of the last to publicly voice the idea that the MPHA-MCDA-GMMHC alliance is bent on "altering the urban landscape in radical ways, ways that should be alarming. It means to make the ground lucrative for a slew of private home-ownership deals to come charging in--to protect the upscaled downtown against 'the black threat,' to put money in the pockets of the City's friends, and to stoke a rhetoric that gives support to gutting low-income rental housing in the city. All, I might add, under cover of a great silence among those who should find this whole deal objectionable."  

           But among the most active players in city development politics--the MCDA, the developers, the neighborhood groups--the silence is understandable. What neighborhood groups in the hot zone (which are made up almost exclusively of homeowners) are hoping for is in a broad sense what the MCDA is hoping for too: more stable and affluent environs. The argument the parties are engaged in, finally, is not about whether the house at 3244 Chicago Avenue, and the dozens of others on the MPHA's dump list, should remain publicly controlled or subsidized housing for the less well-off; the argument is about who is entitled to control its privatized future. All players agree that it's not the people who once lived there. In the new Minneapolis, they figure mostly as a threat to property values.


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