Apartments a Key Part of Neighborhood Revitalization
[This is the second post in a series about density, green space, urban design, and neighborhood revitalization. If you haven’t done so yet, I’d encourage you to click here to check out the previous post. It attracted several thoughtful comments from community members. In addition to the community comments, I’ve written around 6,000 words there between the original post and two comments. It’s worth a look. ]
In Thursday’s post, I wrote about density, green space, and neighborhood revitalization in the context of the city council’s discussion of Home Rentals’ special use permit to build a four unit apartment building on Monroe Street next to the library. I initially also planned to write a response to a statement from the library’s board of directors, but Thursday’s post was too long and I decided to separate the two posts.
Before I begin, I want to point out that I’m not picking on the library or its board of directors. I opposed the Home Rentals special use permit and, of the available options, my preference for this particular parcel is that it be donated to the library. But there was one section of the board’s statement that I’d like to address. Here’s the entire statement, which I got from the Carbondaze Gazette blog, with the part I want to respond to in bold:
The Public Library has a strong interest in the property in question; we reaffirm our opposition to the apartments and agree that the library would be willing to take stewardship of the property if, for example, it were donated to the library.”
Board members also noted that if there is to be any hope of renewal in this neighborhood we cannot have more apartments added. We talked about the fact that the property could be maintained as green space, and could possibly be used to expand library parking, as I will be seeking grant funds to make our annex building (formerly part of Brush school) a more usable and attractive space. Right now, when we have book sales in that building, or large events at the library, our parking lot is completely filled with customers.
In short, if the special use permit passes, there will be yet another apartment complex in Carbondale, where there are already more apartments than the landlords can fill. This is an historic neighborhood, and in my opinion there are better options. We, and our neighbors are very concerned that if an apartment complex is built, the property will not be well maintained. To illustrate this point, I have attached a few examples of what tends to become of Home Rentals’ property over the years.
I’ll address the first bold sentence first, then move on to the second. The board’s statement says that new apartments will prevent renewal in the neighborhood. I think the opposite is true. New apartments are a key part of neighborhood renewal in the central part of town. This, like my views on density and green space, runs contrary to conventional wisdom in Carbondale, so I will again explain at length.
Undoubtedly, many residents of the neighborhood would like to see fewer apartments and rental houses and more owner occupied single family housing. I can see why – owner occupied housing is generally better maintained and neighborhoods with a higher proportion of owner occupied housing are generally more stable than neighborhoods filled with renters. And I think there is room for some conversion of former rental houses back to owner occupied homes. But I doubt that conversion alone will be enough to solve the problem.
To explain, I’ll tell you about a building I lived in for a year. The building is on West Walnut St., in the Arbor District. It’s an old home that has been cut up into apartments. There are two one bedroom apartments on the first floor, two on the second floor, and a two bedroom apartment in the basement. I lived in a one bedroom unit and I paid $325 per month in rent. I assume that the rent was the same for all of the one bedroom apartments. I don’t know the rent on the two bedroom, so I’ll just guess that it’s $450 per month, which is at least in the ballpark. The building was fully rented when I lived there.
That means the owners were raking in around $1,750 per month from that one building. The landlord inherited the building from a parent who was also a landlord, so I feel pretty confident that the building has been paid off for many years. That means most of that $1,750 per month is profit. Sure, there are property taxes. And there are some maintenance expenses, but there can’t be many because the building is in pretty bad shape on the inside, and the outside isn’t especially great. During the time I was there, I wasn’t aware of much maintenance occurring.
Since the building is in such poor shape, it likely wouldn’t appraise for much. I guess I could go over to the courthouse and find out what the county thinks it’s worth, but I work a day job and I’m not interested in taking time off to go to Murphysboro and dig up property values. The appraised value isn’t even that important, but I’m betting it’s fairly low – say something around $100k, maybe less.
But it’s worth more than that to the owners. They’re bringing in $1,750 per month on the building. It’s an income property. If they sell it, they lose that income. That means it’s worth quite a lot to them. The chance that this building will be bought by a family interested in converting it back to a single family home is essentially zero. First, it isn’t for sale. Second, if it were for sale, it would be cost prohibitive to convert it back to single family use.
A buyer would have to pay an income property price, then pay a contractor to gut the house and essentially rebuild it. Even if it were completely rehabbed, the house would never, ever sell for enough to recoup the cost of conversion. That’s important because the person who converts a building to a single family owner occupied home might decide to leave town and wouldn’t want to take a loss. I can’t imagine that specific building ever being converted back to a single family residence.
So what will happen to it? My guess is that it will continue to decay, with the landlord making only the minimum necessary repairs. If maintenance is neglected long enough it will eventually be torn down, but that could be decades in the future. Even once it’s torn down there is no guarantee that the property would be sold for a new single family home. The price for the lot might still be too high, which has been a problem in Carbondale.
Are there other options? I think so. One option is that a future buyer (or the current owner) could redevelop the property at a higher level of density. More apartments, or more bedrooms, means more rent. That additional income might make redevelopment possible. Another option, though less likely, is redevelopment featuring the same number of apartments, but at a higher level of quality (earning more rent each month).
Redevelopment requires a developer to absorb the value of existing structures, the land they sit on, and the cost of demolition and construction (or rehabilitation). If a developer can’t earn enough income to cover these costs and make a profit, redevelopment won’t happen. Greater density helps earn the income necessary to pay for redevelopment.
The point I’m trying to make is that if we adopt a “no additional apartments” attitude, we make redevelopment of certain properties impossible, or at least much less likely. I think we’d be better off if we accepted additional apartments and focused instead on quality and target market. This brings me to the second bold sentence from the library board’s statement.
The board says Carbondale already has “more apartments than the landlords can fill.” There has definitely some increase in vacancy in the older apartments in the center of town since the newer apartments have been added on the south and southeast sides of town. I’m not sure that means we have too many apartments; it may just mean that we have the wrong type of apartments. I’ll explain.
In Carbondale, apartments are generally assumed to house students. No surprise there – we’re a university town. But not all apartments are aimed at a student market. My understanding is that the Sun Valley apartments off Striegel Road on the west side of town are mostly rented by working families. Some of the apartments on Robinson Circle are also aimed at a non-student market.
If I recall correctly, former mayor Brad Cole set a goal to increase the number of people choosing to retire to Carbondale. Maybe that goal left town with Cole but if we’re still hoping to attract retirees, nice apartments near the center of town might appeal to some of them. And don’t forget those working families who live in the Sun Valley apartments or on Robinson Circle. Some of them might be drawn to apartments in the center of town if the quality and the price were right.
With some exceptions, the only tenants available for most of the existing apartments in the center of town, many of which are dumps, are students and the very poor. Since the developments on the south and southeast sides have increased the supply of higher quality student apartments, it has become harder to rent the old dumps to students. That leaves only the very poor as potential tenants. Would we prefer to have the existing number of dumps being rented to the very poor, or a higher number of higher quality apartments being rented to a different market? I think the choice is obvious.
I’ll close with a couple of additional points. In this post, I’ve been talking about redevelopment of existing apartments. The proposed development that led me to write this post would have built new apartments on vacant land. That’s a big difference. Redeveloping slum apartments is good for the community. Adding brand new apartments without redeveloping existing slums may or may not be good.
I also think that the obstacles to conversion of old rental houses to single family housing are less troublesome than the obstacles preventing conversion of apartment buildings. A shabby rental house might earn $500 or $600 per month, while a shabby apartment building can earn in the neighborhood of $1,750. That’s why I say conversion of old rental properties is a part of the solution.
And if it becomes impossible for landlords to find tenants for their slum apartments, even among the very poor, they may start letting them go at fire sale prices. That could make conversion to single family homes possible. But I’m not sure that’s likely. During the year I spent on Walnut Street, there was no vacancy in my building or any neighboring building, and that was after the new apartments were built on the south and southeast sides of town.
I think that’s because some people prefer to live near the center of town. That’s why I chose to live on Walnut Street, even though the apartment was of lower quality than I would have preferred. That’s also why I think there is a market for higher quality apartments near the center of town.
I’d also suggest that we look to the recently adopted comprehensive plan for guidance. If you’re interested, you can click here to get to the summary page, or skip that step and click here for the full pdf. Chapter 4 deals with housing, and on page 4.3 you’ll find an interesting section about alternative housing types. Even more interesting is the suggestion on page 4.9 that we “[d]evelop a not-for-profit housing organization to act as a ‘lead agency’ in housing related initiatives and grant applications.”
I recall that back in 2009, a proposal to do exactly that was delivered to the mayor (see this link). The organization would have been called Renew Carbondale. As far as I know, the mayor didn’t do anything with that proposal. But we’ve got a new mayor and a new council. It might be time to resurrect that proposal. A “lead agency” might result in a major improvement to our housing stock. It’s certainly worth another look, especially considering the change in the city’s political leadership.
Finally, I should point out that I don’t think the kind of redevelopment I’ve described and argued for in this post is likely to happen in the near future. As long as the current landlords are making money they don’t have much incentive to change course. And any redevelopment like what I’ve described would likely encounter political resistance. Maybe things will change in the future. I hope so, and I hope the change is for the better.
Comments are welcome.