By Robert Field, Publisher and Builder / Developer
This is a follow up to NewsLanc’s “Housing Shortage threatens economy” misses an important point.
NewsLanc recommended an alternative approach for addressing some the city’s, region’s and nation’s housing problems.
Why do we presume to know better than others? During the 1970’s, 1980’s and 1990’s we built fifteen large rental apartment complexes and several for-sale townhouse developments. In the 1990’s we consulted with son Richard in planning a ‘mixed use’ community of over two thousand homes and other developments in Hungary and Croatia. We continue to manage apartment complexes and hotels.
In the 1970’s and 80’s, when we were developing three apartment complexes totaling about 750 apartments in WV, all built with our own equity and conventional financing, the federal and state governments were heavily subsidizing apartment construction across the state. It amazed us that we were able to deliver ‘luxury’ units with full complex amenities at perhaps 70% of the overall cost of the heavily subsidized complexes with their smaller size units and lack of features and amenities.
We also ventured into the hotel / motel business, with some successes and, over time, also problems. If a hotel / motel can achieve over 70% occupancy at market rates, it is likely to be very profitable. Below 60%, it bleeds money. At 50%, it hemorrhages!
We have previously written about how, over past decades, we were twice approached to purchase the former Brunswick Hotel. Both times we said, with all sincerity, that we would not pay a dollar for it due to local market conditions. Investors seek ‘cash cows’, not ‘white elephants.’
We continue to manage our portfolio of apartment complexes and hotels.
Our experience and observations lead us to the following:
1) There must be at least 250 and likely as many as 400 relatively attractive garden apartments units vacant in the greater Lancaster area at all times. If the federal government funded and state administered Section 8 rental program allowed the tenant to supplement the government grant so that rental payments were closer to market rates, landlords would be motivated to quickly make vacant apartments available to hundreds of deserving families.
The federal government should stop wasting tax money to spur extravagantly expensive housing that serves the very few and turn those dollars into bigger block grants to states for Section 8.
2) Several distressed motels in the region have sold for $20,000 a room, furnishings included. Others have been torn down. One or two unsuccessful motels could be either contracted or leased out, or even acquired, to provide adequate housing for the functional homeless. There are funds provided from government programs for housing the homeless.
3) With a nationwide trend of ’empty nesters’ and young professionals moving back to downtown areas, the city leadership should have encouraged the development of the Watt and Shand site for condominiums rather than a hotel and convention center. More recently, the city should have led an effort to acquire the former Brunswick Hotel, its annex, and the in bankruptcy Bulova Building, then razed the entire block of Lancaster Square East apart from the parking garage, and subsequently sold off the property to developers of condominium housing. (Recently the first new residential condominium for downtown had virtually sold out long before completion.) Overall, this might not have cost the taxpayers a nickle.
4) Proper development downtown, for example by building condominiums with ground floor shops on the now vacant LNP printing press building on South Queen Street across from the Convention Center, would bring pedestrian traffic to that now largely deserted block. This in itself would make the next block south a prime location for more condominiums. Instead of having to pay huge government subsidies to try to upgrade the block, private investors would do the job on their own dime.
5) Just as we need to have cross-municipality police forces and fire departments as circumstances warrant, we need to have cross-municipality cooperation in providing housing for the disadvantaged and impoverished. (Although there is a County Planning Authority, it has little power.) For example, a motel ideal for serving the homeless may be just outside city limits in Manheim Township. (Remember the 200 units former Host / Days Inn adjoining the Amtrak station to the north?) National studies indicate there is much poverty in the suburbs and rural areas.
6) The state sponsored CRIZ program is one of the dumbest follies ever to be perpetrated on the public, amounting to turning over decades of tax revenue that would be earned from future improvements to current private interests for their enrichment. We will discuss the craziness of the CRIZ program in a future series that will take a couple months to have professionally authenticated.
Interestingly, most informed civic leaders know this, but demur from saying so. Typical Lancaster!
We recognize there are major obstacles to bringing about the above proposed changes in public practices. But before we can tackle these challenges, we must first understand what it is we need to do.