REUTERS/Jim Young

A Chicago church’s plans for affordable housing were crushed by middle-class residents scared about their home values. Would they really fall?

When low-income housing tax credits were introduced by the federal government in 1986, they incentivized private developers to build more affordable home options for families stuck with stagnant incomes. Today, the tax credits are the primary vehicle used by the feds for producing affordable housing. But they haven’t done much about the segregation of poverty and opportunity.

This week, public radio outlet WBEZ mapped the distribution of low income housing tax credits (LIHTCs) around the Chicago metro region and found that the grand bulk of them were used to build units in high-poverty areas. As late as 2009, no suburban Chicago neighborhoods with economic upward mobility had LIHTC housing developments, which are typically apartment buildings. It’s gotten a little better since then, but, as WBEZ reporter Natalie Moore writes, “there is still resistance in many communities.”

Examples of that resistance can be found in Deerfield, an incorporated village just outside the North Side of Chicago with a white population above 95 percent and a median household income of $107,194. As Moore reports, when a local church came up with a plan to build homes on its lot that would serve households making in the $45,000 range with rents around $900 month, Deerfield residents pushed back. And not nicely.

The church was planning on using LIHTCs to build the units, but many Deerfielders felt that the development would basically be a “ghetto tax” on their neighborhood.

“They will not be as stable as people who already live here,” one Deerfield resident told a local newspaper there. “When people with lower income move in others will move out. That was my experience in Chicago and that was on the Gold Coast.”

Below are a few samples of letters that other Deerfield residents sent to the church developer earlier this year explaining why they hated the plan. There is a theme among the detractors: fear of their homes losing property value.

I wanted you to know that I would appreciate it greatly if they locate the low income housing elsewhere. East Deerfield would be impacted negatively and I am sure they won’t subsidize my property taxes one bit. If this actually looks like it is going to be passed my house will go on the market before that even happens. Let’s bring in business revenue and stop subsidizing others to be in Deerfield. Low income housing does not belong on that property. Let’s do something good for the community on that property don’t hurt the residents that already live here.

Sincerely,
Michelle Cozza

This ill-conceived project on the land now occupied by the Zion Lutheran Church will spell trouble for Deerfield. The rental is below market costs and the income maximum foreshadows an influx of welfare recipients, and increase in taxes already high, and a strain on the school system. While those who propose this development may be motivated by good intentions, we must remember that “the road to Hell is paved with good intentions.”

Mr and Mrs Robert Seeley

This is a tough one, but I am very worried about property values and how it will look. … I do think low income housing will bring down our property values and I personally cannot afford that. Again, while I want to be supportive, I am going to look out for my family first.

Thank you.
Kim Gordon  

We strongly believe that the project proposed by the Zion Lutheran Church would have a negative impact on our community in the following ways:
• It will devalue the housing within Deerfield that is close to the property under consideration ...

• It will bring people into the community who normally could not afford to live here, which will create an additional burden on the taxpayers who support the services they will utilize.

Sincerely,
Dr. Evelyn Lewis

I know your busy so I'll keep it short. If this passes I'm moving out of deerfield. Thank you.
(Brad Belden)

This kind of property-value panic is a knee-jerk reaction employed when a predominantly white and wealthy neighborhood learns that it might have to entertain integration. It goes back decades, with historical precedents found right in Deerfield in the 1950s. The David Simon-produced HBO series Show Me a Hero revisits a similar fight in Yonkers, New York, throughout the 1980s and ‘90s.

In a discussion at The Urban Institute about the show, Yonkers Municipal Housing Authority executive director Joseph Shuldner addressed property-value panic syndrome, debunking it and offering a policy solution for the few who might actually experience their homes losing some worth:

I have always thought one way to address the difficulty of access to better neighborhoods is to take away one of the main arguments, which is that affordable housing will depress housing values. I can tell you that a private builder recently completed nine modular homes on Valentine, the site of one of the more vociferous opposition to the scatter site. They are selling for $650,000 each and the neighborhood seems thrilled. I would propose some reserve or guarantee that would reimburse homeowners if housing prices fell as a result of the affordable housing.

My own experience is that payouts from this fund would be few and far between.

Xavier Briggs, vice president of the Ford Foundation’s Economic Opportunity and Assets Program responded that a reserve like that would be “interesting”—within limits. But he agreed that the idea that people’s homes would suddenly depreciate because families of lower incomes moved next door was mostly myth. Wrote Briggs:

Years ago, our research team at Columbia found that even under the extreme conditions of the Yonkers conflict, the scattered-site public housing had no detectable effect on property values in surrounding neighborhoods, with the analysis carried out years after the developments were completed (in order to give us an ample "observation window"). We couldn't rule out small numbers of "panic sales," of course, if homeowners chose to flee, nor could we say that the new developments were a non-issue to every buyer in the marketplace. But you're exactly right: The overwhelming evidence is that affordable housing investments do not have negative price effects AS A RULE and can, conversely, actually upgrade some neighborhoods.  

When working at their best, these are the kinds of upgrades that LIHTCs can help facilitate. But they haven’t proven able to work to optimum effect, mainly because they’ve been used overwhelmingly to build housing in places replete with poverty. When it comes to deciding where to locate low-income housing, developers will take the paths of least resistance. Those will be in places where they’re not fought off by the kind of NIMBYism exhibited in Deerfield and Yonkers.

To read more of about the locations of LIHTC developments in Chicago, read Moore’s story and listen to her podcast below.  

It should be noted that it wasn’t all pitchforks and middle fingers in Deerfield in response to the church’s low-income-housing plans. The letters excoriating the church far outnumbered letters of support, which is why the plans were scrapped, but there were at least a few residents who understood the benefits of housing integration. Here’s one:  

Hi Dan,
I am guessing you are getting lots of negative emails about the proposed low income housing in Deerfield and I just wanted to let you know that I support it fully. Deerfield will be a stronger, better community with a more diverse population. Deerfield children will be better adults if they are exposed to the reality of inequality of opportunity. I am saddened that our community has not come out in favor of welcoming new members.
With hope, Mimi

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