Case Studies of Vouchered-Out Assisted Properties

CHAPTER 2 CASE STUDY OF WOODSONG Newport News, Virginia Prepared by Carole C. Walker, Center for Urban Policy Research Rutgers University INTRODUCTION Woodsong Apartments in Newport News, Virginia, topped HUD’s 1994 list of the 25 most troubled subsidized-housing complexes in the country. Even as preparations were being made to tear it down three years later, Woodsong was used to illustrate the deplorable conditions of properties allowed to decay while their landlords profited from government subsidies. At a press conference announcing a crackdown on such landlords, HUD Secretary Andrew Cuomo and Attorney General Janet Reno stood next to a photograph of a Woodsong apartment.1 The 480-unit development, originally built as market housing targeted to shipyard workers, was a low-rise complex sprawling across 26 acres in a modest residential area. When the vouchering out began in early summer 1995, deterioration had taken its toll: nearly 100 units stood empty. The HUD Field Office in Richmond requested 387 vouchers for the families remaining at the site, and by the end of the year, all but a handful had moved out, about half to nearby neighborhoods and the rest scattering throughout the city and into the neighboring town of Hampton. CONTEXT Geography of the Region Newport News, Virginia, is part of the sprawling Hampton Roads metropolitan area which covers almost 1,700 square miles and includes nine independent cities (Norfolk and Virginia Beach among them) and six counties. (See Figure 2.1.) Situated on both sides of one of the great natural harbors of the world, Hampton Roads is comprised of two distinct parts: “the Peninsula” on the northern side of the water and “Southside” on the south.2 Newport News, a long narrow city, stretches about 20 miles along the southwestern side of the Peninsula. The city of Hampton occupies the lower part of the Peninsula to the east. 1The photograph of Woodsong was selected for the press conference, said HUD spokesman Victor Lambert, because it “dramatized the extent of the issue.” 2Some use the term “Hampton Roads” for the southern side of the harbor only. 2-1 2-2 Containing 69 square miles, Newport News is one of the larger cities in the state in land area. Its consolidation with the city of Warwick in 1958 combined the older downtown central city of Newport News with the largely undeveloped land to the northwest. During the mid-1980s, this area was the scene of a high volume of non residential and residential development as new shopping malls, industrial parks, and office parks burgeoned in Newport News. These developments, however, drained the southern end of the city, known as “the East End,” of much of its commercial activity— leaving behind a concentration of low-income, minority residents, living in assisted housing units. Woodsong is located in the northwestern part of the East End. Demographics The population of Newport News grew from 144,903 in 1980 to 170,045 in 1990, an increase of 17 percent. Despite this growth, the ethnic composition of Newport News changed only slightly over the decade; the proportion of blacks rose from 31.6 percent to 33.6 percent, while the proportion of whites fell from 66.2 to 62.6 percent. In the neighboring town of Hampton, the proportion of blacks rose slightly more, from 34.3 to 38.9 percent during the decade, while that of whites fell from 64.1 to 58.4 percent. When it came time for the vouchered-out residents in Newport News to choose where they would move, the similarity in the racial composition of the neighboring town of Hampton made it a comfortable choice. Socioeconomic Factors The regional economy is heavily oriented to military activity and the defense industry (Kenney 1994). There are 15 military bases in the area, including the largest naval base in the world, located in Norfolk, and Newport News is also home to the largest private shipbuilder in the country, Newport News Shipbuilding, founded in 1886. Local officials are trying to diversify the economy, promoting the area as a tourist destination and seeking to attract high-tech companies to new industrial parks. The city of Newport News has eight industrial parks, and its northwestern end is home to such high-tech facilities as Canon Virginia, Siemens Automotive, and the Continuous Electron Beam Accelerator Facility (CEBAF), which does physics research. The economy is expected to continue to grow slowly over the next few years at the rate of about 1 percent per year (Kenney 1994; USHUD 1994). Newport News has ample room for more development. The boundary line between Newport News and the neighboring town of Hampton is indistinguishable, but there is a local perception, expressed by a number of people interviewed for the vouchering-out study, that a move to Hampton constitutes “a step up.” Although the unemployment rate reported in the 1990 census for the two cities was comparable (6.5 percent for Newport News and 6.8 percent for Hampton), the median income was higher in Hampton than in Newport News ($30,144 versus $27,469) and the share of families below the poverty level was higher in Newport News, 12.2 percent compared to 8.8 percent in Hampton. The difference between the female-headed families below the poverty level in the two cities was even more striking; 43.8 percent of these 2-3 families in Newport News were below the poverty level, compared to 32.5 percent in Hampton (U.S. Census 1992). Hampton’s appeal is also bolstered by the amount of AFDC (Aid to Families with Dependent Children) assistance it grants to families. Despite their close proximity and use of the same shopping facilities, families receive more assistance in Hampton than in Newport News because the state categorizes localities according to shelter costs. Newport News is a Group II city; Hampton is a Group III city. The AFDC payment standard for a three-person household is $354 in Hampton, compared to only $291 in Newport News; for a four-person household, it is $410 compared to $347 in Newport News. Staff at the Hampton Redevelopment and Housing Authority confirmed that people are very aware of the difference in AFDC payment standards between the two cities, and they believe that the city’s Group III classification is a major consideration for people coming to the Authority seeking housing (Hampton Redevelopment and Housing Authority 1996).3 LOCAL HOUSING MARKET CONDITIONS Affordability Vacancy rates in 1990 were 9.1 percent in Newport News, 9 percent in Hampton, and 9.4 percent in the MSA (U.S. Bureau of the Census 1992). By 1995, when most of the Woodsong residents were looking for housing, the vacancy rate in Newport News and Hampton had declined to about 7.5 percent.4 The vacancy rate was not uniform across rent levels, however. In Newport News the vacancy rate is generally higher for the low end of the rental market and lower in the more expensive complexes (Kenney 1994),5 which tend to be the newer developments built during the 1980s boom in the northern section of the city. At the time the vouchering-out process began, HUD’s Richmond economist found a large surplus of apartments priced under $300 a month, many originally built as wartime housing or for the shipyard workers in the East End section of the city, where Woodsong is located. In fact, the median contract rent in 1990 for an apartment in this section of the city was $248—one-third below the city median ($369) (Kenney 1994). The average gross rent (which includes utilities) in 1990 was $439. The payment standards for vouchers are set by local housing authorities based on the prevailing Fair Market Rents (FMRs) for the area in effect at the time the payment 3The term “magnet effect” has been used in regard to interstate relocations intended to take advantage of attractive public programs in destination states. See Thomas Corbett, “The New Federalism: Monitoring Consequences,” Focus 18, 1 Special Issue (1996), p. 4. 4 According to the Richmond HUD economist, the vacancy rate had declined to about 6 percent by mid 1996 (Kenney 1996). Based on its survey of selected apartment projects, the Peninsula Apartment Council of the Peninsula Housing and Builders Association estimated the vacancy rate at about 3 percent in mid 1996. 5The Peninsula Apartment Council’s survey finds the opposite, however—that is, a higher vacancy rate in market rate projects, and a lower vacancy rate in below-market projects. The Council survey is limited to a selected group of developments; it does not include the entire rental housing stock. 2-4 standards are adopted.6 As shown in Table 2.1, slightly higher payments were adopted in Newport News than in Hampton for most unit sizes, except for a four-bedroom unit, where the payment jumped to about $100 more in Newport News than in Hampton. The payment standards appear adequate. For example, payment standards of $437 (in Newport News) and $425 (in Hampton) seem sufficient for a two-bedroom apartment in this area, where the typical unit of that size rents for between $400 and $450 (Schrader 1996a; Kenney 1996). TABLE 2.1 FMRs and Voucher Payment Standards by Unit Size and Year Newport News and Hampton, Virginia Unit Size Payment Standard and Year FMRs Newport News Hampton 1995 1 bedroom $443 $379 $369 2 bedrooms $526 $437 $425 3 bedrooms $733 $538 $523 4 bedrooms $860 $680 $585 1996 1 bedroom $457 $379 $369 2 bedrooms $542 $437 $425 3 bedrooms $756 $538 $523 4 bedrooms $887 $680 $585 Source: Newport News Redevelopment and Housing Authority, 1996, 1997; Richmond HUD Field Office, 1996; Hampton Redevelopment and Housing Authority, 1997.

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