The deal finally reached in mid-January in which the city agreed to buy Laurel Park, an old, severely deteriorated and obsolete public housing development, for nearly $4.5-million has an anti-climatic feel to it, if not a sense of deja vu. After all, the city and the Housing Authority had been negotiating the sale for 19 months and had reached an earlier, well-publicized purchase agreement in August 1989. Most people always had viewed the sale as inevitable. Besides, the Chicago White Sox, who nearly became the Florida White Sox in the spring of 1988, had conditioned their move upon the city providing an additional 1,500 stadium parking spaces. Laurel Park was conveniently located right across the street. Its dimensions were just right for about 1,500 more parking spaces. Who could resist such a natural deal?
On the surface, it would be a "win-win situation." The city would get needed stadium parking. The marketability of stadium events would be enhanced by not having a problematic public housing site directly across the street. Laurel Park residents would be relocated to better quality housing, and the Housing Authority would trade Laurel Park, an obsolete, crime-plagued and sometimes unmanageable public housing site, for 168 new apartments.
The sale also was described as a perfect match and a "marriage made in bureaucratic heaven," wherever that is.
So why did it take 19 months and two agreements before everyone felt good about the "match made in heaven"?
From the onset, the chief stumbling block was money. Or maybe the lack of it.
Meaningful talks between the city and the authority started in June 1988 following publication of the details of a previously secret contract between the White Sox and the city that had included a commitment, never discused with the authority, to develop additional stadium parking at the Laurel Park site.
But from June 1988 to March 1989, the city's bargaining position was that the Laurel Park sale should be at a nominal value. The city thought the only compensation the authority needed was to rid itself of Laurel Park and to substitute 168 new units.
In fact, HUD regulations governing the sale of public housing sites require that such sales be at fair market values.
Besides, the authority's bargaining position was that the sale would have to produce enough revenue to cover costs associated with relocating Laurel Park residents, offset the projected operating losses that would occur as a result of a sale, and protect the integrity of the community's low-income housing supply. Those objectives would cost millions of dollars to implement.
By far, the most important goal was to maintain the low-income housing supply. A word or two about that is warranted because achieving that objective will consume the tiger's share of the $4.485-million sale price and is an element of the sale that is not generally well understood.
On the surface, the sale of Laurel Park will have no impact on the overall low-income housing supply. In fact, the Department of Housing and Urban Development (HUD) will fully finance 168 replacement housing units.
Unfortunately, it takes a minimum of three to five years to process new units through HUD's complex network of development regulations.
Thus, in the short run, the supply of low-income housing would drop if Laurel Park is destroyed.
This point is particularly critical because what we are dealing with is effective supply, not total supply. The St. Petersburg Housing Authority administers nearly 3,100 units of subsidy, but only a few hundred units are available for the 2,000-plus needy on the waiting list each year because demand is so strong that very few units are available for new occupancy.
The loss of the 168 units represented by Laurel Park's sale would have been doubled when you take into account that another 168 units of subsidy would have to be allocated so the current Laurel Park residents can be relocated.
If the authority were to simply wait for the HUD-financed replacement housing units, there would be no housing subsidy left for needy families already on the waiting list.
The deal finally reached will allow the authority to use at least
$3.5-million, leveraged by low-income housing tax credits, state low-income housing construction subsidies and by debt financing to build more than 100 low-income units immediately.
In fact, the sales contract agreement reached by the authority and the city in August provided enough money to cover the cost of relocation, meeting expected operating losses and to build what we have termed "immediate replacement housing" to protect the integrity of the low-income housing supply.
Unfortunately, that agreement had to be scuttled when HUD approved the disposition of Laurel Park, but conditioned its approval upon the Housing Authority turning over all of the net proceeds to the federal government for no apparent reason except to embellish the federal treasury.
That wholly unexpected decision by HUD would have left no money for relocation costs, projected authority operating losses, or to build new housing now to avoid the consequences of lowering the community's low-income inventory for several years.
Assistant Secretary Joseph Schiff, a bright and flexible HUD administrator, agreed with the Housing Authority's petition that explained that the negotiations between the city and the authority had been predicated upon the sale proceeds remaining in the local community and that applicable law, HUD regulations and existing precedent all argued for allowing the funds to remain with the authority.
Schiff's sensitivity paved the way for the city and the authority to reconstruct an agreement substantially similar to the August 1989 deal.
In my view, we really do have a "win-win deal" now. The city will get the additional parking it desperately needs to attract a major league baseball franchise; Laurel Park residents will be offered Section 8 Existing Housing certificates and/or housing vouchers that will allow them to rent housing of their choice in the private market and continue to pay affordable rents; and the authority will form new partnerships with interested private investors to buy both 100-plus non-federally assisted low-income units and ultimately 168 federally assisted low-income units. In the long run, the city's low-income
housing supply will be improved and increased because of the greater than 1-1 replacement housing ratio.
The new deal to sell Laurel Park is a victory for stadium interests and is a victory for Laurel Park residents; but it is a much-needed triumph for low-income housing.
Edward White Jr. is director of the St. Petersburg Housing Authority.
My View columnists, invited to contribute on a regular basis, write their own views on subjects they choose.