interviews
Land, Money, Power
by Jake Virden
August 4, 2020
This interview with Jake Virden, host of the Money. Power. Land. Solidarity. podcast, was conducted and condensed by franknews.
frank | Tell me about yourself.
Jake | I'm an artist, and I like to say I strive to be a practitioner of popular education.
I came to my thinking around the issues that I explore in my podcast - economic development, public policy, race, class, wealth, and culture - really through my own experience in seeing the effects of relative poverty. I'm a first-generation college student. I have had family members incarcerated. Both my parents are recovering addicts. They got sober when my brothers and I were younger and were just really hard-working people, they both worked multiple jobs my whole life. I'm still a working-class person. I have a college degree, but I got hella student loan debt. It's weird because, in some ways, I'm class mobile, I have a lot of privileges that my parents and people in my life didn't have, but, with student loan debt, I'm probably poorer than my parents were at my age.
I think a big piece of the story that connects with the podcast is the neighborhood I grew up in. Historically, it was a violently racist neighborhood, predominately made up of European immigrants. I think the word to describe it would almost be apartheid. When we were coming up, certain parts of Northeast were then considered racially concentrated areas of poverty - mostly Black, central American immigrants, or African immigrants. There used to be a joke in my neighborhood growing up - “What's the longest bridge in the world? The Lowery bridge - it connects Poland to Africa.” The Lowry Bridge on the Mississippi River separates Northeast from North Minneapolis. The Mississippi River cuts through the whole city. It comes North into the city, cuts through downtown, and flows out the Southside. The geography of my life is really central to my thinking.
South Minneapolis is a protected area. There's no industry on the south side riverfront. It's a beautiful river gore, just all protected Parkland. On the Northeast and the Northside, it's all a toxic industry. Some of the most toxic industrial sites in the country are on that industrial riverfront there's the Northern Metals Recycling plant. There's the GAF Shingles factory.
The Northeast is now one of the most heavily gentrified areas in the city. It went from this poor and working-class neighborhood to an arts district of sorts. It's one of the hippest parts of town. I can't afford to live in most of Northeast Minneapolis anymore. And the Riverfront development is really what kicked that off.
There's this establishment that used to be called Gabby’s. It was a real working-class bar and one of the few interracial bars Northeast. A lot of people would probably consider it a Black bar since it was known for having one of the few hip hop nights in that side of town, which was always controversial to the racists in the neighborhood. It was bought up and flipped into this touristy hipster bar called Psycho Suzie's, which was themed and had all these weird tropical drinks. That was like really jarring to us, when we first started to see like, damn this really ain't our neighborhood anymore. It's weird to use possessive language, but that is how it felt.
You mentioned the Riverfront development. I want to start with the Upper Harbor Terminal Development and why it's important to your work, and how it serves to illuminate other crises in Minneapolis.
I think it's important for people to understand the base elements of the project. The Upper Harbor Terminal Development is situated on 48 acres of land that's publicly owned by the city. It is in North Minneapolis, a community that's impoverished and oppressed, a community with some of the worst quality of life metrics of any area across the country, a community with high degrees of poverty and environmental racism. In every way, it is what one would imagine of the inner city poverty in America to be like.
The city has say over what happens there, so theoretically the use of the land should be democratically decided, but the city gave the Pohlad family, the wealthiest white people in the state, exclusive rights agreement to develop this land.
Simply off of principle, it is offensive that the city would take 48 acres of riverfront land owned by the city and turn it over to already wealthy white people.
If you were serious about improving the lives of working-class people, building wealth for Black people, or any of the other goals that the so-called “progressive” leaders of Minneapolis pay lip service to, you obviously wouldn't do that. It just shows that that's just how capitalism functions. Private wealth has turned our public wealth over to private hands. And only those who already control wealth and power have privileged access to that land.
I think this development is a really important case study. It is so clearly the way that the economy of Minneapolis has been tilted and organized. It's handing over public land to wealthy people developments that cater to a wealthier class. It's really a good microcosm of the ideology of development that's gentrified Minneapolis. It's egregious and so obvious. Another reason we’re pointing to it is that there's still some chance we could stop it. It's not much of a chance, but we've caused a lot of disruption and have been able to extract some concessions from them.
Is there any compelling argument from the city about the sale of that land? Are they saying the city needs the funds for something specific?
No, not really. The thing is, they don't even really feel that they have to justify it. Before us and a few other people started to raise awareness about it, it was just accepted as business as usual.
I mean, the political life in Minneapolis is so oppressive that the majority of people don't even know this is happening.
It makes a little bit of money short term for the city, but not a lot. I think that the city's argument would be that by developing this land, the property tax revenue increases, which is the city's main economic engine. But that is not the only way to run the city, and that's one of the bigger ideological points that we try to press in our podcast, that this is the neoliberal, capitalist way to run the city.
It means that poor people, working-class people, are rendered a surplus population.
Our city's motto of economic development is based on a logic that says, if you don't raise the property values, if you can't pay the high rent, if you're not propertied in that way, you're taking up space in the city. They want to replace you with people who can pay more. And that's really what happened in Northeast. I watched as so much of the community that I was raised with, got pushed out to the Northern suburbs because they couldn't afford the rent or couldn't afford their mortgages and got foreclosed on. And that's the logic of this development.
And what do we get in return? They want to build an outdoor amphitheater that'll hold seven to 10,000 people. That's a few service industry jobs. A hotel. Again, that's a few service industry jobs. But mostly, they are talking about things that are going to dramatically boost the property values in that area and price people out.
One of the ways new developments always seem to be pitched, to soften the blow, is through the promise of housing – can you talk about what the Upper Harbor Terminals plan is around housing?
It is still unclear exactly what they want to build, but they are proposing building largely market-rate housing and then a few buildings that are "affordable" housing. I don't like to phrase it that way but that is how it is marketed. “Affordable” housing basically means buildings that are mixed-income. For example, 60% of the units will be priced at market rate, and then maybe 40% of units in a building qualify to be financed with low-income housing tax credits or TIF financing.
Low-income housing tax credits are actually a fatal flaw in the “affordable housing” model. The city gives the developer tax credits that allow them not to pay taxes for 15 years on capital gains.
Often the developer sells them to a bank to get funding, meaning the bank profits off of these tax credits. After 15 years, the bank loses the tax credits and loses the incentive to provide affordable housing.
In Minneapolis in the 1990s, they privatized a lot of public housing and built these new mixed-income developments financed with tax credits. But all those developments are hitting their tax credit marker, and these formerly affordable units now are coming onto the market as market-rate units, furthering the gentrification in the city, and furthering displacement. Capital has long term thinking, and the developers definitely planned this - it is the exact same thing with the affordable units that they're proposing at the Upper Harbor Terminal - any “affordable” units are only affordable for a short period of time.
What is the difference between affordable housing and public housing?
Public housing is a socialist vision that says housing is a human right. We shouldn't be turning public land over to a private developer, and then subsidizing that private developers profit when they say that they can't charge lower rent. Public housing means that the city itself owns the land, the city builds the building, hires the contractors, and keeps the homes under public ownership so that they can rent them at a much lower rate. That's public housing.
“Affordable” housing is a scheme that gives public money to private developers so that they can offer the units at a slightly reduced rate. The developer is in it for private profit, so that all of their calculations assume that they're going to be pulling profit from the rent of this land. That's like the basis of capitalism, and we want to use this example to highlight the inefficiency, and really the cruelty of capitalism.
It also highlights the stereotypes around public housing.
Absolutely. It's complicated because the history of public housing is so fraught in America and in Minneapolis in particular. Our public housing system here was always attacked and set up to fail from the start, the real estate industry didn't want it to thrive, but it's possible.
There's a real hunger for a new vision. I tend to say social housing as opposed to public housing, just to try to break people's stereotypes. It's a falsified image that all public housing in the United States has been negative or bad or unsafe. There's been a lot of success with public housing, but still, when you say public housing, you get this image of Cabrini–Green.
I've been studying international examples of social housing. It's mixed-income in the sense that they have tiered rents in public housing buildings - higher rants for higher-income people in the same complex that has really low rents for very poor people. As opposed to America, where a lot of times public housing is concentrated in poverty where you have to be very poor to live in it. That doesn't have to be the case. With season two of the podcast, we are hoping to get more into some of those examples and encourage some more creative thinking around public housing,
It's really easy to overcomplicate urban planning. It's so helpful to hear this from your perspective, in your voice.
I think that's both intentional and a product of the orthodoxy of the field - like you couldn't possibly understand what's going on here without a PhD or a Masters degree. I'm like, well, actually I can. I see the land, and I see who you're selling it to. It's not that hard.
So often we're excluded. A lot of times I had to ask myself after a meeting, like, damn, am I rude because of the way I speak, did I embarrass myself in there because I got passionate and the volume of my voice raised, or I started speaking fast or I got upset and angry?
It's realizing that it's a process of not buying into this idea that you're supposed to be dispassionate or that it's some kind of neutral academic conversation. This is people's lives.
So I appreciate you saying that, honestly, it's been a big politicizing moment for me. Our big motivation behind doing the podcast is to break these conversations out of that stifled space.
I noticed a few days ago the Minneapolis City Council voted on cutting $1.5 million from the police budget...
Which is not even 1%.
So presumably that means not much is changing. I am curious about your thoughts about how policing accompanies new private real estate developments.
Sometimes people just ignore the very obvious, which is that if your strategy for economic development is to court more rich, wealthy people into the city, those rich wealthy people want protection from the poor people who live there, especially if you add the race element to it.
I experienced it first hand. When they gentrified Northeast Minneapolis, the city pushed this big campaign that was calling for 50 more cops. They tore down this old strip mall where we used to do our grocery shopping called East Gate and built a high-end grocery store there, and right there in that building, they put a new precinct substation.
These were my college years, and even with the white privilege I have, I was brutalized by the police several times. I was pulled out of the car and assaulted by a police officer. He squeezed my testicles, put me in jail. It was me and my younger brother. They had probably like six guns trained on us just for driving down the block. I remember another time I was walking on the block, a police officer drove his car onto the sidewalk, hopped out, slammed me against the car, took my wallet, found my ID, and threw all my stuff on the ground. He didn't say anything, got back in his car, and made me pick up all this stuff.
And at the time that was just kind of the way we thought police acted, which is true, it is the way they acted, but now I understand that it was also because that strip of land was being cleared, it was being hyper policed. United Properties, the company that is doing the Upper Harbor Terminal, has been among the loudest on the Downtown Improvement Council that is calling for more cops. They do this because they want to make downtown safe for all the new white people.
There's a corresponding relationship between new market-rate housing developments, the aggressive marketing of the city to these new professionals, and an increase in the police budget. Those two things go hand in hand.
Right.
Jacob Frye, the mayor, is a gentrification mayor. He ran on market-rate housing, density, and he was the one proposing these huge increases to the police budget. You can't have a gentrification ideology and an anti-police ideology, because how else are you going to clear all the poor Black people and all the poor people that you don't want in the city anymore? How are you going to police them other than violent policing?
The corner of 38th and Chicago, where George Floyd was killed, is a really contested corner in the battle against gentrification.
38th and Chicago is historically the heart of Black Minneapolis.
There are battles over increasing gentrification - there is a new coffee shop that just went up across the street, and there's a new co-op that just went in a few blocks down. You think about this police officer pulling up and murdering this man in broad daylight, in that context, and you realize it's absolutely connected to the attempts to seize that corner for the newer, whiter, wealthier Minneapolis. It's intricately linked.
Where there is development, there is increased police presence - that's just the logic of capitalism. We can't let “defund the police” become a flat slogan. It has to be combined with investment in public housing, with public health infrastructure, with investment in our schools and with real cooperative business enterprise. I've been a bit frustrated, in trying to provide some depth to the calls for defunding the police. Yes, defund the police, but also reinvest in changing the conditions you want to change.
The reality is the only economy for a lot of poor people in Minneapolis is drugs and sex work, and the same conditions that pop up in any poor community. It's not just that there's evil, racist, Nazi police. There are evil, racist, Nazi police, but they are enforcing a social order, which deems poor people expendable and puts investment into these businesses that serve a certain fragment of the population.
One point I think you made so well in your episode titled Poor People and Beautiful Things, is your critique of gentrification. That it’s not that you want everything to remain the same, but that you want to see this money go to reinvestment in structures that assist working people.
Thanks for saying that that's really affirming. That's like one of my favorite episodes.
For me, it is about realizing that our lack of political imagination is the result of political repression.
We don't really have any socialist vision - either it is poverty or gentrification, there is no alternative. We fail to imagine actual wealth building and community development and thriving working-class communities. So it's about trying to ask if this dichotomy needs to exist - if nice things come, do we have to be pushed out somewhere else?
I think the question of how to grow economies locally is a really difficult one, and I think you are right that it will require a new political imagination.
I think it goes back to top-down planning versus the bottom-up planning. Obviously what I'd like to see is like bottom-up change and a real grassroots movement, but I think what we need is a coherent political organization that can operate on both ends. We need professionals, planners, politicians - people who can operate seats of power, but in favor or in the service of a socialist vision, and in communication with every day, working-class people.
That is one thing that was really instructive about this Upper Harbor project - after there was a huge round of protest before the first city council vote, we almost got the project stopped. But, one of the city council members said, we're still gonna pass it, but we will add this community advisory committee - a group of representatives who can meet with the planners. And it's a complete facade. There's an episode coming out in season two, where we interviewed the author of Capitol City, Samuel Stein, and he describes this phenomenon of fake community planning where people get to choose between ascribed choices. And that is exactly what we are seeing.
The current liberal bottom-up efforts are really limited because they have no alternative vision. They just think that if they bring people to the table it solves the problem, but it really ends up disempowering people when they see that they can’t exercise real power. What we are missing right now is an alternative political organization that can compete in these spaces – right now it doesn't exist. You have planners that are indoctrinated liberals, and even if they have good intentions, their bottom-up efforts are not really challenging the power dynamics.
Yeah. I think there's a maintenance of the status quo that is really harmful. Changing the hands of the oppressor happens constantly.
I have to speak on this sensitively because I understand that as a straight white male, I can't speak for everyone. And I want to speak with humility. But, I think that we have to name and criticize the empty bourgeois, fake racial justice rhetoric.
For example, the representative of the ward where the Upper Harbor Terminal is was for a long time represented by the most conservative member of the city council, a white woman named Barb Johnson, a big friend of the police. She was replaced by one of the first Black trans elected officials in the country, Phillipe Cunningham, who made national headlines. What's important to understand is that Phillipe Cunningham has pretty much the exact same politics that Barb Johnson had. He does good work in terms of trans representation, which I value and is important, but he's in the pocket of all the big developers. He is a capitalist and he hasn't done anything to stop this project. So it's like, there's a new face, but he is completely pursuing the same agenda as his predecessor.
That's a piece that I think should be dissected - we have to go beyond representation to ideology and political power.
That takes vigilance, which is exhausting. I also think the celebrity making of politicians makes us afraid to criticize, but it allows people to forget that these politicians work for you, not the other way around.
Exactly. It's so clear in terms of the way that the Minneapolis City Council has been praised around the country like they are abolitionists or something. They gave the Minneapolis police a million-dollar raises this year. They took that bullshit pledge in the park to "work on ending the police department," and then they just passed up the most unprecedented opportunity we've had to defund our police department in Minneapolis history.
We had to redo the budget because of COVID, we had a national uprising sparked by how violent the police are, and they can't propose even a 1% cut to the police budget?
And a lot of that is because that dynamic that you just described in terms of symbolic representation. They'll put out a certain image, but it's really hard for people to pay attention to the substance or follow the policies. So I definitely feel that, and I definitely feel like that's a real issue in Minneapolis right now.
interviews
Uncertainty is the Universal Challenge
by Polina Bakhteirov
April 8, 2020
This interview with Polina Bakhteirov, a vice president of development with Omni New York, was conducted and condensed by frank news.
Will you tell me about your current work?
Omni is an exclusively affordable housing developer, established in 2004. Since then, we have acquired, developed, and managed over 17,000 affordable units across 11 states with an aggregate transaction value of around $3 billion. Omni has a reputation for acquiring very distressed properties and turning them around through extensive rehab and added security.
Prior to joining Omni, I spent about a decade in the public sector. Immediately before joining the firm, I was working in Newark, NJ on small business development with a focus on supporting and growing minority and woman owned business enterprises. Prior to that, I was the inaugural director of preservation for the New York City Housing Authority [NYCHA]. There, I built out the preservation team to implement NYCHA’s PACT plan, which stands for “Permanent Affordability Commitment Together.” I led the rollout of various federal subsidy conversion tools, such as the Rental Assistance Demonstration [RAD] and Section 18, to convert public housing units to project-based Section 8 funding.
These conversions require the housing authority to address the repair needs of each converted property, so we partnered with private and non-profit development teams to raise adequate financing to address the capital backlog and also to bring on new property management and increase on-site social services for residents.
What are your most pressing concerns right now?
I’m primarily concerned about our residents – their health, level of access to medically-accurate information, and ability to cover the costs of basic necessities. Many may be laid off or have hours cut back.
More broadly, low-income renters, especially those living in public housing, may not be receiving information on how to protect themselves from the virus and how to care for those in their homes who are, or may be, infected.
We know that across the board, public housing residents are predisposed to becoming sick with COVID-19 due to pre-existing conditions. Furthermore, 40% of NYCHA families are led by seniors who may contract the virus from their (sometimes asymptomatic) family members, while nearly one in four NYCHA residents are seniors who tend either not to have access to information virtually or are reluctant to trust it. What happens when these residents show up at their management office to pay rent and discover that they can only pay online, via phone, or by mail? Now this senior has unnecessarily left the safety of their home and potentially exposed themselves and others.
Another prominent issue is the lack of consistent government guidance for affordable housing operators. At this point, HUD has issued three consecutive sets of FAQs and more are expected. Sometimes, updated guidance rolls back provisions from previous iterations. For example, the agency changed its guidance on mark-up-to-market projects from what was originally a 5% rent increase allowance since rent comparability studies are suspended due to widespread stay-at-home orders, to now saying that they will issue additional guidance on the matter in the coming weeks. Any requirements for a second appraisal will be a practical challenge as appraisers are not consistently deemed essential workers from state to state.
Furthermore, HUD’s guidance on interim recertification of income for residents differs from that of some public housing authorities, including NYCHA. Even New York State has contributed to the litany of guidance discrepancies, reversing their previous stop on in-person real estate showings, inspections, and appraisals. Another confusing inconsistency that I’m experiencing on my portfolio at Omni is how various states are defining essential workers. For example, New York has carved out the construction of affordable housing as essential, but Philadelphia has shut down such development. My hope is that Phase 4 of the federal legislation will provide more guidance on infrastructure and specifically housing.
HUD wants to keep RAD transactions going, but some documents cannot be recorded. Numerous public land disposition processes are on hold, while others are moving forward but without defined timelines. That makes responding to certain Requests for Proposals [RFPs] more difficult. Should we proceed with architectural design or pause it? Will the changing needs of the community call for a different development program in 3-6 months? Furthermore, the halt of land use review processes may have a multi-year stalling effect on construction. We as developers are obsessed with predictability, so you can imagine our current state of mind. Nonetheless, I think we can all agree that the market will eventually recover, especially given its strength coming into the current crisis and what we anticipate to be even stronger demand for the affordable asset class coming out of the pandemic.
As the federal government contemplates all of its economic triggers, the LIHTC rate [Low-Income Housing Tax Credit Rates] is at a ten-year low of 3.12% for the month of April, and is expected to be even lower in May. This is actually an opportunity to push Congress to permanently set the rate at 4%, similar to how it has done so for 9% credits. Adding this additional layer of predictability to affordable housing finance will definitely be welcomed in this time of great economic uncertainty where underwriting of LIHTC deals - and in general - will most certainly become more stringent.
I believe our biggest areas of opportunity moving forward are in the urban multifamily market. Residential occupancy levels are typically 5% higher for the affordable asset class vs. market-rate units during economic recessions, so the next 12 months may be a greater opportunity to build more new affordable units. And as the federal government is determining the best way to support American renters, I think they should take heed of former HUD Secretary Castro’s proposal to make Section 8 - Housing Choice Vouchers - a federal entitlement for every eligible adult, just like Social Security and Medicare. Or enact a monthly renter’s tax credit for government unassisted households.
At Omni, we have discussed property management logistics, how we're going to continue to operate our sites at this time. It's everything from how are we going to collect rent, to who is on the properties cleaning, and how is garbage being collected.
What are you doing to enhance the safety of residents and employees alike?
In terms of property management, we're looking to stagger shifts. We're looking at reducing the onsite presence of employees to the extent possible, while still maintaining high-quality service. And then obviously examining various cleaning mechanisms and, and ensuring that those deep cleaning sessions are being implemented on a more aggressive schedule. We are also looking to see what work needs to be done immediately and what work is going to have to be delayed. And that's obviously challenging. We have to be able to communicate that to our residents. Other considerations are the policy on visitors to the properties, communications delivered in the languages spoken there, and supporting residents with alternative methods of paying rent and completing interim income recertifications. I’ve found guidance from the National Initiative on Mixed-Income Communities quite helpful when it comes to property management.
People already living in poverty are losing work – how do you protect your most vulnerable tenants?
There are various eviction moratoria coming from different state governors. It's an effective measure in terms of protecting folks from eviction for a period of time, but that doesn't solve our revenue and debt service issues. We still need a residential income coming in order to continue to run the buildings and to run the business. We are also of course worried about having to do layoffs internally.
A lot of our developments have Section 8 contracts on them. And so we hope that the additional infusion of funds from the federal stimulus will fill the gap when it comes to federally assisted households.
We also have properties that are strictly LIHTC (Low-Income Housing Tax Credits) where residents don't have a federal subsidy. We're still thinking through how we can support those folks and how long our reserves will last because of course, all these properties have reserves for emergencies. The biggest challenges that we are facing now, similar to the federal shutdowns we encounter from time to time, is that we just don't know how long this will last. That is really what we are grappling with now.
What do you think about a rent freeze?
That is tough, right? We are not in the business of evicting our residents. In the entirety of our existence over the past 16 years, we have come in and turned around properties that no one in the private sector wanted to touch. We don't want senior residents to lose their homes. At this point, we're trying to figure out how much leeway we can give on rent collection, while also ensuring that we have enough income to continue to operate. We don't want folks that have to choose between rent and other necessities.
I don’t believe that a full-on rent freeze or strike without support for property operators is the best economic solution, since many affordable housing owners have mortgages out on their developments that are securitized, and the investors in these mortgage-backed securities are often pension funds for public workers. Their inability to collect on those investments will have a negative economic impact on working and middle-class families. It’s very circular.
I think the new forebearance allowance for affordable housing owners is a stop gap measure, but there are a few issues. First, the time period (90 days) does not sync up with the “parallel” eviction moratorium of 150 days (120 days plus 30 days’ notice). Second, forbearance is reserved for federally-backed multifamily mortgage borrowers who were current on their loan payments as of February 1st. But we closed on a 2,600-unit property in mid-February with over 6,000 vulnerable residents – where does that leave us?
My top questions as of today are: