(The following was filed for a Business Week story in August 1991.)

Affordable Housing in Tampa

By Bob Andelman

Sandy Freedman suspected Tampa's housing problem was worse than anyone knew when she was first elected mayor in 1987. After the city's fire department conducted a house-to-house inspection on her orders, her worst fears were realized: 23 percent of Tampa's homes were in sub-standard condition or worse.

That's when she began fitting together the pieces of a greater problem. Non-profit social services agencies complained that their clientele - most often female heads of households or married couples earning minimum wages - moved too often to be helped because they lacked adequate, permanent housing. They said they could feed the needy three times a day, but if the city didn't find a place for these people to live, they would be giving them three meals a day forever. Landlords were abandoning single family homes in bad neighborhoods; the buildings, in turn, were stripped down to the walls and used as crack houses. And banks, under increasing pressure by the federal Community Reinvestment Agency (CRA) to aid blighted areas, said they were unable to find and develop the affordable housing market.

Connecting all of these concerns, Freedman and city staff organized a partnership of public, private and non-profit organizations. Each came to the table with a problem and became one-third of a synergistic solution. "A lot of communities talk about housing initiatives, they form task forces, they have lunch. This city went beyond lip service," according to David Hollis, senior vice president of Barnett Bank of Tampa. "Sandy Freedman said there's a need here - what's it going to take? She made the community responsible."

A coalition of banks exceeded the mayor's call for $5-million in low-interest loan money to leverage federal dollars (Community Development Block Grants) with $13.5-million and created Community Reinvestment
Challenge Fund I. The banks offer loans for housing units worth $30,000 to $50,000 at roughly two percent below market rates, accept liberal underwriting criteria and provide extended amortization of 20 years to reduce mortgage payments, which allows buyers to qualify with as little as five percent or $500 down. Buyers pay no closing costs or points.

"The Challenge Fund allows us to compete in affordable housing," says Bob Tanner, regional president for SunBank of Tampa Bay's Tampa region. "I don't think the bank would have been able to otherwise, using its own resources. The city identifies the customers and markets. That eliminates a lot of cost to the banks. We can then offer funds at a lower rate."

Under contract to the city, the non-profits provide staffers who qualify and package would-be borrowers. The city does appraisals, title searches and inspections at no charge. And Tampa guarantees the first five years of any mortgage, promising to buy it back within 90 days of default. Less than four percent of all buyers have defaulted since the program began; only one mortgage of 75 in the program sold by NCNB went back to the city.

"You know what it proves?" says Fernando Noriega, Jr., division manager of Tampa's housing assistance programs and architect of the partnership. "Low-income people pay their mortgages because they have no other option."

Making all this even sweeter to the city is the dramatic reduction in personnel at its Community Redevelopment Division. As non-profits took over agency tasks, its staff was halved, from 41 employees to 22, with money saved in salaries re-directed towards housing. The agency acts more as a brokerage these days, capitalizing on the non-profits to extend its services.

The real jewel in Tampa's solution to its housing woes is the involvement of the non-profits. "Non-profits can deliver housing much more economically than government can," says Noriega. "We couldn't deliver 10 percent of what the non-profits deliver. It behooves us to educate them to deliver housing." The difference, he says, is volunteer labor and less bureaucracy.

Tampa no longer accepts donations of housing, instead directing the donor to the non-profits. This saves the city time and money it would have to expand in protecting the donated property as a city asset. "Non-profits can do turnaround in 30 to 45 days with a minimum expense of 5 percent of what the city would spend," according to Noriega. One in every three affordable housing units in Tampa is now delivered by a non-profit. They package loans and guide applicants in everything from cleaning up their credit to preparing for the tribulations of home ownership. For their trouble, the non-profits get a small development fee from the city and can offer housing at 25 percent less than appraisal value.

As the dollars for affordable housing in Tampa multiply, the Tampa United Methodist Center (TUMC) - like the banks - is beginning to see the potential for profits it can direct to other services. TUMC is even expanding from rehabs into new construction and development, taking over vacant city land and even purchasing properties through the Resolution Trust Corporation with Challenge Fund dollars.

In 1986, the last year Bob Martinez (now U.S. drug czar) was mayor of Tampa, the city rehabilitated and/or sold 110 housing units. By the time Challenge Fund I was exhausted late last year, the city had turned over 2,714 units in three-and-a-half years - 989 in 1990 alone - ranging from single to multi-family and including adult congregate living facilities.

"If this is not the best thing this administration has done, it's right there at the top and it's helping thousands of people," says Mayor Freedman.

Bankers are equally ecstatic. When the call went out for commitments to Challenge Fund II, the city was presented with twice as much money - $28-million from 18 lenders for the next five years - than its first request netted.

"What really makes this different is the teamwork," says Barnett's Hollis. "It's the only time I'm comfortable taking off my competitor's hat and putting on my team hat. This is a good program, very efficiently operated. It's a shame we don't have one of these in every city in the country. The best way to improve the pride in a community is through pride of home ownership. This makes that happen."