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CITY SHOULD BE USING SUBSIDIES TO UPGRADE EXISTING HOMES

The U.S. Department of Housing and Urban Development recently raved about the success of Buffalo's Home Ownership Zone and the city's ability to get new subsidized single-family housing built. It is true that some new single-family housing needs to be offered.

But Buffalo's leadership and policy makers need to analyze the entire picture before accepting blindly that our subsidized new-housing programs are such a glowing success.

HUD provides subsidy programs for new residential development as a way to increase the availability of affordable housing. These programs make sense in most areas of the country which, unlike upstate New York, have benefited from the economic boom of the '90s. Appreciating property and home values in these areas have resulted in fewer and fewer affordable housing opportunities.

But in Buffalo, our experience has been just the opposite: a lack of decent-paying job opportunities, steadily decreasing population, disinvestment in many of our neighborhoods and declining property values. The result: plenty of cheap housing.

In view of this reality, there is a case to be made that the City of Buffalo end its nearly 20-year history of providing deep subsidies to create affordable new single-family housing. In a city that has an abundant supply of decent affordable housing, the last thing we need to do is heavily subsidize new construction of even more affordable housing. Flooding the market with new homes merely drives down the value of existing homes.

Homeowners and buyers, as well as the local economy, would be better served if most of these subsidy dollars were instead used to ease the cost of purchasing and upgrading existing homes. For every newly constructed subsidized home sold, there are dozens of homes in the city that can't be sold for anywhere near what they were purchased for 10 years ago.

Beyond that, there are countless numbers of homes that literally can't be given away because some of our neighborhoods have become valueless. Even more sobering is the fact that there have been a number of subsidized new homes built during the past 10 to 15 years that have subsequently gone into foreclosure.

A review of sales data with respect to these properties reveals that, following foreclosure, they aren't being sold for anywhere near their original selling price.

The time has come to rethink the issue. Just because HUD makes these programs available doesn't mean that they are right for Buffalo.

Twenty years of subsidized new single-family housing programs, coupled with population loss, have contributed to the abandonment of certain neighborhoods, fewer owner-occupied units, vacancies, dilapidated structures and demolitions.

The city's housing policy must focus on necessary demolitions, followed by land-banking of newly cleared land until market conditions are such that new housing can be built with limited public assistance.

This money would be better spent on incentives to assist people in purchasing and updating existing homes; eliminating the huge backlog of structures in Buffalo awaiting demolition; and public-works projects aimed at cleaning up and improving existing neighborhoods.

There is a place for new single-family housing, but it is time to let market conditions drive demand.

STEVEN H. POLOWITZ is a Buffalo attorney who has done subsidized residential development in Erie County.
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