“We are now faced with the fact that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history, there "is" such a thing as being too late. This is no time for apathy or complacency. This is a time for vigorous and positive action.”
– Dr. Martin Luther King Jr. March 23, 1963
Although Dr. Martin Luther King, Jr uttered these words almost 60 years ago, this quote accurately reflects the urgency I feel for preserving Naturally Occurring Affordable Housing (NOAH). NOAH properties are commonly defined by three general characteristics:1)Noah apartment buildings are at least 25 years old; 2) the rents for NOAH properties are affordable for middle income residents; and 3) NOAH properties are not government subsidized.
In major metropolitan areas across the United States, the inventory of NOAH units is declining at an alarming rate. The loss of NOAH units presents middle income residents with two unappealing choices:1) spend more than one third of their income on rent; or 2) move long distances from their jobs in order to secure affordable housing.
Many middle income residents are employed in critical roles for the welfare of our communities such as teachers, first responders, and healthcare workers.
In high cost metropolitan areas, NOAH units serve as a critical affordable housing resource for middle income residents and most be preserved.
The Declining Inventory of NOAH is a Housing Crisis for Middle Income Residents
The inventory of NOAH properties is declining at an alarming rate across the country. CBRE estimates there are 12 million NOAH units across 66 metropolitan areas. 100,000 NOAH units are lost each year, many units are lost when market rate developers acquire NOAH properties and convert them to high-end luxury rentals that are unaffordable for the middle class.
The declining inventory of NOAH units is a housing crisis for this country because the demand for workforce housing in this country is at all-time high. The US Census Bureau estimates that there are 13.5 million middle income renters. Not only are NOAH units disappearing, the lost units are not being replaced. Instead, the vast majority of new apartment construction projects are luxury rentals unaffordable for the middle class.
There is no Federal Safety Net to Protect NOAH
NOAH properties are not afforded the protections that exist for federal government subsidized housing. Government subsidized affordable housing programs generally require that residents earn 60% of area median income (AMI) or less. Middle income residents generally earn 80% - 120% of AMI, therefore, they do not qualify for government subsidized housing.
Since no federal safety net exists to protect middle NOAH units, when NOAH units are lost, middle income residents are left with two unappealing choices: 1) pay more than one third of their income on rent; or 2) or move long distances from their jobs to secure affordable housing.
The COVID Pandemic Reinforces the Urgent Need for NOAH Preservation
The declining inventory of NOAH properties is exacerbated by the COVID pandemic. Federal, state, and local government COVID eviction mortarium programs have expired or will expire soon in many markets across the country. Market rate developer are targeting NOAH properties for acquisition with the anticipation that they will be able to aggressively evict rent delinquent tenants, then start the high end luxury rental conversion process.
My Passion for NOAH Preservation
I have a passion for NOAH preservation that emanates from personal experience. I witnessed how explosive gentrification had a negative impact on my childhood Harlem, New York neighborhood. Long term residents of the community: African American and Latino families were displaced. Harlem residents that could walk their children to school and then take a 20 minute subway ride to their jobs in midtown and downtown Manhattan, were forced to move to upstate New York, Connecticut, and New Jersey and endure long commutes into Manhattan.
In addition to the negative economic and social impact of displacement, I was greatly disturbed by the loss of community that had developed over decades. I feel a personal responsibility to preserve the sanctity of community. Community is disrupted when families are displaced.
I founded Street Corner Ventures to preserve NOAH for middle income residents. We acquire NOAH properties, perform the necessary rehabilitation work, and maintain affordable rents. Our focus is to provide clean and well maintain properties for residents.
In order to preserve NOAH, capital investment is necessary to competitively bid against market rate developer backed by institutional investment. Street Corners Ventures focuses on providing social impact investors with risk adjusted returns with stable cash flows.
NOAH Preservation Case Study: Street Corner Ventures Acquisition of 40th Street Apartments
The Street Corner Ventures recent $7 million acquisition of the 40th Street Apartments in Oakland, California is a classic NOAH preservation case study because it illustrates the urgent need for NOAH preservation in high cost metropolitan areas such as the San Francisco Bay Area.40th Street Apartments is 100 year old building located in the Temescal neighborhood of Oakland. The building is located within walking distance of the MacArthur Bart station so it has a very attractive transit oriented location.
Recently, there has been substantial mixed use development of luxury high rise apartment buildings, coffee shops, restaurants and retail. The increased walkability of the neighborhood has attracted young professionals that can live, commute, shop, and socialize without the use of a car.
The previous owner of the 40th Street Apartments was a market rate developer who purchased the property three years ago. Upon acquiring the property, the owner engaged in an aggressive strategy to upgrade vacants units, raise rents substantially, then sell the property.
Street Corner Ventures successfully bid for this property while competing against market rate developers. We installed a responsive property management team, addressed deferred maintenance issues including replacing a severely damaged roof, and lowered the rents for vacant units to remain within 70% of AMI.
If Street Corner Ventures had not purchased the property, a market rate developer would have purchased the property and the NOAH units would have been lost in Oakland, a city in desperate need of affordable housing. In addition to the positive social and economic impact of the 40th Street acquisition, we are reducing turnover and lowering costs that will lead to steady cash flow for our investors. Moreover, we are very confident in the long term appreciation of the building due to the transit oriented location.
Invest with Street Corner Ventures to Preserve NOAH
Street Corner Ventures is committed to “vigorous and positive action” to preserve NOAH. We cannot build our way out of the shortage of affordable housing so the inventory of NOAH must be preserved. We are faced with the “Fierce Urgency of Now.” If you feel the same urgency that I feel for preserving NOAH, reach out to Street Corner Ventures together we can positively impact the lives of middle income families.
James Williams is the Founder and Managing Partner of Street Corner Ventures. Street Corner Ventures is an African American real estate investment firm committed to positive social impact. Through the acquisition and rehabilitation of NOAH properties, Street Corner Ventures preserves affordability for middle income residents while providing solid returns for investors. Reference
The Case for Workforce Housing: a Market Perspective, CBRE November 2018