December 16, 2007

By: LISA CHAMBERLAIN

THE Phillips neighborhood, just south of downtown here, was riddled with vacant and run-down properties 15 years ago. It was an area where the drug trade was rampant.

One by one, the drug houses and other derelict properties were bought, renovated and rented or sold to local residents — mostly minority residents and immigrants — at affordable prices by the Hope Community, a nonprofit neighborhood and housing organization. The group had acquired the homes over the years, in some cases from the city, for as little as $1.

Hope Community started out in 1977, in a little red house, as a Dorothy Day homeless shelter for women and children. The organization has since overseen the rehabilitation of 10 houses and is behind the development of buildings with 126 affordable-housing units, a playground and a community center.

Two more mixed-income projects are under way. One of them, the Wellstone, a mixed-use building with 49 rental apartments and 6,000 square feet of commercial retail space, broke ground in October. An as-yet-unnamed building across the street will break ground early next year. Rental units at the Wellstone will range in size from studios to three-bedrooms, and 25 percent of the units will be leased at market rate.

Together, the buildings will add 300 units of mixed-income housing, from condominiums to be sold at market rate to small studios reserved for the formerly homeless.

”From the beginning, we approached neighborhood revitalization as more than creating affordable housing,” said Mary Keefe, the executive director of Hope Community, which also provides adult education classes and tutoring for children. ”We are not social workers or service providers — we are catalysts.”

By 2009, Hope Community housing will occupy all four corners of the Portland-Franklin intersection, a thoroughfare for people commuting from downtown to wealthier neighborhoods farther south.

As luxury condos have been built north of the Phillips area closer to downtown, fears of encroaching gentrification prompted the organization to take a more aggressive approach to stabilizing the neighborhood.

”In order to really change the community,” Ms. Keefe said, ”we realized there had to be critical mass.” By building mixed-income housing, Ms. Keefe said, Hope Community is trying to address the inevitable changes on the way and to assist the population that is already there.

One person who has benefited from the organization’s neighborhood programs and affordable housing is Anthony Satchel Sr. He learned about Hope’s apartments after taking a computer class at the community center. He has since rented an apartment in one of Hope Community’s affordable-housing units, paying $700 a month for his one-bedroom. He also tutors children who come to the community center and helps to recruit other local residents to volunteer as well.

”I found out,” Mr. Satchel, 56, said, that tutoring ”calls for a lot of patience. The kids, they call me ‘The Enforcer.”’

Having lots of activity in and around Hope Community’s buildings helps to improve the neighborhood’s safety. For a single mother like Valerie Morris, 52, whose daughter, Alexis, is 15, a safe and drug-free environment is critical.

Ms. Morris has lived in a housing unit operated by Hope Community since 2003, where she pays $664 a month for a one-bedroom. After being laid off recently from her part-time job, she is worried about not being able to pay her rent (which is based on income levels). ”They’re working with me on the rent since I got laid off,” she said. ”And I don’t have to worry about my daughter coming home when I’m not here.”

An unintended result of creating affordable housing and economic development has been a lower rate of foreclosure. As the subprime mortgage crisis has roiled other low-income neighborhoods across the country, the number of foreclosures in the Phillips neighborhood is lower than in wealthier sections of Minneapolis, according to the Minneapolis Community Planning and Economic Development Department.

The Phillips neighborhood has 118 foreclosures, the department said, while the Powderhorn area, just south of Phillips, which has only slightly higher property values, has 309 foreclosures.

”Where there has been the most investment, including affordable rental housing built by Hope Community, there are the least foreclosures,” said Mike Christenson, the department’s director.

Lower foreclosure rates could help keep crime rates down. According to a study by Dan Immergluck, an associate professor at the Georgia Institute of Technology, and Geoff Smith, research director at the Woodstock Institute, when the foreclosure rate increases one percentage point, neighborhood violent crime rises 2.33 percent.

Constructing affordable housing, however, is not easy. The financing is complex and can take a long time to come to fruition, according to John W. Cuningham, the founder of Cuningham Architects, which designed Hope. The Wellstone is being built in partnership with Aeon, another affordable housing development agency, which has nine major donors, including local and state government agencies, foundations and private donors.

”Every funding source puts them through flaming hoops,” Mr. Cuningham said. ”It’s just excruciating. From the time we start designing to the time it’s built, it takes five years or longer.”

But the effort to acquire financing for more affordable housing has been worthwhile for people like Patrick J. Bayle. A recovering drug addict who was once homeless, Mr. Bayle, 48, now works for the Salvation Army mentoring others in recovery. Classes at the Hope Community helped him earn his general education diploma, and now he is attending college to complete a degree in social work. Without his $575-a-month studio apartment, Mr. Bayle said, he would have had to work two jobs to pay rent.

”I don’t make much money right now,” Mr. Bayle said. ”I’m going to college to increase my earning potential,” he added, hoping that eventually he will be able to afford to buy a home of his own.

Minnesota has achieved the highest homeownership rate — 76.3 percent — in the country, in large part because of its policy in encouraging affordable housing, according to Timothy E. Marx, the commissioner of the Minnesota Housing Finance Agency. His agency has invested $1.6 billion over two years in affordable housing statewide, including the Hope Community.

”We shape our buildings and they shape us,” Mr. Marx said, paraphrasing Churchill’s remarks on the restoration of the House of Commons after World War II. ”What is really noteworthy about Hope Community is the fact that it’s mixed income,” he added, noting that the mix of market rate and affordable housing builds ”quality of life.”