Q&A with the City of Las Vegas’ Tim Whitright
Tim Whitright, development manager with the City of Las Vegas Economic and Urban Development Department, talks about what his department is doing to get Las Vegas back on track.
Las Vegas has been hit hard by the recession, suffering the worst foreclosure and unemployment rates in the nation. Tim Whitright, development manager with the City of Las Vegas Economic and Urban Development Department, talks to MHN about the state of the submarket and what his department is doing to get the city back on track.
MHN: Tell us a little about your department, as a division of the Las Vegas Economic and Urban Development Department, does.
Whitright: Our division is tasked with administering the grants’ funding programs, primarily from the Department of Housing and Urban Development. We deal with affordable housing, which is a major part of it, using Home Investment Partnership Program (HOME) dollars and using some of the Las Vegas Redevelopment Agency’s 18 percent set-aside funds, as well as the state’s HOME dollars.
We’ve also recently had the Neighborhood Stabilization Plan dollars, and we’re currently applying for [an additional] round of those funds as well. We’ve also entered into dealing with the foreclosure issue out here in Las Vegas. And we deal with the public-service end, providing funds to homeless shelters … and so on.
MHN: What is the state of the Las Vegas submarket at the moment? For instance, are there a lot of condos being converted to rentals?
Whitright: We had a time when we were going through the condo-conversion craze, where apartments were being converted into condominiums for sale, but what has followed now is you see a lot of those condos going back to rentals. In fact, I think there was a figure that 40 percent of units in many of the condominium complexes are actually now available as rentals. It’s come full circle.
As far as the submarket overall, you’re probably already aware that Las Vegas has the highest foreclosure rate in the nation, and we’ve had it for years. It’s been something like 40 months now. Combined with that, we also have the highest unemployment rate in the nation—two numbers we’d never want to own but unfortunately do.
What this foreclosure crisis has done is resulted in an increased number of single-family homes being available for rent, or what we would call the “shadow rental market.” As a result of that shadow rental market, we now have families that are choosing to rent these single-family homes instead of apartments. They get the yard, maybe a pool, enclosed garage, laundry, etc., and yet they’re not paying any additional money for it compared to what they were paying in apartments. What that’s done is increase vacancy, not just in the market-rate apartments, but it has also impacted the subsidized units that we would directly deal with.
Unfortunately, with that increased vacancy rate, we now see a softening of the rental market. So you have market-rate rental units offering a month’s free rent or cable or sometimes throwing in utilities or things like that to try to keep up. They’re also lowering the rental rates. What that has done in turn is change the market for our subsidized units. You have projects that have been penciled to serve families in the 60 percent median-income area, and in fact now what they’re getting is more like the 30 to 40 percent income coming in and having that need for housing. That’s increased their vacancies, decreased their revenues, and of course that gives them problems in terms of their operating expenses. They can’t keep up now. That’s created quite a bit of pressure for our affordable-housing developments here.
MHN: With respect to affordable housing, what kind of domino effect does this have for mixed-use developments, such as with retail?
Whitright: As far as the impact to our affordable units, we’ve actually tried on a couple of projects—and it’s been years back—to mix the retail on the ground floor, and there are two developments right now where their ground floors have been vacant for years. They haven’t been able to attract the commercial components into those developments, which of course hits their bottom line as well. That has not been a formula that’s worked well for us here, at least with respect to affordable housing. Especially when the private market—particularly referring to the CityCenter development—when they’re hurting, that just trickles down the line.
MHN: Can you talk about your Neighborhood Stabilization Plan?
Whitright: Right now we do have the first round of NSP funds obligated, which we had to do by last September. What we’re doing here is using this program to acquire abandoned and foreclosed properties to then rehabilitate them and make them available for resale to families earning up to 120 percent [of median income]–making around $79,000 a year. Twenty-five percent of those funds, though, had to serve the 50 percent area median-income family, which is a family of four at just under $33,000 a year. So what we chose to do with that portion of the dollars was provide long-term rental. That long-term rental was provided to us for a scattered-site approach where we purchase single-family homes, rehabilitate them, and make them available for a 15-year period at an affordable rate to those families.
With NSP III, we’re seeking a third round and essentially looking at the same strategy of acquisition resale and acquisition long-term rental, again using 25 percent of the dollars as required. The strategy behind that is that you need to use those dollars to help dry up that foreclosure market, as that’s obviously impacting the value of properties all around.
MHN: Can you also fill us in on your Homelessness Prevention and Rapid Re-Housing Program?
Whitright: With that program we’ve focused on families with children—minor-aged children—and seniors ages 62 and older. The county focuses on a broader swath, but we narrowed ours down based on needs data. We’re going to run out of money before the end of the program, even with those restrictions we’ve put on it. Essentially the program allows us to, as a prevention component, go in and pay any back rent, late fees or utilities to keep a person at home and continue them for as much as 18 months on that program. We’re also allowed to move individuals if they’re living in a sub-standard unit that cannot pass an inspection. We can move them to a quality-standard unit as well and pay for the moving costs. And for those who are currently homeless, we can actually move them into a unit as well.
MHN: If you could single out one area at either the state or federal level of government where funding is lacking or something could be done that isn’t being done, what would that be?
Whitright: Particularly here for us in Las Vegas, it’s probably foreclosure prevention. And I don’t know if it’s almost too late now for that, but instead of buying up the properties at the end, after the person’s already been dislocated from their home and now becomes homeless or is couch surfing–and all the other social-service issues that come out because of that–to me the prevention in the first place [is key]. You know the phrase, “An ounce of prevention is worth a pound of cure.” That’s the one area that really could have used some focus and effort, and I believe it would have really saved a lot of problems here in Las Vegas.