What to do about housing? 
Mark Etling 

Editor's introduction 
The oldest charge against professional management in local government is that the use of "professionals" gives control of the community to "outsiders" and reduces local control over local affairs. Advocates of professional management point out that professional administrators are "servants of their elected bosses" and must be responsive to electoral politics even though they are not, themselves, elected to office. 
This case describes the dilemma of a professional manager who finds his efforts to address local housing issues held hostage both to the outcome of a local election and to the policy preferences of newly elected council members whose views on the housing issue have not been clearly articulated. At issue here is a key question: How should the manager adjust his efforts in the area of housing to changes occurring in the community's political climate and leadership? 
Also involved in his decision is the need for sensitivity to a local citizens' group actively opposing any new city housing initiative. The group poses no direct threat to the manager, but it does affect the political climate within which the manager works, and it can influence the council, whose support for any new housing effort is essential. 
In describing the politics of housing (often a sensitive local issue) the case also focuses on the role of the professional administrator as a leader in the policymaking process. First, it describes the administrator's role in bringing policy problems to the attention of the elected leadership-the kind of staff work that is the core of the professional administrator's policy responsibility. Second, it shows the kind of decisions administrators must make as they try to balance their sense of community needs with the political realities of the communities they serve. 
In working its way through these political complexities, the case also follows the evolution of a key administrative decision regarding the community's housing needs and the formulation of an appropriate housing policy for a community whose aging housing stock threatens to decline in value and quality. 

Case 3 
What to do about housing? 

Background 
When the Clarkville City Council authorized the hiring of an administrative assistant to deal with housing issues, it reopened a question that had been of interest in the community for several years. During that time the council had been considering what to do about the city's perceived housing problems. The time now seemed right to confront the issue head-on. 

What to Do About Housing? 43 
Clarkville sprang up in the 1850s as a whistle-stop community several miles from a major midwestern city. Incorporated in 1894, it evolved into a middlering suburb of 24,500 residents located within a metropolitan area with a population of 2.5 million. Like many other suburban communities nationwide, Clarkville experienced rapid growth after the Second World War: its population jumped from 11,500 in 1950 to a peak of 29,000 in 1970. 
Clarkville's seven thousand units of single-family housing spread in all directions around a core of original homes and a central shopping district; the city became a patchwork of subdivisions and annexation areas. 
Over the years the city developed a proud tradition of autonomy and active citizen participation in local government. The council-manager form of government was adopted in the 1950s, and well over 150 citizens serve on a variety of boards and commissions. The seven-member council, though composed of independent-minded individuals, has demonstrated a high degree of solidarity on most issues in recent years. 
By the mid-1980s, when this case begins, a set of perceptions had developed about the city's housing market that troubled several members of the city council. Some early signs of housing deterioration were evident in parts of the city, particularly near the border between Clarkville and Cozens, a poverty-stricken community to the west. Some residents observed that homes in Clarkville seemed to be undervalued by as much as 10 to 20 percent. There was an informal consensus that major corporations in or near Clarkville were directing their relocated employees to homes in other parts of the metropolitan area. Many people wondered whether the "white flight" that had occurred in much of the northern part of the county in the 1960s and 1970s was now affecting Clarkville as well. 
These perceptions persisted despite the fact that the city had taken some steps to address them. For several years the local community development office had been administering Community Development Block Grant (CDBG) funds in the form of home improvement grants and rebates, a paint program, and urban homesteading. A minimum exterior-appearance housing code was enacted in the early 1980s over a storm of protest and after an unsuccessful referendum. 
Still, it took time for consensus to emerge among the council members about the need for more comprehensive and direct intervention in the housing market. Long-time mayor John Keane had, over the course of many years, become more and more convinced of the need for direct city intervention. Two other council members, Fred Castoria and Ted Bunker, also were thought to be solid, if not staunch, believers in greater housing activity by the city. Three members-Janet Johnson, Carl Barth, and Carol Marx-had vigorously supported a more active approach for several years. The seventh city council member, Richard Hall, was considered part of the group favoring greater intervention, but he was in the midst of a campaign for a seat on the county council. Ken Calm, the city manager for three years, had helped build consensus on the issue by consistently advocating a higher priority for the housing issue. 
The council would have to overcome a major political hurdle if it decided to take a more aggressive approach to housing. A small but vocal group of residents would almost certainly fight any new housing ordinance or program. This group embraced the philosophy that city government should be only minimally involved in people's lives, and they were opposed to the concept of any city intervention in housing. In the recent past they had attempted to block the exterior housing code and the CDBG-funded programs. They would almost certainly try to put a stop to any new form of housing activity. Another factor looming on the political horizon was an impending mayoral race. Retiring Mayor Keane's seat was expected to be contested by Janet Johnson-one of the outspoken supporters of greater housing intervention and a loser to Keane in a close race in the previous election-and Fred Castoria, whose support for more housing activity was considered solid but not as strong as Johnson's. 

44 Cases in Decision Making 
The case 
The city council took a first step toward the possibility of increased intervention when, at a June budget hearing, it voted to authorize City Manager Calm to hire an administrative assistant for housing issues. Cecil Roberts, a former newspaper reporter with several years' experience in housing issues, was hired in mid-September, and Calm gave his new administrative assistant two directives: (1) to research the housing situation in Clarkville thoroughly, and (2) to write a report to the council listing a range of viable options for possible housing activity. 
During his first three months on the job, Roberts gathered relevant data about the housing market in Clarkville, using several research methods: 
He compiled and analyzed demographic, socioeconomic, and housing data, using Census material and data previously gathered by the city and by the urban information center of a nearby university. 
In cooperation with the chief housing inspector, he conducted an informal windshield survey of the city to determine the extent of exterior deterioration of the housing stock. 
He gathered information about housing agencies in the local metropolitan area and in other cities around the country. 
He investigated potential funding sources for housing programs in both the public and the private sectors. 
He interviewed community leaders in the real estate and banking industries to learn their impressions of the condition of the housing market in Clarkville. 
The housing report 
By the start of the new year, Roberts had completed a lengthy report. He presented his findings formally to the council and the public at a regular council meeting in February. His analysis of the data led him to draw two basic conclusions: first, that the housing market in Clarkville was fundamentally viable and self-sustaining, and second, that some negative conditions existed that warranted the attention of the city. Several factors substantiated the claim that the housing market was basically self-sustaining. 
First, homes were found to be available in many styles, sizes, and prices. The variety of housing in Clarkville included everything from modest brick or frame bungalows and ranch-style homes to luxury subdivisions and historic homes built a century or more ago. The price range of homes in the city was roughly $30,000 to $160,000. 
Second, the rate of housing turnover was low-4.1 percent in the preceding year and an average of just 5.3 percent over the previous ten years. 
Third, the population base was heterogeneous but stable. The 1980 Census reported a 14.4 percent minority population in Clarkville. At the same time, the Census indicated that 57 percent of Clarkville residents had lived in the city at least eleven years. Apparently the minority population was being integrated into the community gradually and peacefully, and any fears of "white flight" were misplaced. 
Fourth, homes were appreciating steadily in value. In the preceding year the 

What to Do About Housing? 45 
median value of a house in the city was $46,105, a 30.2 percent increase over the median value of $35,400 seven years earlier. 
Fifth, there was a surge of new housing construction in the city. After a tenyear lull in construction activity, ground had been broken for some forty-seven single-family units and ninety-two condominiums in the preceding year alone. 
Sixth, home mortgage financing and homeowner's insurance were readily available to Clarkville homebuyers. 
Finally, the city's housing stock was, overall, well maintained. 
Roberts' report went on to state the adverse housing-related conditions in the city. 
Knowledge was generally lacking in the metropolitan area about the quality of housing in Clarkville. Although several major corporations were located either within or just minutes away from Clarkville, they routinely directed their relocated employees to housing in other parts of the metropolitan area considered more "desirable." Several persons interviewed during the preparation of the report noted that Clarkville was "too well-kept a secret" and needed to be marketed more systematically and aggressively. 
Furthermore, there was a misperception that Clarkville was racially segregated. Much of the area to the south and west of the city had either traditionally housed a minority population or had experienced racial turnover in the 1960s and 19705. Clarkville, however, had assimilated its minority population gradually over the preceding fifteen years without the upheaval in housing values caused by "white flight." Although race was not a significant factor in Clarkville's housing market, this fact was not generally known in the metropolitan area. 
Largely as a result of the first two factors, housing in Clarkville tended to be undervalued and was not appreciating at the same rate as comparable housing elsewhere in the metropolitan area. The 30.2 percent rate of appreciation in Clarkville over the preceding seven years, although respectable, still lagged behind such cities as Rosebud (37.1 percent) and Churchtown (37.8 percent) in the southwestern part of the county. 
The number of homes showing signs of deferred maintenance was slowly but steadily increasing. Although Clarkville's over-all rate of substandard units (4 percent) was significantly lower than the national average of 8 percent, the number of substandard units in the city had doubled in the preceding twentyone years. In some parts of the city, the owner-occupancy rate had declined in recent years, as investor-owners converted single-family units into rental property. This situation was exacerbating home maintenance problems and holding down property values. 
There were a few eyesore properties in various parts of the city. These properties-each of which had a dramatically negative effect on an entire blockhad deteriorated to the point where the conventional housing industry had given up on them. 
The report pointed out that these conditions did not pose an immediate threat to the viability of the housing market in Clarkville but that "if these adverse factors are not addressed, a cycle of lower appraisals, deferred maintenance, and more eyesore properties could be created, resulting in a depressed housing market in Clarkville." 

Recommendations 
Roberts' report spelled out four viable courses of action that were open to the council: 
1.	No intervention in the housing market. A "do-nothing" approach would acknowledge that Clarkville's housing market was fundamentally 

46 Cases in Decision Making 
self-sustaining and would allow the market to continue to be entirely self-directing. 
2.	A modest level of city intervention. The council could authorize lowkey activities such as conducting ongoing research and gathering data about the housing market, monitoring real estate and lending activity, and marketing the city to major corporations. These activities could be conducted without the hiring of any new staff. 
3.	A moderate level of intervention, such as the creation of either a housing corporation or a city housing department. This type of housing agency could acquire, rehabilitate, and sell eyesore properties and give the local realtors a role by listing rehabilitated homes with them. The agency could acquire and demolish seriously substandard homes. It might offer home improvement loan counseling, technical assistance, and loan packaging to city residents. 
4.	A major level of intervention. The council could decide that the best approach to Clarkville's housing situation would be to make the city a competitive "player" in the conventional housing market by establishing a city-run real estate and mortgage finance agency. Such an agency could be empowered to engage in activities that a housing corporation or department could not engage in. It could acquire and dispose of real estate of all types, including, but not limited to, eyesore properties. It could offer permanent financing through federal and state programs. It could also seek funding and marketing support from major corporations. 
After Roberts finished his presentation, Calm made his personal recommendation to the council: that the city establish a not-for-profit, tax-exempt housing corporation. The council agreed to take his recommendation under advisement and opened the floor to the public for discussion. 
Several persons in the audience asked questions or made comments that suggested they wanted to know more about a housing corporation before making a commitment for or against it. Jim Bishop, a long-time local realtor and president of the Clarkville Business Association, was one of those who expressed some reservations about, although not outright opposition to, the proposal. As expected, representatives of the vocal opposition spoke out against the concept of a housing corporation. One of the group's leaders questioned Roberts at length about what a corporation could or could not do. It seemed certain from the tone of their questions that the opposition would try to stop a corporation from ever coming into being. 
Politics and housing 
By February 9, when the housing report was presented, the political landscape in Clarkville had changed considerably. Carl Barth, a staunchly prohousing council member, had announced that he would not seek reelection, and two other supporters, Carol Marx and Ted Bunker, were involved in hotly contested races against younger and better-funded opponents. It was not clear whether either the incumbents or their challengers would be eager to make housing a major campaign issue. In addition, former Clarkville council member Richard Hall had won a seat on the county council in December, and his appointed successor, Bud Adams, was a relative newcomer to Clarkville politics whose views on housing were not widely known. Calm wondered whether council action on the housing report might be delayed for several months or even indefinitely, depending on the outcome of the council races. 
Public discussion on the housing report continued at the February 23 meeting. 
Then, at the meeting on March 8, the council unanimously voted to authorize 

What to Do About Housing? 47 
Calm to draft an ordinance enabling the formation of a not-for-profit housing corporation. The council also decided that the corporation would operate under a set of limitations designed to make it politically more palatable: 
Its activities would be confined to just one area of the city-a neighborhood adjacent to Cozens-where the greatest concentration of eyesore and substandard homes had been identified. 
It would be forbidden to exercise the power of eminent domain (a limitation already imposed by state statute). 
Participation by city residents in any housing programs would be strictly voluntary. 
The city would maintain a high degree of control through the council's appointment of a board of directors to oversee the operation of the corporation. 
At its next meeting, on March 22, the council gave first reading to the ordinance. The political risks involved in this step were dramatized that night when a leader of the opposition announced that he was initiating a petition drive that would require that the corporation be brought to a referendum. With the election just two weeks away, a demonstration of the council's unanimity-or lack of it -on the issue would be an important symbol of its political will. That symbolic gesture was forthcoming: the motion to read the ordinance was supported unanimously by the council. 
The outcome of the April 5 election cast considerable doubt on the status of the ordinance and the corporation. The moderate, although heretofore supportive, candidate Fred Castoria won the mayoral race by just twenty-four votes over the more vigorously prohousing candidate, Janet Johnson. Carol Marx and Ted Bunker, incumbents whose support for the corporation had been consistent, were defeated by Luke McCoy and Bill Reuther, two newcomers whose positions on housing were unknown. A local businessman named Dan McPherson was elected to the seat vacated by the retiring Carl Barth. Yet another opening on the council, created by Castoria's election as mayor, was filled by the appointment of Phil Jameson, another political newcomer who had served as McPherson's campaIgn manager. 
The makeup of the council was now dramatically altered, with new members in five of the seven seats and a new mayor for the first time in fourteen years. Calm doubted seriously whether the new council would support the housing corporation with the nonpartisan unity that had characterized the outgoing council. 
Two agendas were published for the council meeting of April 19: one for the outgoing and one for the incoming council. The scheduled second reading of the ordinance to set up a corporation appeared on the first agenda and would be considered by the outgoing council for final passage. 
After hearing a request from an oppositio~ spokesman to table the ordinance so that it could be taken up-and struck down, he hoped out loud-by the incoming council, the outgoing group made a parting gesture of support for the corporation: they passed the ordinance without dissent. 
The decision problem 
Even though Calm knew he now had the statutory authority to proceed with the formation of a housing corporation, he was reluctant to use that authority. If the membership of the city council had not changed so drastically, he would have seen the April 19 vote as a mandate to proceed with incorporation. But 

48 Cases in Decision Making 
with five new members elected or appointed within the space of just four months, he knew that a reevaluation of the situation was in order. 
To what extent, he wondered, would the new council try to establish an identity of its own, perhaps at the expense of existing programs and policies? What kind of group dynamic would emerge in the new coundl-would the members be cooperative or combative? What would their attitude toward city staff be? What opinion would they have of housing activity in general and of the embryonic housing corporation in particular? 
With these considerations in mind, Calm pondered his options regarding how, or whether, to pursue the housing corporation with the new council. He reasoned that he could handle the issue in one of three ways. 
His first option was a "hard-sell" approach. He could aggressively pursue the issue by proceeding full-speed with the implementation of the April 19 ordinance. He could direct Roberts to draft and submit suggested articles of incorporation and bylaws. His objective would be to capitalize on the momentum already generated by years of consensus building by the former council. If successful, he would head off the antihousing forces in the city before they could exert much pressure on the new council. 
But this approach, with its potential for quick success, might also produce instant failure. Calm's aggressiveness might pressure the council into a defensive posture. They might feel that they were being "railroaded" on the housing issue and respond by rescinding the ordinance (as the opposition had already suggested) or by directing him to delay action on incorporation, perhaps indefinitely. 
Calm's second option was a "low-key" approach that would give the council more time to consider the housing corporation. He could refrain from any immediate administrative action but keep the issue before the council by means of agenda items and the suggestion of a work session on the subject of housing. The council would then be free to dictate the pace of action. Calm could direct Roberts to distribute to the new council the informational report that he had submitted to the former council and to be available to answer the council's questions. Roberts could also make presentations before city boards and commissions and other groups of residents for the purposes of public education and positive consensus building. 
With good information and without the pressure of having to make a quick decision, the council might come to view the housing issue in a favorable light. There was also a greater likelihood that the new council would assume "ownership" of the proposal if given the time to study and evaluate it. 
However, Calm knew all too well that the ancient Greek adage "to know the good is to do the good" did not always hold true in the real world of politics. And he was sure that the opposition would take advantage of the time factor by pressuring the council to abandon the issue. 
Calm's third option, as he viewed it, was a "hands-off" approach. He could simply let the issue go and wait to see when the council would take it up again. He could direct Roberts to "lay low," so as not to pressure the council in any way. 
If he chose this approach, Calm would, of course, be giving the council maximum latitude to act or not act on the corporation. That approach might ultimately prove to be most effective, because the new council might arrive at its own consensus about the need for the corporation or at least for some type of new housing activity. The council would then feel a high degree of "ownership" of the decision. Besides, Calm knew that so far, none of the new council members had publicly expressed outright opposition to the corporation. 
On the other hand, a do-nothing strategy might backfire. In the absence of impetus from city staff, the opposition might convince the council of its position. Or the housing corporation might get lost in the shuffle of a long list of issues facing the council that summer. 
Calm knew he must choose a tactic. 

James M. Banovetz, ed. Managing Local Government: Cases in Decision Making (Washington, DC: ICMA 1990)