Last week, mediated talks broke down between John Lewis Community Services and the Taylor Heights Neighborhood Coalition regarding the planned Cobblestone Terrace affordable-housing development in central Davenport.

With negotiations at a standstill, John Lewis is now moving forward with its plan for 10 single-family homes on a two-and-a-half-acre site, despite the continued neighborhood opposition.

It might seem like a typical not-in-my-backyard spat between a neighborhood and a social-service agency, but the implications are larger. For one thing, neighborhood representatives claim that John Lewis has conducted itself without concern for the well-being of the Taylor Heights area, trying to quietly sneak the development through and then negotiating in bad faith when residents objected to various components of the plan.

That's only part of the story. John Lewis says - probably correctly - that no financially workable version of the Cobblestone Terrace project would have met with the approval of the Taylor Heights neighborhood. The agency determined that Cobblestone Terrace was only viable with at least 10 single-family homes, and the Taylor Heights group has said that it might be willing to support a project with seven.

Furthermore, Taylor Heights representatives insist that John Lewis agreed at a December 22 meeting that it would not submit a new plan to the Iowa Finance Authority without the consent of the neighborhood group, which is exactly what John Lewis did earlier this month. The claim of an agreement has been denied by John Lewis' executive director, a representative of Iowa Finance Authority who was at the meeting, and a city official who participated in the meeting by phone.

But the larger issue is that for a low-income housing development funded almost exclusively with taxpayer money, there has been virtually no public process through which neighbors could express their concerns. Were it not for an anticipated zoning change, residents of Taylor Heights think they might not have been told about Cobblestone Terrace until it was too late to do anything about it.

Talks Break Down

John Lewis Community Services, which has specialized in services for homeless people, conceived Cobblestone Terrace in 2002 as 20-townhome project at the northwest corner of Myrtle and 12th streets, designed to help low-income people buy a home. The townhomes would be rentals, but $50 of each month's rent would be set aside for down-payment assistance. When Cobblestone Terrace turns 15 years old, residents would have the option to purchase their homes, with the help of the money they'd saved through the program.

But when Taylor Heights residents found out about Cobblestone Terrace last year, they viewed it as a threat to their neighborhood, adding rental units to a neighborhood whose housing stock is already one-third rental. In addition, the concentration of units was too high, they argued, and beyond that, the aging infrastructure - streets and sewers - of the area couldn't handle the stress. The units were too small, with little common living space.

"So much about it puts the neighborhood at risk," said Cathryn Lass, a representative of the Taylor Heights Neighborhood Coalition.

Because of residents' concerns, John Lewis re-configured the project, settling on 14 freestanding single-family homes. But the Taylor Heights neighborhood group still objected to Cobblestone Terrace.

Davenport Mayor Charlie Brooke encouraged the two sides to enter mediation about the project. John Lewis and neighborhood representatives agreed and began mediation in December.

At first blush, it might appear the neighborhood won. Earlier this month, John Lewis submitted a new proposal for 10 single-family homes - half the project's original size. The Iowa Finance Authority (IFA), one of the project's funding agencies, approved the proposal last week, according to Tim Waddell, the agency's tax-credit manager. And John Lewis said each house will now have a one-car garage, something the neighborhood had requested.

But neighborhood representatives said they're still not happy, and claim that John Lewis has acted in bad faith with its latest proposal.

The mediation began December 15, and John Lewis and the neighborhood group made a joint statement to the Davenport City Council on December 17. The two parties said that they agreed to meet with the Iowa Finance Authority on December 22 to see if the agency would consider a "material change" - a reduction in the number of units - and that John Lewis would delay seeking final platting of the property.

What happened at the December 22 meeting is a point of contention. Lass and Jennifer Olsen, another representative of the Taylor Heights Neighborhood Coalition, claim that John Lewis Community Services explicitly agreed that the agency would work with the neighborhood group and would not submit a new proposal without the approval of the Taylor Heights residents.

Kate Ridge, executive director of John Lewis, said there was no such agreement. Furthermore, Waddell said that he didn't recall any agreement of that nature, and if there was one, "it wasn't something I or IFA was involved in." Bruce Berger, Davenport's manager of housing and community re-development, participated in the meeting by phone. When asked about a verbal pact that John Lewis would get the approval of Taylor Heights before re-submitting, he said there was no agreement "to my knowledge. ... I didn't hear that."

At an informal meeting on January 6, John Lewis staff told Taylor Heights representatives that they had re-submitted the Cobblestone Terrace project with 10 housing units. "They broke our agreement," Olsen said. "It's a trust issue."

That's when the mediation process began to break down, according to the neighborhood group. The two sides met again on January 9, and "we entered that meeting with a whole new understanding of who we were dealing with," Lass said.

Joe Polaschek, an attorney representing John Lewis, said the neighborhood group misunderstood what the agency had done by submitting a new application with the Iowa Finance Authority. "They mistook our act of going and getting this approval ... as somehow subterfuging our working together," Polaschek said. "Our intent was not to stifle the neighbors. The intent was to be able to go to mediation with a bottom-line number" of units, below which the project would not be financially feasible. "That number happened to be 10," he said.

Ridge added that only the number of units was submitted to IFA. "The rest of the plan was something that would continue to be mediated," she said.

Olsen and Lass presented the new 10-unit John Lewis plan to the neighborhood at a meeting on January 13. "The trust issue was huge," Lass said. "People couldn't get over it. It was very clear to them that their input was never truly sought."

Last week's mediation session never really started. Olsen and Lass said they would not continue with the mediation process, and then asked John Lewis Community Services to re-locate the project and offered assistance in finding an alternative use for the Taylor Heights land.

Olsen and Lass said they found out later that day from reporters that John Lewis has decided to move forward with the project at the 12th and Myrtle site.

Where's the Public Process?

The Taylor Heights group has been skeptical of John Lewis Community Services since the middle of last year. From the outset, Lass and Olsen said, it seemed to them that the agency was trying to move the project forward as quietly as possible. A flyer was distributed in the neighborhood on May 16, 2003, announcing two meetings about Cobblestone Terrace scheduled for May 21.

At the time, because of the project's planned multi-family buildings, John Lewis would have needed city-council approval to switch the property from R4 zoning to Planned Unit Development.

It's this point that irks neighbors the most. If John Lewis had proposed 20 freestanding single-family homes on the property, instead of townhomes, it never would have needed approval from the city council, and residents think they might not have found out about the project until ground was broken. Even though the $2.6-million Cobblestone Terrace project uses federal money channeled through the city and state, there was no public process about how that money would be used. "I think it's a civic embarrassment that this project has developed this far ... without a public process," Lass said.

Olsen and Lass said that the state agencies that are funding the project and the City of Davenport, which is contributing a $220,000 loan, need to develop a public process that ensures neighborhoods have a say in affordable-housing initiatives such as Cobblestone Terrace. (The project also includes $1.6 million in tax credits, and nearly $600,000 in the form of a HOME program loan from the State of Iowa.)

Ridge said that John Lewis, which planned the project in fall 2002 and submitted an application in November 2002, should have contacted neighbors sooner. "We made a mistake ... by not going to the neighbors early on," she said.

But the point is that there is no requirement from any of the public agencies funding the project that John Lewis get the blessing of the neighborhood before it moves forward.

And the neighborhood now has few options open to it to stop or alter the project. An environmental study is in-process, Berger said, and might be finished in a few weeks. Polaschek said John Lewis will ask for plat approval from the Davenport City Council Community Development Committee on January 29 and plans for a spring groundbreaking.

So what's wrong with the Cobblestone Terrace project?

Lass, who has years of experience with tax-credit projects as a staff member of Project Now in Illinois, wondered why she opposed an affordable-housing project. "'Why do I think I'm against this?' It took me a long time to figure this out," she said.

Lass and Olsen stressed that they have problems with the project's details, not its concept.

Density was a key issue. For one thing, it's generally believed that low-income housing works best when it's integrated in small numbers into a stable neighborhood, rather than concentrated in one place.

But there are plenty of other reasons the Taylor Heights group opposes the project. "John Lewis has been really stuck on the number" of units, Olsen said. But "there's no one issue."

Although sold as a home-ownership program, the Taylor Heights group feels the project will be glorified rental properties because of turnover.

"This was never intended as a home-ownership program," Olsen said. John Lewis "found the path of least resistance," Lass added, saying that John Lewis applied for the ROSE - Rental to Ownership Savings Equity - money because there wasn't much competition for it.

Under ROSE, $50 of a person's monthly rent ($438 for a three-bedroom house or $548 for a four-bedroom) is set aside. If that person then decides to buy a home - no matter where or when - that money is used for down-payment assistance. For instance, a person living in the Cobblestone Terrace project could leave after two years with $1,200 toward the down payment on a house.

This raises several issues for neighbors. For one, the Cobblestone Terrace houses won't be available for purchase until 15 years after the project starts.

In addition, the neighborhood group argues that the Cobblestone Terrace houses are so small - the three-bedroom houses will have roughly 1,200 square feet, while four-bedroom units will have 1,300 - that few people would want to purchase them, Lass and Olsen said.

Because of those things, the Taylor Heights group thinks that the ROSE program actually provides an incentive for people to move out of Cobblestone Terrace, thus creating more turnover in the neighborhood. It might be a home-ownership program, but not for their neighborhood.

Another issue is how much would be left on the mortgage after the 15-year rental period. Kris Clements, director of property services for John Lewis, said that the remaining mortgage on the homes after the 15-year rental period would be between $50,000 and $130,000, depending on whether the interest is forgiven in the tax-credit program. Taylor Heights representatives think the higher figure would make it difficult for lower-income people to afford. Clements countered that $130,000 in 15 years has a present-dollars value of about $84,000.

The Taylor Heights group is also concerned that John Taylor is using the project as a source of income. The project includes a $200,000 developer fee over the course of its 15-year life, for example.

It's an open question whether the neighborhood would have agreed to any version of the Cobblestone Terrace project.

Affordable housing always carries with it some risk of failure, and Lass and Olsen said their neighborhood is too fragile as it is, with the high percentage of rental properties and high crime. "This project should be put in an area that can withstand its failure," Olsen said.

Furthermore, Lass said that "we don't want any more institutionalization of this neighborhood" - an area that already includes the Kahl home, Friendly House, and Jefferson Edison elementary school.

That suggests that John Lewis - which has no experience with low-income housing tax-credit projects - would never meet muster with the neighborhood group.

That's certainly how John Lewis views it. "Zero was the only number" of units the neighborhood would accept, Polaschek said. "Why waste our time? Did you really come into the mediation willing to negotiate in good faith?

"I think the neighbors as a whole gave up a lot of things they could have been involved with," he added, including resident screening, the layout of the units on the land, the appearance of the buildings, and site improvements.

He said that although John Lewis won't be working any longer with the Taylor Heights neighborhood group, "we will continue to work with the adjoining property owners."

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