Build on affordable housing successes
Many Texans are barely hanging on; now is not the time to pull away the ladder.
To understand just how welcome the new luxury apartment complex is that’s rising at the corner of West Dallas and Montrose, recall the fire that consumed the $50 million development at that site in 2014.
Seconds before the five-story structure collapsed in flames, a construction worker stuck on the top floor swung himself like Spider-Man down to a lower balcony and then leapt off the railing — into the arms of a waiting firefighter.
A welder’s torch had apparently sparked the fire, but the dramatic scene captured on video of the dangling worker and the smoking wreckage begged for interpretation as a symbol for Houston’s explosive boom and bust cycle. For years, Houston had ridden high on oil and gas while the rest of America was mired in the hangover from the 2008 Great Recession. Across Houston, aging garden apartments came down fast to make way for luxury towers and mid-rises.
When oil prices crashed in June, just as the high-end developments came online, renters looking for a deal on $3,000-a-month, two-bedroom apartments scored. But what Houston needed then, and still does, is housing affordable to that construction worker and the firefighter who saved him.
In the seven years since, good news to that end has been scarce. The math for developers and their investors for close-in affordable housing doesn’t work — lower rents can’t balance the cost of land and construction.
So policymakers and housing officials had to get creative. The 367-unit luxury development that broke ground this week at 2400 W. Dallas shows it’s working. Though the new building is also five stories and will feature chichi amenities like a sky lounge with downtown views, there’s a crucial difference between it and what burned down in 2014. The new complex was built in partnership with the Houston Housing Authority through the creation of a Public Finance Corporation. That means the developer technically leases rather than owns the property and therefore pays no property tax. In return, the developer must reserve 50 percent of units for households earning below $63,000, which i s 80 percent of the area median income for a family of four.
“Without creative public-private partnerships — Houston has no zoning, land is expensive, construction costs are what they are — it’s hard to make affordable housing make sense in a more affluent part of town,” said Philip Morgan, CEO of the Morgan Group, which has developed projects similar to the West Dallas property. “Without any type of help, it is essentially impossible to build.”
The state law that enabled the West Dallas deal was signed in 2015 by the governor. Since 2018, the Houston Housing Authority has used the tool in partnership with private developers to build or acquire 16 properties and has added 2,705 affordable units.
The program comes with a cost — as it removes from area tax rolls millions of dollars in property that, if developed through other means, would generate revenue for cities, schools and other entities. State Sen. Paul Bettencourt thinks that’s too high a price, and introduced a bill Friday that could make such projects all but impossible. Senate Bill 591 would limit the arrangements to properties that set aside more units for those making far less than $63,000 and give every taxing authority affected by the project veto power over it.
“We cannot have entire apartment complexes wiped from the tax roles without any approval from the taxing entities that are affected,” Bettencourt told the editorial board, citing a San Antonio Express-News article on the explosion of these developments and a University of Texas study calling for reforms.
Some additional checks and balances make sense, but Houston’s housing needs are too urgent to give veto power to a long list of taxing entities and effectively kill a program that has created thousands of affordable units.
If Bettencourt is truly concerned about boosting housing for people who make far less than the 80 percent threshold the Dallas project is targeting, he has plenty of company. Many housing advocates also want more of a focus on finding homes even the very poor can afford.
“Affordable to who?” asks Zoe Middleton, the Houston and Southeast Texas co-director of Texas Housers. “We are making progress but not deep enough.” She says units reserved for families at 50 percent or 60 percent area median income are most needed. These would help grocery store and other retail workers, people we now recognize as heroes and officially acknowledge as essential.
She’s right, of course: Houston needs more affordable housing for all levels of income. Fortunately, there has been some good news on this front in recent years. Under Mayor Sylvester Turner, Housing and Community Development has used disaster recovery money to guarantee units for a wide range of incomes.
The city has inked 30 deals with private developers using more than
$300 million of Harvey funds coupled with low-income housing federal tax credits to build 3,100 affordable units. Ten of the developments have broken ground.
In 2016, this editorial board criticized Turner for opposing a plan for affordable housing in the Galleria Area on Fountain View Drive, as he seemed to bow to “not-in-my-backyard” forces. In response, he argued the details of that deal did not pass muster and he had asked housing leaders to build projects “in all areas of the city.” While we still count the Fountain View development as a lost opportunity, Turner can point to fresh concrete and rebar in the ground in nearly every city council district as proof he stood by his commitment.
“The days of concentrating affordable homes in certain parts of the city are over,” Tom McCasland, director of Houston’s Community and Housing Development Department, told the board.
The hard truth, however, is that these steps are not fast and far enough to truly meet a worsening crisis.
“We need significant effort quickly,” said Mark Thiele, the interim president and CEO of the Houston Housing Authority. “Locally, our overall waiting list is 72,730 for public housing and 25,571 for vouchers. Nationally, there is subsidy available only for 1 in 5 households in need.”
To keep making progress, we need all the tools the city can find — help for workers at the bottom of the pay scale as well as those whose pay hovers around the area median income. Unless the Texas Legislature creates better funding sources or figures out a workable form of accountability, we urge leaders at every level of government to continue working with the bipartisan-backed tools already in place. Many Texans are barely hanging on and now is not the time to pull away the ladder.