The affordable-workforce housing needs of Houston are further glaring in the aftermath of the “Tax-Day” flooding event in April, which affected more than 1,800 apartment residences just in the Greenspoint area. The City stepped up to house over 150 families in hotels, and worked with local agencies to provide emergency shelters throughout the city for hundreds of others impacted. A key obstacle during the event was the difficulty of locating units, that could serve as temporary or permanent housing, to transition families displace by flooding into. Four months later, a significant number of residents remain displaced, and numerous tenants have recounted stories of the additional nightmare of landlords who refused to let them out of their leases, forcing them to remain in uninhabitable units. And a significant number have had difficulty finding a housing alternative that falls within their price range, so their lives remain on hold as they hold out hope for a solution.
The Greenspoint narrative is a snapshot of the housing challenges and difficulties faced by so many, a challenge further deepened by Houston’s seeming inability to take full advantage of opportunities to capitalize on developing workforce housing leveraging federal housing tax credits. A recent decision not to authorize a resolution for 4% Housing Tax Credits, places the future of the 2640 Fountainview development, proposed by the Houston Housing Authority (HHA) in limbo. The debate on the development has often overlooked the central issue of the critical need to develop affordable workforce housing in all neighborhoods, particularly in thriving communities like the Galleria. The HHA operates under federal guidelines that require developments in census tracts with higher incomes and good school ratings, to balance out development in historically under-invested communities.
Opponents of the Fountainview development have argued that the $53 million ($240,000 per unit) price tag of the 233-unit development is too high, rather than considering the price is reflective of the cost of building a high quality development on high priced land. Factor in historically high costs of construction, and the need to keep the development unit count low due to school and housing concentration concerns, and you can see how the deal arrives at such a price tag. Development plans usually start out with a loosely constructed financial analysis, but as plans become final, adjustments are made to fit the budget, so it’s reasonable to expect that the development could end up at a lower price than initially proposed. The other factor detractors raised is the $6 million developer fee, which fits within the allowable guidelines of fees for such a development. The fee, only accessible to HHA if the development moves forward, are likely going to be channeled towards other developments they have planned, and it’s likely that HHA would have reduced their fee or deferred a significant portion of it, to help the financing for the deal make, as private developers do in similar circumstances.
Another often misstated assumption has been suggestions of alternative ways HHA could have utilized the construction funds to house more people. The development is slated to be financed with both federal and private funding sources, which come with specific requirements on how those dollars have to be spent. The portion of the financing, covered by federal Community Development Block Grant (CDBG) funds, is earmarked by HUD for development of affordable rental housing. Similarly, the federal housing 4% tax credits have to be sold to a third-party private investor, who provides the cash equity for the project, in exchange for the developer expending those funds in construction of the development. Lastly, the debt financing would require HHA collect sufficient rents in order to cover the annual mortgage payments on the loan. You can clearly see that each funding source for the development, have specific requirements of the funds being utilized to construct a housing development, so without a planned development, again there is no $53 million for HHA to spend.
From the community’s perspective, a workforce housing development is proposed in an affluent area with residents, who chose to live there in part due to the quality of the neighborhood elementary school that’s at full capacity. Developments with the ‘affordable’ or ‘low income’ tag are usually a non-starter, and in numerous instances over the past ten years, such proposals have pit neighborhoods against developers. Communities have found reasons to justify their opposition to such developments, citing factors such as impact on schools, traffic, infrastructure inadequacies, and in this case cost. Over the past few years, several market rate apartments were built tangential to Fountainview Drive, but there are no public accounts of the neighborhood rising up in protest over any of those developments. However, once the proposed plans for the apartments became public, residents found every reason to drive opposition to the development, which makes one wonder, why the sudden angst?
Local news publications have documented what has been a rising tide of workforce housing deals being shelved due to not-in-my-backyard (NIMBY) attitudes. These have included proposals by both the Houston Housing Authority, and separately the Harris County Housing Authority, which were publicly and privately opposed by elected officials who were reacting to community opposition. The HHA ultimately sought to move forward with this development after several other proposals for affordable housing development were rejected over the past few years.
Existing federal law, and a 2015 Supreme Court ruling on a case filed in Texas (ICP vs. TDHCA), have led to HUD emphasizing the goal of ‘Affirmatively Furthering Fair Housing’ (AFFH), and we now have codified into law that ‘disparate impact’ is a considerable factor in how federal housing dollars are spent by state and local housing agencies. Put in laymen’s terms, these two precepts means local and state housing agencies can be held accountable if their spending of federal housing dollars further concentrates affordable workforce housing in low-income and minority communities, regardless of whether they intended to or not. HHA like other housing agencies therefore now have an obligation to pursue developments in affluent areas like the Galleria, with the goal of dispersing pockets of poverty.
A separate overarching issue the City has to reckon with is the rising cost of housing for both renters and homeowners. In the period from 2009 to 2014, several submarkets in Houston experienced a 50% increase in rental and home values. While rents have receded temporarily in some of those submarkets, rental rates are still much higher than they were three years ago, and land costs remain stubbornly high, propping up home values. These facts lead any close observer of housing and demographic trends to the conclusion that Houston needs to act urgently if it hopes to preserve its existing stock of low to moderately priced housing, and must be resolute in implementing a plan to build more housing that can remain affordable long-term.
Houston needs to build workforce housing in all parts of the city, and in doing that has to be intentional in factoring how developments are situated near existing physical infrastructure and access to multimodal transportation. As families with higher incomes make decisions on where to live based on proximity to work or their children’s school, the City must be conscious, when building workforce housing, of the proximity needs of the families that are served. HHA’s data revealed 15,000 potentially eligible residents work within a one-mile radius of the site, who travel more than 10 miles to work each direction. These individuals contribute to the Galleria community, and given the opportunity should be availed a chance to take residence there.
Furthermore, there exists within the Gulfton, Sharpstown, and Tanglewilde areas, a significant contingent of Hispanic and African American families who already live within close proximity of the Galleria, who are left with only aging and deteriorating apartments as their choice of housing. It goes without saying that these hardworking Houstonians deserve to have quality housing options available, where the City is able to make it a possibility.
For the displaced residents of Greenspoint who face a tough and uncertain road ahead, many have no place to turn to find housing options affordable at their income level, placing them and their families at risk of greater long-term insecurity. People often wonder why the issue of workforce housing should be their concern, and the answer simply is that we each have a family member, friend, church member or coworker who faces a high hurdle in meeting their housing expense obligations. So where we have the resources to mitigate the impact, even if for a small segment working families, then we should encourage promoting opportunities to help workforce housing developments become integrated into our communities. We should build replacement housing for displaced residents from Greenspoint to Meyerland, and we should invest in historically underserved communities. We must extend a ladder of opportunity to every American who will grasp on to a rung, and providing safe, quality affordable workforce housing is the first rung of the ladder of upward mobility for many in our community.
Laolu Davies-Yemitan is a real estate broker and developer who specializes in housing, multifamily development, and urban-suburban revitalization. He editorializes on issues related to real estate and public policy. LaoluD.blogspot.com; Twitter: @laoludavies