Why Affordable Housing Could Soon Be Coming To Houston's Most Expensive Districts

[BeerNut]

Why affordable housing could soon be coming to Houston's most expensive districts

 

Quote

Houston’s housing department is using its recommendations for tax credits this year to encourage affordable housing developments across the city in a bid to avoid concentrating them in lower-income neighborhoods where they typically are placed.

 

[BEES?!]

I think this will be really great. One of the reasons so many people are pushed out to the suburbs is, frankly, housing is kind of expensive closer to town. Right now, it sort of feels like a lot of multifamily development going is geared towards the high-end/luxury market. Which is fine, but it's leaving a massive gap for people who aren't making big piles of money. Working-class people, disabled people on fixed incomes- don't they deserve the good access to walkable areas, centers of employment, hospitals, etc., too?

 

How do most of these projects determine 'affordability'? Is it tied to a percentage of an area's median income? Are these projects exclusively low-income or do they offer tax credits for mixed-income housing as well?

[cspwal]

"Affordable housing" is usually tied to your household income versus the median income.  The Chronicle's Looped in podcast just had a pretty good episode explaining a few of the different projects.

 

One project had tiers of housing - a certain amount limited to people making a low income, a certain amount limited to people making a little more, and then "market rate" housing.  The ones that were limited to lower incomes tied the rent to your income, for example if you made $10,000 a year, your rent would be $250/mo, while if you made $20,000 a year, your rent would be $500/mo.

 

The market rate units would be rented out for whatever the building managers wanted to charge - it might be similar to other apartments in the area, it might be more to try to offset the affordable housing, or it might be less because they have trouble getting people to pay the full rent they want to charge.  It would depend on how the apartments fared on the market.

[s3mh]

The city gave out 15k a unit tax breaks to developers building luxury high rises in downtown Houston.  The city damn well better do at least as much for low income housing.  Over the next ten years, gentrification on the East Side and near northside is going to take off in a big way and all but catch up to the rest of the inner loop.  That will mean that anyone in Houston who cannot afford $1,000+ a month in rent will have to live way outside the loop and have a very long commute into the city and may not be able to find employment in the city if they cannot make public transportation work.  

[Houston19514]

2 hours ago, s3mh said:

The city gave out 15k a unit tax breaks to developers building luxury high rises in downtown Houston.  The city damn well better do at least as much for low income housing.  Over the next ten years, gentrification on the East Side and near northside is going to take off in a big way and all but catch up to the rest of the inner loop.  That will mean that anyone in Houston who cannot afford $1,000+ a month in rent will have to live way outside the loop and have a very long commute into the city and may not be able to find employment in the city if they cannot make public transportation work.  

 

The maximum cost of those downtown residential tax breaks, if they are all used, will be $75 Million over 15 years.  The City's annual housing and community development budget is more than $500 Million.

[kbates2]

3 hours ago, s3mh said:

The city gave out 15k a unit tax breaks to developers building luxury high rises in downtown Houston.  The city damn well better do at least as much for low income housing.  Over the next ten years, gentrification on the East Side and near northside is going to take off in a big way and all but catch up to the rest of the inner loop.  That will mean that anyone in Houston who cannot afford $1,000+ a month in rent will have to live way outside the loop and have a very long commute into the city and may not be able to find employment in the city if they cannot make public transportation work.  

 

This was also a tax break to incentivize development that goes on to significantly increase the tax coffers in the future.  An affordable housing development would have a lower fair value and thus bring in less tax revenue making the development make less economic sense.  I am not saying that it would make no sense at all, just not as much sense towards specifically increasing your tax base.

[s3mh]

3 hours ago, Houston19514 said:

 

The maximum cost of those downtown residential tax breaks, if they are all used, will be $75 Million over 15 years.  The City's annual housing and community development budget is more than $500 Million.

The city's budget is $500k.  HCDD just administers the distribution of funding from the Feds.  The Feds sent Texas @$5 bil after Harvey.  About $1.1 bil got sent to Houston.  Of that HCDD has put up $100 mil for multifamily.  But that is really a Harvey recovery program.  

 

The low income housing tax credit also comes from the Feds and is administered by the City.  It is a complicated and controversial program.  

 

The Houston Housing Authority has the big money.  But that is also all from the State and Feds.  And that money is for running section 8, maintaining public housing etc.  HHA does not build that much anymore.  The LIHTC program was intended to replace  government run housing.  

 

The City of Houston can and should be far more aggressive in building affordable housing.  Austin used 380 agreements to get developers to set aside a percentage of units for affordable housing.  

 

 

[s3mh]

2 hours ago, kbates2 said:

 

This was also a tax break to incentivize development that goes on to significantly increase the tax coffers in the future.  An affordable housing development would have a lower fair value and thus bring in less tax revenue making the development make less economic sense.  I am not saying that it would make no sense at all, just not as much sense towards specifically increasing your tax base.

 

The argument makes the assumption that the incentive was needed.  It was not.  There are over two thousand multifamily units under development in the Heights in addition to about another 1250 that were built from about the time the downtown living initiative went into place.  No one needed a $15k tax credit to build those units.  

 

Without a significant increase in affordable housing, Houston will go the way of San Fran, Portland, Seattle, etc.  Piles of homeless people everywhere, teachers, fire fighters, police, etc. having to live way out in the burbs and housing costs eating into Houston's ability to compete for new businesses.  And the last one is a huge issue as we have no Mt. Rainier, Golden Gate Bridge or Mt. Hood.  

[Houston19514]

41 minutes ago, s3mh said:

The city's budget is $500k.  HCDD just administers the distribution of funding from the Feds.  The Feds sent Texas @$5 bil after Harvey.  About $1.1 bil got sent to Houston.  Of that HCDD has put up $100 mil for multifamily.  But that is really a Harvey recovery program.  

 

The low income housing tax credit also comes from the Feds and is administered by the City.  It is a complicated and controversial program.  

 

The Houston Housing Authority has the big money.  But that is also all from the State and Feds.  And that money is for running section 8, maintaining public housing etc.  HHA does not build that much anymore.  The LIHTC program was intended to replace  government run housing.  

 

The City of Houston can and should be far more aggressive in building affordable housing.  Austin used 380 agreements to get developers to set aside a percentage of units for affordable housing.  

 

 

 

I stand corrected.  Nevertheless, as you  mentioned, there is a lot of taxpayer money (whether it is federal, state or local tax money means nothing) that goes towards affordable and low-income housing in Houston.  Any idea what those amounts are? 

[BeerNut]

4 hours ago, s3mh said:

 

The argument makes the assumption that the incentive was needed.  It was not.  There are over two thousand multifamily units under development in the Heights in addition to about another 1250 that were built from about the time the downtown living initiative went into place.  No one needed a $15k tax credit to build those units.  

 

Without a significant increase in affordable housing, Houston will go the way of San Fran, Portland, Seattle, etc.  Piles of homeless people everywhere, teachers, fire fighters, police, etc. having to live way out in the burbs and housing costs eating into Houston's ability to compete for new businesses.  And the last one is a huge issue as we have no Mt. Rainier, Golden Gate Bridge or Mt. Hood.  

 

It was needed to transition downtown area from an area no one wanted to be after dark to a destination.  Which was money well spent to quickly make this happen instead of waiting for the market to do something.  Houston's an easier sell to conventions and sporting events if you have a vibrant downtown.  

 

Saying Houston will go the way of those west coast cities is laughable.  Houston has probably added more housing units in the last five years than all those cities have in the past decade.  Yes, housing is considerably more expensive inside the loop than it was a decade a go but there is still plenty of affordable housing not too far outside of 610.   

[Houston19514]

38 minutes ago, s3mh said:

 

The argument makes the assumption that the incentive was needed.  It was not.  There are over two thousand multifamily units under development in the Heights in addition to about another 1250 that were built from about the time the downtown living initiative went into place.  No one needed a $15k tax credit to build those units. 

 

Whether or not one agrees with the goals of the downtown living initiative,  development in the Heights tells us nothing about whether the subsidies were necessary to get residential development downtown.

[august948]

43 minutes ago, s3mh said:

 

The argument makes the assumption that the incentive was needed.  It was not.  There are over two thousand multifamily units under development in the Heights in addition to about another 1250 that were built from about the time the downtown living initiative went into place.  No one needed a $15k tax credit to build those units.  

 

Without a significant increase in affordable housing, Houston will go the way of San Fran, Portland, Seattle, etc.  Piles of homeless people everywhere, teachers, fire fighters, police, etc. having to live way out in the burbs and housing costs eating into Houston's ability to compete for new businesses.  And the last one is a huge issue as we have no Mt. Rainier, Golden Gate Bridge or Mt. Hood.  

 

It's a bit overdramatic to suggest that we're on our way to joining SF, Portland, and Seattle in this regard.  Two of those have significant geographic limitations and all three have shot themselves in the foot repeatedly with bureaucratic policies that artificially limit the market. Houston has always been much more market driven and we've got the Katy prairie instead of Puget Sound and San Francisco Bay.

[BEES?!]

I don't think we'll go the way of the more expensive parts of the country- for one we don't have the same physical limitations that put a cap on growth like the PNW/West Coast cities do.

Plus we have a much more relaxed attitude, for better or for worse, toward development, which I think helps keep housing costs low. (And lets us densify much faster, being real)

There seems to be active sabotage in some cities, like SF, toward building more housing, which is a major problem there. You don't have enough housing, you have people trying to move in for jobs, and you have tons of red tape in place that severely limits what housing can be built and where- it's like a perfect storm.

 

[zaphod]

In order for prices to rise out of control don't you also need rich people who will pay them? Supply and demand issues may be the root cause but the high incomes of tech and finance people must also play a role?

 

Houston's only forseeable driver of that kind of income tsunami is the oil and gas industry. The O&G industry in Houston is definitely cooling down, and every prediction I see is more and more pessimistic. With the concerns about climate change it will probably never boom again the way it did a decade ago, or in the early 1980s. Houston is probably peaking right now, and will never grow its economy quite as fast as it did this last decade. I think we will mature and grow less in every decade from now on, eventually settling down into a slow growth state similar to other major cities. The future of the US is demographic aging, collapsing birth rates, and harsher restrictions on immigration. So the country as a whole will not grow as much. I just don't see what would sustain the 2010's rate of expansion then.

 

So yeah, TLDR, I don't worry about us getting too expensive. Established attractive areas will continue to go up in price and there will be more and more infill and high rise development and the western half of the regional urban core establishes itself. But areas further out will eventually just become settled and not change as much, IMO.

 

I'm not an expert on this subject so my opinion may be worthless...