Naked City

Credit Where Credit Is Due


Credit Where Credit Is Due

It wasn't a great year for low-income renters in Austin. The price of housing continued to soar, a city-financed affordable apartment complex never materialized, the proposed mixed-income Traditional Neighborhood District in East Austin got flattened by SH130, and now this: On the same day, July 30, that Mayor Kirk Watson was heralding the release of an affordable housing task force report, the state housing agency gave a thumbs-down to all but one local application for tax credit-subsidized rental housing. Normally, Austin could expect at least two major properties to be financed by the tax credits, a national program adminstered by the Texas Department of Housing and Community Affairs which subsidizes new apartments for people with modest incomes. This year, however, nine out of 10 proposed projects in Austin were rejected.

Lost in the perilous and arcane TDHCA selection process was a 230-unit complex planned by a nonprofit developer in West Austin, the first affordable rental property ever proposed west of Mo-Pac. The reason given by TDHCA for denying a tax credit to the project, situated adjacent to Hwy. 71 in Oak Hill? "Limited visibility." Walter Moreau, executive director of the Central Texas Mutual Housing Association, which proposed the development, couldn't bear the slight silently. He addressed the TDHCA board, whose members have been accused of favoring developers with whom they have personal or business connections, directly, accusing them of being unduly influenced by lobbyists. Moreau asked the board to reverse their decision to award tax credits to an apartment complex in Georgetown shepherded 'by prominent consultant Joe Bishop for a nonprofit organization in Florida.

The housing agency, of course, did no such thing. But at least one state legislator, Dallas Rep. Harryette Ehrhardt, is seething over the appearance of impropriety in this year's selection process. Her office has begun a legislative inquiry to find out how this year's tax-credit recipients were chosen. Ehrhardt isn't alone in her concerns; for the last three years, the TDHCA has been under siege from state and federal investigators because of the seemingly capricious way it has selected recipients for tax-credit subsidies in the past.

The agency's selection process does allow for some subjectivity in determining who gets credits under the Low Income Tax Credit program, which has been chronically oversubscribed since its inception in 1987. Two years after a 1996 state audit concluded that the agency was allowing conditions that "contributed to a perception of lack of fairness" in the allocation process, disgruntled developers, along with Ehrhardt, got the attention of Governor Bush, who is responsible for appointing TDHCA board members and the agency's executive director. Less than a month later, TDHCA executive director Larry Paul Manley left his position. Now, board member Florita Bell Griffin, who sits on the agency's tax-credit committee, is under investigation by the FBI, which could release the findings of its probe before the end of the year.

But investigative scrutiny didn't prevent oddities from showing up in the selection process this year. For instance, six deals worth $72 million -- about a third of all allocations -- were bumped to the top of the list one week before the board met to hand out the credits, although those projects had originally been low-priority. Three of those projects involved the same developer. And the reservations TDHCA staff had about the apartment site in West Austin didn't stop other low-ranked developments from being approved: Two Houston projects, controlled by the same developer, got tax credits despite being ranked 41st and 32nd out of 43 sites in the area.

Furthermore, the nonprofit development in Georgetown, which competed directly with Central Texas Mutual Housing's West Austin site, was helped along by former TDHCA director Manley, who has admitted to a "limited role" in the project, but says adamantly that he "did not lobby" for the organization, Affordable Housing Solutions for Florida.

Manley, meanwhile, says that Ehrhardt's recent inquiry is motivated by animosity toward the housing agency. "The main problem is there's not enough money to pass out to all the worthy programs that apply," Manley says. "People who are trying to find other reasons why they don't succeed are tilting at windmills." But Ehrhardt says that with more than 2 million Texans spending at least 50% of their monthly incomes on housing, the tax-credit program -- one of the only large-scale means the state has to leverage affordable rental property -- must work fairly. "I want this department ... to effectively and efficiently provide affordable housing," Ehrhardt says. "We have to be very sure that it is not in any way questionable as to how they're doing that."

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KEYWORDS FOR THIS STORY

texas department of housing and community affairs, walter moreau, harryette erhardt, low-income, subsidized, housing

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