Naked City

This Old House

Affordable housing advocates have been saying for years that the Texas Dept. of Housing and Community Affairs places the interests of developers ahead of the needs of low-income Texans. Now, a staff report from the state Sunset Advisory Commission suggests the critics may be right. In fact, the report says, TDHCA has fallen so short of its mission to house poor families, and proven so incorrigible to legislative reforms, that the agency should be given two years to either shape up or close its doors. The report is now in the hands of commission members, who will accept an official response from the agency and hold public hearings next month before signing off on formal recommendations.

The report criticizes the state housing agency for directing allocations toward wealthier urban neighborhoods and called the agency's current board structure a "relic" that is "not adequate for the agency and its current mission." The majority of TDHCA board members, the report notes, are professionals in the housing industry, which "creates potential conflicts of interest" and "produces unintended biases regarding the State's housing priorities." Unfavorable practices that have resulted include:

  • an "unfriendly" climate for public scrutiny and comment;

  • failure to prevent discrimination against poor applicants in apartment units that receive TDHCA allocations;

  • a lack of rewards and incentives for nonprofit developers who build affordable housing at lower costs, and;

  • failure to check developers' past histories before awarding them further subsidies.

    Furthermore, the report adds, the TDHCA board has repeatedly rebuffed legislative attempts to make the agency's allocation process more equitable, accountable, and effective. Last year, it notes, state Rep. Harryette Ehrhardt (D-Dallas) convened a meeting of housing industry experts to hammer out revised rules for distributing the agency's allocations; yet those recommendations were summarily ignored.

    The housing agency's subsidy packages for affordable housing builders consist primarily of federal tax credits and low-interest bonds; developers who take advantage of these low-cost financing incentives agree to reserve a portion of their new apartments for renters in lower income ranges. The report states that despite legislative mandates to invest at least 15% of allocations on housing for the state's most desperate residents, TDHCA has never come close to hitting that goal, directing just 6% of its funds to that purpose in 1998, and 10% in 1999. A large portion of those appropriations were funneled through the federal Section 8 program, which by law can only be spent on the poorest residents. But the agency's tax credit allocations -- by far the biggest, most lucrative, and most integrity-challenged of all TDHCA's handouts -- flows almost exclusively into areas where median incomes are relatively high: Higher-income counties have received twice the per-capita allocations of tax credits as the lowest-income areas, the report finds.

    One of the Sunset report's recommendations for fixing the agency is to trim the nine-member board down to five members who show "demonstrated interest in housing and community support." It also recommends capping tax credit allocations to any individual to $2.4 million over three years. The board had recently lowered that cap to $1.8 million per year.

    TDHCA board member Michael E. Jones, who replaced Don Bethel as chair just last week, says he disagrees with the assertion that TDHCA has become a tool of the housing industry. Jones says that the Sunset Commission and board members are "on the same wavelength" in crafting reforms, and that the report is not so much a criticism of the agency as it is a "suggestion as to how to improve services to Texans." Jones adds, however, that he doesn't yet understand how some changes, such as the five-member board, would be helpful. John Henneberger of the Texas Low Income Housing Information Service says he believes that board membership should actually be pared down to three full-time, paid commissioners, much like the state Public Utility Commission. That way, he says, TDHCA officials will be more accountable and in better control of agency programs. "What I fear is that if you pull off the housing experts [now serving on the board], then you end up with the staff running the agency," he says.

    The Sunset Commission will not make a final decision on which recommendations to forward to the 2001 Legislature until June 21. Commission chair Fred Bosse (D-Houston) says that in general he assumes that a Sunset staff report "is gospel until proven otherwise." With the exception of the Texas Department of Economic Development, adds Bosse, he's never seen an agency more in need of a structural shake-up than TDHCA. A two-year probationary period, he says, would give the Lege a "pretty good hammer" for enforcing reforms on the agency. But commission vice chair Sen. Chris Harris (R-Arlington) says that given TDHCA's history of intransigence, he doubts the agency will ever fix itself. Harris says the solution is to dissolve the agency and reconstitute it with a new board and new mission. "We have to take very punitive action," he says, "I don't see any other choice."

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    Sunset Advisory Commission, Texas Department of Housing and Community Affairs, Harryette Ehrhardt, Don Bethel, Michael E. Jones, John Henneberger, Texas Low Income Housing Information Service, Fred Bosse, Chris Harris

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