Naked City

Extra Credit

This year's applications for tax-credit apartment complexes are all in at the state housing agency, and once again, Austin faces stiff competition from surrounding communities for state-administered affordable housing. Outlying areas such as Cedar Park, Leander, Lockhart, and Kyle have attracted more proposals than the city proper, where housing costs are the highest in the state and even middle-income professionals can barely afford to live.

Tax-credit housing, subsidized through federal tax credits parceled out through the Texas Dept. of Housing and Community Affairs (TDHCA), is specifically designed for renters of low and moderate incomes. The tax-credit program has put more reasonably priced housing on the ground in Texas than any other program, and serves as the only incentive for new affordable housing construction in many smaller communities.

But TDHCA can only fund about one in five tax-credit projects that apply, and its distribution of credits has proven controversial. In April, a Sunset Commission report found that the agency has failed to put housing where it is most needed. Rural and border regions have been the biggest losers, but Austin, too, has suffered from neglect. Last year, only one new development, located on East William Cannon, was approved in Austin while three others landed in Georgetown, Dripping Springs, and Wimberley ("House of Cards," Oct. 22, 1999).

Developers say Austin's land costs and regulatory hassles compel them to look outside city limits for construction sites. But what they sometimes fail to mention is that while development costs in outlying areas are lower, the rents they are allowed to charge by the tax-credit program are about the same as they would be in the urban core. All of the sites in Austin's vicinity (see map) are included in the Austin Metropolitan Statistical Area, meaning that their rent schedules will be based on Austin's median family income, which is relatively high compared to other regions. That means developers will be able to pocket a larger margin of the tax credits, while areas with the most pressing housing needs will go without new subsidized apartments.

State Rep. Harryette Ehrhardt, D-Dallas, has criticized the state housing agency for allowing business principles to dominate its tax-credit allocation process, which last year left Texas' border regions high and dry while urban areas in Houston and Dallas had tax-credit projects practically stacked on top of one another. In Travis County this year, applications aren't rolling in from needy rural areas around Jonestown or Mustang Ridge, but they are from bedroom communities such as Kyle and Cedar Park.

In the Austin area, proposed projects include a 220-unit complex in Cedar Park and one in the unlikely province of Southwest Austin. The Cedar Park project, submitted by Patsy Lynch, is requesting a whopping $1,051,202 in credits for 132 affordable units, a per-unit cost well above typical developments. The West Austin project on Old Bee Caves Road, submitted by Monday Esiere, the recipient of last year's only tax-credit award in Austin, is located curiously close to a site proposed last year by the nonprofit Central Texas Mutual Housing Association. That site was snubbed by TDHCA's tax-credit manager as unattractive. This year, Esiere has requested $756,220 in credits to build 96 affordable units, compared to CTMHA's request last year for $679,909 to build 120 units.

Will TDHCA find reasons to justify the higher-priced projects? The agency hasn't shied away from questionably expensive developments in the past.

The agency will hold a public hearing on the 2000 tax-credit application list this Friday, May 19, at 10am at the TDHCA Headquarters at 507 Sabine, in the fourth-floor boardroom. It's the first of four hearings around the state; see for the full schedule. Or you can send written remarks to: Cherno Njie, LIHTC Program Manager, Texas Dept. of Housing and Community Affairs, POB 13941, Austin, TX 78711-3941, or by fax to 476-0438 or 475-0764.

Got something to say on the subject? Send a letter to the editor.

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Texas Department of Housing and Community Affairs, tax-credit housing program, Harryette Ehrhardt, Patsy Lynch, Monday Esiere, Central Texas MutualHousing Association

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