Fort Worth approves change in affordable-housing policy
Fort Worth Star-Telegram (TX), 2014-05-07
May 07 -- FORT WORTH -- To provide housing for its poorest residents, the City Council adopted a development policy Tuesday to raise cash for affordable housing while approving a new housing complex deal that could become a guide for adding other units.
The council voted 7-2 to allow developers seeking tax credits to opt out of providing affordable-housing units within their proposed complexes and instead pay a fee of $200 per unit per year to a trust fund that would later be used to help finance housing for low-income families.
Almost simultaneously, the council, acting as the Fort Worth Housing Finance Corp. , also gave its seal of approval to a $38.6 million , 339-unit complex in the Alliance area. The city agency will act as general partner, developer and owner of the land, thus cutting the costs for the developer.
Jay Chapa , director of the Housing and Economic Development Department , said the deal made to build the housing complex off Westport Parkway and Alta Vista Drive could become a blueprint for how the city adds housing for those who live at 30 percent of the area's median income.
The finance corporation is partnering with Integrated Housing Solutions on the project.
"It is different for us. We usually use tax credits to do these things," Chapa said. "Integrated brought the deal to us, and we reviewed it and talked about it and found it would work for us."
New tax abatement policy
The city's previous housing policy gave tax credits to developers that set aside 20 percent of their project for residents living at 60 to 80 percent of the area's median income, or $39,480 to $52,650 a year for a family of four.
But the city's great affordable-housing need is for those living at 30 percent of the median income, or $19,750 for a family of four. Fort Worth needs nearly 17,000 units for those at 30 percent.
With the policy change, and contingent on council approval, developers can now pay $200 per year per apartment during the agreement's term rather than providing affordable-housing units within the complex.
The $200 payout is based on the average subsidy given to developers to fill the gap between market rents and the required affordable rents. That money would be deposited in the Fort Worth Housing Finance Corp. trust fund to pay for projects aimed at those lowest-income families.
Since November 2005 , the city has approved 11 multifamily developments that received tax incentives, but none of those were aimed at families making 30 percent of the median income.
Had the new buyout policy been in place and been used in each of those deals, the city would have about $9 million in the trust fund for rehabilitation or construction of affordable housing in the next 25 years, Chapa said.
Councilwoman Kelly Allen Gray voted against the change, saying the city is not addressing the need to provide housing now for residents making 30 percent of the area median income.
"What other mechanisms do we have in order to do this, aside from just allowing the developers the option to pay their way out and us as a council kicking a housing disparity down the road?" Gray asked, saying the city needs to find ways to put money into the trust fund in the fiscal 2015 budget.
Councilman Jungus Jordan also voted against the change.
Councilman Danny Scarth , who voted for the change, said the buyout plan is better than the current policy.
"Our policy today doesn't create units at 30 percent. So we aren't giving anything up, but if we adopt the new policy, we do have the option to create some dollars that are flexible," Scarth said.
"Then we can very specifically and directly create some units that are affordable at that lower rate. So I'm willing to give it a shot, because obviously what we are doing today hasn't done it," he said.
The finance corporation will serve as the general partner, developer and owner of the land for the project off Westport Parkway and Alta Vista Drive in far north Fort Worth .
Integrated Housing Solutions, which will secure financing, will build the 22-acre complex and manage the Enclave at Alliance.
"It creates affordable units up in Alliance, where a lot of warehouse jobs are showing up and folks who are making that midincome and can't afford high, high rents," Chapa said.
The complex will have one- to three-bedroom apartments, with 20 units at 30 to 50 percent of the area median income, 166 units at 60 to 80 percent, and 153 units at market rent.
The city will spend $20,000 for professional services related to the project, but the finance corporation is also expected to generate $6.2 million in revenue over 15 years of the project in developer fees and net cash flow.
The partners hope to acquire the land in early August and start construction in mid-August. Construction is expected to be completed on July 1, 2016 , with lease-up by February 2017 .
Caty Hirst , 817-390-7984 Twitter: @catyhirst
(c)2014 the Fort Worth Star-Telegram
Visit the Fort Worth Star-Telegram at www.star-telegram.com
Distributed by MCT Information Services