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New Texas rules cause affordable housing problems

Limiting State’s city dwellers

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Recent rule changes to Texas housing subsidies may be creating additional barriers to low-income housing developments, according to The Texas Tribune:

In many ways, the planned site for a huge affordable apartment complex in South Dallas seemed perfect.

The project, known as Hatcher Square, sits next to a train station and bus lines; it is close to jobs, churches and community centers, and surrounding residents have widely supported its construction.

But according to its backers, Hatcher Square will be all but impossible to build under new state rules that govern the lucrative subsidies developers rely on to build affordable housing.

The rule changes, approved in late 2011, were intended to address two major concerns: that the Texas Department of Housing and Community Affairs has unfairly funneled housing for the poor into low-income, minority areas; and that the agency’s board was using its power over subsidies too freely and without sufficient transparency.

Many developers and affordable housing advocates agree that the new rules were drafted with good intentions. But they fear that the changes could make it much more difficult for projects to be built in cities.

Studies have shown that building low-income housing in higher-income areas can dramatically improve the life chances of poorer families, who benefit from better schools and safer neighborhoods, for instance. But advocates of inner-city housing say families who make that move also can lose the benefits of public transportation, and can lose touch with their extended families and community support networks.

“It is going to limit the diversity of the types of projects that are built,” said John Greenan, executive director of the Central Dallas Community Development Corporation. “We’re going to see projects in exurban areas where they have good schools and where it doesn’t have a high minority population.”

The Rev. Donald Parish, a South Dallas pastor involved in the Hatcher Square project, said he understands that the state shifted its rules in an attempt to correct problems with its policies. “But this makes it impossible to do a development in situations like ours,” he said, “where you have decades of red-lining and the only way to get a development done is to have help.”

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A tough road for projects in poor areas

The seismic changes for subsidies — the new scoring and the halt to direct awards by the board — have widespread implications for the locations of future affordable housing projects, several developers said.

For one thing, the path to build projects in lower-income areas will be much tougher. The agency will reward projects in “high-opportunity areas,” defined as census tracts with higher median incomes and good schools or access to transportation.

Dorothy Hopkins, president of the nonprofit group Frazier Revitalization Inc., said the changes have made it all but impossible to win subsidies to build Hatcher Square.

“It does seem odd to me that low-income housing tax credits should be for low-income housing, but if you’re in a low-income area, you get penalized,” she said.

For the short term, there will be some push to build projects in downtown areas. But Greenan, the developer already connected to two low-income projects in downtown Dallas, noted that the downtown point advantage is temporary. Once a subsidized project is built in a census tract, the points a new project can earn for locating in that same tract are reduced or eliminated. When points can no longer be gained for locating downtown, he said, developers will shop higher-income areas for competitive sites.

But do not expect them to seek properties in wealthy suburban areas, several developers agreed. First, land costs are too high. Second, projects are still heavily penalized under the points system if neighborhood groups oppose them.

“There is a stigma,” said Dan Allgeier, vice president of the affordable housing developer NuRock Companies. “The neighbors don’t want it. The school district doesn’t want it. There is always an issue.”

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