The Consequence of Picking ‘Qualified Candidates’ for HUD Secretary

December 2016

The nomination of Dr. Ben Carson, the former presidential candidate and neurosurgeon, as the Secretary of Housing and Urban Development (HUD) has been met by an outcry from those asserting that he is unqualified for the position. Dr. Carson’s detractors argue that his lack of experience in housing or community development are instant disqualifiers, which causes one to pause and ponder prior appointees to the position, the career experience those individuals possessed, and the result of their tenures on the present state of urban America.

Other arguments that have been proffered include his lack of government experience, having never managed anything close to the size of the $47 billion agency, and his apathy for the idea of the government being able to act to improve the lives of vulnerable citizens, an assertion attributed to his June 2015 comments where he stated, “there are reasonable ways to use housing policy to enhance the opportunities available to lower-income citizens, but based on the history of failed socialist experiments in this country, entrusting the government to get it right can prove downright dangerous”.

Looking back at HUD secretaries over the last three administrations (Castro, Donovan, Preston, Jackson, Martinez, Cuomo, Cisneros), three had prior backgrounds in housing, two previously served as mayor of the city of San Antonio, then you had one lawyer and one banker. These prior HUD secretaries had varying degrees of success, however, the impact of each secretary draws no direct correlation to the experience they brought to the position. Furthermore, the combined efforts of these former secretaries have culminated in rendering America’s urban communities to the state they are currently in: gentrifying in growing cities, and deplorable in stagnant or contracting cities.

Whether Dr. Carson has the requisite experience to run HUD in the context of his own previous admission is up for fair debate, however, the larger issue we must focus on is the current state of urban and rural America, and the impact the efforts, or lack thereof, of prior secretaries has rendered on these communities. If we are to accept the premise that prior housing experience is a necessary qualifier for assuming the role, then following that logic should point to results that show how previous secretaries with the relative experience, left a legacy of transforming urban and rural communities all over the United States.

This clearly has not been the case, and in light of recent administrative rulings by HUD, and the Supreme Court ruling in TDHCA vs. ICP, urban communities specifically risk suffering deeper underinvestment going forward. Cities such as San Francisco, New York, Seattle, and Los Angeles, which enjoyed significant economic success over the last two decades have watched their inner-city communities undergo significant gentrification, displacing long-term residents. Emerging metropolitan areas are currently undergoing a similar trend, as seen in cities such as Houston, Austin, Washington-DC, and Denver. In each of these cases, communities that for a long-term were neglected and had no significant investment, welcomed revitalization of their areas, only to get swept away as older single-family homes were replaced by multi-story townhomes, and mom and pop shops, were replaced by coffee shops and organic restaurants.

The next HUD Secretary has to commit to assembling a team that will focus on revitalizing communities, rather than simply rehabilitation of existing units or delivery of new housing. Revitalization of these declining communities must prioritize housing, infrastructural investment, economic development, educational improvement, mass transportation, and physical and mental healthcare. The next secretary also must be judicious in application of the affirmatively furthering fair housing (AFFH) rule by prioritizing balancing the need to create housing options in so-called “high opportunity areas”, and the urgent need to invest in communities at risk of gentrification or greater decline into further deplorable conditions.

A Secretary with a fresh perspective might just be the shot in the arm that is needed by HUD, and Dr. Carson could have the potential to not only transform the agency, but to elevate its significance from the perspective of Congress, and in the minds of Americans.

Balancing Housing Needs is Essential in Shadow of Fountainview Controversy

The affordable-workforce housing needs of Houston are further glaring in the aftermath of the “Tax-Day” flooding event in April, which affected more than 1,800 apartment residences just in the Greenspoint area. The City stepped up to house over 150 families in hotels, and worked with local agencies to provide emergency shelters throughout the city for hundreds of others impacted. A key obstacle during the event was the difficulty of locating units, that could serve as temporary or permanent housing, to transition families displace by flooding into. Four months later, a significant number of residents remain displaced, and numerous tenants have recounted stories of the additional nightmare of landlords who refused to let them out of their leases, forcing them to remain in uninhabitable units. And a significant number have had difficulty finding a housing alternative that falls within their price range, so their lives remain on hold as they hold out hope for a solution.

The Greenspoint narrative is a snapshot of the housing challenges and difficulties faced by so many, a challenge further deepened by Houston’s seeming inability to take full advantage of opportunities to capitalize on developing workforce housing leveraging federal housing tax credits. A recent decision not to authorize a resolution for 4% Housing Tax Credits, places the future of the 2640 Foutainview development, proposed by the Houston Housing Authority (HHA) in limbo. The debate on the development has often overlooked the central issue of the critical need to develop affordable workforce housing in all neighborhoods, particularly in thriving communities like the Galleria. The HHA operates under federal guidelines that require developments in census tracts with higher incomes and good school ratings, to balance out development in historically under-invested communities.

Opponents of the Fountainview development have argued that the $53 million ($240,000 per unit) price tag of the 233-unit development is too high, rather than considering the price is reflective of the cost of building a high quality development on high priced land. Factor in historically high costs of construction, and the need to keep the development unit count low due to school and housing concentration concerns, and you can see how the deal arrives at such a price tag. Development plans usually start out with a loosely constructed financial analysis, but as plans become final, adjustments are made to fit the budget, so it’s reasonable to expect that the development could end up at a lower price than initially proposed. The other factor detractors raised is the $6 million developer fee, which fits within the allowable guidelines of fees for such a development. The fee, only accessible to HHA if the development moves forward, are likely going to be channeled towards other developments they have planned, and it’s likely that HHA would have reduced their fee or deferred a significant portion of it, to help the financing for the deal make, as private developers do in similar circumstances.

Another often misstated assumption has been suggestions of alternative ways HHA could have utilized the construction funds to house more people. The development is slated to be financed with both federal and private funding sources, which come with specific requirements on how those dollars have to be spent. The portion of the financing covered by federal Community Development Block Grant (CDBG) funds, is earmarked by HUD for development of affordable rental housing. Similarly, the federal housing 4% tax credits, have to be sold to a third-party private investor, who provides the cash equity for the project, in exchange for the developer expending those funds in construction of the development. Lastly, the debt financing would require HHA collect sufficient rents in order to cover the annual mortgage payments on the loan. You can clearly see that each funding source for the development, have specific requirements of the funds being utilized to construct a housing development, so without a planned development, again there is no $53 million for HHA to spend.

From the community’s perspective, a workforce housing development is proposed in an affluent area with residents, who chose to live there in part due to the quality of the neighborhood elementary school that’s at full capacity. Developments with the ‘affordable’ or ‘low income’ tag are usually a non-starter, and in numerous instances over the past ten years, such proposals have pit neighborhoods against developers. Communities have found reasons to justify their opposition to such developments, citing factors such as impact on schools, traffic, infrastructure inadequacies, and in this case cost. Over the past few years, several market rate apartments were built tangential to Fountainview Drive, but there are no public accounts of the neighborhood rising up in protest over any of those developments. However, once the proposed plans for the apartments became public, residents found every reason to drive opposition to the development, which makes one wonder, why the sudden angst?

Local news publication have documented what has been a rising tide of workforce housing deals being shelved due to not-in-my-backyard (NIMBY) attitudes. These have included proposals by both the Houston Housing Authority, and separately the Harris County Housing Authority, that were publicly and privately opposed by elected officials who were reacting to community opposition. 

The HHA ultimately sought to move forward with this development after several other proposals for affordable housing development were rejected over the past few years.

Existing federal law, and a 2015 Supreme Court ruling on a case filed in Texas (ICP vs. TDHCA), have led to HUD emphasizing the goal of ‘Affirmatively Furthering Fair Housing’ (AFFH), and we now have codified into law that ‘disparate impact’ is a considerable factor in how federal housing dollars are spent by state and local housing agencies. Put in laymen’s terms, these two precepts means local and state housing agencies can be held accountable if their spending of federal housing dollars further concentrates affordable workforce housing in low-income and minority communities, regardless of whether they intended to or not. HHA like other housing agencies therefore now have an obligation to pursue developments in affluent areas like the Galleria, with the goal of dispersing pockets of poverty.

A separate overarching issue the City has to reckon with is the rising cost of housing for both renters and homeowners. In the period from 2009 to 2014, several submarkets in Houston experienced a 50% increase in rental and home values. While rents have receded temporarily in some of those submarkets, rental rates are still much higher than they were three years ago, and land costs remain stubbornly high, propping up home values. These facts lead any close observer of housing and demographic trends to the conclusion that Houston needs to act urgently if it hopes to preserve its existing stock of low to moderately priced housing, and must be resolute in implementing a plan to build more housing that can remain affordable long-term.

Houston needs to build workforce housing in all parts of the city, and in doing that has to be intentional in factoring how developments are situated near existing physical infrastructure and access to multimodal transportation. As families with higher incomes make decisions on where to live based on proximity to work or their children’s school, the City must be conscious, when building workforce housing, of the proximity needs of the families that are served. HHA’s data revealed 15,000 potentially eligible residents work within a one-mile radius of the site, who travel more than 10 miles to work each direction. These individuals contribute to the Galleria community, and given the opportunity should be availed a chance to take residence there. Furthermore, there exists within the Gulfton, Sharpstown, and Tanglewilde areas, a significant contingent of Hispanic and African American families who already live within close proximity of the Galleria, who are left with only aging and deteriorating apartments as their choice of housing.  It goes without saying that these hardworking Houstonians deserve to have quality housing options available, where the City is able to make it a possibility.

For the displaced residents of Greenspoint who face a tough and uncertain road ahead, many have no place to turn to find housing options affordable at their income level, placing them and their families at risk of greater long-term insecurity. People often wonder why the issue of workforce housing should be their concern, and the answer simply is, we each have a family member, friend, church member, or coworker who faces a high hurdle in meeting their housing expense obligations. So where we have the resources to mitigate the impact, even if for a small segment working families, then we should encourage promoting opportunities to help workforce housing developments become integrated into our communities. We should build replacement housing for displaced residents from Greenspoint to Meyerland, and we should invest in historically underserved communities. We must extend a ladder of opportunity to every American who will grasp on to a rung, and providing safe, quality affordable workforce housing is the first rung of the ladder of upward mobility for many in our community.

Laolu Davies-Yemitan is a real estate broker and developer who specializes in housing, multifamily development, and urban-suburban revitalization. He editorializes on issues related to real estate and public policy. LaoluD.blogspot.com; Twitter: @laoludavies

Improving Housing for Working Class Residents: Houston 2025 Workforce Housing Plan

The City of Houston, fourth most populous city in America, and soon to be number three based on its current growth rate. This welcome growth has brought a number of challenges, particularly in areas of transportation infrastructure and housing affordability. If Houston is to continue to thrive and prosper, city leaders must work vigorously to help retain its two main selling characteristics: economic opportunity and affordable cost of living. The City plays a role in maintaining a business friendly regulatory environment that helps attract new employers and retain existing businesses within the city, however, the City plays a very limited role in job creation. In housing, contrastingly, the City can play a more significant role in delivery of moderately priced housing, and in implementation of policies to preserve the City’s housing affordability.

In a research paper published in September 2015, it was calculated that approximately 70,000 rent-restricted housing units were available within Houston, and several thousand private-owned voucher based multifamily units. The household and population analysis revealed that approximately 345,000 households earning below $35,000 annually need below market rate housing; an estimated 30,000 of those households were homeowners in 2012. The difference between the household count and the number of restricted affordable units reveals a gap of approximately 220,000 units, leaving those families having to rely on ‘market’ supply. This fact is not lost on employers, and there is a growing concern that housing within the Urban Core is becoming out of reach for middle income families as the city undergoes re-urbanization.

The Houston 2025 Workforce Housing Plan proposes specific action and policy directives the City should implement to preserve Houston’s affordable housing base for working class families in order to meet the City’s growing housing needs long-term. The housing plan focuses on addressing single and multifamily housing needs in the homeownership and rental categories. The plan further articulates a comprehensive strategy that emphasizes mixed-housing development, where different housing types and housing at various price levels are integrated within the same development, particularly in “opportunity zones”, areas within higher income census tracts in proximity of employment centers. Execution of a strategic short and long-term housing plan will help the city avoid the trap that has taken great cities like Austin, San Francisco and Seattle on an unsustainable path, and would help Houston maintain its viability as a city of opportunity poised to sustain long-term economic and population growth.

GOALS

The Houston 2025 Workforce Housing Plan would be implemented in two phases: a five year short-term plan, and a 10 year long-term sustainable affordability plan. The first phase would span the years 2016 through 2020, while the latter phase continues from year 2021 through 2025. The housing units constructed under this plan would target working families with household earnings ranging from 30% to 120% of area median income (“AMI”). The plan will target development of the below specified number of units by housing category:

MULTIFAMILY

The multifamily plan calls for development of 30,000 multifamily units from 2016 through 2020 and an additional 70,000 units from 2021 through 2025, for a total of up to 100,000 units over ten years. Development of these housing units will be accomplished through both new construction and rehabilitation of existing multifamily developments, and financed by leveraging a number of incentives (tax abatements, land grants), housing tax credits, and implementing policies to accelerate housing development.

SINGLE FAMILY

The single-family plan calls for construction of up to 50,000 owner-occupied homes, and 15,000 rental and rent-to-own housing units.

Owner-Occupied
The plan proposes construction of 20,000 single family homes within Houston’s Urban Core (Beltway 8) from 2016 to 2020, and an additional 30,000 homes within the city limits from 2021 through 2025, for a total of 50,000 housing units. The homes would be sold under affordability guidelines that expands on the current HUD minimum affordability period requirements and includes a 20-year buyback right of first refusal reserved to the City or its designee, where publically owned land is involved as “donated” land.

Single Family Rent-to-OwnThe plan proposes construction and rehabilitation of 15,000 single family homes as rental housing for working class families. Households would qualify for rentals based on affordability guidelines tied to household earnings; a key objective would be converting renters to homeowners over the long term, through 5 to 10 year lease-to-own options subject to specific stringent criteria.

The Single-family housing plans will be accomplished through a concerted effort that relies on leveraging federal housing dollars, providing property tax incentives, loosening income eligibility guidelines, improving city development policies, and rebranding of the Homebuyer Assistance Program (“HAP”) with a focus on a public service worker program. The public service worker program would focus on employees of the City of Houston, METRO, and Independent School District’s within the City limits. 

*HAP provides a $15,000 to $40,000 downpayment assistance grant for families who meet certain income criteria and purchase a home in Houston city limits that meet certain eligibility requirements.

PLAN IMPEMENTATION

The city of Houston 2025 Workforce Housing Plan would be implemented through a strategy that connects various tools and resources into a turnkey model that achieves the stated quantifiable objectives. Furthermore, the plan recognizes that those key components required to execute a successful housing and urban revitalization plan include elements of Housing, Infrastructure, Transportation, Public Amenities, Economic Development, Healthy Living, and Education. The plan anticipates incorporating aspects of these core components at various stages; infrastructure and transportation part of pre-development planning, and economic development and education in the long-term. This will help the City achieve comprehensive revitalization of neighborhoods, creating a modernized livable city platform.

MULTIFAMILY HOUSING

Development of multifamily housing has the dual benefit of achieving density, and incorporating commonly beneficial amenities within or external to a development. The goal of constructing up to 100,000 units within the next ten years is reasonable and attainable by establishing a set of guiding policies that provide City staff, housing organizations, non-profits, and private developers with a clear set of objectives and development targets. Those targets should include proposed housing units to be built within geographic boundaries, de-concentration of housing units, access to lifestyle amenities, and connectivity to transportation. This provides a platform through which the private sector can better align their long-term plans with the City’s stated goals and funding priorities. The guidelines further provide predictability, and helps the City and the development community plan ahead towards fulfilling these long-term goals.

The basic criteria for workforce multifamily housing would require that developments reserve at least 49% of their units for households earning at or below 80% AMI to qualify for treatment as an affordable multifamily development. Developments that meet this basic requirement would be eligible for property tax abatement, fast-track permitting, and flexible unit sizes; high density developments could further benefit from minimum amenity requirements, reduced parking requirements, relaxed setback rules, and possibly modified detention requirements.

The Housing and Community Development Department (“HCDD”) will issue an annual Request for Qualification (“RFQ”) to prequalify apartment developers who would be eligible to propose developments requiring City funding for the fiscal year. Prequalified developers then have the opportunity to propose qualified multifamily developments over the course of the fiscal year that meets the City’s criteria for funding and or incentives. Developers not included in the annual pre-qualification will have an opportunity to submit proposals for any subsequent solicitations from the HCDD for available funding. Developers prequalified during the prior year can simply submit an annual update to their prior year RFQ response, provided they have had no violations with HCDD or the Texas Department of Housing and Community Affairs in the preceding two years.

Once a developer has secured a site and completed preliminary plans, they would have an opportunity to submit an electronic application to the City for the incentive categories they are requesting, including fast-track permitting, tax abatement, and Chapter 380 economic development agreement. The fast-track permitting application would be the avenue to request variances for parking, setback, and detention requirements, though granting of the fast-track permit would confer no guarantee that the subsequent variance requests would be granted once full plans are developed. The application for tax abatements should include a specific dollar request on a per unit basis. After review the City may agree to or modify the tax abatement request based on cost certifications of the development. Development of multifamily would target certain Housing Opportunity Zones defined as areas within Economic Opportunity Zones, Concentrated Revitalization Areas, and High Opportunity Areas with Quality Schools (the City’s Director of Education will coordinate with local school districts on issue of school capacity). Tenant eligibility will range on a sliding scale of household incomes 30% to 120% AMI, and developments funded by TIRZ housing funds would be eligible for modified guidelines based on average market rents within the zip code.

*Note: The fast-track permitting process would be guided by the fast-track permitting proposal attached as an exhibit to this plan.

SINGLE FAMILY HOUSING

Delivery of 50,000 owner-occupied single family housing units would require construction or rehabilitation of on average 5,000 homes annually over the next decade. The strategy proposes maximizing conversion of existing property, belonging to the City and its affiliated entities, to construction of new and improved housing units. Affiliated entities include but are not limited to the City of Houston, Land Assemblage Redevelopment Authority (“LARA”), Tax-Increment-Reinvestment-Zones (“TIRZ”), Houston Housing Authority (“HHA”), and METRO. The plan would prioritize renovation or reconstruction of deteriorating housing stock, within targeted non historic preservation designated neighborhoods, in combination with construction of new housing within areas of heavy concentration of public-owned land; properties owned by LARA and tax-delinquent properties should be the highest priority for conversion.

As the Plan unfolds, the City should seek out opportunities to pursue additional land acquisition in Housing Opportunity Zones, and areas poised for concentrated revitalization. The City-controlled land can then be sold to private developers at a de minimis amount, or can be structured under control of a land trust to take advantage of potential tax benefits. Development of workforce housing should also leverage private land, owned or controlled by the builder applicants, who develop plans that conform to City guidelines for affordable or mixed-income single-family home construction. Eligible projects would qualify for fast-track permitting, and other applicable development incentives. Construction plans where feasible should incorporate sustainable environmental design and construction principles. Developments should include low and high density single family homes, zero lot patio homes, single-car garage requirements, relaxed setback rules, and reduced on-site detention requirements.

The single-family program would allow HCDD to prequalify eligible builders through an annual application process, with builders prequalified in the immediately preceding year simply submitting an annual update to their company profile, provided they have had no violations with HCDD in the preceding year. Builders not prequalified can still participate in the program through private land they control or by submitting a comprehensive application to acquire land from the pool of available land in target areas in a given year.

A builder who has secured site control and completed preliminary plans would have an opportunity to submit an application to the City for the incentive categories including fast-track permitting or property tax abatement. The fast-track permitting application would be the avenue to request variances for parking, setback, and detention requirements, though granting of the fast-track permit would confer no guarantee that the additional variance requests would be granted once full plans are developed. Application for tax abatements would be limited to land owned by affiliated city entities or developments where the land will be held in a trust. Eligible applicants for the tax abatement would be the homeowner or the land trust with the aim of maintaining long-term affordability, and tax abatements would be transferable to new owners meeting the affordability income guidelines.

Development of single family housing would target specific neighborhoods in defined Economic Opportunity Zones and Concentrated Revitalization Areas. Tenant eligibility will range on a sliding scale of household incomes from 50% to 120% of AMI, depending on the zip code. The City currently caps the purchase price for purchasers eligible for homebuyer assistance at a value of 95% of the median purchase price for the Houston area or approximately $160,000 (2015). The City’s HAP home price guidelines need to be modified to a sliding scale model with limits ranging from the 95% to 133% of the median purchase price within the city of Houston, with a provision allowing for further adjustments in neighborhoods and zip codes where the median price is significantly higher. This will expand the pool of affordable housing, and will enable more families to become eligible for moderately priced housing within the Urban Core.

INCENTIVES

Fast-Track Permitting

Eligible developments submit an application for fast-track permitting once preliminary substantive construction plans are complete for a development. The fast-track permit will reduce approval time for various phases of a construction process, mitigate inspection requirements, and shorten the development timeline, thereby providing cost savings on developments that ultimately get passed on to homeowners and renters.

Tax Abatement

The City should implement a standard incentive that provides a baseline tax abatement for construction of workforce housing, based on the category of housing and cost certification criteria; for example an eligible development within a TIRZ could be eligible for a rebate of up to 75% of the increment in taxes. For developments to qualify for the abatement, developers have to prove that the development would be cost prohibitive but for the tax abatement.

The City should expand the Downtown Living Initiative model to high opportunity areas, where City property taxes would be capped at present value, and up to 75% of the tax increment would be retained by the development for a fixed period or approximately 15 years. The program should leverage TIRZ incremental tax rebates in areas such as Galleria, Midtown, Montrose, Energy Corridor, and Medical Center. The City should also dedicate federal funds for projects that eliminate blight by tearing down existing substandard housing and condemned structures.

For developments involving City-owned property or a commitment of City funds, a developer should be required to deliver one affordable unit per $100,000 in financial incentive provided by the City. For developments involving publically-owned land acquired at a nominal amount, one single-family housing unit must be delivered per 5,000 sf of land, and 10 units per acre for multifamily or 15% of total development unit count, whichever is greater. 

Parking/setback/detention requirements

High density developments (40+ units per acre) should have reduced parking ratios, setback, and detention requirements, particularly for developments along a major transit axis with easy access to multi-modal alternative forms of transportation. These developments should also incorporate micro units in order to reduce costs, and maximize site layout; efficiency units should require no more than a 0.75 parking space per unit requirement.

Infrastructure and Economic Multiplier

The City should invest in infrastructural improvements in targeted revitalization areas, where significant private development and public investment is being made. Where feasible, workforce housing development should be targeted to areas with existing enhanced infrastructure or areas undergoing significant infrastructural improvements. The improvements to infrastructure should focus on expanded water and sewer capacity, sidewalks, security apparatus/lighting, parks, bike paths, and public amenities. Coordination of such investment efforts would accelerate the pace of community revitalization within the Urban Core, and will help the city achieve maximum impact.

The next step in community revitalization is economic development, which occurs when an area attracts private investment via incentives, available skilled workforce, or the potential return on investment. Achieving the economic multiplier imperatives requires the City gathering localized data to make the case for retail investment, and to help attract credit tenants for commercial space. The City should also emphasize providing economic and tax incentives for developers willing to invest in retail, and businesses willing to make investments within the targeted areas.

AFFORDABILITY GUIDELINES

Multifamily

Current guidelines for 4% and 9% LIHTC provides affordable units for households earning 30% to 60% of AMI. Affordability housing targets should be stratified on a sliding scale for households at 30 – 80% AMI (standard), and 50 – 120% of AMI for “high cost” developments.

Single family

The affordability cap for the City’s Homebuyer Assistance Program for single family dwelling units should be modified upward on a sliding scale from the current $160,000 to $230,000 for units within the inner-loop and higher income census tracts. Furthermore, the City should consider indexing the affordability cap going forward to the median home values within the City’s Urban Core and the Greater Houston MSA respectively.

LAND/PROPERTY

Develop a comprehensive database of property tracts owned by the City of Houston and its affiliated public entities (LARA, TIRZ, and HHA), classifying sites by size, zip code, and location characteristics. These sites should be pooled by the City through interlocal agreements with the various entities, and offer the property for sale or auction at a “de minimis” amount for construction of workforce housing. For larger scale (20 units or more) single-family owner-occupied developments, the possibility of establishing a land trust should be explored for the dual purposes of instituting restrictive covenants and securing tax relief benefits for the development.

COMMUNITY ENGAGEMENT

HCDD in conjunction with TIRZs, housing advocates, community groups, housing developers, business organizations, and the City need to develop a long-term education and awareness campaign to promote the comprehensive workforce housing plan. The campaign should focus on the importance of promoting housing and community revitalization efforts that maintain Houston’s affordable cost of living, and to encourage redevelopment of Houston’s neighborhoods in order to expand the tax base. The engagement efforts should also promote homeownership, and inform the general public of various tools and resources the City, its affiliated public entities, and community organizations have available to assist those seeking housing opportunities.

SUMMARY

The city of Houston has long been known as a city of opportunity for working families due to economic opportunity and housing affordability. The downturn in the energy industry, and rapidly escalated housing costs, require the City take decisive steps to avert a housing crisis. Implementation of a workforce housing plan for Houston will help the City retain its affordable housing stock, and expand the property tax base, further enabling the City to maintain its standing as the leading metropolitan city where working class families can work and raise their families.

The City housing department should conduct a Comprehensive Housing Market Analysis to determine the current housing stock by category, home values, and rental costs. This analysis will provide factual data on current housing inventory, the age of the housing stock, and condition of dwelling units in order to identify areas where the housing gaps exist. This data would then be applied and used to improve the Houston 2025 Workforce Housing Plan. 

Glossary of Terms

380 Agreement - An economic development incentive that provides reimbursement through tax abatement to developers for investment in public infrastructure.

CHMA – Comprehensive Housing Market Analysis: A study conducted of a defined market area to capture quantitative housing data on housing including unit count, type, age, condition, and values.

CRA – Concentrated Revitalization Area: A set geographic area targeted for focused comprehensive revitalization in areas of housing, infrastructure, and economic enhancement.

Developers – Includes private developers, non-profit organizations, Community Development Corporations

DLI – Downtown Living Initiative: An initiative by the City of Houston that offered a tax incentive of $15,000 per door for developers who build new multifamily apartments on the eastern part of Downtown Houston.

EOZ – Economic Opportunity Zones: An area of town characterized by employment opportunity, available skilled workforce, and significant private investment.

HOA – High Opportunity Area: An area or census tract where residents earn in the top 1^st or 2^nd quartile of income that features good schools and public amenities.

HAP - Homebuyer Assistance Program: Program of the City of Houston Community Development Department that provides financial grants for downpayment assistance to home purchasers who meet income eligibility criteria, and purchase homes priced at or below 95% of the area median home purchase price.

HCDD – Housing and Community Development Department: The City of Houston department responsible for administering various housing programs, and distribution of federal and local housing funds.

HHA – Houston Housing Authority: An independent agency responsible for administering the HUD housing voucher program, and who develops and manages project-based housing voucher developments.

LARA – Land Assemblage Redevelopment Authority: A City of Houston entity responsible for acquisition and assemblage of land in targeted neighborhoods.

LT – Land Trust: An arrangement whereby a private entity (the “trustee”) agrees to hold title to property for the benefit of another party or parties (the “beneficiary(s)”).

TIRZ – Tax Increment Reinvestment Zone: A public entity created by the City of Houston that operates within a specific geographic boundary where taxable values are “frozen” at the time of creation, and any increase in taxable values and subsequently taxes paid is captured for reinvestment within the defined boundary.

Urban Core – Area within the 610 loop, and certain fully developed corridors within Beltway 8.

IMPLEMENT FAST TRACK PERMITTING TO AUGMENT HOUSTON’S GROWTH AND AFFORDABILITY
by: Laolu Davies-Yemitan (September 2015)

Houston’s real estate market has been on an accelerated growth path over the last three years, however, a leveling off of prices is the optimistic outlook in the shadow of $50 per barrel oil. While consumers stand to benefit at the pump, households will continue to feel the pinch of rising unaffordability, tight supply, and fewer new projects to close the housing gap. The City has few options it can exercise to keep up its momentum, and one of those would be to implement a Fast-Track Permitting Program to make the development process more streamlined and predictable. This would also help facilitate the construction of more affordable housing options as the efficiency achieved would help alleviate ambiguities in the permitting process, limit construction delays, and drive down construction costs for the end users, Houston residents.

The City’s implementation of a fast track permit process for construction plan approval would share similarities with what has been done in cities like Austin and San Antonio. In Austin, the fast track permit process allows site development to begin while a site plan application is undergoing review by the City. The process authorizes the director of development to grant approval of a fast track permit, if in the director’s opinion, the developer meets certain requirements, including but not limited to: undergoing training for fast track certification, agreeing to a pre-construction conference, posting a cash fiscal surety for erosion and sedimentation control, and authorizing the City to draw on the cash fiscal surety.

In San Antonio, the Development Services Department has instituted fast track permits for various aspects of commercial construction including plumbing, electrical, and mechanical. To be eligible, a development needs to first obtain a fast-track permit for its interior finish structural construction. Contractors submit an application, pay a non-refundable building permit fee based on the estimated cost of construction, and submit the full design package for the interior finish. Obtainment of this preliminary permit renders the project eligible for fast-track permits for plumbing, electrical, and mechanical, provided applications are completed for each, and similar stipulations are complied with.

The City of Houston should develop its own fast track permit process for commercial and residential construction by applying elements from the aforementioned cities. Fast-Track permitting should be applicable for various construction categories including site work, water & sewer utilities, fire, mechanical, plumbing, electrical, and fire. The City should begin by establishing a Fast-Track Certification program for contractors who meet certain minimum standards, complete the requisite training, fill-out an application, and submit the required fee. The City would then establish an ad-hoc Fast-Track Committee consisting of officials from the various permitting departments that would meet weekly, where contractors can present to them during a pre-construction conference.

For projects to be eligible for fast track permitting, the general contractor must first obtain Fast-Track Certification. Next the contractor needs to sign-up for a pre-construction conference, where the City’s Fast-Track Committee will meet on a weekly basis to review the entire construction plans for each fast-track permit being requested. The construction plans need not be final, but would meet a minimum completion threshold to be eligible for preliminary review by the Fast-Track committee. If the pre-construction conference yields a preliminary approval from the committee, the project is ruled eligible for fast track permitting for each step of the permit approval process, provided the project complies with the City’s requirement for each fast-track permitting category.

Instituting the above proposed fast track permitting process will confer significant benefit to the City of Houston, and to developers, owners, and end-users. The City should begin by running a pilot Fast-Track Permitting program on qualified projects that promote Affordable Housing, Community Revitalization, and Public/Private Partnerships. Once the pilot yields measurable results, then the program can be expanded for other project types that meet the stipulated requirements. Successful implementation of the program will make the process of completing projects more efficient, cost effective, and would not abridge the rights of residents and neighborhoods to weigh in on certain projects.

Why a Houston Workforce Housing Plan is Urgently Needed!

Over the span of a few weeks in October 2015, Houstonians were horrified by news reporting of the horrendous condition of the Crestmont Village Apartments. From reports of leaking sewage, to loss of power due to non-payment by the landlord, the dire situation at that apartment complex displayed why the City of Houston needs to act urgently to begin addressing the affordable housing challenge its residents face. The apartment story is an example of well-intentioned plans gone awry. An out-of-town developer purchased an aging apartment complex during the economic downturn, with intentions of completing some minor upgrades and turning it into a cashflow positive property. The repairs never materialized, and within a short period of time, the complex spiraled into significant disrepair, leaving behind a declining property.

The proliferation of substandard apartment complexes is not an uncommon phenomenon, as various parts of Houston are littered with them. This has been brought about in part by the significant number of apartments developed during the economic boom of the 1970’s outliving their usable lives. As the economy contracted during the 1980’s, landlord’s rushed to fill their apartments with any readily available tenants, often paying less attention to management and maintenance, while surrounding neighborhoods fell into decline as homeowners fled to the suburbs.

In the case of Crestmont Village, we have a community that has undergone significant decline over the last three decades, with schools that have fallen behind, and no significant public or private investment made in over twenty years; the current reconstruction of Sterling High School being one of the few exceptions. Similar stories ring true for many communities throughout the Houston area, where places that were once vibrant have been left with boarded-up homes, overgrown lots, declining infrastructure, and substandard housing structures as their housing stock.

The City can and must act to redress this situation by developing an affordable housing plan, as part of a broader community reinvestment effort, towards creating what former St. Petersburg Mayor Rick Baker described as a seamless city. Houston City Council passed a general plan for the City in 2015. Alongside the plan should be a comprehensive reinvestment strategy, where the City utilizes public dollars to invest in workforce housing, elimination of blight, and improvements to public infrastructure and amenities i.e. parks, sidewalks, and drainage. The plan should establish a 10-year goal of developing 100,000 new affordable workforce multifamily housing, and construction of 65,000 single-family housing units for working families within the City’s urban core.

These goals can be accomplished by leveraging local and federal housing dollars, repositioning public-owned land for development, and leveraging private funds in partnership with private builders and developers to accelerate the construction of new housing units. The City can further tap into “homegrown” investment dollars by partnering with local banks in meeting their Community Reinvestment Act obligations, and by working with the City’s Police, Municipal, Fire, and METRO pension funds to encourage reinvestment in the Houston community. The City, furthermore, should offer tax abatement for workforce housing development, invest in building infrastructure in areas undergoing significant revitalization, provide incentives for tearing down dilapidated structures, and lower the barrier of entry by providing fast-track permitting for workforce housing developments. These steps taken in concert will enable the City provide quality housing for low-to-moderate income families, expand the City's property tax base, and return our neighborhoods to the vibrant livable communities they deserve to be.

Laolu Davies-Yemitan is a real estate broker/developer who specializes in housing, multifamily development, and urban-suburban revitalization. He editorializes on issues related to real estate, policy, and workforce housing. LaoluD.blogspot.com; Twitter: @laoludavies