Fort Worth may change affordable-housing tax credit policy
04/01/2014 6:59 PM
04/01/2014 6:59 PM
In a bid to make more money available to build housing for the city’s poorest residents, the City Council may allow developers seeking tax breaks to donate money toward the effort instead of requiring them to serve that population.
The city’s current policy gives tax credits to developers who set aside 20 percent of their project for residents who are 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.
As a result, Fort Worth has an 8,250-unit surplus for those with the higher income, but it needs nearly 17,000 units for those living at 30 percent of the median income, or $19,750 for a family of four.
With the proposed change, landowners would pay $200 per year per apartment during the agreement’s term rather than providing affordable-housing units in the complex. The money would go to the Fort Worth Housing Finance Corp. trust fund.
Councilwoman Kelly Allen Gray, however, is worried that the change will delay addressing an urgent need for affordable housing.
“That is the part that concerns me, that we are just moving it down the road and giving the developers an out by doing this. … We have a problem now, not 15 years from now,” Gray said.
The waiting list for vouchers at the Fort Worth Housing Authority is 18,000 people long, and it closed to new names in 2011. A study released March 24 by the National Low Income Housing Coalition found that a person making minimum wage in Fort Worth would have to work 100 hours a week to afford a fair-market-value two-bedroom apartment in Fort Worth.
Projects already approved
The city cannot offer tax incentives to build apartments at 30 percent of the median income because developers would lose more money in rent than they would make up in tax breaks, said Jay Chapa, director of the Housing and Economic Development Department.
The $200 payout is based on the average subsidy given to developers to fill the gap between market rents and the required affordable rents in the current policy. That money would be deposited in the housing trust fund to pay for projects aimed at the lowest-income families.
The City Council approved two such agreements in February by granting exceptions. The proposed ordinance change would provide the alternative option for neighborhood empowerment zones and for the general tax abatement policy.
The Clearfork Development in southwest Fort Worth agreed to pay $79,000 a year for the next 15 years — nearly $1.2 million — into the trust fund instead of providing affordable housing in the development.
Fort Worth-based Trademark Property Co. made a similar arrangement on the Waterside project planned for the Lockheed Martin Recreation Association property.
Kicking the can down the road?
But Gray is worried about how many projects must be approved before the trust fund has enough money to build housing.
“If the incentive project is from 10 to 15 years, we are still kicking this can down the road before we actually have enough money to start doing some of these projects on our own,” Gray said.
The two developments already approved with the deal will start generating revenue for the fund after they are built in two or three years. How quickly money from the fund can be turned around will depend on how many projects take that route, Chapa said.
The policy change would also require council approval for the buyout option case by case, Chapa said, which would help his office spread low-income units across the city. The ordinance is scheduled to come before the council next week.
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