Fort Worth

Council members square off over low-income housing

The city’s Housing Finance Corp. is building a house on this Lee Avenue lot on the north side of Fort Worth. The Lee Avenue project is one of two to recently win approval for additional funds.
The city’s Housing Finance Corp. is building a house on this Lee Avenue lot on the north side of Fort Worth. The Lee Avenue project is one of two to recently win approval for additional funds.

A housing program set up in part to spur residential development in some of Fort Worth’s underserved neighborhoods is drawing new attention at City Hall after estimates show it will lose about $350,000 on a north side project.

The Housing Finance Corp., created in 1979 to serve as the city’s housing development arm, recently approved spending $470,000 to complete five homes in the 1400 block of Lee Avenue, in the Northside neighborhood, a project that was set in motion several years ago.

The HFC builds homes for low- to moderate-income families. The Lee Avenue homes will range in size from 1,479 square feet to 1,875 square feet.

In all, the homes will run up more than $1 million in development and construction costs, but estimates show they will only sell for about $719,000, leaving about a $349,000 gap, according to reports. Three years ago, the project lost federal funding when rules on how certain Housing and Urban Development money could be spent were changed, causing delays.

Town homes were initially planned, but that also didn’t meet federal or state guidelines for funding.

By that point, though, the HFC had already spent $255,964 in acquisition, demolition and other preparation costs.

The HFC receives no money from the city’s general fund and operates on its own revenues that are gained from the sale of homes it builds. In fiscal 2016, the HFC realized $1.3 million in revenues. But because that is considered public money, the City Council serves as its board for oversight. The HFC has an inventory of 83 lots.

At least one council member has voiced concern over whether it’s money well spent, while another says the city needs to fulfill promises made to the neighborhoods.

Aubrey Thagard, the city’s Neighborhood Services Department director, who serves as assistant general manager of the HFC, told its board that the city will still benefit from completing the Lee Avenue homes through future property taxes and eliminating the cost of maintaining the vacant lots.

More importantly, though, the program fulfills the HFC’s mission of providing affordable housing in blighted areas of the city, he said. Jump-starting neighborhoods, city officials say, can attract private developers to parts of the inner city they otherwise might overlook.

“We had to go back and do some serious reconfiguration on what we were planning for those homes originally,” Thagard said. “We feel very confident we’re going to sell all five homes.”

Because there is no federal money in the project, the homes can be sold to households making 120 percent of the area median income or less. For a family of four, that means $85,650.

His remarks did little to assuage Councilman Cary Moon, who has real estate experience from his own businesses and voted against approving the additional money. Moon said it’s not the role of government to fill the void of the private sector and that the HFC should only be providing infrastructure.

“I don’t see the value in the direction that these projects are taking,” Moon said. “I think there are other ways to do this better and be more prudent. It will take 30 to 35 years to get our money back in property taxes. I don’t see that as a valuable investment.”

The Lee Avenue project is one of two to recently win approval for additional funds. The HFC also approved $570,000 to complete four homes in Terrell Heights, an eight-home project that began in 2009. Of those, three houses were sold and have families living in them. Another is under contract.

For the Terrell Heights project, which is run out of the city’s Neighborhood Services Department, the City Council approved $988,870 in HUD funds to build eight homes. They are sold to people earning 80 percent or less of area median income, which means income for a family of four must be $57,100 or less.

HUD says those funds can only be used to fill gaps in projects, which is why the city asked the HFC for the money. Thagard said the city will be able to repay the money from sales proceeds.

Councilwoman Kelly Allen Gray, whose district includes the near south side Terrell Heights neighborhood, argued for the approval, saying housing represents economic development in some areas of the city. She said the city needed to fulfill its promise of bringing the projects to Terrell Heights and the north side.

“This is a lot money that we are losing, but we are seven years into this project and two different neighborhoods and the community is not looking at you, Cary. They’re looking at me, saying, ‘You guys promised us two council members ago this project is going to happen,’ ” Gray said. “If I’m waiting for the private sector to come and save me, I’m going to die. That’s just the truth.”

“I think everybody understands that there are some times in some communities we are going take a loss to make a gain,” Gray said. “We have to be willing to take a loss so other people can benefit.”

The HFC will be hiring Trinity Habitat for Humanity to build the homes. The organization has begun providing homes built completely by subcontractors and using higher quality materials.

Thagard said the homes in both projects could be completed by the end of the year.