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September 2009

Housing for
Everyone

by Gerard MacCrossan

Low-income housing challenge sharpened
by disasters, downturn

Texas’ residential property market boomed for much of this decade. But the demand for private homes was accompanied by a rising number of Texans who need help just to keep a roof over their heads. Devastating hurricanes and the recession have only added to the problem.

The U.S. Department of Housing and Urban Development (HUD) channels tax dollars to local and state agencies that work directly with low-income Texans. Typically, larger communities have housing authorities offering a combination of subsidized rental properties and rental assistance under the Housing Choice Voucher program (formerly called Section 8). Some Texans in urban and rural communities live in privately owned rental housing subsidized directly by HUD grants.

Although many agencies provide help, thousands of Texans, particularly in urban areas, remain on waiting lists for housing assistance.

In Houston

Houston, the nation’s fourth-largest city, has more than 2.2 million residents, yet the Houston Housing Authority (HHA) operates only 5,500 rental units under its public housing and affordable housing programs. A further 15,000 rental assistance vouchers are available for residents who qualify based on income limits, while additional rental assistance is provided through post-hurricane emergency programs.

Some good things are happening to improve housing for low-income Houston residents.

“Core programs administered by the HHA – the Housing Choice Voucher Program and Low Rent Public Housing – involve assistance that results in lower rents paid by program participants,” says Steve Mikelman, HHA chief of staff. “HHA also administers a homeownership program.”

HHA’s annual budget has more than doubled in the past 10 years, from about $85 million in 2000 to $180 million in 2010. Even so, the waiting lists for vouchers (19,000) and public housing (5,900) both exceed the number of families receiving these forms of aid. The voucher waiting list currently is closed, Mikelman says. HHA advises voucher applicants that the waiting time can be 18 to 24 months, while public housing applicants may face a wait of two to four years.

“The recession and Hurricanes Ike, Rita and Katrina have all had a significant impact on demand for housing assistance in Houston,” he says. “The Housing Authority is in the midst of an aggressive intake program to move families from our waiting list, issue them vouchers and have them identify and lease suitable units.”

It’s not all gloom, though. Some good things are happening to improve housing for low-income Houston residents, he says.

“The Housing Authority added 1,658 units to its portfolio from 2003 to 2006, and has demolished and reconstructed 500 units since that time,” he says.

Help for Developers

The Texas Department of Housing and Community Affairs (TDHCA) administers federal programs intended to encourage private developers to build affordable rental housing for low-income Texans.

In rural areas, rental assistance is more commonly available than public housing.

After a couple of slow years prompted by low interest rates and a shaky construction market, TDHCA is ramping up its Housing Tax Credit and Multifamily Mortgage Revenue Bond programs. The tax credit program gives a federal tax break to developers who create affordable rental housing; the revenue bond program provides financing for such projects.

Since the 1986 creation of the Housing Tax Credit program, private developers have filed 1,721 successful tax credit applications based on the construction of 195,000 residential units in Texas, says TDHCA spokesman Gordon Anderson. These developments, built across the state in both urban and rural areas, must be made available to tenants who do not earn more than 60 percent of the area’s median family income.

“The application requires a market study demonstrating the need for housing, including the likely impact on existing rental housing within a certain determined and defined submarket,” Anderson says. TDHCA scrutinizes the projects’ financial feasibility before awarding tax credits.

Housing Help in Houston

Low-income Houstonians can receive housing help in the form of subsidized housing or rental vouchers.

The federally funded Low-Rent Public Housing Program provides affordable rental housing for families, seniors and persons with disabilities at developments owned and managed by the Houston Housing Authority. Residents pay no more than 30 percent of their annual adjusted income for rent.

The Housing Choice Voucher Program provides financial assistance to low-income families, seniors and persons with disabilities for rental apartments, duplexes, single-family homes and town homes in the private market. The housing authority provides these payments directly to participating property owners to offset the cost difference between tenant payments and actual rent. Families with vouchers generally pay 30 to 40 percent of their annual income for rent.

Rents must be reasonable compared with similar, unassisted units in the area, and the property must meet HUD’s housing quality standards. The Houston Housing Authority’s Housing Choice Voucher Program waiting list is currently closed.

Number of
Family Members
Income Limit
1$22,350
2$25,500
3$28,700
4$31,900
5$34,450
6$37,000
7$39,550
8$42,100

Source: Houston Housing Authority

HUD sets income eligibility limits for the voucher program at percentages of the local area median income. This table lists maximum household incomes based on the number of family members in the household.

TDHCA’s financing tool, the Multifamily Mortgage Revenue Bond Program, has helped fund 471 properties since the program’s beginning in 1980, with a total of 103,466 new and rehabilitated residential units. These rentals are available to tenants meeting the same income requirements used in the tax credit program.

In rural areas, rental assistance is more commonly available than public housing. The Alamo Area Council of Governments (AACOG) operates a voucher program for rural residents in eight of the 12 counties in its region.

“Our 2009 budget [includes] approximately $339,000 for rental assistance payments,” says AACOG Housing Director Rose Jackson. That funds 77 vouchers; a further 129 applicants are on a waiting list, Jackson says.

Officials from both AACOG and HHA say the economic recession and the impact of recent hurricanes forcing Texans from their homes have added to requests for housing assistance.

“The demand for rental properties is increasing due to the foreclosures and overall economic crisis,” Jackson says.

Increased demand is a tough proposition for AACOG. Jackson notes that the council’s HUD funding has shrunk by a quarter in recent years.

To help homeowners at risk of losing their homes, AACOG – along with HUD, local governments and various financial institutions – sponsors foreclosure prevention workshops to help those on the brink of foreclosure avoid it.

Nonprofits’ Role

More than 1,400 Texas individuals and families live in one of 41 rental communities operated by Volunteers of America Texas, a faith-based nonprofit organization, in communities around the state. Many of these facilities have a specialized mission. Some cater to elderly Texans, others to individuals with a disability or illness and a few to families.

Volunteers of America Texas applies directly to HUD for its funding. While some Volunteers of America communities have many applicants on their waiting lists, others have just a few, according to Betty Morris, the organization’s housing director.

Low-income Texans with annual individual incomes of less than $19,000 qualify for the rental units. Each resident must pay 30 percent of his or her rent, with the remainder funded through HUD allocations.

Morris says Volunteers of America Texas used federal funds to complete two more rental communities in 2008. No future developments are planned until the organization appoints a staff member to spearhead its grant applications.

“If you go in for a grant, it’s a one-year process,” she says. “Once approved, then you go out and get a builder and an architect. It takes another year or two to build.” FN

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