An audit of the Houston Housing Authority reveals there’s a disconnect between the goal and outcomes of controversial tax deals that are supposed to create more affordable housing in the city.
The housing authority exempts certain apartment complexes from property taxes in exchange for making some units affordable to low-income residents – and paying the housing authority a fee.
However, only 1% of the tens of thousands of tax-exempt units actually target the needs of Houston’s extremely low-income residents.
Rebecca Schuetz, who covers housing for the Houston Chronicle, said this is a statewide tax exemption program. Her recent article looked at just over 100 deals with apartment complexes in Houston.
“There are a few people who benefit. One is that the developers save what they would have paid in property taxes. And if you’re looking at one of these large apartment complexes, with like 300 or 400 units, that can be around $1 million a year,” Schuetz said. “What they do with that, they’re supposed to reduce rent.”
But, Schuetz said, the audit found that rents are not being reduced enough to help Houstonians with very low incomes.
“The mayor’s administration asked for this internal review of these controversial deals. So they did this internal review, and there was a section in it that said Benefit to Houstonians. And they said ‘Look at how much money there is for Houston’s neediest.’ These are people who, for a three-person household, a two-bedroom apartment, they shouldn’t be paying more than like $640 a month, according to current figures,” Schuetz said. “They’re like ‘look at how much the need is for these people.’
“But if you look at the units that were created with this program, they don’t meet the needs of those people. So I feel like in that way, you know, you can see they’re both highlighting where the need is not being met by the market, and they’re not meeting that need either.”
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The Legislature did try to address this issue during the last session, Schuetz said.
“There was a reform bill that was meant to guarantee that a certain percentage of the tax break received by the developers would go towards lowering rents,” she said. “Since that legislation, the Houston Housing Authority, and many housing authorities across the state, have been using a different part of the tax code that wasn’t part of that reform bill. So that’s one area that could be looked at.
“The other thing that the Houston Housing Authority told us when we asked about this was this tax break just isn’t enough to create truly affordable housing. Things like project-based vouchers are needed to create truly affordable housing. So they’re sort of saying there needs to be an increase in federal funding for vouchers, which do serve people with very low incomes.”
Schuetz said the Texas Legislature doesn’t have control over federal housing voucher funding.
“But I’ve heard there is appetite to reform the part of the tax code that housing authorities are currently using, so that it will be in line with the laws that were passed last legislative session,” she said.
There is also a question as to whether the money the housing authority has collected in fees through this program might be used to target programs toward extremely low-income renters.
“We can talk about the $53 million that they have collected so far. They could use that $53 million to be like ‘we’re going to use this money to meet the needs of that population. We’re going to increase the number of government subsidized housing for this population,’” Schuetz said. “They’re saying that they have bought land to do so, that they’re contributing some money to the redevelopment of Cuney Homes.
“But it’s not clear how much money has been spent, where that money has been spent, and whether that money has increased the pool of units or this population.”
