By Moses Leos III.
Don’t call it low income housing. Instead, advocates and industry insiders want to call the properties created under the Low Income Housing Tax Credit (LIHTC) program “workforce housing.”
According to Jeanne Talerico, executive director of the Texas Association of Local Finance Agencies, the term “low income housing” is a misnomer. She and others believe education is vital to dispel the many negative connotations conjured up by that phrase.
“The program has a preface of a low-income (community),” Talerico said. “You’re kind of getting a reaction to it, instead of seeing one (of the facilities) and the people that live there.”
Families take part in a Thanksgiving feast held in the clubhouse at Encino Pointe. With many of it’s residents part of the working class, affordable housing pundits work hard to dispel the misnomer of “low income.” (Photo by Moses Leos III) |
Firefighters, teachers, police officers, heath care professionals and customer service representatives are a few of the professionals she described as living in workforce housing.
The LIHTC program, headed by the U.S. Department of Housing and Urban Development (HUD), which provides federal funding for affordable housing across the country, is a public and private partnership, where developers apply for two types of funding: competitive and non-competitive. Locally, the Texas Department of Housing and Community Affairs (TDHCA) scores and disperses LIHTC funding.
Federal tax credits are sold to private investors to raise equity for a development. That equity is raised at a lower cost, which allows developers to restrict rent for tenants for a 15-30 year period.
LIHTC program communities are not limited to young families. Several age-restricted LIHTC properties exist in Hays County, catering to senior citizens.
Yet negative connotations abound, including perceptions that workforce housing lowers property tax rates in nearby neighborhoods. Another is that LIHTC communities are similar to Section 8 housing – which is government subsidized housing using a voucher system.
Debra Guerrero, Vice President of Governmental Affairs with the NRP Group of San Antonio, has seen those issues as a developer and city councilwoman.
“So many people want to demonize, but it’s about families and individuals,” Guerrero said. “It’s not forever (housing). They are looking for temporary fix for whatever circumstances are at the time.”
City leaders worry that workforce housing means lost revenue for city coffers because many developers team with 501(c) 3 nonprofits to score better on the application process, making them exempt from paying city, county or school taxes.
Guerrero said her group, which oversees Encino Pointe Apartments in San Marcos, gives back in contributions, making up for the tax exemptions. She said it’s written into their requirements.
NRP Group gives $26,500 each year to the San Marcos CISD. It also gives $37,000 to the city of San Marcos at a four percent escalation rate annually for 15 years, at which time the amount will freeze. The firm also gives $15,000 to Hays County each year.
LIHTC developments also give back in other ways. According to the National Association of Homebuilders (NAHB), approximately $7.1 billion in economic income is generated, with 95,000 jobs created per year across the country.
As such, LIHTC often goes hand in hand with economic development. Talerico said prospective businesses seek housing that will fit their employees’ pay scale.
“If you don’t have that, [businesses] won’t be coming,” she said.
Completing the application is half the battle. Getting it right the first time is also vital. Developers spend $50,000 on the application process alone, putting up as much as $500,000 before construction begins. Construction costs can range from seven to $16 million dollars.
Having a good working relationship with cities is key, according to Jason Arechiga, assistant developer at The NRP Group. Taking the due diligence to locate the correct spot for a development is vital. To do otherwise, according to Guerrero, is “disrespectful.”
Developers also say they place a high standard on the property conditions. Jim Shaw, executive director at the Capital Area Housing Finance Corporation (CAHFC), said it’s due to the long-term guarantees.
“We have to make sure the property is maintained well and managed well. It has to remain an asset,” he said. “We are not going to be selling (the property) five years down the road. We are going to be here for a long period of time.”
Talerico said workforce housing offers assistance to the public, which hits home for her. She took part in a similar program as a single mother in the mid-1980s. That help, she said, “saved my life.”
“I often have flashbacks to that time,” she said. “I wonder how many [single mothers] are going to walk in there.”
