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Affordable Housing FinanceREGIONAL REPORTSOUTH CENTRAL At the Starting Line in TexasAFFORDABLE HOUSING FINANCE • September 2008 Two Texas developers are ready to roll on projects that serve two important groups—rural residents and seniors BY DANA ENFINGER Two Texas developers are ready to get rolling on affordable housing projects for two different constituencies— rural residents and seniors— after receiving funding awards from the Texas Department of Housing and Community Affairs (TDHCA). Texas Housing Foundation (TXHF), a regional housing authority in Marble Falls, is ready to break ground on Creek View Estates, a 28-unit affordable development in Johnson City, population 2,000, located about 30 miles from Austin. “Johnson City is small, but there is a lot of planned development,” said Mark Mayfield, TXHF’s president and CEO. “The growth in Austin and San Antonio, which is about 60 miles away, is spurring some growth here. A new hospital is also going to be built nearby.” Austin May Have to Pay to Support Its Affordable Housing GoalsDeveloper Ardent Residential wants the city of Austin to pay more to keep rents affordable at a project viewed as key in helping to scatter affordable housing throughout Austin. The developer is redeveloping the former site of the Stoneridge Apartments, which originally was a complex with moderate rents. Principals Art Carpenter and Bret Denton said that the initial $1.1 million pledge of public funds won’t be enough to keep 30 rental units of the planned mixed-use project affordable for households with incomes topping out at 50 percent of the area median income (AMI). Under Austin’s vertical mixed-use ordinance, Ardent must keep rent for 10 percent of the planned 298 units affordable for 40 years for people who earn up to 80 percent of the AMI. That would put rent on a one-bedroom or studio in the development at about $930. The city, however, agreed with Ardent to buy down the cost of the 30 units, making them affordable for people with incomes maxing out at 50 percent of the median income at rents of a little more than $600 per month. The council asked staff members to waive fees worth $397,650 and negotiate a $710,350 loan for Ardent, drawing on the Affordable Housing Trust Fund and the $55 million in affordable housing bonds that voters approved in November 2006. The city council would have to approve any additional public funding. —Dana Enfinger Originally, TXHF had planned to build a 64-unit development financed by a private-activity bond and 4 percent low-income housing tax credits (LIHTCs). The authority’s bond investor in the deal—Freddie Mac—backed out at the very last minute. “Freddie Mac backing out really sent us into a tailspin,” said Mayfield. “We had invested a lot of money to make that deal happen.” Undaunted, the authority drafted a plan for 48 units and then trimmed it down to 28 units, which would be entirely financed with $3.25 million in HOME funds. “TDHCA really worked with us to get this deal,” said Mayfield. “The limit on HOME funds is $3 million. We were given a waiver.” TXHF has built a dozen projects across the state. Its focus is on rural development. “It’s getting tough out there to build rural developments,” said Mayfield. “First, it’s hard to convince investors to get on board. Second, the Texas allocation system for tax credits dictates that one property per rural region will be funded per year. Our rural region is in the Austin area, which is probably the most active region in the state. With all the competition, that totally eliminates that program for us.” Even though the unit size is small, it’s expected to have a big impact on Johnson City. The size of the development is 10.4 acres. The other rental properties in town are a 50-unit public housing complex and a couple of duplex apartments. Mayfield plans on trying to develop more units at the site in the future, eventually creating a total of 48 units. Leaseup for the development is expected to occur next spring. Seniors in the city Another developer, Stonearch Development, a for-profit affordable housing firm based in Houston, is poised to begin work on West Oaks Seniors Apartments, also in Houston. The 232- unit property received $14 million in multifamily mortgage revenue bonds and an additional $841,000 in LIHTCs. “We’re just waiting for the city to print the building permits,” said coowner David Russell. “Our goal was to allow seniors, a good number of them, to remain in the area close to their family and friends,” said Russell. All of the 122 one-bedroom and 110 two-bedroom apartments are targeted to seniors earning no more than 60 percent of the area median income. Rents will be between $625 and $748 per month. The project’s total development cost is nearly $23 million. Completion is expected by October 2009. |
