AUSTIN TEXAS—Michael Gerber is leaving the Texas Department of Housing and Community Affairs (TDHCA) after five years as the agency's executive director.
Affordable Housing Finance caught up with him to ask about the state's low-income housing tax credit (LIHTC) program, pending state legislation, and what he plans to do next.
Q: What kind of demand for LIHTCs have you seen this year?
A: The Department received more than 200 applications in our pre-application cycle, and more than 150 active applications remain in competition in the 2011 cycle.
This demand for units remains high across all regions of the state but particularly in Texas' urban communities. There also is a need for additional affordable housing in rural Texas where incomes are lower and housing resources are fewer. For that reason, we set aside a full 20 percent of our annual allocation for these rural and often underserved areas. Unfortunately, the demand from the investment community for credits has not been as great in those rural communities, and we see the need for additional incentives to encourage investor demand in those areas.
Also, recent census numbers and analysis from our state's demographers predict that Texas' population will double over the next 30 years, as will the number of low-income households. Clearly, there will be a long-term need for added high-quality affordable housing, and the LIHTC is the best tool for our state to meet that challenge.
Q: What trends have you been seeing in your LIHTC program?
A: There are a few trends we are observing that the Department believes will have an impact on our tax credit program. We are seeing increased demand for credits to develop properties serving special needs, such as those of seniors, persons with disabilities, and transitioning homeless. TDHCA has funded several of these unique developments over the past few years in Houston, Dallas, San Antonio, and Austin, and we expect to see more in the near future.
Another encouraging sign is that we are also seeing better-than-anticipated pricing in many developments underwritten a year ago, and the trend of stronger pricing is continuing in new applications for this year.
Third, we are seeing some older developments that have experienced not only the financial challenges that any aging property faces, but often also changes in local demographics and demand. In that regard, we have developed a material amendments policy so that when a developer finds that the best solution is to consider some substantial changes there is a process to frame and consider the issues with extensive input from affected stakeholders.
Q: What concerns do you have for developers this year, and is TDHCA working on any initiatives to help them get deals done?
A: Because of the strong demand for credits in urban areas, the Department continues to assess what it can do help increase development activity in rural Texas, where the need for housing is great but demand from investors for credits tends to be less. We are fortunate to have a very savvy staff at TDHCA, and these bright folks are working closely with the development community, layering multiple sources of funding (like the HOME program) to create attractive deals in rural communities. And like every other state, we are hoping to see increased interest from the syndicators and better pricing for credits.
Q: Getting away from housing tax credits, what key changes have been made to the agency's other housing programs?
A: The Department is constantly working to improve program design and service delivery. The staff of our HOME Program, for example, has been working diligently to increase the awareness of and access to these funds on the part of those communities eligible to apply for assistance. We have ramped up our outreach efforts to communities across the state. Many of the program's activities have recently moved to a reservation system, significantly streamlining the application process and giving eligible applicants greater latitude regarding the use of funds on an “as-needed” basis.
We also continue to cultivate our state-funded Housing Trust Fund to ensure it adapts over time to meet special or unique housing needs among low income Texans. Right now we are focusing on homebuyer assistance, barrier removal activities to assist persons with disabilities, rental assistance to qualifying veterans of our country's armed forces, and grant assistance to local governments and nonprofits applying for USDA Rural Development 502 direct loans.
Q: What legislative proposals do you think will have the biggest impact on TDHCA?
A: There are a number of measures being considered by our Legislature that would impact TDHCA programs. The most significant is the agency's sunset bill (reauthorization legislation), which, if passed, would give us 12 more years of serving low-income Texans. Other legislation addresses concentration issues with affordable rental housing, an increase in the credit ceiling per year for an applicant, and debarment rules based on noncompliance. At the end of the day, we will take our direction from the Texas Legislature and our governor and move forward in delivering housing finance products for Texans.
Q: We hear that you are leaving TDHCA. What are your plans?
A: I have had the privilege of serving as executive director for five years. In fact, amazingly, I am the longest serving executive director in the Department's history. We (the Department and our partners) accomplished an incredible amount—more than 10,000 Texas families became first-time homeowners, and more than 45,000 rental units were built or rehabilitated during my years of service. It's also been a challenging time, helping Texans recover from a series of hurricanes and making effective use of more than $1.2 billion in federal stimulus funds.
I am very proud of the Department, our staff, and our partners. But, to everything there is a season, and I feel the time is right for me and my family to move on to other opportunities. I intend to stay active in affordable housing and community-based programs. Millions of Americans depend on these programs, and there is much work to be done.