Michael Gerber was appointed executive director of the Texas Department of Housing and Community Affairs (TDHCA) in May 2006. Gerber previously acted as staff liaison between Texas Gov. Rick Perry and the TDHCA board and staff in coordinating the state’s housing responses to hurricanes Katrina and Rita. Prior to joining the Governor’s staff, Gerber served at the Department of Housing and Urban Development. He was an adviser first to the assistant secretary of public and Indian housing and then to the assistant secretary for policy development and research. Gerber served as a legislative assistant to Sen. Kay Bailey Hutchison from 1997 to 2001 and in the same role for Sen. Phil Gramm from 1990 to 1997.

Q What are some obstacles affordable housing is facing in Texas?

A We all suffer from the challenges of NIMBYism. I’m seeing increased opposition in the suburbs to affordable housing. We are also dealing with the reality that some markets in Texas have been overbuilt. And now there’s an emphasis on rehabilitation. That’s really important in places like Houston and Dallas. We have lowincome Texans in urban areas who are living in housing that needs to be torn down or fully rehabbed. At the time they were built, they were market-rate units. Now they’re low-quality complexes that have not weathered well over time.

To prevent oversaturation, we are trying very carefully not to oversubsidize a deal. At the same time, we don’t want to undersubsidize a deal so that it doesn’t have sufficient credits to make the economics work out. We want to make sure development partners have what they need to make the deal successful.

The demand for affordable housing is ever-growing as the population of Texas looks to double in the next 25 to 30 years.

The demand for affordable housing remains high in key areas of the state. And the occupancy rates remain high. There’s Galveston with the influx of all those hurricane evacuees a couple of years ago, which pushed occupancy to the edge. That’s receded a bit to 92, 93 percent. Still, the occupancy [rate] is 95 percent in key markets.

With that limited supply and with the demand ever growing ... the reality is we just don’t have enough affordable housing in our state to meet the needs, and it’s driving the rates up on marketrate units.

Texas is such a diverse market, and we’re trying hard to meet a variety of needs. It’s been valuable to me to look at best practices of other state housing finance agencies to see how they’re addressing issues. There are some states that primarily have rural populations. Some states are heavily urbanized and don’t have to address the needs of a rural constituency. We have the best of all worlds. The word we hear in rural [areas] and cities is: More. More safe and decent affordable housing. And when we get those units online, that they be maintained well. We want those units to stay [as] community assets.

Q Is there any state legislation that could have an impact on affordable housing?

A Definitely. The state Legislature passed Senate Bill (SB) 1908 in this last legislative session [last May]. We are very pleased with this. The bill sets out a very clear set of penalties for those who fail to comply with the terms of receiving a tax credit award. Those penalties can go up to as much as $1,000 per violation per day. This is a strong incentive for parties to represent their capabilities to [TDHCA] appropriately, and then to do what they say they are going to do. The last thing we want is to bring problem properties into our portfolio. SB 1908 was one of the first times that the state Legislature has spoken forcefully on the issue of making sure that developers do what is expected of them when serving lowincome persons through our tax credit programs. The legislation also expanded our first-time homeownership program to include households earning no more than 80 percent of the area median income (AMI) [up from] households earning no more than 60 percent of the AMI.

Q Has it been harder to get tax credit projects approved in the coastal regions of Texas since hurricanes Katrina and Rita?

A I’m not seeing that. The storms have been creating additional tax credits. States affected by the storms received an additional percentage of their previous year’s allocation. Texas only received an additional $3.5 million in tax credits because of damage caused by Hurricane Rita, which translates into about 400 units of new construction— maybe a little more, considering rehabilitation. But it wasn’t nearly enough given the needs in far southeast Texas, where the bulk of that Hurricane Rita damage was. Additionally, it hasn’t been particularly harder in Houston, because the need there is centered on rehabilitation.

Q How have insurance costs affected affordable housing developers operating in Texas?

A That issue is a big deal in Southeast Texas, where there has been significant damage from flooding. The bigger issue for the long term is the increase in construction costs. That remains an enduring problem for all developers.

Q You’ve been executive director with TDHCA for a little over a year. What has been a big challenge for you so far?

A The department has the enormous task of disbursing $503 million from Washington in Community Development Block Grant funds for disaster recovery in Southeast Texas. This agency was put in the lead role of this job, getting the funds in the hands of Texans for emergency repair, housing restoration, and new construction. That has really changed the agency in some key ways. We have this big additional mission on top of our trying to marry up our existing programs with community needs. The mission is to concentrate on housing in rural Texas. We have very rural poor areas of Texas, and we also have areas that are heavily urbanized, difficult to build in. New refineries are being built in our rural areas. Dairy operations and sophisticated technology businesses have chosen to settle in smaller communities in Texas. And now these communities don’t have enough housing to meet the needs of their employees. I’m very excited because we recently announced a $5 million HOME notice of funding availability for rural Texas, where new businesses have created jobs. That’s not much, but it’s a good start.