For years, getting apartment developers to include affordable housing in their plans was like buying a used car –– it took a lot of haggling on the part of city officials. The best leverage the city had was tax incentives, so that was usually the trade-off: tax abatement in exchange for varying percentages of low-cost apartments. But the deal was different every time, and a lot of the city’s affordable apartments were funneled to the poorest areas of town, perpetuating economic segregation and resentment among residents in those neighborhoods.
In May, the Fort Worth City Council aimed to end the haggling process and spread affordable housing throughout the city by standardizing its economic development incentives. It’s a complicated system that basically forces developers to either include a specific number of affordable units in each project or, in place of that, to pay cash into a local housing trust. Under the new ordinance, each deal lasts for only 15 years, after which the developers can hike the rent. However, if they want continued incentives from the city, they’ll have to keep offering the affordable apartments.
The options actually help provide two kinds of housing for less-well-off Fort Worth residents: affordable housing, designed for people who make somewhat less than the median income for the area; and low-income housing, for those who earn 30 percent or less of the median figure.
The tax abatement option means that affordable-level units are included in new apartment complexes all over town. The payments into the housing trust help the Fort Worth Housing Finance Corp. build or subsidize low-income housing in many neighborhoods.
City council member Kelly Allen Gray said that distinction is important because of the stigma attached to low-income housing, which is often seen as being synonymous with crime. “The first thing is, we have to get past that negative stereotype,” she said.
“When we say ‘affordable housing,’ more times than not it comes with a negative connotation,” she said. “Everyone who hears the term automatically thinks of Section 8 or the very poor in our community.
“Affordable housing is for the mother or the father who works at Wal-Mart or Target, the kids who are just graduating college and just going into the workforce, our teachers, our firefighters, people who work in hospitals,” she said. “That’s who affordable housing is designed for.
The pressure to add to the city’s moderate-price housing stock has come from several directions recently.
In a presentation to the city council in July, the Fort Worth Coalition to End Homelessness, a 10-member ad hoc committee, suggested that safe, low-income housing in different areas of town would go a long way toward solving homelessness.
And a study released in March by the National Low Income Housing Coalition found that a person making minimum wage in Fort Worth would have to work 100 hours a week to afford a fair-market-value, two-bedroom apartment.
Jay Chapa, the city’s housing and economic development director, said he recommended the new policy because it would be consistent for every developer.
“More and more developers were showing up looking for incentives and then questioning why they needed to meet [the affordable housing] requirement,” he said. “We went to the council and told them we really need to solidify a policy. We didn’t want to deal with everything on a case-by-case basis, because if one developer negotiated a lower percentage, then that would become the ceiling for the next one.”
Now, if developers want to reap incentives, such as tax abatement or certain grants, they can set aside 20 percent of their apartments to be rented at a reduced rate to people who make 60 to 80 percent of median income in the area. In Fort Worth, that works out to about $39,000 to $52,000 for a family of four. Half of the set-aside units would be for people with income at the 60 percent mark or below and the other half for those who make up to the 80 percent figure. The tax abatement covers city property taxes on improvements — the buildings — not on the land itself.
The buyout option is available only in those areas where city officials have determined that there is already an adequate supply of affordable housing. Each case is subject to review. The cost of the buyout is $200 per year for each apartment that would have been set aside. Chapa told the council in January that Fort Worth is short by roughly 17,000 apartments of what is needed for low-income residents.
He explained that, to bring rents down to the level affordable for those in the 30 percent of median income bracket — less than $20,000 a year for a family of four — a developer would lose more in rent than tax abatements would cover.
“Typically the incentive is either an abatement on city taxes for the new development or what we call a 380 grant agreement,” he said, referring to a grant that refunds the developers’ taxes if they hold up their end of the bargain. To qualify for incentives, the developers also have to use local vendors and contractors.
Before the recent law change, the number of affordable units a developer had to offer depended on a complicated formula based on how much the development would benefit the city and how much profit the developer stood to lose.
Gray and council member Danny Scarth voted against the new policy because it lets developers wiggle off the hook after their deals expire in 15 years, Gray said.
“We have a need in our community, and in some of those instances we have allowed those developers to kick the can down the road and not hold anyone responsible,” she said. “So we have areas of town that have an overabundance of affordable units, and we have other areas that have an overabundance of market-rate units, and there could be a very happy mix for both areas.”
Council member Sal Espino said he supported the ordinance because it encourages people to live and play in the same area where they work.
“You want to have workforce housing,” he said. “Studies have shown in public schools, when you have middle-class kids going to school with kids from all economic strata, all of the kids do better.
“Every part of the city should be available for all citizens,” he said.
The new policy is part of a larger plan to address the growing need for affordable housing in Fort Worth, he said. “That’s always been our goal. We’ve been trying to partner with private developers, the Fort Worth Housing Authority, and this tax credit program, using the combination of city dollars, federal dollars, and tax credits.”
Gray said it’s too soon to judge the success of the new standards. She said that the policy will work only if the affordable housing is spread throughout the city. Otherwise, she warned, the NIMBY (“not in my backyard”) attitudes will persist.
“For me, that’s my bigger issue,” she said, “making sure the projects are dispersed all over town, not just in a few areas.”