House Urban Affairs met on March 24 to discuss a number of bills. This report covers HB 1286. An archive video of the hearing can be found here.
This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
HB 1286 (Rosenthal, Walle) – Relating to requirements for beneficial tax treatment related to a leasehold or other possessory interest in a public facility used to provide affordable housing
- Developer receives tax credit, 100% tax exemption on property tax and purchased material, with the promise that they will provide a certain amount of affordable housing
- Original amendment was that 50% had to be affordable houses for families receiving 80% of the family median income for the area
- Bill is seeking to move it from 80% to 60%, less than 45,000 in area
- Half of families have no housing they can afford
- A single person making minimum wage for 40 hours a week 50 weeks a year is $12,500
- 30% AMI or less have nothing available
- 70% cannot find a place to live in San Antonio, 85% in Austin
- Developers would still be required to reserve 50% for affordable housing
- Fiscal note could be positive
- Step in direction to make housing more affordable
- Reforming the exemption, was not supposed to help the 80%, focuses on helping lower than 60%, those who actually need it
- Gates – The rent is based on 30% of your income, which is $1,500 a month, that does not seem very low income, a teacher making $45,000 would be able to afford this for projects over $1 million?
- Correct, think about the janitors and cafeteria workers that only make $30,000 a year, these people have to spend more than half of their income just to have a place to live
- Gates – So your proposal is 60% AMI?
- Yes, I would like it to be 30%, but this is a step in the right direction
- Gates – I think it should go a bit further
- Thanks
Christina Rosales, Texas Housers – For
- Continuation of tax exemption for developers for luxury housing isn’t ideal
- Marginal financial returns stripped by property tax losses
- The cap on the number of developments makes it a competitive process
Elena Sanders, Kittle Property Group – Against
- These developments tend to go into the higher opportunity zones
- These deals do not work where tax deals would work
- More units available for lower income brackets
- New Braunfels has made strides for workforce housing
- Housing prices are skyrocketing and contractors are limited by increasing lumber costs
- So many programs already set aside for those who are poorest
- Spent 2 weeks ago driving the entire city of Houston and identified over 56 sites that could suit these types of developments, 3 were applicable, these were by Katy, Spring, and the Woodlands
- These provide access that tax credit deals are not
- Gates – These projects are not offering rents lower than the market system, but the free market is paying property taxes, is this unfair?
- I agree, we apply upgraded amenities to our costs, sets affordable pricing at the 80% levels
- Has to remain local throughout the process because municipalities differ
- 80% rents in Katy are below market rents whereas it is higher than the market rent in other areas
- Gates – Do you represent these projects?
- Yes, all of them
- Gates – Where are the addresses?
- They are going through permitting
- Gates – Do you have current projects I could compare with?
- We do not
- Gates – Does the school district have a say so?
- No, they don not
- Gates – But if you build a 300-person project, they have to teach these kids with no income?
- Yes, but there is a zero-objection letter that all tax-involved parties involved have to pass through
Debra Guerrero, NRP Group – Against
- Definitely some elements apart of discussions with stakeholders
- Cities, counties, and local jurisdictions create PFCs, this is missing
- Compliance and transparency are issues that need to be addressed
- Opposition comes from the fact that this legislation was not created only for affordable housing
- Is currently being used by municipalities and make it more restrictive than the state law affirms
- Gates – It hinders economic development due to the tax subsidy because it is an unfair advantage for developments next to each other, the prices are not as low to begin with
- There are cities throughout the state of Texas, private development does not want to serve market rate housing, distrust of receiving rent
- Has examples of positive development, documented $6 million in economic data in area just south of town, cannot assume free market will go into all parts of town
- Gates – What is wrong with the state setting criteria for a minimum standard?
- You are taking away local control
- Gates – You have places in Houston that do not have a single project lower than 80%?
- When it comes to the mission of affordable housing, you want to be careful because the local entity would not have flexibility to make it work
- Gates – At least 16 projects in San Antonio, the vast majority is done by 2 or 3 people?
- There are at least 6
- Gates – Your company has 40% of the projects?
- Yes, in partnership with public entities
HB 1286 left pending