Texas DHCA: Area Economy Wins as 4 Housing Projects Get Tax Credits

Amid the gloom and doom in local real estate, here's one bright spot: affordable housing.

This segment of the market flies under the radar, because it's relatively small, and the stiff competition required to win tax credits further winnows the field.

But last week, Fort Worth said that four developments had won the nod from state officials, clearing the way for private investors to spend almost $53 million on nearly 400 units.

That's a meaningful bump for the Fort Worth economy, especially the weakened construction business. As a public incentive, there's also much to like. In addition to helping low-income workers and attracting private capital, the projects may spur additional development and help turn around some troubled areas.

The four Fort Worth projects secured $4.7 million in federal tax credits, roughly twice as much as city proposals usually win in these annual allocations. The big haul is a testament to the strength of the developments and to Fort Worth's planning and support for the effort.

Officials targeted areas in the city that would benefit from affordable housing and agreed to team with developers. Then they fought for funding in Austin.

"In this business, Fort Worth is on the cutting edge of the state," said Dan Markson of the NRP Group, which is developing two of the four projects.

To get tax credits, projects are scored on 30 criteria, led by financial feasibility, community participation and the income level of prospective tenants. Getting local funds is a big plus, too, and three of Fort Worth's winners had that locked up.

Local officials went to Austin twice in the past two months to restate their case.

An innovative project for the Terrell Heights neighborhood was one point shy of making the automatic funding cut, prompting a personal appearance from Councilwoman Kathleen Hicks and Economic Development Director Jay Chapa.

The effort paid off early this month, after the board for the Texas Department of Housing and Community Affairs funded both Terrell Homes and Sedona Ranch with money from next year's pot. The announcement was made at the end of hours of testimony from developers and city officials.

"I embarrassed Jay, because I started crying when I heard that Terrell Heights got it," Hicks told the City Council last week. "It's a wonderful day for our entire city."

Since 1986, federal tax credits have been available to developers who build housing for low-income residents. The credits are often sold to other investors, and the proceeds used to help secure financing. In Texas, the Housing Department administers the program and makes the funding awards, which grow in proportion with population growth.

For every winning project, three to four don't make the cut, says a spokesman, and more builders have jumped into the game as the housing slump persisted. Some affordable housing projects ran into trouble two years ago, when the credit crunch reduced the value of tax credits. Stimulus funds softened that problem, and in Texas there's always a waiting list if projects fall off.