Unable to meet deadline, Houston ends $60M affordable housing program using Harvey funds, lays off 40

By R.A. Schuetz, Houston Chronicle | Sep. 13, 2023

Houston city officials are ending a $60 million program to develop affordable single-family housing communities using Hurricane Harvey disaster recovery money.

Houston notified the state office in August that it would not be able to complete its single-family development program by its February 2025 deadline, said Brittany Eck, director of communications for the Texas General Land Office.

Keith Bynam, director of Houston's Housing and Community Development Department, said they were not granted more time to develop nearly 700 homes with the federal money.

Disaster recovery money is channeled from U.S. Department of Housing and Urban Development through the GLO to Texas counties and municipalities. 

Bynam said that ending the program means the city has lost control over how that money would be spent, though it must be spent in Houston. "I have no idea what (the GLO) will do," he said.

The team also played a key role in Mayor Sylvester Turner's push to build 3,000 homes. In early 2022, the city shifted millions away from the Houston Community Land Trust, which creates permanently affordable homes, and it directed the money instead to the efforts of the team, known as the large tract division, which had been more quickly developing homes.

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The terminations raised concerns about the future of such efforts.

"Where does all that work stand?" said Alan Watkins, executive director of the Houston Housing Collaborative, a collective of affordable housing organizations. "It raises more questions than it does answers... You cut the land trust money and now you're cutting (staffing for) these programs that are supposedly affordable."

Bynam said that the $43 million in Harvey recovery funds used to purchase land to build the nearly 700 homes will have to be returned to the GLO. Those projects, which had already lined up developers, will be scrapped and the land sold to recoup the money.

Housing projects using money from a special taxing zone will continue, but under different staff.

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In August, for example, City Council voted for the division to use $5.5 million from a special tax zone, known as a TIRZ, to pay for the infrastructure for 326 affordable homes in Southeast Houston and Greater OST. Those and other TIRZ-funded projects will continue as planned, Bynam explained. 

Eck, from the GLO, said Houston officials in the August notification said that negative market conditions, rising construction costs and high interest rates had made it difficult to complete its single-family development program by its deadline. The contract had required Houston to build 266 new affordable single-family homes for low- to moderate-income households affected by Hurricane Harvey.

Eck said that so far no homes had been built under that contract, and that the ultimately the U.S. Department of Housing and Urban Development decides whether to grant programs an extension. HUD had not yet responded to Houston's request, she said.

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In addition, she said, it was difficult for the city to prove that building new affordable communities would help Houston recover from Hurricane Harvey. 

"The farther you get from the storm, the harder it is to show the tie back, which is also a federal regulation we're unable to waive," Eck said.

While it was clear that rebuilding a home for a Harvey survivor was connected to the storm, she said "If you have 200-plus homes you are selling to individuals who may or may not have been here at the time of the storm, it's very difficult to say whether (HUD) will accept that."

The city has said the single-family homes would replenish the housing stock lost due to Hurricane Harvey.

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The 700 homes that will no be longer built were located in three communities throughout Houston. 

Almost 11 acres in the Near Northside at 850 Burnett St. had been purchased for $15.8 million to build 201 homes. About 15 acres in Sunnyside off of Cityscape Avenue, just south of Terra Bella Health and Wellness Suites, had been purchased for $13.2 million to build 240 homes. And more than 12 acres in Willowbend off of Stella Link Road, just north of Harmony School of Ingenuity, had been purchased for $13.8 million to build 240 homes.

Roughly half of the homes would have been sold at affordable price points, made possible by providing developers the land for free and providing up to $135,000 per home in down payment assistance. The homes would have stayed affordable for five years, at which point homeowners who had bought the homes at steep discounts could resell them for full market price, a decision that had drawn debate.