The Texas Department of Housing and Community Affairs will determine July 31 how it will allocate tax credits for 173 proposed affordable housing communities, including the Cardinal Point Apartments at 11011 1/2 Four Points Drive, Austin. Public comment on the project to TDHCA closes June 12.
Cardinal Point is a 120-unit community that would offer affordable housing including rents between $600 and $700 per month, said Walter Moreau, executive director of developer Foundation Communities.
Market-rate rents in the Four Points area range from $848-$2,299.
A portion of the community would be reserved for residents who have recently moved out of homelessness, Moreau said.
Developers are able to cover 70 percent of low-income housing construction costs through the tax credit program, said Gordon Anderson, senior communications adviser at the TDHCA. Funding construction through credits allows a developer to offer rent at less than market value, he said. Tenants earning up to 60 percent of the area median family income are eligible to live in properties built using credits.
How tax credits work
Housing tax credits are part of a federal program funded through the U.S. Treasury Department to use private investment dollars to create affordable housing, Anderson said. Once the developer receives a tax credit, he or she then sells the credit to an investment partner who provides capital in exchange for equity in the project. Investors receive a dollar-for-dollar reduction on federal tax bills for 10 years.
The Cardinal Point proposal is part of a region that includes seven applicants competing for $3,787,731 in tax credits as of April 15, Anderson said. Those seven applicants have requested a total of $9,261,437 in tax credits, nearly a 3-to-1 ratio of funding. Cardinal Point developers have requested $1.5 million in tax credits for the project. Additionally, the project is planned for an area in which only 6.1 percent of the residents live at or below the federal poverty rate.
“The [ratio of nearly 3-to-1 in available tax credits] illustrates just how competitive the process is,” Anderson said.
“The goal of the program is to target as deep a pocket of need as possible."
–Gordon Anderson, senior communications adviser at the TDHCA
More than 20 criteria exist to score applicants for tax credits, Anderson said. However, there are a few factors that are given more weight in the decision, including the financial feasibility of the proposed development, income levels of tenants served, and the size and quality of the units proposed, he said.
Additionally, scoring factors include the amount of local government support the project has, he said. On Feb. 12, Austin City Council agreed to a $1.88 million loan to developers for the Cardinal Point project.
“The goal of the program is to target as deep a pocket of need as possible,” he said.
Cardinal Point developers are currently waiting to learn the scoring of the project and real estate underwriting review by TDHCA, Moreau said.
The Cardinal Point proposal has drawn opposition from nearby neighborhoods including River Place and Grandview Hills, as well as opposition from District 6 Councilman Don Zimmerman, who voted against three proposed projects in his district, including Cardinal Point. Although Zimmerman supports affordable housing, he said he is against subsidizing development because such properties are not on the tax roll, resulting in higher taxes for nearby residents to sustain the additional burden on roads and other city services.
“Subsidized housing is unaffordable because it’s based on unsustainable taxation and government subsidies,” he said.
Instead, Zimmerman said the city should focus on reforming existing ordinances, reducing regulation and revamping management in the permitting department to make housing development more affordable.
The River Place homeowners association filed a statement with the TDHCA on Feb. 27 opposing the complex based on concerns about the increase in traffic the project would create at the nearby intersection of RR 2222 and River Place Boulevard. The group also noted that Four Points lacks bus service.
Zimmerman said he does not buy the traffic argument.
“It’s not possible anymore to target a particular development or project and oppose that on the grounds of traffic congestion because the entire city is congested,” he said. “If you’re going to bring that principled rationale, no one is allowed to build anything anywhere for that reason.”
Multifamily housing also contributes lower amounts of traffic than single-family homes or commercial developments, said Mandy De Mayo, executive director of HousingWorks Austin, an affordable housing research and advocacy group. People who would qualify to live at Cardinal Point likely already work in the area and need housing closer to work, she said.
“You need to look at affordable housing as a traffic solution,” De Mayo said. “If you have jobs all over town and people can only afford to live in Buda, Kyle or Manor, then … they’re clogging the roadways.”