The lawsuit, filed by Dallas-based nonprofit Inclusive Communities Project, claimed McKinney’s public housing and the majority of its low-income apartments were segregated east of US 75 and claimed the city relegated minorities to the city’s poorer areas.
Although McKinney Mayor Brian Loughmiller said he felt some of the litigation was a reaction to policies that made the city appear to be promoting fair housing in one side of the city and not the other, the city and ICP in 2010 reached a settlement that resulted in an agreement to build 260 rent-subsidized units in two separate complexes, both west of US 75.
“Historically, McKinney has had a larger percentage of affordable housing compared to other [neighboring] cities,” Loughmiller said. “It’s a tough issue—there is no doubt about it. We have balanced it out pretty well, but at what point do you look at other cities and see that McKinney has taken on more of the responsibility than other cities?”After the settlement the city was later found to be in compliance with fair-housing laws, Loughmiller said, but the result of the lawsuit was the construction of Millennium, which was completed in July 2015 and includes 130 units reserved for low-income residents, and Post Oak Apartments, which is expected to be complete this summer and includes another 130 units for low-income residents.
The city in April also broke ground on a rehabilitation project at Newsome Homes in east McKinney, which is expected to drastically increase the density and quality of life for senior citizens dependent upon public housing, according to MHA officials.
Newsome Homes is a 64-unit property built more than 50 years ago along SH 5 on the city’s east side. Jeremiah Hammer, vice-chairman of the MHA board of commissioners, said Newsome was in desperate need of a rehabilitation project. [polldaddy poll=9406374]
“Newsome Homes was beyond the scope of what we could reasonably repair and upgrade,” Hammer said. “The site has been plagued with issues for years, from deteriorating pipes and underground infrastructure to the lack of gutters and modern drainage. Above ground, the structures were completely out of date. They were built when clothes dryers weren’t widely affordable, but clotheslines were, so all of the units had clotheslines outside.”
When redevelopment is complete in February, Newsome will consist of a $21.6 million three-story apartment complex with 180 low-income units.The recent projects have led to continued discussion about the need for more affordable housing options in McKinney.
Project funding
Tax credits, distributed by U.S. Department of Housing and Urban Development to the Texas Department of Housing and Community Affairs then distributed to MHA, were used in combination with private development dollars to build Millennium and Post Oak Apartments.
Tax credits can be purchased by investors, usually banks or other large institutions, according to the TDHCA. The funds generated from the purchase are counted as equity for the development, and in exchange for purchasing the credits the investor uses them to offset various taxes for a 15-year period.
“After 15 years, those purchasers can sell those tax credits to anyone they want. In our agreement they are selling them back to us,” said Justin Beller, chairman of the MHA board of commissioners. “So over a 15-year period of time, you have taken a public housing site that depends on HUD and turned it into a publicly owned site financed using money from private funding, private debt and private equity coming in from buying tax credits that eventually expire.”
Beller said the financing allows the MHA to make improvements as needed without waiting for government funding or approval since the property is owned by private developers, tax credit holders and the MHA.There are two types of tax credits available—a 4 percent tax credit and a 9 percent tax credit. Both have specific requirements and represent either 4 percent or 9 percent of the present value of the eligible costs of a low-income housing project.
In order to accomplish the Newsome redevelopment, the MHA turned to the HUD’s and Urban Development’s Rental Assistance Demonstration. According to HUD, the RAD program was created in order to give public housing authorities such as the MHA a tool to preserve and improve public housing properties and address the nationwide $26 billion backlog of deferred maintenance.
Beller said RAD allows public housing agencies to leverage public and private debt and equity so they can reinvest in the public housing stock. Beller said the MHA was one of the first three housing authorities in the state to participate in the program.
The RAD program combined with a 4 percent tax credit allowed the Newsome redevelopment to be more than 80 percent funded by private debt and tax credit equity.
Future project need
The success of the Newsome venture and the addition of more affordable housing options on the city’s west side has led the MHA to begin looking at redeveloping its other properties, Beller said.
The 86-unit Merritt Homes, located on North Tennessee Street north of downtown McKinney, was built in the 1960s and has infrastructure issues similar to Newsome. MHA Executive Director Roslyn Miller said the housing authority plans to submit an application to the TDHCA in January for 9 percent tax credits. In order to receive these credits, MHA would need the city to deem the area a revitalization zone, a subject not yet discussed by council.
However, Loughmiller said city participation in any future project depends on the cost of the projects and whether the city has room within its budget.
“One of the reasons we were able to do Newsome Homes was because there was money from the city, and ultimately the McKinney Community Development Corp. had a hand in that,” he said. “It’s hard for me to sit here and proactively say that we will commit dollars to something when we don’t know what those dollars would be, how much it would cost or what we are working on.”
Loughmiller said available funding makes it easier for the city to commit to projects. However, he said the city must determine whether there is a need for additional affordable housing, and if so, decide what the city’s responsibility is in providing that.
“If it is a countywide issue, what is happening in the other cities?” he said. “Quite frankly, there is an issue of whether you are building something that is for the people who already live here or building something that will effectively be a draw to people from other cities because those cities are not providing affordable housing.”
Miller said the MHA is roughly 5,000 units shy of meeting current demand for affordable housing and was forced to cap its waiting lists at a total of 500 people for both housing choice vouchers—used to subsidize a portion of a person’s or family’s monthly rent—and public housing units.
“The city of McKinney is the county seat and the No. 1 place to live in the country, so as families grow and people come back from college and continue to move to this area there is a greater demand for affordable housing in this area,” she said.
Miller said anyone can apply for an open waiting list, but generally when a housing authority posts those lists they do so in local newspapers and with local social service agencies.
Loughmiller said he requested a breakdown of the lists to determine the number of the city’s residents on them.
“I want to know where these people are coming from,” he said. “Are they actually all McKinney residents, or are they coming from other areas? Our responsibility is to the people who live here. We know we are growing; we know that people are moving here; but we won’t handle the responsibility to make sure that anybody who wants to move to McKinney can do so.”
