Affordable Housing Options and Pitfalls, part 1

Affordable housing means different things to different people. To some, it means reasonable property appraisals and low taxes, so they can pay their apartment rents and home mortgages. To others, affordable housing means reduced apartment rents often referred to as workforce housing, rent-controlled housing, below-market housing, or rent-capped housing. This kind of affordable housing is generally for those earning around 60%-50% of the median income. For those who earn even less, in the 30% of median range, they qualify for housing choice or section 8 vouchers that can be used at any apartment with an opening and takes the vouchers. 

Below are the income levels HUD uses. Note that HUD doesn't go by Collin county median income, but by the Dallas Metro area median income. According to the U.S. Census Bureau, Collin county's median income is $86,188 and McKinney's median income is $83,257.

What kinds of jobs do people hold who are in the 60% of median income or less range most in need of rent-capped apartments?

Teachers? In MISD, the starting teacher salary is $52,350. Teachers would not have low enough income to meet the 60% of median income threshold unless they were single parents with more than 5 children.
Police? In McKinney, the starting police salary is $57,889.
Firemen? In McKinney, the starting salary is $55,556.

Rent-capped apartments are made more for many entry level, retail, maintenance, secretarial, restaurant, teaching aides, day care, tradesmen, and factory workers. College students with part-time jobs would qualify too. 

Whether you believe promoting or paying to provide below-market housing is a job for the city of McKinney or not, it is still important to learn about the topic. Because our city takes federal and state funding, the strings attached require at least some city effort.  

Below, three of the usual tools for promoting rent-capped housing will be explored, including their positives and negatives: non-profits, LIHTC, and housing set-asides. After that, some past city actions, City Council decisions, and citizen responses will be reviewed. Hopefully, in the end, we can move forward with realistic and cost-effective decisions that will make as much sense in 20 years as they do now.  

Non-Profits 

When groups like Habitat for Humanity are in control and require little or no government funding, they make the best use of their money. There are few government requirements for locations, amenities, applications, materials used, or populations served. This means they can keep the costs down. McKinney is getting a shipping container community because Habitat for Humanity can work out of the box to address housing needs. 

Studies show that the more requirements put on developers from cities, states, or the federal government, the higher the costs will be. Here’s a Citylab.com article that gives the reasons why government subsidized housing is more expensive than when non-profits, who fund the projects themselves with few strings attached, do it themselves:

...As we wrote earlier this year, California Governor Jerry Brown made that point in his state budget. He’s said that he’s not putting any new state resources into subsidizing affordable housing until state and local governments figure out ways to bring the costs down. Last year, opposition from labor and environmental groups blocked the governor’s proposal to exempt affordable housing from some key regulatory requirements. Brown had offered $400 million in additional state funds for affordable housing if that proposal was adopted. Brown took that money off the table.“We’ve got to bring down the cost structure of housing and not just find ways to subsidize it,” Brown said in his budget speech.”

How would the city promote involvement with non-profits while avoiding the usual higher costs involved when government gets involved? Grants are a possible work around on this issue. McKinney Community Development Corporation (MCDC) gives grants to non-profits on an annual basis.