Houston



Narrative Explanation of Proposed Houston Land Bank Project

The Neighborhood Stabilization Program (NSP) was established, by the federal government, to help cities address the problem of abandoned and foreclosed residential properties in economically distressed areas. Through NSP, the City of Houston is scheduled to receive $13,542,193 directly, to finance activities benefiting low-moderate income families living in the areas of greatest need in Houston. Based on the number of residential foreclosures, housing characteristics and census data, sections of Houston were rated for risk of increased foreclosures and abandonment of residential property. The areas determined to be most in need of intervention were identified as Target Zones 1, 2, and 3, on the map, attached.

In the federal application, Houston identified two major activities to be undertaken: acquisition, rehabilitation, and resale of single family homes to families earning less than 50% of Area Median Income (AMI); and acquisition, blight removal, and resale of residential properties to individuals or entities that will immediately redevelop these properties.

As the plans for the above two programs have developed, it has become clear that Houston must also land-bank certain properties to stabilize large tracts of blighted apartment complexes located in areas of unusual apartment concentration. The amount of grant dollars allocated to Houston directly from HUD is inadequate to the task of stabilizing the neighborhoods of the nation’s fourth-largest city. This application requests $2,500,000 to accomplish the acquisition and land-banking of up to four multifamily properties, plus an additional $200,000 for administrative costs.

The properties under consideration for purchase by the City of Houston with the proposed grant from the State of Texas, Department of Housing and Community Affairs will have the following characteristics:

1. Properties will be unoccupied and foreclosed upon.

2. Properties will be close to or within the expanded flood plain, making redevelopment with federal funds difficult.

3. Properties will be in areas with a high concentration of sub-standard units that have a negative impact on surrounding single family neighborhood values.

4. 55% of properties will be located in areas with AMI below 50%; 45% of properties will benefit areas with AMI below 120%

5. Properties will be within the market areas shown on the attached maps, knows as SuperNeighborhood maps. These areas were first identified in 2007 under Houston’s Apartments to Standard Initiative, which sought to reduce the density of certain highly concentrated areas of multifamily development. The market areas are called Fondren/Southwest, Antoine/DeSoto, and Broadway.

The three market areas are located in areas known in Houston as SuperNeighborhoods. The SuperNeighborhoods involved in this application are Number 78- Greater Hobby Area, Number 5- Greater Inwood, and 36-Greater Fondren/Southwest. Household income in the three markets is as follows, according to the U.S. Census – 2000, the most recent data available.

|Neighborhood |Zip Code |Median Household Income |US Median Income |

|Hobby-78 |77061 |$30,440 |$41,994 |

|Inwood-5 |77091 |$25,405 |$41,994 |

|Fondren-36 |77071 |$32,238 |$41,994 |

Properties purchased for the land bank will have experienced some degree of flood or hurricane-related damage that seriously impairs their habitability. Acquisition of these properties will significantly benefit the area. The City plans to demolish any sections that are found to be in the flood plain and develop that portion of property into parkland or other public uses.

Properties that may benefit from renovation will be secured and held by the City for the period of time needed for the local market to stabilize. In time, the City expects that it will become economically viable to redevelop the remaining properties. A private partner for such redevelopment will be sought through a fair and open process. While the close-in nature of the Target Zones will likely promote redevelopment in three to five years, after this current recession has concluded, no properties will be held longer than ten years in the proposed land bank.

A grant from TDHCA under the state NSP will allow Houston to address the areas known as Fondren/Southwest, Antoine/DeSoto, and Broadway, in a holistic manner. The City of Houston currently is receiving applications for tax-credit supported multifamily rehabilitation projects, several of which could be positively impacted by appropriate cleanup of adjacent properties. The goal is to leverage NSP funds with private sector and local dollars to reduce abandonments and the crime attracted by the same, reduce adjacent neighborhood deterioration and home foreclosures, and expand the stock of affordable housing. These improvement strategies will benefit the entire area. With the acquisition and demolition of vacant units, the neighborhoods will be de-concentrated.

The target areas are composed of both single family homes, most of which are owner occupied, and multifamily homes. The condition of the apartments has negatively impacted local home values, with both sales prices and number of sales dropping over the last six months.

According to the Houston Association of Realtors, February 2009 brought a continued decline in property sales. Prices fell 10.5%, and volume of houses sold declined by over 25%.

The land bank will be an integral part of an overall local strategy to preserve and revitalize the three defined market areas known as SuperNeighborhoods. Two of the SuperNeighborhoods are entirely within the NSP Target Zones; one (Fondren/Southwest) is not within the federal NSP Target Zone, but has included in this application due to a high concentration of multifamily properties in the area that could impact the residential areas surrounding them.

In Exhibit I, TDHCA lists Harris County as sixth-highest in terms of need. The five ‘higher need’ counties are considered such primarily due to financial foreclosures. The City of Houston respectfully suggests that the hurricane-related damage to area housing is not adequately represented in the financial data, and asks that the following be considered:

1. Hurricane Ike has rendered more than 18,000 dwelling units uninhabitable in Harris County according to the Houston Chronicle.

2. On October 29, 2008, evidence of Houston’s overriding need for affordable housing was the subject of a hearing held by the House Financial Services Subcommittee on Housing and Community Opportunity. The hearing, entitled “Affordable Housing Needs in the City of Houston: Unique Challenges and Opportunities,” was chaired by Representative Maxine Waters (D-CA) and attended by several Houston congressional representatives, all of whom agreed that Houston was experiencing an affordable housing crisis. Expert testimony established that only one subsidized unit exists for every 22.5 persons living in poverty in our city.

Project Reconfiguration

The City of Houston has requested $2,500,000 in grant funds for Land Bank acquisitions, with an additional 8%, or $200,000 for administrative costs associated with the Land Bank. If the entire amount of grant requested is not available, the City of Houston will gratefully accept as much funding as is available to acquire properties, to serve areas of highest need.

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