The Texas General Land Office (GLO) received federal approval this week to proceed with its plan to take control of $1.2 billion in funding that was given to the City of Houston to help residents impacted by Hurricane Harvey.
The decision by the U.S. Department of Housing and Urban Development to sign off on the Texas GLO’s plan, which comes amidst claims that Houston has not utilized the 3-year-old recovery funds in a timely and efficient manner, could impact at least two multifamily housing projects planned for the Heights and Oak Forest areas, which were set to receive a total of about $20 million from the city in Harvey recovery money.
The Houston City Council last month approved a $9.09 million loan to nonprofit Avenue CDC for its Avenue on 34th project, a 70-unit affordable housing complex planned for the site of the former Doyle’s Restaurant on West 34th Street. The city also has pledged about $11 million to help fund the Dian Street Villas, a 108-unit affordable housing project planned near Shady Acres.
“We hope they are willing to proceed with all the multifamily projects, which will provide over $1 billion of safe, resilient, affordable housing for Houston residents,” Houston Mayor Sylvester Turner, referring to the Texas GLO, said in a Tuesday statement. “One is scheduled to close (Wednesday), and this news puts that project and all other projects in jeopardy. Unfortunately, we cannot fund and go forward with these projects without GLO’s confirmation that we can use the funds that have been already reserved for these projects.”
The Texas GLO’s impending takeover of the Harvey recovery funds is contingent upon the outcome of ongoing litigation with the city, which sued the GLO in July in an attempt to block the takeover. The matter is currently in front of the Texas Supreme Court.
A spokesperson for Avenue CDC said Tuesday that it’s “really too soon to know how this will affect current or future work.” Peter Doyle, who owned Doyle’s Restaurant and the surrounding property, confirmed the property sale to Avenue CDC was finalized last week.
“We are continuing to monitor the situation and remain committed to bringing safe, quality affordable housing to communities where Houston’s working families need it most,” the Avenue CDC spokesperson said.
Texas Inter-Faith Housing executive director Russ Michaels, whose organization is developing the Dian Street Villas, did not respond to a Tuesday text message seeking comment. The project was awarded a federal housing tax credit in July by the Texas Department of Housing and Community Affairs (TDHCA), with the pledged money from the city also expected to be critical to the overall funding of the project.
A TDHCA spokesperson said department staff, while going through the underwriting process, subsequently determined the Dian Street Villas project to be financially infeasible. Upon appeal by the developer, though, the spokesperson said the TDHCA governing board remanded the project application back to staffers and asked them to work with the developer to clarify the financial details of the project.
So the TDHCA spokesperson said the developer remains in line to receive the tax credit award, which is worth $1.5 million annually over a 10-year period.