Housing stock that was largely built at the same time years ago may be in need of reinvestment. This can be challenging because rehabilitation can be an expensive prospect, however there are ways to finance reinvestment in existing housing.
Tax Exempt Bonds
Definition: Municipalities can issue bonds to developers for housing activities. Developers do not need to pay taxes on the interest earned.
The Texas State Affordable Housing Corporation issued $4.2 million in bonds to acquire and rehabilitate the Brooks Manor Apartments in West Columbia, Texas. The developer will add new roofs, energy efficient windows and Energy Start certified HVAC systems to improve the existing housing.
Low Income Housing Tax Credit (4% for rehabilitation)
Definition: A dollar-for-dollar credit reduction in income taxes for developers that construct or rehabilitate low-income housing.
Cottages at South Acres, a 144-unit affordable community of single-family homes in Southeast Houston, was funded in part by the purchase of $15.2 million in low income housing tax credits, in addition to $3.1 million in HOME Investment Partnership funds, and a $15.8 million construction loan from Capital One Bank.
Community Development Block Grants
Definition: Either directly appropriated to entitlement communities, or applied for by non-entitlement communities, Community Development Block Grant funding can be used for housing rehabilitation and acquisition, and a wide variety of other housing support projects—including infrastructure.
Among a variety of other uses, Missouri City used CDBG recovery funds to rehabilitate 17 households—12 of them low- or very low-income—making them more energy efficient and handicap accessible.
Tax Increment Reinvestment Zones (TIRZ)
Definition: A political subdivision that uses property taxes from a designated area to fund public improvement projects in that area.
The City of Houston has 27 Tax Increment Reinvestment Zones, which use ad valorem property taxes to fund infrastructure, in addition to affordable housing, façade programs, and other public improvements. TIRZ can work alone or partner with other organizations to purchase and rehabilitate aging housing.
Housing Trust Fund
Definition: Housing trusts receive ongoing public funding to support the preservation and production of affordable housing.
Austin City Council dedicates 40% of City property tax revenues from developments that have been built on previously city-owned land toward affordable housing.
Chapter 380/381 for Aging Infrastructure Improvements
Definition: An agreement between a municipality and a developer that provides sales tax incentives to the developer in exchange for their project meeting performance metrics.
To partially fund landscaping, signage, and façade improvements at a mixed-use property in Tomball, TX, the city negotiated a Chapter 380 agreement with the developer, BakerKatz.