Three affordable housing developments awarded federal tax credit funding in July are on their way to create and rehabiltate rental units to house Waco’s low-income residents.
But city housing leaders acknowledge that the new projects won’t come close to reversing a growing shortage of affordable housing in Waco.
The state of Texas awarded federal credits to subsidize the construction of veteran housing at the Doris Miller Veterans Affairs Medical Center, called Freedom’s Path; a downtown senior complex called Paige Estates; and a redevelopment of Estella Maxey public housing, to be known as Melody Grove.
Buildings 19, 20 and 21 at the Doris Miller VA campus will receive asbestos and lead-paint remediation before they are renovated to become part of a Freedom’s Path development providing supportive housing for homeless, near-homeless and disabled veterans.
Waco Housing Director Galen Price said the tax credits are one tool in the city’s toolbox to correct shortfalls identified by the city’s 2022 strategic housing plan. In the past the city has solicited tax credits for affordable projects such as Barron’s Branch and the Lofts at Old Waco High.
People are also reading…
But Price noted that the housing study identified a shortage of some 4,500 rental units, based on 2019 data.
The city used data from 2019 since the pandemic prevented reliable data collection when planning began, but “these figures are sure to have increased given the costs of housing in today’s market,” he said.
“Back in 2019 they said we were 4,500 units short,” he said. “Now given a fact of, you know, the industry that’s being brought in and different economic development-type activities, more than likely that gap has probably grown faster than what can be built.”
The study concluded that Waco lacked a supply of units across all housing types and income levels, specifically those that would be affordable for people earning between zero and 30% of the area median income.
A one-person household living at 30% of the area median income brings in about $13,000 to $14,000 per year, and those individuals typically live on a fixed income, Social Security or disability benefits, Price said.
The study also highlighted a housing mismatch in which people who can afford more are “buying down or renting down” into housing more suitably priced for lower income brackets, he said. Several things may influence someone’s decision not to maximize their housing costs, like unavailability of their desired housing or other non-housing living expenses.
Waco has 7,900 households deemed extremely low-income but only 2,200 units considered affordable for their income. That leaves a gap of about 5,700 units and causes people to spend more of their income on housing, Price said.
“Well, that squeezes those individuals who may only be able to afford a certain amount out because that decreases the amount of rental units available where there’s already a shortage,” he said.
By the U.S. Department of Housing and Urban Development’s standards, people are considered cost burdened if they are spending more than 30% of their gross monthly income on housing. They are severely cost burdened if they’re spending more than 50%.
The growth in average rent for a one-bedroom unit in Waco has far outpaced any increases in wages, going from about $750 in 2018 to $1,157 in 2023, an increase of more than 54%. Those figures do not necessarily include other utility expenses.
“With the cost of housing increasing it’s affecting more people literally by the day because as those costs increase … that increases the amount of money needed to be made by a household to keep it affordable,” Price said.
He said to keep that one-bedroom unit affordable by HUD’s 30% rule, a household or individual would need to make about $46,000 a year.
The median household income according to the U.S. Census Bureau’s 2021 American Community Survey was about $43,000, “so you think about it, the median is $43,000, but to afford the average unit you need to be at $46,000,” Price said.
“So you can see just based on that alone, there could be a substantial amount of people who are cost burdened … who are spending more than 30% of their income on housing expenses just on a one-bedroom.”
The average cost for a two-bedroom rental unit increases to $1,469 and $1,659 for three bedrooms. Those working to make ends meet may resort to living with family, forcing larger groups into smaller units, or may even live in their cars or other inhabitable places, Price said.
The city and other community leaders are using several tools to increase Waco’s affordable housing stock, including incentives, tax credits and the remaining American Rescue Plan Act funding. Price said the recommendations of the housing study mobilized four city task forces:
- A vacancy task force focuses on about 5,000 vacant lots, housing units and abandoned units around Waco and tries to find ways to put them back in use,
- The high-density task force looks at ways to create denser development – including accessory dwelling units – which squeezes more units on an amount of land, decreasing cost per unit and increasing affordability,
- A neighborhood revitalization task force is working with neighborhood associations to understand non-housing needs and gather community input on vacant spaces to pass on to potential developers, and
- Another task force focuses on community land trusts and housing trust funds, which is a long-term approach to land development, building wealth and providing affordable housing.
“But what we’re trying to do is, as we do create additional housing opportunities, we are trying to create mixed income developments where there’s an affordable component as well as a market component, thereby addressing all income types across the spectrum,” Price said.
Three developments were awarded funding from the Texas Department of Housing and Community Affairs’ Competitive 9% Housing Tax Credit Program, which allows investors to buy federal tax credits off the approved projects and receive a dollar-for-dollar offset to their tax liability.
The tax credit approach began during the administration of President Ronald Reagan and has become the largest federal program for affordable housing.
The 9% program draws from a competitive pool of state funding. Developments receive points and are ranked based on several criteria, including a resolution of support from the local governing body, that show their overall benefit to the population they serve.
Melody Grove, the name residents have chosen for the Waco Housing Authority’s renovated Estella Maxey Place, received state funding for the overhaul’s first phase that will reconfigure 114 units at the complex at Gholson Road and Herring Avenue into 79 units for seniors and disabled residents.
The $23 million project was granted $1.83 million during this year’s round of awards, but Housing Authority CEO Milet Hopping said she plans to apply for more state funding for the project’s next two phases.
The long-term project will reduce Estella Maxey’s total number of units from 364 to between 250 and 275 units at a complex that was built in the 1950s and ’60s. The project is part of the housing authority’s greater plan to renovate many of its campuses.
The $17.2 million Paige Estates project will create 64 units of senior housing at 826 S. 11th St., the site of Cruz Grocery, across from the Kate Ross public housing complex. The project received $1.12 million in tax credit funding in 2021, plus an extra $168,300 this year based on a 15% inflation adjustment.
The development also recently received $550,000 from the city’s allotment of federal ARPA funding.
Price said Paige Estates will have a mix of 54 affordable units to serve those at different percentages of the area median income and 10 market-rate units.
“This development is going to serve as a complement to Kate Ross, as at some point Kate Ross is going to be remodeled, so that’ll give individuals – specifically seniors – the ability to relocate somewhere that’s not relocating them out of their immediate area,” he said.
Freedom’s Path, a $10.4 million veteran housing development, also received $454,000 in 2021’s round of competitive state funding and a 15% adjustment this year, adding $68,100. It was also recently approved for $550,000 in HOME-American Rescue Plan funding through the city.
The project, managed by the nonprofit Solutions for Veterans, will renew three historical buildings at the Doris Miller Department of Veterans Affairs Medical Center and build one new to create 34 units for homeless, near-homeless and disabled veterans.
