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Affordable housing proposals on Coast causing concern

If you want to insure minimal participation in a public hearing, hold it on Mardi Gras Tuesday in Gulfport at about the same time and place where a Mardi Gras parade is starting. Or, hold the public hearing across town from the impacted neighborhood in a building with no electricity.

Gulfport Councilwoman Barbara Nalley, who represents the area of Orange Grove north of Interstate 10 in Gulfport, said tactics such as those above have been used by developers of proposed affordable housing projects. She has been to seven public hearings in a week recently on affordable housing projects proposed to take advantage of significant tax incentives through the Gulf Opportunity Zone Act (GOZA).

“I don’t have concerns or problems with low- to moderate-income housing,” Nalley said. “I have a problem with the process that is being done under the GO Zone Act.”

Nalley is uneasy that a large number of tax credit units have been approved by the Mississippi Home Corporation for Gulfport, far more than other Coast cities. There have been 1,071 tax credit units approved so far in Gulfport compared to only 34 in Biloxi.

In addition to concerns that a large number of the projects have been proposed for the Ward Seven area she represents, Nalley and others including local tax assessors have raised concerns about the impact on the local tax base. Developers of the tax-credit units pay taxes based on the income from reduced rent rather than the normal assessed value of the property. That could leave other property owners in the city subsidizing public services such as streets, drainage and schools needed for occupants of the affordable housing.
The apartments and homes are for residents who earn less than 60% of the median income of the area.

Nalley said developers are selecting property that is zoned correctly so they don’t have to go before the city for a zoning change that might attract significant neighborhood opposition. And she feels the public notice requirements are lacking. Developers are required to put only a one-day notice in the classified section about the meeting. In some cases, they have put their 18” x 36” sign advertising the public hearing in areas not easily seen. And while the public hearing is supposed to be held in the same community as the proposed project, most of the hearings she has attended were across the city from Orange Grove.

The city was providing letters of recommendation for the projects without notifying city council members.

“What a lot of cities do is just give them zoning certification,” Nalley said. “Our city, however, has been giving them letters of recommendation. Our director of planning has said developers get zoning certification letters and are misinterpreting them. But they are pretty much giving them recommendation letters. There is a point system under Home Corp. rules. This letter is important for these developers. I feel that is why we have more of them here. If no one has complained because they didn’t go to public hearing, Home Corp. is more likely to approve that application than if they don’t have that letter.”

In Gulfport, 12 complexes have been approved through February 15 for a total of 1,071 units. That compares to Biloxi, 34 units; Pascagoula, 264; Jackson County, 119; and Bay St. Louis, 129.

“That doesn’t include the wave of applications submitted March 9,” Nalley said. “I have five projects in Ward Seven. And I have information that another 12 have been submitted for March 9 and more are planned for another round in July. The reason for such a feeding frenzy is 100% the GO Zone tax credits. That is why so many of these guys want a piece of this. The developers will sit there and say, ‘This is like a crap shoot,’ but it is a very lucrative crap shoot. If you win, it is like winning the lottery. It has opened up a feeding frenzy on many different levels. It is like all of the rules have changed. I am upset with the city giving recommendation letters without telling city council members.”

Too many?

Nalley’s concern is that the city, and particularly the area she represents, could end up with too many of these affordable housing units. She feels that could hurt the local building and rental markets. She is also concerned the large number of units could attract residents from all over the Gulf Coast. Impact on the tax base is another major issue.

“On these tax credit developments, we will only get about a third of the tax base that we would get with a private developer,” she said.

Gulfport has stopped giving letters of recommendation to developers, and Mayor Brett Warr has said that while affordable housing is critical to the city’s recovery, there are flaws in the process that must be addressed.

Scott Spivey, vice president of corporate communications for the Mississippi Home Corporation, said the problems with the process brought to light in Gulfport are a concern for Mississippi Home Corporation, too.

“If we receive notification that the public meeting requirements were not met, we need people to contact us so we can do something about it,” Spivey said. “One of the things people have to understand about the tax credit program is who is going to live in these units. This is your local workforce. These are factory employees, casino workers and municipal employees. For example, in the Gulfport/Biloxi area, tax credit units are available to people with 60% of the area median income. In Biloxi/Gulfport, that is $19,680, and for two people it is $22,500. This is your local workforce. A lot of people don’t understand that right away. That is why we are here to answer questions.”

A misconception is that the program is for Section 8, which is government-subsidized housing. It is not. There are just limits to what can be charged for rent. The tax credit allows developers to fill the gap between what it costs to run the apartment or home, and the rent so they can make their projects cash flow.

Demand has to be there

Spivey downplayed concerns about over-construction of affordable housing in the area. Part of the application process is a market study.

“So, the demand has to be there as demonstrated in the market study for a developer to go ahead,” he said. “The next cycle would take into account how many have been approved and how many are moving ahead.”

In the bottom six counties, an estimated 8,500 affordable housing units were destroyed or severely damaged by Katrina. So, the units approved so far would be only a small percentage of that.

Another point Spivey makes is that there are requirements for the housing to be immaculately maintained for a long period of time, and that is monitored by Mississippi Home Corporation. “Everything down to the batteries in the smoke detectors has to be maintained,” he said.

David Tipson, a staff attorney with the Lawyers Committee for Civil Rights, said he hopes the controversy doesn’t put major roadblocks in the way of construction of badly needed housing.

“There are still lots of people living in terrible situations in FEMA trailers and doubling up with relatives,” Tipson said. “If Gulfport wants to be a community for people with a range of incomes to live and work, the low-income housing credits have to be part of that. Gulfport has a consolidated plan that supports the construction of affordable rental housing. Our position is that we need to support the construction of these projects.”

Tipson said while any individual projects may raise concerns for environmental or other reasons, ultimately the goal of organizations that support affordable housing would be to support the Low Income Housing Tax Credit program.

Tipson said the bottom line is the community has a right to be concerned if there are legitimate land- use-planning and environmental issues. But he hopes the city will not allow prejudice against low-income families or concerns about taxes to block the construction of desperately needed housing.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

About Becky Gillette

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