By: Jacquinette Murphy, NDG Contributing Writer
Reverend Donald Parish, Sr. the senior pastor of True Lee Missionary Baptist Church at 3907 Bertrand Avenue in South Dallas is looking for a spark of hope for his community.
“This community has been so depressed that we are just looking for anything that would stimulate growth in this area,” he shared.
For more than a decade, Dallas developers used tax credits as a key to unlock the door to building affordable housing in the Southern Dallas area. However, they have failed to find an effective combination to open the gateway to creating economically sound communities for its residents.
Since 1999, 125 tax credit supported constructions have been completed in the City of Dallas according a recent housing report. Approximately 75 percent of the projects are in the South Dallas area. In 2004 and 2005, tax credit awards supported the renovation of the Frazier Courts multi-housing project into a town home community complete with a recreation center and early childhood center. In 2011, the Carpenter’s Cove 252-unit senior facility was completed in the Southeast Dallas area. Current housing tax construction efforts include the Buckeye Trails Commons on Bexar Street and the Wynnewood Senior Housing facility on Zang Boulevard.
Yet today, the North-South Gap remains a stubborn divisor in the city’s overall economic growth plan and brings to question of whether or not the use of tax credits alone has simply been a patch for the long absence of a true master plan for communities south of the Trinity River Corridor, I-45 and I-30.
Tax credits are defined as a dollar-for-dollar reduction in the income tax liability for the investors of housing tax credit properties. After the amount of tax is calculated on the property, the tax credit award is deducted from the total fees. This deduction aims to make the construction offer more attractive for potential investors by putting “free” dollars into a project. This results in the investor actually spending less money out-of-pocket.
Parrish stated, “We need tax credits to do development in our area because not a lot of people are doing development to the Fair Park area. It makes the project more doable.”
The idea of awarding tax credits is a result of the 1986 Internal Revenue Service (IRS) federal tax reform code (Public Law No. 99-514, 100 Stat. 2085) developed to form a funding mechanism to ensure the sustained availability of affordable housing properties in the United States. It provides a legal means of directing private capital toward the development and preservation of affordable rental housing for low-income families.
Although, the initiative began on a federal level, the tax incentives are actually distributed by the state- level government agencies managing the funds for projects within their boundaries. Annually, a regional allocation formula (RAF) dictates the amount of tax credit awards assigned to the states for disbursement to developers through a competitive bidding process.
In Texas, the Texas Department on Housing and Community Affairs Agency (TDHCA) is the overseer of the tax credit allocation for the construction projects in the state of Texas. Its program, called the Housing Tax Credit Program (HTC) allows private developers to apply for project funding awards to offset the cost of constructing the housing developments.
Cities such as the City of Dallas become conduits that help funnel the developers through paperwork, and manage the process for gaining the essential project permissions. The city benefits from this program through the increase in the base value of the area of development. This can also create jobs for the community, and at the same time it does not displace the residents.
Unlike traditional investment projects, when developers use federal tax credits to fund their project, these initiatives must offer the majority of the housing units under the market rate to accommodate the lower income families. Additionally, little to none of the project can be combined with retail, restaurant, transit or other related development plans. Developers that do not comply or keep to the TDHCA guidelines, from conception and up to 40 years after development, can be penalized or even barred from participation in the HTC program.
Over the years, the use of tax credits has brought revitalization to the housing aspect of the still incomplete Southern Dallas community development puzzle, but Parrish sees it as kindling. “It is my hope that this would be a catalyst to spur more development and that people would start move in instead of moving out of the area. Success breeds success. We need something to stimulate this area.” He continued, “Once it starts, other people would want to come in.”
Recently, Dallas Mayor Mike Rawlings expressed his focused initiative to bring full-scaled development to the Southern Sector of Dallas. He unveiled Grow South, a master economic development plan aimed to create sustainable neighborhoods. In the one-hour presentation, he outlined and pledged to create and personally oversee private equity investment funds directed to cleanup, promote and attract corporate business, major restaurant and retail establishments south of the Trinity.
With the introduction of the mayors plan, and the continued HTC construction projects the community development of the long desolate Southern Dallas area has a dual opportunity to be revitalized.
