Riddle amendment to TDHCA Sunset bill is ill-conceived and discriminatory

I wrote last week about the ill-conceived amendment the Texas House of Representatives tacked onto the TDHCA Sunset bill. The first part of this amendment removed the Sunset Commission recommendations and gave state representatives virtual veto power over Low Income Housing Tax Credit applications. Today I want to focus on the other part of that amendment that requires city and/or county governing bodies to hold a public hearing and provide a recommendation on each housing tax credit application.

This second part of Representative Debbie Riddle‘s amendment requires a public hearing and a statement from the local governing body supporting or opposing the housing development, “only if neither a state representative nor a state senator provides a written statement expressing either support or opposition…” Given the timing of the application submission and scoring process, I think the public hearing and the local governing body statement favoring or opposing the development will have to take place regardless of whether the state representative decides to weigh in to support or veto the development.

It may be appropriate to permit city and county governing bodies to play a role in determining which developments are selected for funding using housing tax credits. Arguments can be made for and against this. But the way the Riddle amendment sets up the process is not going to go over very well with local city and county government bodies and it is ultimately designed to exclude people of color from moving into majority white neighborhoods.

The Riddle amendment requires city councils and county commissioners courts to hold hearings on the applications within their jurisdictions and vote on which applications they are for or against. But the Riddle amendment permits a single state representative to render the local governing body’s hearing and resolution meaningless. In larger cities where there are a number of senators or representatives this will be complete chaos. Consider how this will play out in Houston. The City Council will hold a series of public hearings on a dozen of so housing tax credit applications in a given year. If the City Council follows the law they will consider which developments should move forward in the best interest of the tenants and which are necessary to meet the city’s obligation to “affirmatively further fair housing” under the requirements of the Fair Housing Act. Houston will probably be eligible for two or three developments in a given year. But after going through this careful process to locate the housing where it will best serve the interests of the tenants and meet the legal requirements, a single state representative can veto any development in their district just by writing a letter opposing the development.

The state representative is not required to give their reason. It is a pure and simple power to issue an arbitrary veto. Nowhere else in Texas law are individual representatives granted such executive power. The ability to exercise this arbitrary veto raises questions about whether a state representative could be legally held accountable under the Fair Housing Act for their actions. Given the stakes involved I imagine we might find out about that individual liability if the Riddle amendment survives the Senate.

All of this begs the question about of why a public hearing should be held in the first place.

This type of special public hearing is not required on multifamily housing unless there is a zoning or permit change. What is it about Low Income Housing Tax Credit financed multifamily housing that distinguishes it from any other multifamily development? The answer, of course is the tenants. It is not the income of the tenants. Some apartments in LIHTC funded development are required to be affordable to tenants earning less than 60 percent of the median family income (MFI). But 60 percent of MFI is generally the same tenant income targeted in many conventionally funded multifamily developments.

There is one characteristic of LIHTC developments that is compelling public hearings and heightened review  — the race and ethnicity of the tenants.

In Low Income Housing Tax Credit developments tenants are more likely to be persons of color than are tenants in unsubsidized developments. This is because federal law prohibits landlords from discriminating against Section 8 voucher holders in renting apartments in LIHTC developments. Section 8 voucher holders are much more likely to be persons of color than the renter population as a whole.

The Riddle amendment erects barriers to the construction of affordable housing that is accessible to persons of color in traditionally white neighborhoods. Not just cities, but the State of Texas as well are legally required to affirmatively further fair housing. By doing this the Riddle amendment lays the State open to the consequences of failing to do so. More thoughtful Senate leaders and the governor should strike this amendment and support the Sunset Commission recommended reforms.

Here is the second part of the Riddle amendment concerning public hearings and local governmental resolutions.

Sec. 2306.67071. ADDITIONAL APPLICATION REQUIREMENT: NOTICE, HEARING, AND RESOLUTION BY CERTAIN GOVERNING BODIES.

(a) Not later than the 60th day before submitting to the department an application for housing tax credits, an applicant 21 must provide notice of the intent to file the application to:

(1) the municipality in which any part of the proposed development is to be located;

(2) the county in which the proposed development is to be located if any part of the development is to be located in an area of a county that is not part of a municipality; and

(3) the municipality and county in which the proposed 28 development is to be located if any part of the development is to be located in the extraterritorial jurisdiction of a municipality.

(b) Not later than the 30th day after receiving notice under Subsection (a), a county or municipality, as applicable, shall provide for public comment on the application at a hearing held in compliance with Chapter 551.

(c) In addition to the application information otherwise required under this subchapter, an application for housing tax credits must be accompanied by a certified copy of a resolution from each applicable governing body described by Subsection (a). The resolution must certify that:

( 1) notice has been provided to each governing body as required by Subsection (a);

(2) each governing body has had sufficient opportunity to obtain a response from the applicant regarding any questions or concerns about the proposed development;

(3) each governing body has held a hearing under Subsection (b); and

(4) after due consideration of the information provided by the applicant and public comment, the governing body 18 does not object to the filing of the proposed application.

(d) A preapplication submitted under Section 2306.6704 is 20 not considered an application for purposes of this section.