Houston is making its first foray into developing entire subdivisions, with plans for roughly 700 homes — half of which will be made available at affordable price points.

But the Houston Housing Collaborative, a collection of more than 50 housing advocates, developers and other groups advocating for equitable housing, is concerned that the city has designed the program in a way that spends tens of millions of public dollars but makes no requirement that homes stay affordable for future buyers.

At the heart of the debate is why the city is investing in home ownership for low-income families. Should it be primarily as a way for families to build wealth, with homeowners pocketing a forgivable loan and eventually selling the home at market rate — which won’t be affordable for the next family? Or should the focus be providing housing stability, allowing more Houstonians to feel secure at being able to afford the city over the long term and the home itself remains affordable — meaning homeowners will reap smaller profits upon selling?

“It’s great for the individual homeowner because they can… profit and build wealth that way,” said Alan Watkins, executive director of the housing collaborative. But he said building hundreds of homes that would only remain affordable for five years “is an opportunity lost” because the city is investing in affordable housing stock will eventually disappear.

Despite the naysayers, the city is preparing to spend $43 million on land for three developments — 240 homes in Willowbend, 240 homes in Sunnyside and 201 homes in the Near Northside.

Under the program, families earning 80 percent of Houston’s area median income are eligible for resulting single-family detached houses, townhomes, duplexes or condos. For example, a family of three earning $57,050 or less would currently qualify.

Houston would not only provide qualified residents access to a lower price point. For the 51 percent of homes that would be affordable, the city would also provide downpayment assistance of up to $135,000 per family in the form of a no-interest, no-payment loan. Every year, 20 percent of the loan would be forgiven, so that after five years, the loan would effectively become a grant. After five years, homeowners would also be free to sell the home at market value — a boon for participants in the program, who would be able to build wealth by capturing their home’s appreciation, though it also means homes may not remain affordable for more than five years.

In an emailed statement, the Houston Department of Housing and Community Development did not address the pros or cons of designing a program in which homes would remain affordable for longer periods. Instead, the department put that decision in developers’ hands.

The department said that the developers that the city selects to build the homes could choose to extend the affordability period for the homes beyond the city’s mandated five years. “We encourage any (developers) to take on the administrative and compliance burden in pursuit of longer term affordability,” the statement read.

A Notice of Funding Availability, which outlines the parameters of a project that requires a contractor, has already been issued and filled for the subdivisions in the Near Northside. But such parameters have yet to be issued for the Willowbend or Sunnyside subdivisions.

Curtis Davis, who teaches in the architecture department at both the University of Houston and Rice University and is a member of the Houston Housing Collaborative, pushed back on the idea of the city relying on others to address the long term affordability of its investment. “To leave that up to developers or to faith is not, in our point of view, a prudent investment of public dollars,” he said.

Watkins urged the city to consider making the affordable homes part of the Houston Community Land Trust, a program that makes a similar investment in individual homeowners, but in a way that keeps the home permanently affordable.

For the land trust, homeowners get up to $150,000 toward the purchase price of the home, and the land is placed in the trust. Since participating homeowners do not have to pay taxes on the land, their taxes are also greatly reduced, lowering monthly payments.

The way homes in the trust are kept permanently affordable is by capping the amount its resale value can rise at 1.25 percent every year. So if you paid $100,000 for a home (after the trust contributed the remaining $150,000 of the purchase price) and own it for 10 years, you could then sell it for $112,500 to another family earning 80 percent of the Houston area’s median income.

Watkins called integrating the plans to build subdivisions with the Houston Community Land Trust a “win- win.”

“You’re replacing the housing stock that was lost to Harvey, which is your primary objective” — the money the city is investing comes from Hurricane Harvey disaster recovery relief funds. “But you would also be increasing the affordable housing supply that is very much needed in the city of Houston… It would be wonderful if the city would press this issue and require some of these things for the developers.”

Davis said that another option would be to extend the period before a homeowner could sell a home at market rate from five to 15 years.

He said that both that option and the community land trust option not only create long-term affordability — they also protect homeowners from rapidly increasing tax increases. If a home cannot be sold for market value, tax appraisal districts should appraise their values accordingly.

The way the city’s program currently stands, he said, will put low-income homeowners in a “tenuous situation.”

The Housing and Community Development Department started up its Large Tract Division — which aims to facilitate the development of entire subdivisions — after Hurricane Harvey’s widespread devastation in 2017 cost the city tens of thousands of homes, said Ray Miller, assistant director at the department.

The division buys land and deeds it over to a developer free of charge in exchange for the developer selling at least 51 percent of its homes at affordable prices.

The 10.7 acres for Hardy Yards in the Near Northside at 850 Burnett St. has already been purchased for $15.8 million in Harvey-related disaster recovery funds. The developer Hardy Yards LLC, headed by Kirby Liu of Lovett Commercial has been selected for the project, which is awaiting City Council approval, a fact sheet provided by the Housing and Community Development Department shows.

Willowbend and Sunnyside developments are both in very early stages — the city has the land under option and is currently conducting due diligence before purchasing the properties. The Willowbend site, which spans 12.2 acres off of Stella Link Road, just north of Harmony School of Ingenuity, is under option for $13.8 million. The Sunnyside site, which encompasses 14.9 acres off of Cityscape Avenue, just south of Terra Bella Health and Wellness Suites, is under option for $13.2 million.

[email protected]