Developers get tax breaks, while the poor get not-so-affordable housing

Developers get tax breaks, while the poor get not-so-affordable housing

David Starr storyA few months ago reporter Karisa King got a tip that Michael Amezquita’s job was in danger. Amezquita is the chief appraiser for the Bexar County Appraisal District, the agency that appraises the value of all property in the county, which affects the tax bills of landowners.

Except not all landowners pay property taxes. Case in point: Some nonprofit housing developers get tax breaks under a program to provide affordable housing to the poor.

Amezquita claimed some developers weren’t fulfilling their end of the bargain. “They rent to poor people, but they’re not giving them a break in the rent,” Amezquita said. He revoked the tax exemption status for 42 housing developments, sparking an outcry from developers who claimed Amezquita was out of line. Some board members of the appraisal district sided with the developers.

Karisa’s first story about the conflict ran in April. It was a good primer on the controversy, but Karisa didn’t have much information about the housing developers benefiting from the tax exemptions.

“That begged the question, what’s going on with these housing groups?” Karisa told me when I asked her how she got involved in the story.

So for the next eight weeks, Karisa dived into the arcane world of government housing programs for the poor. The results of what she learned appeared on Sunday’s front page this week: A nonprofit organization called American Opportunity had applied for the most exemptions last year in Bexar County — 22 apartment complexes that could save $4.8 million in taxes in return for providing affordable rent for poor families.

But Karisa learned that Texas sets no caps on the amount of rent that can be charged. She learned American Opportunity, chaired by developer David Starr, was often charging families rents that were higher than they could afford:

To meet financing requirements for some properties, American Opportunity rents to many low-income families. But the state law that created the exemption imposed no rent limits, allowing the group to charge more than fair-market rent and caps used in other affordable housing programs.

Loopholes in state laws and a lack of oversight mean nonprofit groups can exploit the tax incentive without providing housing that is affordable for low-income people.

Struggling families paid as much as $1,040 a month in rent last year for a three-bedroom apartment. For some, making the rent means skimping on groceries, turning off the air conditioning and pinching other basic needs, the kind of hardship that affordable housing is supposed to relieve.

Meanwhile, American Opportunity paid $1.1 million to private companies run by Starr and his family in 2008.

“I learned a whole lot about the world of affordable housing,” Karisa said. “How important it is when lawmakers create these kinds of exemptions to tie it to some kind of test — something that allows you to test whether or not there’s a real public benefit that’s gained.”

For students, bloggers and journalists who look into a complicated topic like this, Karisa said the best thing to do is figure out what kind of documentation exists and then get your hands on it. In this case, Karisa wanted to find out if low-income tenants were truly paying affordable rents. She learned about public reports that showed many tenants were actually paying market-rate rents.

“I totally would not have had any story if there hadn’t been those records,” Karisa said. “It hinges on the documentation.”