Stacked Deck

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When developers are done winning over a sprawling cast of public officials, they'll need to turn their attention to the local neighborhood association. If a qualified neighborhood group backs your proposal, you may win 24 points. In a process where developers can miss out on a fortune in tax credits based on a few points, losing a neighborhood's approval could cost a developer millions in future revenue as well as the thousands of dollars already spent on submitting the application.

Despite the wealth and power of tax-credit developers, the way the program is structured, a neighborhood association can kill a proposal by taking a quick vote in a member's basement during half-time of a football game. Most neighborhood associations don't like affordable housing, wrongly linking its current incarnation with old-style public housing projects. So, developers often go to absurd lengths to placate community groups and their elected representatives, often appeasing the neighbors' prejudices against the working poor.

In Fort Worth, several neighborhood associations signed memorandums of understanding with tax-credit developers that required all prospective tenants to undergo a credit check and provide a two-year job history, a litmus test that the associations couldn't possibly force upon any of their middle-class neighbors. That same agreement required the developer to "set the rental rate at the highest level" allowed by the program in order to "enhance the quality" of the surrounding neighborhood. It also mandated that the complex employ private security patrols.

Oddly, due to a quirk in the program, if an affordable-housing complex is planned in an area without a neighborhood association, the developer can only win 12 out of 24 points in the community support category. So last year, the attorney for the Odessa Housing Authority incorporated a local neighborhood association that, in turn, "supported" the agency's plan to develop an affordable-housing complex, earning the agency 24 points on its application. The state later rescinded the points.

For developers, winning the support of neighborhood associations adds up to a series of procedural headaches that can thwart even well-intentioned proposals.

"If I go to a zoned piece of multi-family property and I want to build a high-end apartment building, there is not a single public hearing I have to go to," says Brent Stewart with Trammell Crow Residential. "But if I want to build an affordable development, I have to get letters of political support and the support of the local neighborhood association. If you really think about it, you're not going to get their support most of the time. I've spent a lot of time with neighborhood and community groups and neighborhood leaders, and I've lost a lot of money on deals that were killed for the wrong reasons."

And let's be clear here: The stakes can be very high. Affordable-housing advocate Henneberger says that developers used to call their tax-credit applications a "Two-Lexus Deal," because if they won, they could buy two Lexuses. Now, though, he says the rewards for tax-credit deals are even greater. With the developer fees in the millions, "you can buy a whole bunch of Rolls-Royces," he says.

Even after the endless series of stories on Potashnik and his connection to the FBI investigation, the developer remains something of a hero among a cluster of neighborhoods in far East Dallas along Ferguson Road and Buckner Boulevard. Against a backdrop of urban blight, you'll find thriving streets of old, regal homes, middle-class subdivisions and tiny, well-kept ranches. But a series of bleak, crime-ridden apartments seems determined to plague their own tenants and the surrounding neighborhoods. These are not tax-credit properties, so landlords don't have to worry about state regulations governing the appearance and operation of their apartments.

At the beginning of Ferguson Road, off Interstate 30, sits the Fairway Crossing, an abandoned apartment complex of dirt-brown two-story town homes. Some of the windows are boarded up; others are shattered. A broken spotlight dangles from an electrical wire on one of the front buildings. Behind several rows of empty apartments, in an alley out of sight of the main thoroughfare, thieves ditch the cars they've gutted.

In 1998, a neighborhood activist named Vikki Martin helped found the Ferguson Road Initiative (FRI), a nonprofit umbrella group that would grow to cover nearly 20 neighborhoods in and around Buckner Boulevard and Ferguson Road. The group received a federal grant through the U.S. Department of Justice and used part of the money to help pay for more bike patrol officers to watch over the crime-ridden apartments. The officers would later tell the group how easy it was for them to ride right up to a drug deal in progress. FRI also helped lobby for $3.7 million in a city bond package that included paving sidewalks for neighborhood children to walk to school. In turn, developers came in and built single-family homes worth up to $300,000.

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Matt Pulle
Contact: Matt Pulle