The program that provides a $15,000 per unit to developers building in the Downtown District is poised to double. The proposal will increase the number of subsidized units from 2500 to 5000 residential units and increase the tax abatement to $75 Million. Houston Chronicle: “Downtown views call to many suburbanites”
For Krishnan Iyer, moving downtown meant a lot of things: Not having to use his car in auto-dependent Houston, being able to walk to work, to restaurants, to the movies.
The 34-year-old consultant left The Woodlands two years ago for a one-bedroom apartment in the Post Rice Lofts at Main and Texas and hasn’t looked back. Iyer expects many others to follow him in the coming years.“I think for sure the rising oil prices will have an effect on people moving inward to a place near where they work, and there is a trend of renting among younger people rather than buying,” Iyer said. “There’s going to be demand to live here. It’s not going down.”
With people like Iyer in mind, developers are proposing six residential projects for downtown Houston that could add more than 2,200 new apartments to the urban core, fueled by a $15,000-per-unit city subsidy program that officials now want to expand.
The new projects include a 40-story tower just off Market Square Park and a 12-story complex with more than 500 apartments on two blocks near Toyota Center. Counting several apartment buildings already under construction thanks in part to the subsidy, the amount of downtown housing could more than double within the next several years.
If the Downtown Living Initiative program is expanded from its original cap of 2,500 apartments or condos to a proposed 5,000 – opening the door to up to $75 million in subsidies – all of the new projects and potentially many more could benefit from the program.
Over the last decade, downtown Houston has received the lion share of tax subsidized development funding, with the addition of Minute Maid Park, Toyota center, Hilton Convention Hotel, Discovery Green, and the mobility access provided by METRO’s light rail. I’m sure a back of the envelope calculation would reveal an easy $1 Billion in economic development spending right in the city core. And yet people are not interested in living downtown. The 10,000 residential unit target proposed ten years ago is still a dream away it seems.
Consider subsidizing an existing property in SW Houston, like say the Forum Plaza Apartments at 10101 Forum Park, which might be ready for redevelopment. Even if the City of Houston abated 100% of the tax bill (about $20,000 per year for the City portion) it would take over 140 years to equal the same subsidy provided for new development downtown.
Let me make that more clear: The downtown subsidy of $15,000 per unit would equal $3.2 Million for the owners of a “NEW” Forum Plaza if the same subsidy was provided in the Sharpstown area. That equals a ONE HUNDRED YEAR payback with a simple inflation adjustment.
And by all means don’t forget that the $75 million would have stayed downtown anyway because the properties are within the downtown TIRZ. These funds can only be spent inside the downtown land map.
Now back to my pothole on Fondren.