Austin Business Journal writes, "With a lack of affordable housing among the most pressing problems affecting Central Texas, public-private partnerships have become a necessary tool to help solve it.
That's the view of Nick Walsh, vice president of development at The NRP Group, a for-profit developer of multifamily and affordable housing projects currently engaged in a number of public-private partnerships. Such partnerships are delivering thousands of housing units priced at levels deemed affordable, based on the region's median income levels.
The price of land is just too steep to make regular math work, real estate experts have lamented for years. Relationships that offer tax breaks and other perks only found via the public realm are pretty much needed to balance prices with profit.
"Affordable housing and workforce housing does not happen but for the participation of strong public-private partnerships," Walsh said. "Without these partnerships, we can't deliver the quality units that are needed that are affordable to folks that would otherwise not be served by the market."
A seemingly endless flow of people have been migrating to the region, making the development of more housing at every price point crucial for supply to meet demand.
NRP uses housing tax credits to finance many of its affordable housing projects in the metro, Walsh said. But for that to work, it needs public partners to be co-owners.
The state's Housing Tax Credit program is a means of providing financing for the development of affordable housing, according to the Texas Department of Housing and Community Affairs. The non-competitive, or 4%, housing tax credits — which investors in qualified affordable housing use to lower their federal income tax liability — are coupled with a separate multifamily bond program when the bonds finance at least 50% of the cost of the land and buildings in development.
The bond program, which requires the participation of a public partner, provides low-interest loans to the developments. Participation of a public partner also ensures projects are exempt from property taxes.
For a for-profit company like NRP, he said, public-private partnerships enables it to develop affordable housing while still earning money and paying employees.
“There are a lot of incredible nonprofit companies that do affordable housing, but we are for-profit,” Walsh said. “At the end of the day, while we want to do good and we want to build a quality product and provide affordability, we also need to ensure that we have a sound business, that we can pay the salaries of our staff and that we can continue to build new units. We would not be able to do that without the public partnerships that make it possible.”
But he cautioned that there are a number of things to consider before entering into public-private partnerships, chief among them being the partnership itself.
“If you’re going into a business partnership with a friend or a colleague, you know your goals might be more aligned because your goals are, ‘Hey, we want to make money,’” Walsh said. “But when you go into a public-private partnership, the goal of the public partner is not just focused on the financials.”
The public partner has a range of aims it wants to achieve, including public benefit, levels of affordability and a positive impact on the overall community. For companies looking to enter the affordable housing space, it can be a shock to have a project or concept not approved by the public partner — and it's often because the public partner has concerns that go beyond the narrow scope of profit.
Meanwhile, there are tools developers can use to develop affordable housing that don’t amount to full blown public-private partnerships, such as the city’s Affordability Unlocked and SMART Housing programs.
In exchange for providing certain levels of income-restricted units in a multifamily development, the SMART Housing program provides waivers to some development fees, including permitting, capital recovery and construction inspection fees. This can be critical for developers, as Austin’s development fees far outpace those of other large Texas cities.
The Affordability Unlocked program, on the other hand, is used to add density to projects. In return for setting aside at least half of a development’s multifamily units as affordable, developers can build them higher and denser and also get waivers on requirements for parking, compatibility and minimum lot sizes.
NRP has been something of a leader in Central Texas, in terms of public-private partnerships, entering into such deals with the Travis County Facilities Corporation, Housing Authority of the City of Austin, Housing Authority of Travis County, Capital Area Housing Finance Corporation and Austin Independent School District.
Recent projects include the newly opened Bridge at Estancia, the Preakness Apartments and Ross Road, which is a public-private partnership between NRP and TCFC, as well as a third private entity tied to PointOne Holdings.
But it's not the only company taking advantage of public-private partnership to develop affordable housing. Travis County Facilities Corp. alone lists more than two dozen public-private partnership projects in discussion, under construction or completed, with the bulk located in East and Southeast Austin. Private partners on those projects include NRP, The Kor Group, Z Modular, Marcus Building Company, Endeavor, The Geyser Group and others."
Source: Austin Business Journal
Written by: Cody Baird
Published: November 26, 2024
Posted by Grossman & Jones Group on
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