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Martinez criticizes AHFC for deal eliminating Section 8 clients

Friday, November 21, 2008 by Mark Richardson

What is usually a routine approval of an Austin Housing Finance Corporation project took on a different tone Thursday when Council Member Mike Martinez criticized the agency for the way it negotiated a contract.


Meeting as the AHFC’s Board of Directors, Martinez and other Council members were upset when they learned that the contractor for the redevelopment of the Stoneridge Apartments at 1500 South Lamar Boulevard had insisted on waiving a city rule that included Section 8 clients in affordable housing. AHFC Director Margaret Shaw told Council members that the contractor would not sign the contract without the waiver.


There was controversy last year when the Council approved a plan to tear down the apartments, which were considered some of city’s the best affordable housing close to downtown. City Council approved $1.1 million in loans and fee waivers for the developers in exchange for designating 10 percent of its units for families at 50 percent of median family income for 40 years.


The developers deal’ for approval on Thursday included an additional $710,350 to assist them in providing not less than 30 units at the affordable price. However, Martinez reacted angrily when he learned that the city had waived an AHFC regulation that affordable housing providers must seek tenants eligible for federal Section 8 funding.


“Why were we not informed of this at the time we were briefed?” he asked AHFC’s Shaw. “Why would we negotiate an affordable housing contract and exclude the people who most need affordable housing? We should have been notified of this much earlier. This makes no sense.”


Shaw explained that affordable housing is normally required to offer 10 percent of units at 80 percent of MFI, but that in this case, in order to allow some of the Stoneridge tenants a chance to move back in the area, they had a contract that allows 50 percent of MFI.  Section 8 is a federal program that funds housing at 30 percent of MFI.


“So we are building affordable housing but we are excluding the poor?” Martinez said. “It’s the same old thing. We are telling the poor people that ‘if you want a place to live, you have to go east. Don’t be coming down here on South Lamar.’ ”


Alluding to an earlier Council action, Martinez also wondered aloud if the deal did not go through would the contractor reimburse the city for vacating a street next to the apartments. Shaw said that was an action separate from the Stoneridge matter.


Council Member Laura Morrison also expressed concern over the exclusion of Section 8 clients, but noted that since they are funded at 30 percent of MFI, they would not be eligible for this project. Shaw noted that since federal funding of Section 8 paid the difference between 30 percent of the client’s income and the balance, some Section 8 clients might have qualified.


Council Member Randi Shade commented that this was a somewhat different situation, since the city normally negotiated these contracts with non-profit agencies, and the contractor here was a for-profit corporation.


“I think we learned some things with this project that we didn’t know before,” she said. “We can take this experience and use it going forward.”


Council members, voting as the AHFC Board of Directors, voted 5-1 to approve the contract, with Martinez voting no and Mayor Pro Tem Brewster McCracken absent.

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