Faced with high housing costs and run-down vacant lots, the City of Victoria is proposing to kill two birds with one stone: Why not fill the lots with houses?
The City is partnering with the Victoria Housing Finance Corporation to create an infill housing program. Based on similar programs that have been successful in other cities, the program will aim to transfer vacant lots to residential developers who will build houses at reasonable prices that meet the requirements set forth by the program guidelines.
“Housing is a basic necessity that is becoming less and less affordable in Victoria and around the country,” said Assistant City Manager Mike Etienne, who has helped to manage infill housing programs in San Antonio and Virginia. “This program will allow more Victorians to become homeowners and will add more productive properties to our tax rolls, especially in older and more traditional neighborhoods.”
Vacant lots
PHOTO: Victoria has hundreds of vacant properties with some type of lien.
The City has no shortage of potential properties for the program. Victoria has hundreds of properties with some type of lien, usually because of unpaid fines due to code enforcement violations.
When a property owner can’t or won’t maintain a property, the cost of doing so falls to the City. Last fiscal year, the City spent $126,000 mowing and clearing debris on private properties and $99,500 demolishing dilapidated buildings. Approximately 85% of that is recovered through billing, but many property owners leave their bills unpaid, resulting in a lien against the property.
That can lead to a cycle that harms the property owners, who might like to sell their unoccupied properties but are unable to do so, either because of the liens or because of problems with the property titles. With no clear path to ridding themselves of their unwanted properties, the property owners continue to rack up fines, and Victoria continues to be full of abandoned lots that are maintained at taxpayers’ expense.
One man’s vacant lot is another man’s development opportunity
Over the next couple of months, the City will identify vacant properties that are good candidates for the program and reach out to property owners to begin the process of acquiring the properties in exchange for forgiveness of outstanding liens. Because the program is operated through the nonprofit Victoria Housing Finance Corporation, residents who donate their properties will be eligible for a federal tax deduction.
In June, the City will solicit bids from developers to build homes on the vacant properties. City officials hope to transfer 10 properties to developers during the first year of the program.
“In addition to helping residents become homeowners and helping lot owners who are burdened by overgrown lots, this program will create a better, cleaner Victoria,” said Councilman Rafael DeLaGarza III, who serves as the president of the Victoria Housing Finance Corporation. “Improving our city’s image will enhance livability and help with attracting businesses. This program is truly a win-win for everyone involved, and we hope to expand it in the future if the pilot is successful.”
The problem with home prices
As part of the bidding process, the City will require developers to price their homes within a limited profit margin in exchange for giving them the land or selling it at a reduced cost.
This is critical because rising home prices in Victoria and across the country have placed the average market price of a home outside of what many residents can afford. This problem has only been made worse by supply chain issues that have led to an increase in costs for building materials.
“We’re hoping to solicit builders and incentivize the construction of new homes using a forgivable lien for lot cost,” explained Development Services Director Julie Fulgham. “The City used this method when developing the Swan Crossing subdivision to help ensure that the new homes would be affordable.”
Unlike the Swan Crossing program, the infill housing program won’t require any investment from the City to extend streets or utilities to the new homes. This is because the new homes will be built on properties within existing neighborhoods.
As an additional incentive, the City will help the developers seek out homebuyers for the program. To be eligible, residents must make no more than 80% of Victoria’s median family income. To find out if you qualify, view the table at www.victoriatx.gov/cdbg.
How it’s funded
City officials plan to provide some assistance with down payments and closing costs using community development block grant funds, which are federal funds that must be used for community development and elimination of poverty in qualifying census tracts.
Other program costs will be funded by the Victoria Housing Finance Corporation, which makes money on some of its projects through developer fees and bond issuance fees. The VHFC serves as a general partner in the Enchanted Gardens Apartments (currently under construction) and Odem Street Apartments, and it was also a bond issuer for the Enchanted Gardens project.
The VHFC will receive about $500,000 from the Enchanted Gardens project this fall. Over the next 17 years, the projects are expected to earn about $5 million that will be used to develop housing for low- to moderate-income residents.
A many-sided approach
PHOTO #2: City Council members, from left, Jan Scott, Dr. Andrew Young, Rafael DeLaGarza III, Mark Loffgren and Josephine Soliz pose for a photo during a Jan. 7 site tour of the future Enchanted Gardens Apartments, 4601 N. Ben Jordan St.
The infill housing program will give the City another tool to address the community’s affordable housing shortage, which is a serious problem that demands a many-sided approach, Etienne said.
During the past year, the Victoria Housing Finance Corporation partnered with two developers on the Enchanted Gardens Apartments and Odem Street Apartments, which will be reserved for low- to moderate-income residents. In addition, the City Council this year offered its support to five developers seeking state tax credits to build housing for low-income seniors.
Although multifamily projects are an effective source of affordable housing, City officials wanted to create a program that would help more residents become homeowners.
“Right now, our homeownership rate is 58%, which isn’t too bad, but it is below the state average,” Etienne said. “Homeownership is a way for families to build wealth, and it also helps to create a more stable community.”
What’s next
The City will start seeking homebuyers for the program this summer, after lots are successfully acquired and builders are chosen. Interested residents can contact the City Manager’s Office at 361-485-3030 or swest@victoriatx.gov.
Construction on the new homes will begin in the fall, and the first homes will likely be ready for move-in next spring.