How Midtown Houston is closing the affordable housing gap

When it comes to facilitating the development of affordable housing with all the amenities of market-rate housing, the Midtown Redevelopment Authority (MRA) has discovered a winning formula that benefits the community.

The vision

In 1995, when MRA was formed as a Tax Reinvestment Zone, land was selling for $5 per square foot in Midtown. Fast forward ten years and land prices had increased to about $45 per square foot. MRA’s investment in neighborhood infrastructure was working.

Faced with this rapidly appreciating real estate market in Midtown and a legal requirement to spend a third of its revenue on affordable housing, MRA leadership went searching for an area where land prices were still in the $5 a square foot range. They found it in the nearby Greater Third Ward area.

“We were able to accumulate land,” said MRA Real Estate Coordinator Todd Edwards. “It was not a grandiose plan for MRA to take over the Third Ward or become the preeminent affordable housing developer in the country. It was a more simplistic approach in which MRA would serve as a facilitator, a partner, providing the land but leaving the actual building to nonprofits and developers.”

Although it was not part of the vision all those years ago, MRA’s program does appear to be unique. Edwards cannot state that as fact, but in the 17 years he has been there, he has not run across another city or organization doing affordable housing quite the same way.

How it works

MRA either gives lots to nonprofit builders for free or sells to for-profit developers for a nominal fee of about $1.50 per square foot. As a result, a 5,000 square foot lot that would normally sell for $100,000 on the regular market sells for just $7,500, or nothing at all. By drastically reducing or removing land costs altogether, it suddenly becomes possible to build affordable housing that does not skimp on the amenities. These homes look like market-rate housing, but they come with price tags affordable for teachers, young couples just starting out, single moms, working families, and others for whom having a piece of the American Dream might be out of reach.

MRA’s partners in this program are the Center for Civic and Public Policy Improvement, the Houston Area Urban League, and several builders and nonprofits. Read our previous blog posts and find out more about the program here.