'High-end’ affordable housing for McAllen gains some ground

McALLEN - By December 2016, the overgrown thicket behind a northwest gated community near the corner of Ware and Trenton roads could be another gated community named Orchard View at Mirabella.

But, unlike the collection of houses directly north, Orchard View would be affordable housing, albeit what’s being called “high-end” affordable housing.

The proposed 108-unit complex would have stone and stucco exteriors, fencing and “resort-style pools with Wi-Fi access,” not to mention a clubhouse with a 51-inch LCD television, according to a letter Madhouse Development Services president Henry Flores sent the City Commission.

Flores, whose company has developed several complexes in the Rio GrandeValley, proposed the same project last year. He ultimately withdrew his plans after late City Commissioner Scott Crane expressed his concerns about having such housing close to affluent neighborhoods.

“Philosophical or strategic discussions about areas of town where those new, modern low-income developments could actually improve property values and revitalize an area in decay,” Crane said at a February 2014 commission meeting, according to previous Monitor reports. “But I don’t believe in any shape or form would they enhance property values in middle- and upper-income neighborhoods.”

But Flores faced no such opposition on Feb. 23, when the commission approved a resolution supporting the plan that requires some pecuniary creativity.

No commissioner representing District 1, where the complex would be located, sits on the commission since Crane’s death in December. Early voting in a special election to fill the seat begins later this month.

“There is no doubt that we need more apartments here in McAllen,” City Manager Roy Rodriguez said.

Flores must still get federal funding to build the complex. He sent in the application Feb. 27, but with other cities in the Valley competing for the same money, Mirabella is no sure thing.

“We’re not counting our chickens,” he said, adding he wouldn’t start drawing blue prints until he learns by the end of July whether he has funding.

As “high-end” housing, Mirabella’s intended tenants are working families that earn $32,000 to $35,000 a year, Flores said Friday.

A family with that total income falls in between being able to afford a home on their own and qualifying for assistance, such as Section 8 housing for people who are near-homeless.

“If you’re making $33,000, no one takes care of you,” Flores said.

And in McAllen — where the median income is a little over $41,000 a year, according to 2013 government census data — a rather large swath of people fall into that category, said Bobby Cavillo, the executive director of Affordable Homes of South Texas.

Many who work in the city live in Mercedes or Mission because the rents are cheaper, he said. They also end up spending more money because they have longer commutes to their jobs, he said.

Flores said he expects to charge about $500 a month for a two-bedroom apartment and up to more than $700 for a three-bedroom unit.

Those amounts fall in line for what the Department of Housing and Urban Development suggests people with low-incomes and who qualify for Section 8 should spend on rent — 30 percent of their monthly income. For a family bringing in $30,000, they could, at least in theory, afford $750 a month.

But to get the ball rolling on Mirabella, Flores first has to secure the funding.

To help build housing, private developers compete for tax credits — money from the Internal Revenue Service distributed by the Texas Department of Housing and Community Affairs — by scoring points. Having more tax credits means Flores can charge less rent.

The developer with the highest point total wins, Flores said. For example, points are awarded for how large the affordable housing units are and the quality of schools nearby.

Developers are also rewarded points for having the financial backing of communities — the more money, the more points. So the city agreed to provide a loan at $15,000 per unit, or about $1.6 million for the 108-unit complex.

“Not many cities are willing to do that because that’s a lot of money,” Rodriguez said.

But McAllen really won’t have a dog in the fight. A lender — who hasn’t been officially named but will probably be the Royal Bank of Canada, Flores said — will loan the city the money, who will then act as a “conduit” to funnel the money to Madhouse Development, Rodriguez said. Essentially, the city’s the middle man.

This way, the city doesn’t risk any money, but Flores can rack up points. Madhouse is competing against companies looking to do similar projects in Edinburg, Brownsville and Hidalgo, Flores said.

Programs funded through the department of housing and community affairs are usually “first-class” facilities, Cavillo said.