Houston's Housing

Meanwhile, an impatient Councilwoman Huey was pressuring Manley to close the deals for the purchase and demolition of Springtime Estates and the Seville Apartments. In May 1994, she fired off an angry letter to the lawyer, grousing about the "diminished quality of life" her constituents were suffering as a result of the rundown buildings.

She was also outraged to learn that the negotiations were hung up on how many of the single-family homes to be built on the sites after demolition were to be set aside for low-income families. Was the councilwoman to understand, she asked, that all the homes were to go to the lowest wage qualifiers? She urged Manley to secure a higher percentage for moderate-income buyers.

By early July of last year, Manley had gotten the RTC to agree that the 50 homes to be built on each site in Huey's district would be available to people making as much as 115 percent of Houston's median income -- roughly $52,000 for a family of four, not particularly poor by anyone's standards. He also convinced the agency to "donate" the two complexes for the token price of $1,099, plus $300,000 in back taxes.

"I just don't know how they did that," says Henneberger of the Texas Low-Income Housing Information Service of the demolitions of Springtime Estates and Seville. "I cannot think of any precedent anywhere for allowing a city government to buy an RTC property under the affordable housing program and then demolish it."

Nonetheless, Council approved the purchase of Springtime Estates and Seville on July 11. By October 1994, the city had closed those deals and four others:

* Streamside Apartments, a 201-unit complex, near the upscale Inwood Estates neighborhood in northwest Houston. The city paid $2,360,000.

* The 169-unit Fondren Green Apartments, near Woodlake in west Houston. The city bought it for $132,184.

* Southwest Village Apartments, a 198-unit complex in far southwest Houston near the Missouri City line. The city paid $745,968.

* And the 1,682-unit Willow Creek Apartments near the Gulfgate Mall in southeast Houston, which the city bought for $3.2 million.

By May of this year, the city had unloaded all but Streamside, which it still owns. Nickson, the Houston condo developer who had taken Tara Hall off the city's hands in January 1994, bought Fondren Green last March for $1,350,000.

In May, Los Angeles businessman Joseph Guglielmo bought Southwest Village and Willow Creek, along with the two Bellfort Southwest complexes, for a total of $15.3 million.

The RTC, apparently awakening to the fact that something odd was going on, instituted a "recapture" policy for the city's second group of apartment purchases. The agency claimed about $3.8 million from the resale price of Fondren Green, Southwest Village and Willow Creek.

Still, when the dust cleared, the city's net gain on the resales of seven of the ten RTC complexes was an impressive $9.2 million.

But that has brought Houston little needed affordable housing. Of the 3,021 units bought by the city, the most affordable ones are one-bedrooms, which constitute almost 75 percent of the total. But most complexes restrict one-bedrooms to single people or married couples with no children, which makes them off-limits to many working-poor families.

Of the 536 two- and three-bedroom apartments, the least expensive are the 234 two-bedrooms at Willow Creek Apartments. They rent for $415 to $450 a month, and, like almost every unit at Willow Creek, are already being rented by tenants who qualify for a low-income unit.

Housing advocates say that the city might have been able to actually add low-cost housing for the truly needy if it had spent more of its profit margin on repairs, rather than passing along the lion's share of that expense to the apartment complexes' new owners. Guglielmo signed a clause in his purchase agreement committing himself to a $3.5 million rehabilitation of Willow Creek. Edward Savides, trustee for the Sante Fe Realty Trust, signed a similar agreement to spend $400,000 on Winwood Club. Meanwhile, except for the rehabilitation of the two Bellfort Southwest properties, the city contributed mostly minor repair work.

"The rents are higher at those places because folks took a profit on the front end," says Barbara Lashley, advocacy director at Christ the Good Shepherd, a church that helps provide social services to an apartment complex bought from the RTC last year by a local nonprofit group. "The residents have to pay for it on the back end, and now it's housing that minimum wage people cannot afford. If the city had paid for the rehab, what would the rents be?"

Lower than they are now, in all likelihood. A comparison of the rental rates provided by the city -- which were assembled during Duddlesten's due diligence prior to the RTC sales -- and those acquired recently by phone from the complexes themselves show rental increases as high as 20 percent.

For example, two-bedroom rents at Lanier's showcase complex, Winwood Club, have risen 11 percent -- to the $550 to $625 range -- since the mayor toured the place with Clinton and Gore. That's considered affordable for a moderate-income family of three earning between $22,000 and $26,000 a year.

And it's within the RTC's guidelines. But as Sheila Simmons, a researcher for the Coalition for the Homeless, notes, "There aren't many people who are at risk of falling through the cracks who make that kind of money."