Council defers vote to suspend tax credits

GALVESTON — After a month’s deferral, a city council resolution that could have threatened the Galveston Housing Authority’s plan to build mixed-income developments on the island has been delayed for two more weeks.

The resolution, which asks the state to suspend tax credits for low-income housing developments for three years, was delayed to allow the new interim city attorney time to study it, Councilwoman Elizabeth Beeton said.

Beeton said she also could consider amending the resolution to call for a review of tax-credit projects on a case-by-case basis. The council would have considered the resolution Thursday.

In January, Beeton and Councilman Steve Greenberg asked the council to consider the resolution, and the council voted to defer it for 30 days at the request of the Galveston Chamber of Commerce and the Galveston Economic Development Partnership. Representatives said they wanted time to weigh the consequences of approving the resolution.

This month, the chamber released results of a survey sent out to 569 chamber members. The survey asked whether the members supported the mixed-income development plan, if they supported denying tax credits specific to that plan and if they supported the proposed resolution as written. Of 569 members, 73 responded.

About 65 percent said they did not support the mixed-income development plan, and another 60 percent voted to deny tax credits related to the plan. About 58 percent said they would support the council resolution.

But proponents of the mixed-income development said the resolution could delay the housing authority’s plan to rebuild some of the 569 public housing units destroyed during Hurricane Ike in 2008 and also discourage developers from investing on the island.

If tax credits are suspended, the developments, a blend of market rate, tax-credit and public housing units, could be less economically feasible.

Critics have said the proposal for the mixed-income development, which would be managed by St. Louis-based McCormack Baron Salazar, would cripple the island’s housing market by adding more units to the soft market.