San Marcos Mercury | Local News from San Marcos and Hays County, Texas

March 8th, 2010
Thomason questions house purchase for homebuyer program

by BRAD ROLLINS
Editor and Publisher

Treading ground they must be finding familiar lately, the San Marcos City Council at its regular meeting last week delved into a big-picture discussion on the role of municipal government when talk turned to a homebuyers assistance program funded with federal stimulus money.

Council member Ryan Thomason pulled items from the consent agenda that authorized the city’s purchase of two foreclosed homes, one on Capistrano Drive in the El Camino Real subdivision and the other on Ramona Circle in the Castle Forest neighborhood. In a program paid for with money from the Housing and Economic Recovery Act of 2008 to prevent blight in distressed neighborhoods, the city intends to make necessary repairs to the homes and sell them to buyers who qualify for a 30-year, zero-interest mortgage from the Texas Department of Housing and Community Affairs. The program is targeted to people who make less than half of the area median income — $25,650 for a single person and $36,650 for a family of four.

But Thomason, wondering why the city was paying $101,110 for the Capistrano Drive house when it was recently on the market for $94,900, was told the city got into a bidding war with another potential buyer when the property was auctioned on the Hays County Courthouse steps.

“I think it’s horrible that the city beat out somebody else, an individual and potentially a first-time homebuyer — we don’t know and we’ll never know — all in the name of getting into the house flipping business so that we can in-turn sell it to somebody else,” Thomason said. Later, he added, “Think about if you grew up in San Marcos and finally got to a point where you could buy a home and your city stole it from you with your own tax dollars. I understand its federal money but everybody who lives in this country still pays taxes.”

Council member Kim Porterfield countered, “I’m wondering if that’s not a simplistic view.”

The program, she said, “also provides funds for down payment assistance and mortgage buy down assistance and I wonder if the people who this city stole this house from, if they could qualify somewhere else but the people that the city might put into this house through this program are people who might not qualify without the program.”

By chance, council member Chris Jones had been on the courthouse steps that day looking to buy a different house for himself. He ended up being outbid on the house he was seeking by a local Realtor who bought it for $102,000 and told Jones later that he intends to sell it for $222,000.

“I’m just trying to paint the other side of the picture,” Jones said, underscoring suggestions by city staff that the homes the city bought may have otherwise ended up as rentals or out of reach of the lower-income buyers the program seeks to help. The Ramona Circle house in particular is in a neighborhood where rental properties are quickly proliferating in what was almost exclusively a single-family neighborhood 10 years ago.

“We don’t know if the other buyer is buying it for themselves, trying to put their family in there or if it’s an investor trying to turn it into rental property. From that standpoint, I think when we go ahead and buy the house we’re assuring that we’re going to be assisting a family that needs that opportunity and we have something that’s going to be on the tax rolls for the future with a happy family in it,” said Chuck Swallow, the city’s Development Services director.

Thomason was the only council member who voted against the Capistrano Drive purchase and it passed 6-1. The council approved buying the second house unanimously. Thomason said, “This one does fit into the program.”

To prevent a situation in which the city might buy houses out from under private buyers who want to live there, Mayor Susan Narvaiz suggested the council advise city staff to only buy houses on which there are no offers. No one on the council moved to do that.

Thomason’s concerns, the mayor said, are well-taken.

“The whole housing collapse was based on people getting into mortagages they couldn’t continue to pay. So we have to be careful about what our objective is. It really isn’t to compete when there is a willing buyer,” Narvaiz said.

Although it is a nonpartisan body and its members do not run under party labels, the city council often bobs along in the current of larger political and policy discourse. In recent months, as the national narrative has been dominated by unrest over spending and government growth, those issues have become regular grist for city council debate, often at the behest of Thomason, the body’s newest member. In recent weeks, Thomason has invoked fiscal discipline on subjects ranging from furniture for a new fire station, which he thought was too expensive, to tax incentives for a downtown residential redevelopment project, which he thought was unnecessary.

Jones alluded to the changed tenor of council deliberations earlier in the meeting when he said on a different subject: “I’m getting frustrated with this Tea Party notion that has flooded our budget process.”

The Neighborhood Stabilization Program offers closing cost assistance and gap financing up to $30,000 to help low-income families buy homes. The city received $450,000, expected to cover the purchase of three homes, in addition to $50,000 to demolish eight blighted structures.

Homebuyers are financed by the Texas Department of Housing and Community Affairs through the U.S. Department of Housing and Urban Development.

CORRECTION: This article has been corrected to say that Ramona Circle is in the Castle Forest neighborhood, not Franklin Square.

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8 thoughts on “Thomason questions house purchase for homebuyer program

  1. Mr. Jones may not like the idea of the Tea Partyer’s, but I sure like the idea of being fiscally responsible. I guess some of them don’t understand originally the money came from us and we would like to make sure it’s being spent responsibly. It is our job to hold them accountable.

  2. I couldn’t tell if that meant Mr. Jones is frustrated with Thomason and other council members, or if he has grown frustrated with citizens demanding fiscal responsibility.

    There certainly is a simple solution to the latter, if that is the source of his frustration.

  3. Thank you Ryan.

    Even Kim Porterfield has to admit there is no blight on Capistrano Drive. San Marcos does not need this stimulus money in the first place and should have turned it down. Since these 7 will never turn down a chance to spend someone else’s money (and are “frustrated” at the mere mention of such a thing), they could at least not steal a home out from under a private party who didn’t need government pork to fund their purchase. Or they could not pay more than the price at which the home was listed, because such actions by a taxing entity artificially inflate the tax values.

  4. How about bulldozing some of the run-down duplexes on Sagewood, particularly those abutting property on Camaro and off Sierra Ridge? There’s some real blight there. Maybe some of it can be turned back into the green space/buffer that it was originally intended to be and a few of those people will be able to sell their homes (or maybe they won’t want to leave anymore).

  5. Can we use some of the Federal money to replace old folks on the tax roles who are on fixed income? That would really be putting it to good use. How much will it cost the city to fix up these properties, compared to a private entity who might do the labor himself?

  6. Thomason is right in my opinion. As a graduate of UT at Austin with an economics degree the idea of governments competiing with the private sector is "horrifying" to me. Here you have the goverment acting as a real estate agent and lender.

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