The East End unfolds next to downtown as a patchwork of luxury townhomes, rusty warehouses, car shops and hipster bars, a reflection of a changing neighborhood where affordable housing and upscale homes are increasingly in demand as city’s affluence spreads east.

The Houston Housing Authority is proposing to provide both by building a pair of apartment complexes where low-income residents would live in the same buildings as working-class Houstonians and young professionals, and in doing so, sparking conflict over the character of neighborhood and its future.

Housing authority officials say they’re running out of time to bring moderately priced housing to the area as land costs skyrocket, working furiously to finalize a series of complex real estate transactions to propel their vision forward. At the same time, a vocal group of residents has worked just as hard to kill the plan, which they argue will overwhelm the area’s strained infrastructure and take valuable land off the tax rolls.

“I’m not against affordable housing,” said Mark Rodriguez, who was born and raised in the East End, also known as the Second Ward. “I’m against the fact they want to bombard the community with so many units.”

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A lawsuit filed against the housing authority by local developer Alan Atkinson alleged residents were inadequately notified of the two projects and that a portion of the land was chemically contaminated by ash from a former incinerator. An online petition to stop the projects has collected more than 2,000 signatures. Some have put up yellow-and-black signs reading “Save the East End.”

Tory Gunsolley, former chief executive of the housing authority, questioned their motives.

“To be completely candid, I think it’s largely a small group of people, the leaders of which have financial interests in land nearby these projects and they believe these projects are going to hurt them financially,” Gunsolley said in an interview before his tenure at the authority came to an end Jan. 28 after his contract was not renewed.

Shaping the future

As the East End — roughly bounded by downtown on the west, Buffalo Bayou on the north, Interstate 45 on the south and the 610 Loop on the east — rapidly transforms, residents, developers and city housing officials are striving to steer the direction of change. In a neighborhood where a third of households make less than $25,000 a year, according to Census estimates, industrial sites and small wooden bungalows are being converted into townhomes, restaurants, bike trails and high-end apartments. Change is afoot, bringing with it hopes and fears for the future.

The authority’s proposals for two large-scale, mixed-income housing developments, which will include units for some families earning less than 30 percent of the median income of the Houston area, have brought that tension to the fore.

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As property values in the Heights, Montrose and other close-in areas have shot up over the past decade, housing in the historically working-class East End has become popular with young families and millennials who want to live near bars, restaurants and their downtown jobs.

They’ve snatched up bargains in Eastwood, an early 1900s neighborhood within the East End originally developed by William Wilson, who also built the sought-after Woodland Heights. Today those deals are harder to find. The median price-per-square foot in Eastwood has almost doubled since 2012 and renovated bungalows sell for as much as $400,000 or more, well above the city’s median home price of $245,000.

Developers have purchased the area’s largest industrial sites. Midway, developer of CityCentre in west Houston, recently began preparing the 150-acre site where the Brown & Root industrial complex once stood on the northern banks of Buffalo Bayou for what will become a high-end mixed-use development.

Common concerns

Though they are at odds over the proposed housing developments, both the Housing Authority and area residents assert they are worried about the impact of the changes in the neighborhood.

Chief among the concerns is the fear that new development will lead to higher taxes and gentrification that could weaken the area’s strong culture, which celebrates Latino traditions and treats neighbors as family.

Tony Padua, a developer who recently moved to the area, has complicated feelings. While he understands the need to preserve housing for longtime residents, he also wants to see the East End evolve and grow.

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Padua built a four-story home just south of the bayou for himself, his wife, their newborn baby and their two-year-old Goldendoodle, Loki. He has spent the past several years developing streets and other infrastructure for a community of upscale townhomes across from one of the proposed affordable housing sites. He’s worried the authority’s projects could hamper the transformation he’s helped set in motion.

He’s been planning to develop a four-story condominium building with smaller, lower-priced priced units, but is now reconsidering.

“We’re being very cautious,” Padua said. “At this point, we’re not doing anything to move it forward until we know what will happen.”

Concerns that low-income units might negatively affect a neighborhood could be overblown, said Kyle Shelton, deputy director of Rice University’s Kinder Institute for Urban Research.

“Pretty much across the board, affordable housing research tends to show there aren’t really negative impacts, on everything from property values to schools,” Shelton said. “Because in the grand scheme of things, it’s usually a couple of hundred to a couple of thousand people, which is a small slice of a neighborhood.”

On the contrary, he argued, what research really shows is the dangers of displacing low-income families from their longtime neighborhoods. “In a neighborhood like East End, that can happen very quickly,” he said. “So we can lose a lot of people.”

Updated approach

The apartments planned by the Housing Authority are, in part, meant to replace Clayton Homes, a 1950s-era public housing complex at 1919 Runnels just east of downtown next to U.S. 69. The 296-unit property, badly damaged by Hurricane Harvey and only partially occupied, is slated for demolition to make way for a massive highway reconstruction project. The authority has a contract to sell the roughly 19-acre site to the Texas Department of Transportation for $90 million, or approximately $109 per square foot. That’s on the high side according to some estimations.

Tom Dosch of Dosch Marshall Real Estate, a Houston brokerage firm that specializes in land deals, said smaller one- to two-acre properties near the BBVA soccer stadium are receiving interest at around $100 per square foot, but larger sites, such as Clayton Homes, often sell at a discounted rate.

The Housing Authority plans to replace the housing complex on two sites east of downtown: one north of Buffalo Bayou almost directly across from Clayton Homes, the other just south of the bayou off Middle Street near Navigation, a boulevard that’s been transformed in recent years with public art, new restaurants and a weekend farmers market. Both parcels are owned by Pinto Realty, the real estate arm of the Cockrells, one of Texas’ wealthiest oil families.

The northern parcel is expected to have 600 units on about 10 acres. Just under half of those units would charge market-rate rents. The majority of the remaining units would be reserved for households making 80 percent of Houston’s median income of $42,750 for an individual and $61,050 for a four-person household. Seventy-five units would be for Houstonians who qualify for the “Housing Choice Voucher Program,” formerly known as Section 8. These apartments, which would replace some of the Clayton Homes units, would be subsidized by the Housing Authority and residents would be subject to income eligibility limits set by the U.S. Housing and Urban Development Department. A family of four, for example, could earn no more than $37,450 to qualify.

The southern parcel, 28 acres off Middle Street, is expected to house a 400-unit complex with units for those earning 60 percent of the area median income. Seventy-five units would be reserved for voucher holders. A second 400-unit phase was proposed, but the authority has only authorized the first.

A partnership including a private developer and the Housing Authority would own each property. The Authority would own the land, which the Harris County Appraisal District values at more than $19 million. Yet both the land and improvements would be exempt from property taxes.

Tax revenue loss

That’s led to more questions from the residents: Should the developments, which together will encompass at least 38 acres and at least 230 market-rate units, be exempt from taxes that fund local infrastructure and services?

The properties are located within a tax increment reinvestment zone, or TIRZ, an area where a portion of property taxes pay for local street and sidewalk upgrades, landscaping, security and other neighborhood needs.

Because the apartments will be tax exempt, the TIRZ will be missing out on potentially funding millions of dollars in improvements.

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“If the housing authority buys that acreage, it’s gone forever and we get zero value forever,” said Tony Patronella, a member of the TIRZ board that administers the funding.

The authority’s Gunsolley said the tax exemption is a way developers compensate for a loss of rental income in a mixed-income building. Gunsolley will be leaving the housing authority in the near future after the board declined to renew his contract.

But as the future of the East End takes shape, residents have felt in the dark. Jeff Kaplan, an East End resident and native Houstonian, hopes the projects will benefit the neighborhood and perhaps become a model for mixed-income housing. But he also wishes the community could have a say.

“For such a big project,” he said, “I would hope that there would be some sort of a community engagement process.”

nancy.sarnoff@chron.com

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rebecca.schuetz@chron.com

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