GALVESTON — Housing authority commissioners on Monday approved a $72.2 million budget for the controversial replacement of two demolished public-housing projects with mixed-income developments catering to both the poor and the general housing market.
The approved budget, which will be sent to the Texas General Land Office, increased about 4.2 percent from a $69.3 million budget master developer McCormack Baron Salazar presented last week, Chairman Irwin M. “Buddy” Herz said. The increase was in the amount the authority anticipates spending on “human capital” programs for residents of the developments and in developer fees, according to budget documents.
Human capital programs include such things as job training and child care aimed at helping people work themselves out of poverty.
The previous budget had anticipated spending slightly more than $1 million on those programs. The approved budget anticipates spending almost $2.6 million, according to budget documents.
Developer fees rose to $18.4 million from $17.1 million that was listed on the budget presented last week.
The amount the housing authority will contribute to construction also was amended from the earlier budget, Herz said.
Early plans called for the housing authority to contribute $13.2 million of about $16.8 million in insurance money it received after most of its buildings were flooded during Hurricane Ike in 2008.
That contribution had become something of an issue because only about $8.5 million of the $16.8 million settlement remained, the rest having been spent under previous authority boards.
Herz and other commissioners appointed by Mayor Lewis Rosen had for weeks been attempting to determine how much of the spent money could be counted toward the redevelopment projects.
The approved budget includes $11.1 million from the authority — $8.5 million in remaining cash and $2.6 million in payments already made to McCormack Baron Salazar for such things as design and engineering work on the mixed-income projects.
Some of the insurance proceeds were spent on initially repairing and then demolishing four housing projects flooded during Ike — Magnolia Homes, Cedar Terrace, Oleander Homes and Palm Terrace.
Herz said he thought money used at Magnolia Homes and Cedar Terrace could have been credited toward the mixed-income projects, which will be built where those projects stood.
Less certain was whether money spent on the other two old housing projects could have been counted, he said.
Also for weeks, Herz, other new commissions and Rosen, an ex officio member of the board, have raised questions about other expenses paid by past boards with the insurance money.
The new board ultimately decided to move ahead, Herz said.
“Nobody wanted to go through the process of determining why the old boards spent some of the money like they did on legal fees, travel, public relations and things like that,” Herz said. “So, the decision was made to just move forward.”
Herz said he did not think the housing authority being about $2.1 million short on its contribution to construction would make a great deal of difference.
The new budget anticipates a $3.3 million increase — to almost $7.9 million from about $4.6 million — in the amount of Round 2 Community Development Block Grant-Disaster Recover money devoted to the projects.
With a budget approved, the land office staff would be able to immediately begin drafting a contract and “wrap things up” so the housing authority could get to work rebuilding, spokesman Jim Suydam said.
The land office is administering the federal disaster recovery money that will pay for about half of the projects’ costs.
A plan Galveston City Council approved Sept. 28 calls for building 122 units at Cedar Terrace, which is mid-island, north of Broadway on land between 29th and 30th streets and Sealy Avenue and Church Street.
It calls for 160 units at Magnolia Homes, which is between downtown and the University of Texas Medical Branch campus on land between 16th and 18th streets and Mechanic and Strand.
Units at both sites would be divided into two categories — 51 percent would be public housing for low- and moderate-income people in which the rental costs are subsidized by the government, and 49 percent would be market-rate open only to those who could afford the full cost of rent.
That means about 63 of the units would be public housing at Cedar Terrace and about 82 would be at Magnolia Homes.
McCormack Baron Salazar officials said last week construction could begin in July at the Cedar Terrace site and in September at the Magnolia Homes site.