Economy & Jobs

Houston Incorporated: A Local Government Corporation for Economic Development Execution

  • The City of Houston lacks an empowered, transparent vehicle to execute a holistic economic development strategy centered on local business growth and community equity. This policy proposes establishing Houston Incorporated, a Local Government Corporation (LGC) designed to carry out economic development execution in partnership with the Mayor’s Office of Economic Development, aligning public investment tools with resident-led priorities and ensuring all programs are accountable, inclusive, and performance-driven.

  • What is the problem?
    Houston’s current approach to economic development is fragmented, under-resourced, and inequitable. While the Mayor’s Office provides policy guidance, it lacks the staff and authority to implement a comprehensive economic development strategy. Simultaneously, tools like Chapter 380/381 agreements and Tax Increment Reinvestment Zones (TIRZs) have often subsidized luxury developments without delivering public benefits such as jobs, affordable housing, or economic mobility.

    Who is impacted?
    Residents in historically underserved neighborhoods, particularly communities of color, are most affected by this misalignment. They are denied access to targeted reinvestment and left out of economic decisions despite being subsidizers through redirected tax dollars. Working-class taxpayers also shoulder the burden as general fund resources are diverted to wealthy districts, and economic development programs fail to support the city’s homegrown businesses.

    Previous attempts and gaps
    The City’s reliance on opaque incentive structures has led to ineffective and, at times, exploitative outcomes. Investigations into TIRZ and 380/381 practices reveal projects with no clear goals, few public safeguards, and limited performance metrics. The 2021 Houston Chronicle’s Unfair Burden exposé highlights how millions were spent without ensuring job creation, living wages, or community benefits . Additionally, the City’s failure to sunset TIRZs—some dating back 30 years—has entrenched fiscal silos that are misaligned with broader city priorities .

    Broken promises
    These programs were intended to revitalize blighted areas and promote inclusive growth, but instead they have funneled resources into high-income enclaves. Public trust has been eroded by the lack of transparency, community engagement, and mechanisms for resident oversight.

  • How Houston Inc. solves the problem
    Houston Inc. would operate as an LGC empowered to coordinate, administer, and evaluate economic development programs citywide. Its charge: center equity, performance, and transparency in all initiatives. It would:

    • Align economic development initiatives with the City’s Capital Improvement Plan (CIP) to avoid duplicative infrastructure spending.

    • Create pathways for greater resident input into economic development decision-making by establishing community advisory committees and reforming the process for appointing LGC and TIRZ board members, who are currently unelected and unaccountable to constituents.

    • Develop and publish a public-facing economic equity dashboard tracking incentives, outcomes, and community benefits across neighborhoods.

    • Conduct a comprehensive study of best practices from other LGCs and TIRZs locally and nationally, identifying factors that have made similar entities accountable, transparent, and successful—or not. This evaluation would inform Houston Inc.’s governance model and performance criteria.

    What remains unsolved
    Houston Inc. would not by itself eliminate state preemption or reform every existing incentive program overnight. However, it would provide the structure and authority needed to rationalize programs like Chapter 380/381 and overhaul TIRZ operations through transparency and alignment.

    Legal feasibility
    The City of Houston has legal authority to create LGCs under Chapter 431 of the Texas Transportation Code. No state preemption impedes its establishment for economic development purposes.

    Fiscal impact and funding strategy

    • Start-up funding could come from a combination of General Fund allocations, reallocated TIRZ surplus, and public-private philanthropic partnerships.

    • Houston Inc. could generate self-sustaining revenue through project-based service fees, federal economic development grants, and shared returns from community investment funds.

    Sunsetting dysfunctional systems
    Houston Inc. should also be empowered to recommend sunset schedules for TIRZs, many of which have long outlived their original purpose. TIRZs were never meant to be permanent fixtures—especially when data now show they regressively redistribute wealth and increase inequality.

    1. Launch a Houston Inc. Feasibility Task Force with representatives from HCDD, Planning, local chambers, community-based organizations, and fiscal oversight experts.

    2. Initiate a citywide audit of existing Chapter 380/381 and TIRZ agreements to identify sunsetting opportunities and misaligned expenditures.

    3. Design a resident-facing dashboard and engagement portal for Houston Inc. and TIRZ activity—ensuring transparency and input on priorities.

    4. Develop performance standards and accountability metrics tied to job quality, local hiring, and worker protections for all future incentive agreements.

    5. Draft enabling ordinance for Houston Inc. creation and define board structure with built-in community representation.

Stewarding Midtown Redevelopment Authority Land for Affordable Housing and Community-Led Development

  • Hundreds of vacant lots in Houston’s Greater Third Ward, originally acquired by the Midtown Redevelopment Authority (MRA) for affordable housing, remain unused or have been diverted to unrelated developments. This policy proposes the full transfer of all remaining MRA-controlled lots in the Third Ward to the Houston Land Bank (HLB) for redevelopment as permanently affordable housing through the Houston Community Land Trust (HCLT), with oversight by a new Third Ward Housing Advisory Committee to ensure community-led planning, transparency, and long-term equity.

  • What is the problem?
    The MRA’s affordable housing initiative has failed to deliver on its promises. Despite acquiring hundreds of parcels in the Third Ward with tax increment financing (TIRZ) funding, most lots remain vacant or underutilized. Others have been allocated for market-rate or non-housing projects, including a controversial $22 million office building. The absence of a transparent, accountable mechanism for land disposition has fueled gentrification and undermined housing stability for long-time residents.

    Who is impacted and how?
    This failure disproportionately impacts Black residents of Third Ward, particularly low-income families, seniors, and renters. These groups face heightened displacement pressures as housing costs rise and public land assets are mismanaged. Financially, the public loses the opportunity to generate equitable development and community wealth. Public health is also at stake, as vacant lots attract blight, vector-borne disease, and disinvestment while housing insecurity drives poor health outcomes.

    How has the City attempted to solve this in the past?
    Previous efforts have been fragmented and lacked enforceable commitments. While the City of Houston has invested in the Houston Land Bank and HCLT as tools for affordable housing delivery, MRA has operated largely without meaningful public oversight. The MRA’s housing production targets have consistently fallen short. No comprehensive, community-driven plan has been funded or implemented to bring the MRA’s land portfolio under aligned stewardship.

    What promises has this broken?
    The MRA’s original charge was to mitigate displacement by producing affordable housing. Its failure to deliver on this mandate constitutes a breach of public trust. Public commitments made to legacy Third Ward residents during land acquisition phases have not been honored in practice. Investigative reporting and community testimonies have revealed a pattern of opacity and disregard for public input.

  • What part of the problem does this solve?
    This proposal reclaims public land for its intended public purpose: permanent affordability and equitable development. It places land stewardship in the hands of institutions—HLB and HCLT—with a demonstrable track record of transparency, accountability, and affordability. It also empowers the community to lead and monitor the process through a formal Housing Advisory Committee.

    Where else has this solution or similar been attempted?
    Cities such as Atlanta, Durham, and Denver have effectively combined land banks with community land trusts to produce permanently affordable housing. Houston’s own pilot efforts through the HLB/HCLT partnership have delivered successful models in the Sunnyside and Near Northside neighborhoods. These efforts show the value of removing land from speculative markets and grounding housing in long-term affordability mechanisms.

    What is left unsolved by this solution?
    This proposal addresses only the land disposition and stewardship piece of the affordable housing challenge. It does not resolve broader zoning reform needs, gaps in housing subsidies, or infrastructure investment disparities. Sustained coordination with other City departments and state and federal funding streams will be essential to scale and sustain progress.

    Legal Authority and Preemption
    The City and the MRA, as a local government corporation (LGC), have full legal authority to convey land to the Houston Land Bank. There are no state-level preemption barriers. Precedent exists for public land transfer among these entities.

    Financial Impact to the City
    This proposal is not cost-intensive. Most implementation costs will be borne by existing HLB and HCLT operations, which can leverage federal programs like the HOME Investment Partnerships Program and philanthropic funding.

    • Revenue Impact: Long-term tax base stability and potential revenue from ground leases.

    Funding Source: No additional General Fund dollars required at this stage. HLB’s operations are supported by federal and private sector partners.

    1. Introduce Ordinance: Draft and introduce a City Council ordinance to authorize the full conveyance of MRA lots in Third Ward to the Houston Land Bank, with deed restrictions for permanent affordability.

    2. Establish Housing Advisory Committee: Create a Third Ward Housing Advisory Committee composed of residents, planners, and community-based organizations to guide priorities, design standards, and builder selection.

    3. Public Engagement: Convene community visioning forums to establish development goals, accessibility standards, and affordability tiers aligned with community needs.

    4. Transparency Mechanism: Develop a public-facing tracking dashboard to monitor lot transfers, development timelines, housing prices, and affordability compliance.

    1. Chronicle Staff. 2025. “A Houston Agency Was Supposed to Help Third Ward Fight Gentrification. It Built a $22M Tower Instead.” Houston Chronicle, Jan 7, 2025. https://www.houstonchronicle.com/news/investigations/article/midtown-development-zone-office-building-19628432.php

    2. Chronicle Staff. 2025. “Houston’s Midtown Development Agency Has Been Plagued by Scandal. What Can Mayor Whitmire Do About It?” Houston Chronicle, Apr 8, 2025. https://www.houstonchronicle.com/news/investigations/article/midtown-redevelopment-authority-whitmire-changes-20036213.php

    3. Greater Third Ward Super Neighborhood #67 et al. 2025. Prospectus for Stewardship of Midtown Redevelopment Authority Affordable Housing Lots. Submitted to Mayor John Whitmire, July 9, 2025.

    4. Roshan Abraham, “How Houston Land Bank Is Building Accessible, Affordable Housing – While Turning a Profit,” Next City, November 14, 2024, accessed July 17, 2025, https://nextcity.org/urbanist-news/how-houston-land-bank-is-building-accessible-affordable-housing-while-turni.

    5. Kinder Institute for Urban Research, Rice University, “The 2025 State of Housing in Harris County and Houston,” Kinder Institute for Urban Research, June 17, 2025, accessed July 17, 2025, https://kinder.rice.edu/research/2025-state-housing-harris-county-and-houston.

    6. Texas Tribune. 2023. “Houston Wanted to Lead the Nation in Long-Term Affordable Housing. Now It’s Backpedaling.” Texas Tribune, Feb 20, 2023.

Transforming Fund 2409 into the Houston Affordable Housing Trust Fund

  • Fund 2409 was created to support affordable housing in Houston by capturing one-third of all TIRZ (Tax Increment Reinvestment Zone) revenues. However, lax oversight and weak policy guardrails have undermined its impact. This policy proposes converting Fund 2409 into a dedicated Houston Affordable Housing Trust Fund with binding expenditure rules, public oversight, and eligibility focused on households earning 80% of the Area Median Income (AMI) or less—with a priority for 60% AMI and below. The fund will drive equity-focused development through preservation, new construction, and wraparound supports, while attracting philanthropic and private-sector contributions.

  • What is the problem?
    Fund 2409 has not fulfilled its mandate to expand access to affordable housing in Houston. Instead, a significant portion of the fund has been used for administrative costs and vaguely defined initiatives. A 2017 audit by the City Controller found that more than half of expenditures were not directly tied to affordable housing creation or preservation. Further reporting from the Houston Chronicle revealed that although the fund collected over $130 million over a decade, it produced fewer than 500 homes with affordability covenants.

    What “accountable to” constituency does this problem impact? How?
    This problem disproportionately affects Houston’s low- and moderate-income residents—especially seniors, Black and Brown renters, and working families in neighborhoods experiencing gentrification and displacement pressures (e.g., Third Ward, Second Ward, Near Northside, Acres Homes, and Sunnyside). The lack of deeply affordable housing increases financial stress, contributes to housing insecurity and displacement, and exacerbates racial inequities in homeownership and wealth-building.

    How has the City attempted to solve this in the past?
    The City established Fund 2409 as a mechanism to earmark TIRZ revenues for affordable housing. However, the fund was not legally required to be used strictly for housing development or preservation, nor did it have strong monitoring and reporting mechanisms. Repeated calls for reform have not yielded binding structural changes, resulting in misalignment between spending and public need.

    What promises has this policy fallen short on?
    Fund 2409 was intended to equitably distribute the wealth generated through TIRZs by investing in housing for residents at risk of displacement. Instead, it has broken both the letter and spirit of this intent by favoring bureaucratic spending and insufficiently serving the targeted population. It has eroded public trust and contributed to worsening affordability challenges across the city.

  • What part of the problem does the solution solve?
    The proposed policy directly addresses the misuse of funds, lack of transparency, and failure to prioritize housing for residents most in need. It repositions Fund 2409 as a vehicle for equity and accountability by legally mandating its use for deeply affordable housing and community-centered development.

    Where else has a similar solution been attempted?

    • Austin, TX: The Austin Housing Trust Fund allocates dedicated revenue from property tax increments and development fees, with specific targets for low-income residents.

    • Atlanta, GA: The Atlanta Affordable Housing Trust Fund leverages TAD (Tax Allocation District) revenues to finance new affordable units and preserve existing housing.

    • Charlotte, NC; Denver, CO; Portland, OR: All maintain locally governed housing trust funds with public-private partnerships and multi-source revenue streams.
      These examples show that with defined expenditure policies and robust oversight, local housing trust funds can become critical tools for housing justice.

    Legal Authority
    The City of Houston has full legal authority to restructure Fund 2409 via ordinance. No state preemption has been applied to this area. The City can codify expenditure guidelines, eligibility requirements, and reporting standards under municipal law.

    Financial Impact
    This is not a new expenditure but a realignment of existing revenue.

    • Revenue Generating: Potentially, yes—if matched with philanthropic, corporate, or developer contributions.

    • General Fund Impact: Minimal to none unless expanded, as Fund 2409 already exists and is fed by TIRZ revenues.

    The Remaining Challenge  While this reform focuses on funding and governance, it does not in itself streamline permitting, increase land availability, or address (lack of) zoning challenges. Those efforts must accompany trust fund reforms to maximize impact.

    1. Draft Ordinance
      Work with the City Legal Department and City Council Housing Committee to draft an ordinance creating the Houston Affordable Housing Trust Fund, outlining:

      • Eligible uses

      • Income targets

      • Caps on administrative costs

      • Annual reporting requirements

      2. Establish Independent Oversight Board
      Form a board with representatives from community organizations, housing experts, impacted residents, and developers to review and approve disbursements and annual plans.

      3. Develop Public Transparency Tools
      Create a publicly accessible dashboard to track disbursements by project, Council district, AMI served, and outcomes (e.g., number of units preserved/produced).

      4. Broaden Funding Sources
      Pursue partnerships with local foundations, anchor institutions, and impact investors. Consider enabling contributions through:

      • Development linkage fees

      • Bond proceeds

      • Short-term rental taxes

      • Corporate philanthropy

    1. Houston Chronicle. “Audit questions Houston's use of affordable housing funds.” July 11, 2017. https://www.houstonchronicle.com/politics/houston/article/Audit-questions-Houston-s-use-of-affordable-11271291.php

    2. Office of the City Controller, City of Houston. Housing & Community Development Department and Mayor’s Office of Economic Development Follow-Up Audit, Report #2026-01. July 10, 2025. https://www.houstontx.gov/controller/audit/reports/2026-01.pdf

    3. City of Houston Controller’s Office. “Audit of Affordable Housing Fund 2409,” 2017. https://www.houstontx.gov/controller/audit/reports/2018-01.pdf

    4. Minnesota Housing Partnership, Local Housing Trust Fund Manual for Minnesota (St Paul, MN: Minnesota Housing Partnership, July 30, 2019), https://mhponline.org/local-housing-trust-fund-manual-for-minnesota/

    5. Kinder Institute for Urban Research, Rice University, “The 2025 State of Housing in Harris County and Houston,” Kinder Institute for Urban Research, June 17, 2025, accessed July 17, 2025, https://kinder.rice.edu/research/2025-state-housing-harris-county-and-houston .