Austin City Council mulls $300M affordable housing initiative

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Austin affordable housing

A trio of Austin City Council members want taxpayers in November to sign off on borrowing $300 million for an affordable housing initiative nearly five times larger than any ever approved by voters in the city.

Experts agree the sum of money will not come close to putting a dent in what the city estimates is a shortage of 60,000 units of lower cost housing. At least one expert thinks that other than a payoff to a certain class of developer and dozens of special interest advocacy groups, the $300 million will do nothing more than raise the tax bill of every homeowner in Austin.

In some ways, the question of whether or not to commit to the spending is as complicated as the tangle of zoning, buildings codes, permitting and real estate taxation formulas that have bound up development in the city. That thicket, however, obscures a relatively simple truth, Jake Wegmann, one of the leaders of a gentrification study being done by the University of Texas, said.

“I’m going to lob a grenade here,” Wegmann told The Texas Monitor. “People are not ready for this conversation in Austin. But if we are really serious about making housing affordable in the city, single family zoning has got to go. And given that single family homeowners are the most potent voting bloc in Austin, that isn’t going to happen.”

Wegmann likes to joke that because he is an academic (an associate professor in the UT School of Architecture) he is one of the only people who can lob that grenade and survive.

Wegmann thinks voters should approve the $300 million bond, in spite of his concerns that it might not be enough, or that it might not be used as wisely as it should. Wegmann thinks city government needs to take an active role in what city officials have, for almost 20 years, recognized as a housing crisis.

He thinks part of that role is taking responsibility for the current state of development, something being undertaken with CodeNEXT, the first revision of the city development code in 30 years. Austin policymakers need to make it easier, quicker and cheaper to build housing, he says.

“Politically, it’s a lot easier to get a bond passed in a city like this than to change the rules of the development game,” Wegmann says. “I don’t see it happening. For all the rhetoric of affordable housing, we don’t want people tearing down houses to put up three or four or six units next door. We have met the enemy and the enemy is us.”

Despite the broad portrayals of greedy developers and mansion owners versus honest, hard-working folks, many of them minorities, the enemy really is all of those who have kept Austin on an unbroken 40-year growth bender. The population in the city has more than doubled in the last 20 years.

With growth has come the rise in real estate prices and the search for more affordable land on which to build. Rents in Austin have doubled and according to a survey done last summer by RentCafe, the most expensive and three of the five most expensive average rents were in Austin zip codes.

At the same time, the estimated need for housing in the price range for lower income families has shot up. Austin was one of the 10 most undersupplied lower income housing markets in America, according to a study last year by Crain’s.

Along with it, has been a sharp climb in the need for affordable housing units, from 40,000 in 2012 to 60,000 today. Austin is one of the 10 fastest gentrifying cities in America.

The problem didn’t suddenly surprise Austin planners. Concerned citizens — as they often do in Austin — formed the first task force to take on gentrification in 2001. There were two others before a report by the City Auditor in January prompted a City Council resolution calling for the formation of yet another, the 17-member Anti-Displacement Task Force.

Among its tasks will be to contend with a list of every idea offered to the city since the first task force convened. The list stands at 541 ideas, although the Auditor’s report says 56 of them have been implemented by the city.

Assistant City Auditor Katie Houston told KUT Radio in February that city staff determined during an inventory of affordability programs only 133 of the ideas on the master list were of a quality to be implemented.

“There’s a whole lot of them that are kind of impractical as written or are too broad or vague,” Houston said.

Add to that the work of academics like Wegmann at UT, like the Institute for Urban Policy Research and Analysis which completed a study on the impact of gentrification on the homeowners and renters who have stayed in East Austin.

And then there is the study Wegmann is involved in, which is supposed to be delivered to the Anti-Displacement Task Force by the end of August.

“There have been numerous task forces, there have been numerous resolutions and recommendations, and yet we find in our community that as our economy continues to grow, the problem with displacement and gentrification is not getting better,” Mayor Steve Adler said at the meeting to announce the latest task force. “It is getting worse. The challenges continue to grow.”

“If Austin somehow manages to figure it out, we’ll be the first,” Wegmann said. “Because with affordable housing, no one’s figured it out.”

If it follows a pattern that has repeated itself since the Great Depression, as it appears to be doing, Austin will not figure it out, either, Edward Pinto says.

Pinto is the co-director of the conservative American Enterprise Institute’s Center on Housing Markets and Finance. Like Wegmann, Pinto is an advocate for making it easier, faster and cheaper to develop, allowing for more space and funding for less expensive housing to be built.

Unlike Wegmann, Pinto thinks making taxpayers pay for the development quagmire in Austin with $300 million in borrowing, will only compound the problem.

Council Members Greg Casar, Delia Garza and Pio Renteria, in whose districts much of the gentrification in the last two decades has gone on, announced last week their intention to vote as a bloc for the $300 million affordable housing bond to be put on the ballot in November.

Austin’s Bond Election Task Force recommended the bond be set at $161 million. The largest ever affordable housing bond was $65 million, passed in 2013, a year after voters rejected a $78.3 million bond.

And while the council members did not specify how they thought the bond money should be spent, they set a list of what they called “progressive” priorities, including having developers pay the cost to relocate displaced tenants and forcing all city incentive program developments to accept low income housing vouchers. The trio also urged their fellow council members to convince their constituents to welcome housing of greater density in places never before considered.

None of those priorities are compatible with the goal of creating housing for the people they say they want to help, Pinto told The Texas Monitor.

“I can tell you now that $300 million will just get swallowed up by the advocacy groups and the developers of affordable housing, the rent-seekers,” Pinto said. “When you say affordable housing, what you mean is subsidized housing and there is never enough money for the subsidies. That’s the dirty little secret.”

Pinto is a historian of urban housing policy. In the U.S. cities with the most acute affordable housing shortages — New York, San Francisco, Washington, D.C. — policy makers for the past two generations have responded to population growth in identical ways.

Zoning became more exclusive; building codes more stringent. Environmental impact studies became a requirement. Homes and other buildings became landmarks and off-limits to developers. The beneficiaries of those policies were established single family homeowners, Pinto said.

In places like Portland, on the same gentrification and housing crunch lists as Austin, and with the same progressive bona fides, residents of those established neighborhoods are fighting for less, not more density. And still, the politicians there fail to make the connection between their zoning choices and their affordable housing shortage.

In a recent op-ed in Wall Street Journal, Pinto pointed to studies that showed the places where there are fewer restrictions on developers and the housing is more affordable.

Like Wegmann, Pinto isn’t confident Austin policy makers will take the hint because so many others haven’t.

“You have public officials who don’t know any better, being led by experts telling them to build more affordable housing,” Pinto says. “And it only works for the crony developers and the crony advocates. They don’t believe in markets. They’re interested in one thing and one thing only: more subsidies.”

Mark Lisheron can be reached at [email protected].

49 COMMENTS

  1. They want to get the rest of the lower income people except their serfs in the projects out of the interior of Austin. Those of us that do ok but are by no means wealthy bear the brunt of the taxes. “It’s only $x per month” well yeah add up all the damn taxes you add every year and that little bit becomes a mountain. Enough!

  2. Conservatives need to get out and vote! This is ridiculous! I have a daughter who’s a graduate from the University of Texas, holding two jobs trying to make ends meet and you want to give subsidies to, let me guess…. Illegal immigrants and lazy people who are unemployed, no doubt!

  3. Austin voters better pay attention to whom they put in office this November. Conservatives are not showing up to vote, liberals are winning with 10% voter turnout!

  4. Bob Elliott let’s raise taxes to make things more affordable. The best line in this article is
    “Wegmann thinks voters should approve the $300 million bond, in spite of his concerns that it might not be enough, or that it might not be used as wisely as it should. Wegmann thinks city government needs to take an active role in what city officials have, for almost 20 years, recognized as a housing crisis.”
    Though the money won’t be spent wisely we should raise your taxes for this. Haha

  5. Progressive Priorities tells you all you need to know! These are the same progressives that granted tax incentives for developers to build in East Austin, drive the pricing and taxes up by gentrification run all of the old timers out then want to pass a big tax bill to relocate them all.

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