Austin seeing new trend in affordable housing

The city is negotiating an affordable housing deal that requires Brookfield Residential to make 1,000 new housing units in their 10,000-unit Easton Park development available as affordable housing. The first phase for 188 single-family homes is under construction. RICARDO B. BRAZZIELL/AMERICAN-STATESMAN

The city is negotiating an affordable housing deal that requires Brookfield Residential to make 1,000 new housing units in their 10,000-unit Easton Park development available as affordable housing. The first phase for 188 single-family homes is under construction. RICARDO B. BRAZZIELL/AMERICAN-STATESMAN

Austin is seeing a new trend emerge in affordable housing through the city’s smart housing program, which has been on the books since 2000, but only now is being used to generate hundreds of permanent affordable housing units that offer the opportunity for home ownership across the city.

That trend can be seen in at least two deals on the table, the Easton Park development in Southeast Austin and The Grove at Shoal Creek in Central Austin.

The new path is the result of a confluence of politics — as in a new mayor and city council — and a recent change in state law.

Though the city’s smart housing policy always permitted affordable housing developments of this scale, the policy lacked the tools to make it viable, including legislation that would clear the way for cities and nonprofits to use land trusts or other such structures for tax appraisal purposes.

With those limitations, the city’s smart housing policy typically was used to generate one-time affordable housing that reverted to market-rate once sold or rental agreements expired. A change in state law to accommodate land trusts came in 2011. The wheels at the Travis Central Appraisal District turned soon after that.

But politics nor policy changed at City Hall. Mayor Steve Adler said it took Austin’s new 10-1 council to realize the full potential of the smart housing program working with city staff. As a result, the city might well have its most effective tool in generating permanent affordable homes across the city without staging bond elections, accumulating debt or raising taxes.

Despite the benefits, the road has been, well, bumpy.

You might recall that Easton Park, advanced by Adler and District 2 Council Member Delia Garza, initially ran into trouble when critics saw it as a multi-million dollar giveaway to a developer as well as a financial drag on the city’s water utility. It is neither, we are learning as details emerge.

The deal involves waiving fees for Easton Park a planned mixed use development in Southeast Austin that sought zoning changes from the city. The largest of those fees are water and wastewater impact fees, totaling about $51 million over a couple of decades. That could add 64 cents to 96 cents to monthly water bills of Austin residents over multiple years.

What was not fully understood in the roll out is that the developer still must pay those fees. Instead of going to the water utility, however, an amount equal to those fees would be put in a city-run fund. That money would be used to ensure that 10 percent of the 6,500 homes, condos and townhomes planned by developer Brookfield Residential are permanently affordable to lower-income households. In all, 650 homes would be affordable most likely through a land trust so they remain in the hands of lower-income homebuyers forever — even when they are sold.

Another 350 rental units would be reserved for low-income households for a 40-year period.

To quell the controversy, Adler tweaked the details to give the city greater flexibility in using developer fees for either permanent affordable housing or the water utility. With that clarification, the deal looks like it moving toward final approval.

A similar deal is being discussed with developers of The Grove at Shoal Creek as it seeks favorable zoning from the city for its mixed use community in Central Austin. Though it is far from done, it would be the first in a pricey central Austin neighborhood to take advantage of the city’s smart housing program, allowing fee waivers on all housing units in a development so long as at least 5 percent of the ownership units are permanently affordable.

There are greater trade-offs in this deal because the developer, ARG Bull Creek, will keep the savings from fee waivers, so it means less revenue going to Austin Water and other city services. Even so, it’s the right thing to do.

The Grove project would generate dozens of homes and apartments for working- and low-income people in a section of Austin where the median home price was more than $544,000 as of the 2010 census. Consider that affordable-rate condos are estimated to cost from $160,000 to $200,000, while rentals would start at $753 for a one-bedroom apartment and $967 for a three-bedroom unit. In all, the developer is committed to making 5 percent of the ownership units permanently affordable and 10 percent of the rental units affordable for decades.

Adler is talking about the potential of doing similar affordable housing deals with developers of Whisper Valley, Indian Hills and Wildhorse, all in northeast Travis County in the city’s extra territorial jurisdiction or its limited purpose area.

“It’s to the point where we begin the conversation (with developers) with what can we get in permanent affordable housing in mixed-income (developments),” Adler said.

The timing couldn’t be more critical. As Austin’s hot housing market continues to force long-time Austin residents out of the city — in particular African Americans and Latinos — the creation of permanent affordable housing through fee waivers and city housing dollars may be the city’s best tools against gentrification and further economic segregation.