Why Austin isn’t getting as much affordable housing money as you might think

City taxes on future development at the Grove at Shoal Creek, shown last year, are supposed to go to Austin’s housing fund. But if the past is any guide, some of those dollars will go elsewhere. RALPH BARRERA/AMERICAN-STATESMAN

Facing an urgent need to fund more affordable housing in Austin, the City Council set its sights on some tax dollars it figured no one would miss.

New tax dollars.

Specifically, the shiny new tax revenue that materializes when government-owned land, which doesn’t pay property taxes, becomes private housing, commercial or mixed-use developments that do.

The City Council decided in 2000 that as city lands were sold for development, 40 percent of the city tax revenue from those sites should go into Austin’s housing trust fund.

A different council doubled down in December 2015, saying 100 percent of the city tax revenue on former city lands should go to various housing programs.

By June 2016, the council widened the net to capture all city tax revenue from the redevelopment of all government-owned sites — lands owned by state agencies, Travis County, Capital Metro, Central Health, you name it. All of those city tax dollars, the council decided, should go toward affordable housing.

“We have such a need for affordable housing in this community, and this is a very appropriate remedy,” Council Member Kathie Tovo, who championed that 2016 measure, told me this week. (In fact, she said, her 2016 measure spelled out the full extent of the policy that her council predecessors had intended in 2000.)

I recently wondered how much money these mandates are channeling toward Austin’s housing efforts. I was surprised to learn the answer was: Not all of it.

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This year, $3.7 million in city taxes are being paid on redeveloped, ex-government lands assessed at $923.8 million. But only $2 million of that revenue went into the housing fund, city finance staff told me.

Next year, redeveloped, ex-government lands worth $1.1 billion will spin off an estimated $4.6 million in city taxes. How much will go to affordable housing? Who knows.

The City Council makes the real spending decisions each year during budget season. The resolutions that called dibs on these redevelopment dollars reflect a goal, but they’re not legally binding. And when council members are facing the city’s many budget needs, they sometimes decide they can’t put as much money as they’d hoped toward affordable housing.

“A couple of us expressed a strong desire (during last budget season) that we would be able to identify enough additional money” to put the full $3.7 million toward the housing fund, Tovo said. “In the end, we had so many needs.”

I appreciate the council’s efforts to look for affordable housing money under every couch cushion, and I don’t doubt their sincerity in wanting to see all of these new tax dollars put toward the cause. But think for a moment about some of the big-ticket developments in the works on old government lands. Is it realistic for Austin to absorb all of these residents and workers without putting at least some of their property tax revenue toward the city services they will need?

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It’s tempting to put all of the property tax revenue from those developments toward the affordable housing Austin desperately needs. But the reality is, even if these are new tax dollars, other parts of the city budget may need them. They come from residents and commercial projects that add to the demand for city services.

Tovo remains hopeful the city could somehow set aside all of this tax revenue for the housing fund. I’m less optimistic, but I see the value in these resolutions. They set an ambitious funding goal for the council and ensure an annual reckoning at City Hall over housing needs.

“This resolution forces us to acknowledge each year what the amount (for affordable housing) should be,” Tovo said. “I hope we get to the point where it is all flowing to the affordable housing fund because it is so necessary for our city.”