AUSTIN (KXAN) — On Thursday, Austin City Council is expected to kickstart the process of creating a housing fund intended to attract philanthropic resources to our city to pay for preservation of naturally occurring affordable housing.
The idea came from Austin City Council Member Marc Duchen after Austin leaders realized they had loopholes in affordable housing incentive programs — specifically, DB 90, which allows developers to build taller in exchange for affordable units.
But in the case of at least one Austin apartment complex, Acacia Cliffs, it meant allowing the demolition of affordable housing that already existed, and building a new complex that was taller and (while it met the DB 90 affordability requirements) resulted in a net loss of affordable units.
“Someone could be incentivized to tear down naturally occurring affordable housing in order to build additional housing that…some of it is affordable and some of it is not,” Austin City Council Member Ryan Alter said.
The housing fund could help in cases like offering property owners grants to fix up the property in exchange for those units staying affordable.
“It’s not necessarily buying down the rent, it’s saying to an owner, without disrupting the market, saying ‘hey owner, if you are interested in selling your property because the deferred maintenance and capital improvements are so significant, we have a grant source that we could provide to you to do the capital improvements in exchange for a covenant on the property to guarantee affordability,'” Austin’s Assistant City Manager Dr. Eric Johnson explained.
Austin isn’t the first city to consider an affordable housing fund. In fact, Johnson helped the city of Dallas create a similar fund in 2021, which is where he worked at the time.
“We simply leveraged six million dollars as part of a foundation building to attract private, philanthropic dollars to Dallas,” Johnson said. “It sounds complicated but it was really that simple.”
According to the Dallas Housing Opportunity Fund (DHOF) website, Dallas’ fund is now at more than $40 million because of contributions from the private and banking sectors. There is also $60 million in the pipeline, the website says.
In Dallas, the fund aims to “produce a minimum of 1,500 affordable housing units through the creation of new affordable units or rehabilitation or retention of existing affordable units on or before December 31, 2031.”
Where would the money go in Austin when that fund is up and running? Johnson explained it as a trifecta.
“The trifecta would be: Grant-based source for NOAH (naturally occurring affordable housing) to help with capital improvements…we would look at a low cost fund to help with new construction and a component around services,” Johnson said.
A challenge the city will face, according to Johnson, is that it will have to compete with the fast-moving market. While developers may offer to buy a property and rebuild them outright, which requires less work looking at the bones of the existing structure, the city would need to compete with those developers while also making sure the existing complex was sufficient.
Austin City Council will take up the item on Thursday at its meeting.
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