DALLAS – Austin, Texas, is taking aim at its housing affordability crisis with plans to seek a record $250 million of housing bonds.
The housing bonds would be included in a $925 million proposal that is expected to go to voters in November.
Mayor Steve Adler said that the city’s strategic plan and meetings with citizens identified affordable housing and homelessness as the top investment priority.
“We have a bond package which is doing that now here,” Adler told the council. “And it’s such a significant and major statement about who we are as a community and what our priority is and what our value is. And I’m proud to be a part of that.”
Adler made the statement in response to council member Jimmy Flannigan’s announcement that he would not support the bond proposal because of its lack of specificity about the projects.
“As much as I will not be able to support the item tonight, I do support making a significant investment in housing,” Flannigan said. “But I don’t think there’s an honest conversation about where we’re willing to spend it. I don’t see the list of projects. And if I’m going to ask my community to support nearly $1 billion of bond spending, I have to know the individual projects, and I have to know the operational impacts, and I have to know that it’s not going to force us to do CO [certificate of obligation] spending later.”
Flannigan cited the new Austin Central Library as a project whose $120 million cost exceeded the $90 million price tag identified in a 2006 bond proposal approved by voters.
“There are folks who say when we built the Central Library, which as we acknowledged this morning is an internationally recognized building, that the original bond did not cover the full cost. But some people said, ‘But we knew – we knew – when we passed that bond that it would not cover the full cost.' I don’t see any evidence that that is being fully vetted in this bond package.”
Flannigan’s northwest Austin district is made up of well established and generally affluent neighborhoods. Much of the bond money would go to protect lower-income residents in East Austin who are at risk of losing their homes to gentrification and rising property taxes.
Advocates of a housing bond of up to $300 million called on the council to approve the proposal as a matter of social justice.
“In 2014, Austin Housing Choice Survey, 52% of renters surveyed responded that they had to reduce or forego spending on a basic need to afford housing,” said Trent Henderson, leader of the Austin Interfaith coalition of religious and nonprofit organizations. “That includes 31% reporting having to reduce or forgo medical spending and 22% that had to reduce or forgo spending on food. We call on you to pass an affordable housing bond issue that minimizes displacement of current residents by helping to offset skyrocketing land values, housing costs, rents and taxes.”
The council voted to proceed with plans for the bond election, pending a final decision in August.
“This is a historic level of funding for housing, and it is time to have that conversation with the community,” city council member Ann Kitchen told the council. “This is such a critical need.”
Austin’s most recent Comprehensive Housing Market study found a shortage of 48,000 housing units affordable to households earning at or below $25,000 annually, or approximately 30% of the median family income.
“It is estimated that the cost to close that gap today with construction of new units would be $6.48 billion,” the study said. “By 2025, the cost to close the gap is estimated to grow to $11.18 billion. Given the magnitude of the challenge, subsidies alone are not a realistic solution.”
Austin’s median home value is $346,800 after rising 7.7% over the past year, according to the online real estate firm Zillow, which predicts another 1.7% rise within the next year. The median list price per square foot in Austin is $211, which is 35% higher than the Austin Metro average of $156. The median rent price in Austin, per Zillow, is $1,678, which is $10 higher than the Austin Metro median of $1,668.
Andrei Lubomudrov, representative of the Austin Board of Realtors, said that his organization supports the housing bond proposal.
“We are going through an ongoing and growing affordable housing crisis in this city,” Lubomudrov said. “Our housing crisis affects just about everyone.”
Nationwide, Americans need to net $22.10 per hour to afford a standard home, according to the National Low Income Housing Coalition. The federal minimum wage is $7.25. The report calculates that renters would need to work 122 hours per week at the minimum wage to be able to afford a rental home.
In Texas, where the minimum wage is $7.25 per hour, the average wage to be able to afford a two-bedroom home is $19.32 per hour.
In Travis County, which includes Austin, Texans would have to earn a minimum of $25 per hour to afford a two-bedroom house.
After discussion of the housing bonds, Austin council members voiced concern about the prospects for passage of debt for transportation, parks, flood control, and cultural facilities. With eight members in favor of the package, three opposed.
“The council it is making a strategic mistake in putting $250 (million) toward affordable housing and cutting street reconstruction when we all know that consistently the No. 1 or 2 thing that people care about is roads and infrastructure,” council member Ellen Troxclair said. “I know it is going to have a tough time in my district because of that alone. So I guess just a word of caution on that.”