Austin Pursues Ambitious Housing Overhaul

Leah Binkovitz | @leahbink | June 29, 2016

Dubbed one of the most segregated cities in the country, Austin is looking to dramatically change how it approaches housing affordability. Courtesy City of Austin.

Dubbed one of the most segregated cities in the country, Austin is looking to dramatically change how it approaches housing affordability. Courtesy City of Austin.

When Austin was ranked one of the most economically segregated cities in the country last year, it came as something of a wakeup call for residents and lawmakers alike.

The report, co-written by the Martin Prosperity Institute’s Richard Florida, one of the world’s most famous urbanists, was one of a slew of recent studies that highlighted growing housing costs in the booming city as well as their implications.

From 2003 to 2014, average rents in the city increased 50 percent, according to the city. And the cost of homeownership is shooting up too. “Today half the city’s renters and 28 percent of homeowners spend more than the recommended 30 percent of their income on housing,” according to one city report.

“It was kind of this shock to the system for a lot of folks in Austin,” said Mandy De Mayo, executive director of the advocacy organization HousingWorks Austin, of the segregation study. “We consider ourselves a really progressive place.”

A recent audit found the city’s Neighborhood Housing and Community Development department, responsible for providing affordable housing, was underperforming without clear targets or adequate monitoring. That report and others underscored the need for action.

Now, the state’s capital city is hoping to correct past missteps by overhauling its housing strategy in an unprecedented way. It’s setting specific targets, extensively overhauling its land development codes for the first time since 1984, and looking to expand existing housing affordability programs.

It’s a series of moves other major Texas cities may want to take note of, especially since the Martin report found that Austin isn’t unique relative to its peers: four of the 10 most segregated cities in the U.S. are located in Texas; Austin is joined by San Antonio, Houston and Dallas. If Austin’s efforts work, it may offer a model for other cities in Texas — and across the country — facing similar challenges.

Struggling with the state

In Texas, those working to fight economic segregation face unique hurdles from the state, which curtails their ability to use some of the main tools used elsewhere to address the problem. Texas severely limits inclusionary zoning, or policies requiring that new construction provide a certain amount of affordable housing. Texas also prohibits cities from setting their own minimum wage for all workers.

“We’ve tried a variety of strategies that the state has kind of batted down,” De Mayo said.

So Austin is pursuing other approaches. They’ve had mixed success in the past, but advocates are hoping the current efforts will go further than before.

The city has several density bonus programs, which allow developers to build denser developments than otherwise permitted if they contribute to affordable housing funding. The city also has a housing program, dubbed SMART, which provides incentives to developers like a fast-tracked process and fee waivers in exchange for affordable units.

Moreover, Austin is starting to take advantage of 2005 state legislation that allows cities to create homestead preservation districts, the idea being that these districts would be in gentrifying neighborhoods; as property taxes rose, the city could divert additional tax dollars toward affordable housing in that same area. It took years for Austin to get its first program of that type up and running.

By the time the district just east of I-35 was established, gentrification had largely run its course, said Isabelle Headrick, executive director of the nonprofit Accessible Housing Austin. “That part of town — it’s gone,” she said. “Those property values are insane now.”

And it’s not just there. The National Low Income Housing Coalition estimates that the Austin metro area is short more than 55,500 available and affordable housing units, meaning that someone making 30 percent of the area’s median income could live there without spending more than 30 percent of their income on housing costs.

Building on the past

Like many cities in Texas and the U.S. Sun Belt, Austin’s population is booming, with a population just under 1 million. Last year, it was one of the fastest-growing metros in the country, adding 57,395 people from 2014 to 2015, according Census estimates.

What was once known as a college town and state capital, said De Mayo, is now a trend-setting city in its own right. “We’re becoming kind of a destination, which means hotel workers and bar and restaurant workers, which really translates to low-wage jobs,” she said. “We have an enormous number of low-wage jobs, particularly in the urban core.”

But the city’s high-paying industries have grown too — the city is known for a booming tech sector that brings lucrative salaries — causing what De Mayo describes as the bifurcation of the population.

The city’s current segregation, however, also has deep historical roots.

For years, black residents lived throughout the city, but in 1928, Austin created the “Negro District,” east of what is today I-35 but was then known as East Avenue. Even after de jure segregation was outlawed, the East Austin area remained largely African-American.

Eventually, that community started to gentrify, and “by 2010, the African-American population was no longer a majority, as many longstanding residents sold their homes to newer, wealthier residents before relocating to the surrounding suburbs outside of the city limits,” a study from the University of Texas at Austin’s Institute for Urban Policy and Research explained. The trend wasn’t confined to that area: a 2014 study found Austin was the only rapidly-growing city that simultaneously had a declining African-American population.

Researchers Eric Tang, Bisola Falola and Chelsi West Ohueri surveyed 100 African-American families who had moved out of the neighborhood and determined affordability was the driving force behind their relocation. In addition to the 56 percent of respondents who cited affordability as their top reason for leaving, another 16 pointed to racism.

The study, released in May, helped confirm that many people weren’t leaving the community because they were drawn to the bigger lawns of suburban households, but rather, because they were pushed out.

Beyond subsidies

But before the report even came out, the city had begun taking action, approving several more homestead preservation districts and overhauling its housing strategy and city codes.

“We can’t subsidize our way out of this challenge alone,” said Jonathan Tomko, senior planner for the city’s Neighborhood Housing and Community Development department.

Tomko helped oversee the creation of the city’s draft housing plan in response to the critical audit. After surveying the community, his team came up with a long list of ideas for further consideration, including everything from new state legislation permitting rent control to expanding community land trusts, which allow communities to buy up land and set it aside for affordable housing by allowing potential low-income homeowners to buy the house but not the land.

The plan also calls on the city to review existing incentive programs and align them with the vision of the city outlined in the city’s Imagine Austin plan, which, in part, championed the development of corridors ripe for denser development. But perhaps most significantly, the draft housing plan created specific targets for the department, including making at least 10 percent of rental housing in every zip code affordable to households earning at or below 30 percent of the median family income.

Meanwhile, the city has been working through a comprehensive update of its land development code for the first time since 1984. “Austin was a very different place in terms of population and affordability,” explained Tomko of the last time the city went through that process. Dubbed CodeNext, the plan includes a series of prescriptions that address affordability not just in terms of available units but in terms that account for transportation costs and density.

“When people say they are supportive of affordable housing,” said De Mayo, “it’s about investing directly in low-income housing, but we need to do more than that,” she said. “It’s how we facilitate affordability through things that don’t necessarily cost money but are policies here locally.”

Both efforts are still in the planning stages. The draft housing plan is available for public comment until August. And the CodeNext draft is expected to be made public in January.

Other proposals

Then there’s also a proposal from councilmembers Gregorio Casar and Sabino Renteria that calls on the city council to study strategies for affordable housing in a variety of ways, including “linkage fees,” that could be collected from new development and put towards a dedicated affordable housing fund. That package of initiatives largely won support at a recent city council vote in June, meaning the council agreed to investigate strategies and funding streams, many of which overlap with the concurrent code overhaul and housing plan.

But these undertakings haven’t come without opposition, including from Don Zimmerman, a councilmember who represents District 6, an area that has a high number of low-wage jobs and several affordable units, according to an analysis by HousingWorks.

“We have an affordability problem for the people who are having to pay the taxes and pay the subsidies, so whenever we increase subsidies, there’s going to be a cost to those who have to pay the subsidies,” he said at a recent council meeting discussing a housing trust fund. “They have to pay their own way and then pay for more and more subsidized people.”

Councilmember Sheri Gallo also voiced concern about the need for city council to control how tax dollars are spent. She suggested she’d prefer more flexibility, without specific dedicated streams for affordable housing. “I think it’s important in this community to make sure we have affordable housing geographically dispersed throughout our community,” she said. “But I think it’s also important to give the council the ability to take tax dollars and spend them with — and balance them with — all the other needs that we have.”

Tomko and others are still optimistic. “It’s very exciting that they are taking such big leaps and have such an open mind to some of these policies,” said Tomko. “They are complex and difficult undertakings but you’ve got to start somewhere.”

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