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City offers loan program to preserve existing low-cost apartments
Wednesday, September 3, 2008 by Austin Monitor
Austin’s Neighborhood Housing and Community Development Office is working on a new tactic to promote affordable housing in central-city neighborhoods. In addition to providing low-interest loans to developers of new apartment complexes, the NCHD plans to offer long-term forgivable loans to owners of existing complexes. That would allow those owners to pass along their reduced costs to tenants, essentially letting the city buy-down rental rates in a limited number of units in properties that take part in the program.
The program is designed to address the fact that it is frequently cheaper to construct new apartment and condominium complexes in outlying areas, while city leaders are seeking to promote more affordable housing downtown and in surrounding neighborhoods that are closer to employment opportunities.
“This is a tool where we’re trying to be as innovative as possible in reaching the hard-to-develop areas… west of Lamar and west of Congress, where we have a difficult time with our affordable housing partners being able to develop properties,” said NCHD Director Margaret Shaw. “So this is a way we feel this tool could be used for these projects.” Shaw stressed that the forgivable loan program is not designed to replace the city’s existing efforts to promote affordable housing development, but instead to supplement them in areas where the city has had difficulty because of land costs or development costs.
Under the program, the city would make forgivable loans to the owners of already-existing apartment complexes. “The deferred forgivable loan sits on the title for 40 years…it acts as a grant. They would only have to pay it back if they don’t meet the affordability guidelines,” said Shaw. The city would obtain a restrictive covenant on those properties that participate. The guidelines for the program call for the funding to be used to buy-down units from 80 percent of MFI to 50 percent of MFI. The city would buy-down the rental rates at no more than 10 percent of the units in a particular complex.
Several Council Members expressed concern that the city would be diverting resources away from efforts to boost the amount of affordable single-family housing. “I think we should create some type of goal that lets the citizens know what we are going to do with the money they entrusted us with,” said Council Member Mike Martinez. “I think if they had been told that a large portion of this $55 million could go to buy-downs on condominiums and multi-family housing complexes, I think we would have had a different outcome. The ballot language and the campaign was about affordable housing, and I think the image that was created in their minds was single-family housing.”
Meanwhile, Council Member Sheryl Cole said she attended a meeting on affordable housing along with Mayor Will Wynn and Council Members Laura Morrison and
The MacArthur Foundation has selected Austin and the other finalists, 10 of which will receive grant funds for both rental and ownership of residences, she said.
According to statistics compiled by the city, almost 18 percent of
Cole said the MacArthur Foundation would select 10 finalists to receive grant funding. That announcement is expected at the end of December. The
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