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City leaders debate how to spend affordable housing funds

Wednesday, February 24, 2010 by Michael Kanin

A debate is brewing over what the City of Austin should do with $13 million in funds that are designated “to create or retain affordable housing for low-income (city) residents.” That money is all that remains of a $55 million portion of the 2006 General Obligation (GO) bond election that was set aside for affordable housing. The City Council will hold a public hearing on the spending priorities for the rest of the funds on Thursday, with action expected on March 11.


The director of Austin’s Neighborhood Housing & Community Development Department, Margaret Shaw, summarized the funding situation in a letter addressed to the City Council. “Currently, 76 percent of Austin’s $55 million in GO bonds have been expended or committed,” she wrote. “There is a need for a strategic investment plan for the remaining affordable housing bond funds that is built on community input to ensure funding, supports top community priorities.”


Francie Ferguson, the president of Housing Works Austin, said that the GO bonds “have been a huge success so far.” She noted that the program has made housing more affordable to more people across the city and added that this is what the people of Austin voted for in 2006.


Still, Ferguson said that there are gaps in the city’s affordable housing efforts to date. She cited two specific areas: what she called “workforce home ownership” and a variety of people who earn less than 30 percent of median income. For a family of four, that is about $22,000. Workforce home ownership is a term that applies to people who make approximately 60 to 100 percent of the area’s median income level. According to the U.S. Department of Housing and Urban Development, the median family income for Austin is $73,300.


Ferguson told In Fact Daily that the city would have to address these issues “if we want to be able to continue to have a city where people who live here work here.” She would like the city to use the remaining $13 million to plug those gaps.


According to the housing market study commissioned by the city last year, the need for affordable rental housing is particularly acute for those earning 30 percent and below the median family income. “The study identifies that just one in six renters earning less than $20,000 can find affordable housing in Austin,” said Rebecca Giello, policy and planning manager for NHCD.


But Giello also agrees that renters who might become homeowners in other markets have a tougher time in Austin. For example, she said, “Renters earning less than $50,000 who want to buy a home in Austin would have found just 16 percent of the market affordable to them in 2008. Austin has a need for homes priced between $113,000 and $240,000 to enable its renter population earning between $35,000 and $75,000 per year to become homeowners.”


In many cities, she noted, this demand for affordable homes is partially fulfilled through attached housing (duplex/condos/townhomes); however, in Austin, such options are limited.


Mayor Pro Tem Mike Martinez said, “We need to take in all the information necessary to decide on spending the remaining funds. But for me, the first consideration is to the unanimously adopted commitment the council made to spend 40 percent of the total funds on single-family affordable housing. I believe going back on that promise would make it very difficult to go back to our citizens again for future bond requests and have the citizens’ confidence and trust.”


But Council Member Sheryl Cole told In Fact Daily that she wants to see the remaining funds directed toward people who make zero to 30 percent of the median income level — those whom she terms “the poorest of the poor.”


“We have not committed very large sums to that population and we have not reached that population in 10 years,” she said. “It is an issue for our entire city.”


Cole thinks that the remaining funds should be directed more toward renting than homeownership. “Now that we’re further along in the process, we recognize how expensive homeownership is, as opposed to (funding) rental (properties),” she said.


Ferguson disputes this. She points to a set of numbers that she’s extracted from the AHFC’s stats on 2006 GO bond expenditures. She says that, on average, home ownership costs are about 10 percent more than renting costs. Here she separates owned from supportive housing. According to Ferguson’s numbers, the city spends, on average, $52,600 per unit of supportive housing. She says that the cost per unit of owned housing is $27,248. She puts the cost per rental unit at $24,559. Her figures include only funds that came directly from the 2006 GO bond election.


Supportive housing is a more fiscally intense process for which a municipality assumes the responsibility for the much broader range of expenses associated with caring for disabled or otherwise dependent people.


Wherever the debate takes the Council, it appears that the priorities that they set may extend beyond the immediate remaining $13 million in 2006 GO bonds. “I look at the (distribution of the) remaining funds as us making a policy decision,” said Cole.


There have been discussions about doubling the $55 million sought in 2006 for affordable housing in a future bond election.

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