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Advocates see city’s affordable housing budget shrinking rapidly

Friday, April 13, 2012 by Kimberly Reeves

Austin is poised to see steep drops in its commitment to affordable housing in the upcoming budget, drops that could move the city backward in its efforts to expand affordable rental and first-time home ownership, according to advocates.


Stuart Hersh, a retired city affordable housing official, starts every speech he makes to Council with the mantra “like most people in Austin, I rent.” During a speech on the HUD action plan last week, Hersh said declines in federal funds and bond monies were making the pool of dollars for affordable housing the tightest the city has seen in at least a decade.


“If these trends aren’t reversed, the city is getting ready to see the most disinvested housing budget we’ve had in this century,” Hersh said. “Our capacity to produce affordable housing will be diminished because we won’t be able to access the resources we’ve had for many, many years.”


Hersh cites what he calls the “perfect storm” for Austin’s affordable housing efforts: multi-year cuts in the community development block grant from Housing and Urban Development; the end of the general obligation bonds for affordable housing approved in 2006; and decreases in revenue flowing into the city’s housing trust fund, which assistants in the creation of affordable units.


And most housing dollars have targeted the categories of “extremely low” and “very low” income, which translates to between 30 and 50 percent of the median family income. Even fewer city dollars hit what might be considered low income, which would serve those between 50 and 80 percent of median income.


“The incentives used to exist to build moderate-priced housing, housing for those between 80 and 120 percent of median income,” Hersh said. “The city just isn’t getting much out of the SMART funds anymore, which were created for the for-profit developers to build market rate rental properties and carve out a percentage for low-income residents. A lot of that has gone away.”


Add to that the results of the Community Action Network’s survey, announced on Thursday, noted that for the first time, the percentage of people in Austin that fall into the “low income” category now exceeds the state average.


The Housing and Community Development Department is keenly aware of the changing landscape. Director Betsy Spencer signaled that in a memo to Council, dated April 6, that outlined the $2 million cut in funds this year, including a third of the federal dollars received for the HOME program. 


Unlike prior years, local investment dollars were not penciled into the grant application to be sent on to HUD on August 15. Instead, the dollars will be provided to the federal agency in an amendment after the city budget is approved in mid-September. The result is a starkly different proposal this year.


“What will go to HUD is, in its true sense, just the proposal for where the federal funds are going,” said Rebecca Giello, assistant director of Neighborhood Housing and Community Development. “Because there has been a significant cut in federal funds this year, $1.7 million, the public can expect to see a significant difference in where we will be proposing spending in our programs.”


Most years, Neighborhood Housing and Community Development could go into the budget process with the assurance of level funding. This year, it’s still a far stretch until existing programs are whole, much less expanded. Giello puts a positive spin on the situation, saying that the department has been aware of tightening financial constraints and that future spending ought to be considered within the full framework of the city’s range of departments.


“There’s such a scarcity in resources across the 30 departments that this is a pragmatic approach,” Giello said. “When you look at Parks and Health and Human Services and all the departments – we all have to balance when there’s limited dollars. It’s a constant give and take and compromise.”


Housing advocates like Hersh see a vast need. Neighborhood Housing and Community Development sees a vast need. Cuts in federal funding mean that each federal dollar is now matched by one local dollar in the budget. Still, the fair approach is to consider the city’s budget as a whole, Giello said.


“We are not the only department serving low-income residents, and so there should be a balanced conversation,” Giello said. “Health and Human Services and a number of other departments have the same challenge that we do, so having that discussion within the same lens can bring awareness.”


Housing and Community Development, more than ever, must educate the public on the need for affordable housing and rental property, Giello said.


“When our CDBG (Community Development Block Grants) was cut by 40 percent two years ago, we knew there would be a downward trend in federal funding, that there would be a time when the change would be starkly felt,” Giello said. “We knew we were going to have to change the way we have discussions with the public and the way we communicate.”

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