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Support growing for another Affordable Housing bond election this year

Thursday, August 8, 2013 by Michael Kanin

Council support is coalescing around a major November bond initiative that would, if approved by voters, raise somewhere in the neighborhood of $65 million for the city’s affordable housing programs. At the Tuesday work session, Council Members Mike Martinez, Laura Morrison, and Kathie Tovo, all signaled that they would approve of a bond question that asks for roughly that amount.


Their statements were prompted by a question from Mayor Pro Tem Sheryl Cole, designed to take her colleagues respective temperatures on the matter. Cole, Council Members Bill Spelman and Chris Riley have all expressed interest in a major affordable housing bond election this November (See In Fact Daily, Jan. 22).


Politically, such a proposition could be risky. Austin voters turned down a $78 million affordable housing bond initiative in November 2012. A similar failure at the ballot box just a year later – coupled with Council reliance on that vote — could do serious damage to an already needy city division.


It could also cripple future affordable housing ballot initiatives.


In the wake of the November 2012 vote, Council members asked city staff to report back about alternative options to another pass at the voters. Staff from the city’s Neighborhood Housing and Community Development and Budget departments came back with a recommendation that would offer significant changes to the way the city calculates its Affordable Housing Trust Fund. Those changes would pave the way for a major internal shift toward funding affordable housing initiative via the city’s General Fund.


If staff plans were approved, the city’s Affordable Housing Trust Fund would be granted a set percentage of the city’s general fund each year. Under city staff’s proposal, costs a portion of the city’s contribution to affordable housing would be gradually shifted out of the city’s Sustainability Fund – an account that collects contributions from the Austin Water Utility and Austin Resource Recovery – as they are picked up by the General Fund.


Tuesday, Council members expressed serious concerns about that shift. Martinez worried about the conflict that taking an automatic slice off the top of the city’s General Fund might pose. “What I don’t want is to create a situation where this Council and future Councils are having to weigh between do we take care of our workforce, or do we take care of affordable housing,” he said. “I really think that creates very poor choices for Councils.”


Mayor Lee Leffingwell agreed. “When you talk about funding it from a percentage of the General Fund…I think there is a serious concern, and Council Member Martinez pointed it out, that in bad times you can find yourself in a mess,” he said. “You are going to be having those funds competing with Public Safety, with Libraries, with Parks. I’m very uncomfortable…with the principle of using (operations and maintenance) funds to finance capital projects.”


Riley pushed back on that point. “I don’t see a black and white distinction between capital and (operations and maintenance) when it comes to projects that warrant our support in terms of our affordable housing programs,” he said. “For instance, we have our housing repair program, which is a very important part of our affordable housing program – it could be considered capital, it could be considered (operations and maintenance).”


Despite earlier support for the November bonds, Riley also signaled his desire to move away from bond support of affordable housing. He further questioned the current Affordable Housing Trust Fund arrangement, one where fund contributions are derived from taxes on a handful of downtown buildings. Riley suggested that there was only so much tax money to squeeze out of those facilities, and that the city’s affordable housing program would be in a long line of potential recipients of those funds.


According to budget staff calculations, $65 million is that maximum bonding capacity that city officials could ask for in November. If that effort fails, Martinez suggested that Council could look to the staff’s reconfiguration of the Affordable Housing Trust Fund.

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