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Pilot Knob attorney seeks fee waivers

Friday, November 13, 2015 by Jo Clifton

City Council heard more ideas about how to create more long-lasting affordable housing in the Pilot Knob Municipal Utility District last night. But, on agreement between Council Member Delia Garza and Richard Suttle, the attorney for the developer, the vote on second reading for zoning was postponed for one week.

The developer, Brookfield Residential, has committed to providing 10 percent of owner-occupied units at 80 percent of median family income when they are initially offered for sale, for a total estimated at 600 to 1,000 houses for Southeast Austin.

In addition, Brookfield is offering 10 percent of rental units at 60 percent of MFI for a period of 40 years from the date of the agreement, which is 2012. Suttle said his client is willing to start the affordability clock when the project is brought online, as opposed to the date the agreement was signed.

The developer has also promised to make a financial contribution to the city’s affordable housing program equal to 2 percent of the total “hard” construction cost reimbursements the developer actually receives up to a maximum of $8 million. The commitments are part of the MUD agreement between the city and the developer.

“To this day, that’s still the best affordable housing deal the city’s ever gotten in a private deal,” Suttle said.

Garza has nonetheless argued that it is not sufficient.

Suttle said one way to get more money for affordable housing is for the city to waive development fees. He told Council, “We just wanted to start the conversation and see – are fee waivers on the table?”

He continued, “Because if fee waivers are on the table, it gives us more tools for more affordable housing or deeper affordable housing or more longevity in affordable housing, whatever the Council deems to be important.”

Suttle said he wanted to know whether they were going down the right path in looking at fee waivers because that might be the only way his client could add more housing that would be affordable. But if that was not an option, they might have to come back to Council and say that their current proposal is all they can offer.

He said the largest fee was for water and wastewater lines, about $8,000 per unit. “If we were to get the waivers on that, it opens up a big door on what we can do to keep those houses affordable for a long time,” Suttle said.

He added that he knew that the water and wastewater department “is probably going to scream,” but that Pilot Knob would be bringing it a lot more customers than it previously had and that the developer would be responsible for oversizing the lines.

Mayor Steve Adler said that as currently proposed, the program would require the developer to offer the houses at an affordable price only on initial sale and that there is no requirement that the developer screen the customers for those houses to ensure that they are qualified for the lower price. “So conceivably,” he said, “there could be a holding company that buys all the affordable housing at a lower price and sells them all at a higher price.”

After a short diversion into how the Travis Central Appraisal District would appraise the houses, Council returned to the problem.

“Conceivably, I could buy all those houses at an affordable cost and turn around and sell them at a market rate,” Adler said.

Suttle responded, “And your political career would be over, but you would have a windfall.”

Adler said, “With 3,000 homes, Diane (his wife) and I would be off, but I don’t know where we’d go to.”

Suttle concluded, “You could turn them all into (short-term rentals). … People could Uber out to them, and they’d all have solar.”

Suttle said his client was open to adding more affordable housing but could not sell more houses below market without help. He said Brookfield wanted to help, especially in light of the flooding along Onion Creek.

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