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Council OKs more funds for east side housing

Friday, December 16, 2016 by Jo Clifton

Acting as the board of the Austin Housing Finance Corporation, City Council on Thursday approved an additional $992,000 to a loan for the Chestnut Neighborhood Revitalization Corporation to help the company build affordable housing at 1212, 1301 and 1309 Chicon St.

The project, called the Chicon, will be redeveloped into a mixed-use, mixed-income development with ground floor retail and two stories of housing located above. According to AHFC, the homes will be built to SMART housing standards and are designed to achieve a three-star Austin Energy Green Building rating.

The total city investment in the project will be $4,954,717 for a development offering 33 affordable ownership opportunities in a 43-unit project close to downtown, in District 1.

The income-restricted homes will be sold for approximately $145,000 to $235,000. The nonprofit organization Community Wheelhouse will administer the affordable housing in order to ensure long-term affordability.

The market-rate units are expected to range in price from approximately $190,000 to $338,000, according to city staff notes.

District 3 Council Member Pio Renteria, who generally supports affordable housing, was critical of the deal, saying it was too expensive. He asked for an explanation of why the additional money was needed.

Sarah Andre, representing the nonprofit corporation that’s building the development, explained that costs increased when the builder discovered in April that there was a title problem, which took several months to resolve. While they were dealing with that problem, their costs continued to accrue, but they could not close on the loans they were getting from the private lender or the state of Texas housing fund.

Rebecca Giello, assistant director of the Housing and Community Development Department, told the Austin Monitor that the title problem was not the fault of the developer. The problem “required the developer to either demobilize or maintain construction, and basically incur fees from their general contractor,” Giello said. “They kept going, and so a portion of the funds that they were requesting is due to this issue. They want to, obviously, deliver the units, so this is the project back on track.”

Renteria said it would be better to spend the money on a project in a less expensive location.

Giello said there are “a couple of key attributes of this project” that make it particularly worthwhile. “At a per-unit cost for the city, it is still a good deal. … It’s very close to downtown in an area that’s gentrified,” she said. “Comparables for condos in the area on 12th Street are selling for $350,000 to $400,000. Comparables just a block away on Waller are selling for $500,000.”

In addition to the title problem, contractors had a particularly difficult situation given Occupational Safety and Health Administration standards related to overhead electric lines, which are required to be at least 10 feet away from any person or building, according to backup material provided to Council. Eventually, the Chestnut Neighborhood Revitalization Corporation ended up having to bury electrical lines, which added several hundred thousand dollars to the cost of the project.

However, Andre complimented city staff, including Austin Energy, who worked with the developer to try to ameliorate the problem.

The developer also encountered a problem related to city zoning regulations, which require that mixed-use developments have sidewalks in front of them.

Council Member Ora Houston, whose district includes the project, told her colleagues that she had been asking questions about the project’s cost and was satisfied with the answers.

When the vote came, Renteria joined conservative Council members Don Zimmerman and Ellen Troxclair in voting no. However, their colleagues all voted for the additional money in a vote of 8-3.

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