Sections

About Us

 
Make a Donation
Local • Independent • Essential News
 
austin sunset skyline

Fund to preserve workforce housing begins the hunt for first 1,000 units

Monday, April 16, 2018 by Chad Swiatecki

A group of real estate investors focused on preserving housing for Austin’s middle-class workforce is on the hunt for properties, with the goal of purchasing up to 1,000 apartment units within the next year.

The Austin Housing Conservancy announced last week that it has received commitments from its first 20 investors and can begin negotiating for the first of three or four existing apartment complexes to launch its portfolio. The private equity fund is managed by the nonprofit Affordable Central Texas, which was founded by former Urban Land Institute Austin executive director David Steinwedell.

Steinwedell, who is CEO of Affordable Central Texas, wouldn’t disclose how much money was raised in its first round, but some of its investors include Sweet Leaf Tea founder Clayton Christopher, Amherst Holdings CEO Sean Dobson, and philanthropists Michael and Jeanne Klein.

The fund was announced last year to draw attention to and create a solution for the growing problem of the area’s workforce getting pinched by the rising cost of housing throughout Central Texas. Investors committed to participate with the expectation of modest and stable single-digit returns and will keep the rental rates at the purchased properties accessible to families earning from 60 to 120 percent of the area’s median household income.

“Folks are attracted to what we’re doing because of their personal experience, and they feel the pain of what we’re trying to address, because they have a business and have a hard time attracting employees or retaining employees because the employees are having a hard time finding a place to live,” Steinwedell said. “They’ll get to participate in the upside as we have success in stabilizing housing for the nurses, teachers and musicians that will be our residents.”

While the city and Travis County officials have launched and announced a variety of plans to improve the earning power of the area’s middle-class residents, most of the attention on the housing front had been focused on the affordable sector defined as made for households earning 60 percent or less of the median income.

Steinwedell said he’s hopeful proposals such as Mayor Steve Adler’s hope to create a city strike fund for workforce housing can be paired with the Austin Housing Conservancy’s knowledge of the market to make a difference in the local housing market as the portfolio grows to 10,000 units and more.

“If the city has discretionary capital to take advantage of opportunities that come up, private capital can move fast, but public capital can move the needle in terms of cost and expediting the process to get things done more efficiently,” he said. “The concept of a single fund that is sitting on the sidelines waiting for an opportunity sounds noble, but the practical side is going to be the ability to work in conjunction with a variety of other sources.”

Steinwedell said currently rent growth in the workforce sector is averaging 1 or 2 percent per year because of high vacancy rates in newly built and upper-income sectors. But once those vacancies disappear, he said it’s certain that rents in the workforce and affordable sectors will return to near double-digit increases.

Frances Ferguson, acting vice president of national real estate programs for NeighborWorks America, said Austin Housing Conservancy is the first privately funded effort she’s seen nationally looking to invest money in properties with the goal of keeping them at a level affordable to middle-class residents.

“Public capital is not nimble enough to do this, and by being privately funded we can acknowledge the security of affordable units and giving a steady and moderate rate of return,” said Ferguson, who is a board member for the fund. “And this is structured so we don’t end up arguing over keeping the properties affordable once the (rental rate) difference starts to show 10 years down the road.”

Photo by Ed Schipul (Flickr: Austin Texas) [CC BY-SA 2.0], via Wikimedia Commons.

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.

You're a community leader

And we’re honored you look to us for serious, in-depth news. You know a strong community needs local and dedicated watchdog reporting. We’re here for you and that won’t change. Now will you take the powerful next step and support our nonprofit news organization?

Back to Top