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Real estate leaders tackle equity, housing affordability at ULI breakfast

Thursday, April 26, 2018 by Chad Swiatecki

Austin’s ability to continue its rapid economic and population growth while trying to keep longtime residents from being forced out due to affordability issues was the topic of the day at Wednesday’s breakfast meeting for the Urban Land Institute. The professional trade group focused around property developers, brokers and other professionals in the real estate industry tackled the question of the role the private sector can play in planning and creating equity, and how local governments can work with them, in the Building Equitable Cities panel discussion.

With the city cited in 2015 as the most economically segregated city in the U.S., the discussion covered how Austin is attempting to increase the earning power of its middle class, what sections of the city offer opportunity for affordable mixed-use housing close to transit options, and why friction with established neighborhood groups is a barrier to affordable housing in all fast-growing cities.

While Brion Oaks, the city’s chief equity officer, pointed to the revisions to the city’s economic incentives programs to grow small business and middle-skill jobs, there was also a harsh dose of reality from Jon Roberts, a principal partner with the national economic development consultant group TIP Strategies.

“The shrinking of the middle class is even worse than it looks,” he said.

“When you look at the ability to create or attract middle-skill jobs, it is becoming more difficult and facing massive economic headwinds because we can manufacture with far fewer people than in the past, and that trend’s not likely to stop. You can have that as a goal, but you’re facing an unlikely set of circumstances of making that happen. We’ll grow low-income because we need service workers, but there’s no upward mobility.”

Roberts said Austin is in a class of cities that overlaps almost completely with the sites considered for Amazon’s HQ2 project, with fast growth fueled by the tech industry creating six-figure jobs that skew an area’s economics away from middle-class employment.

Oaks said that dynamic is creating the possibility that Austin could be washed of its cultural and ethnic diversity in a generation or less.

“We’re listed as a best place to live, but the flip side is to say Hispanic and black children are five to seven times more likely to live in poverty,” he said. “We have these extremes of systemic inequity. If we continue on this trajectory and we don’t move the needle to close the gap on these populations that are left behind, then what does Austin look like 20 years from now?”

Panelist Diana McIver, president and owner of DMA Properties, which specializes in affordable and senior housing communities, said Austin has made progress in providing affordable housing with projects such as the Mueller development and the under-construction Plaza Saltillo project where her company will create 92 units of affordable housing.

One of the biggest obstacles to affordable housing, she said, is reactionary community groups who spread stereotypes about the impact those developments will have on nearby neighborhoods.

“Are they opposing it because of density, or are they opposing it because of affordable housing?” she said. “We still have neighborhoods who are very much afraid of affordable housing in their neighborhood and don’t understand it. We try to put a face on the people who will be living there – that it’s working families or it’s going to be seniors – and get them away from the old stereotype that public housing is for pimps and prostitutes.”

Oaks said there is also a vein of economic anxiety that gets stirred up when new development of any kind moves into underpriced communities that have historically been stable places for working-class residents.

“With any kind of development there’s worry about gentrification, whether that’s multifamily or single family, it’s just that someone’s coming,” he said. “I’ve been following the mayor’s Anti-Displacement Task Force and hearing discussion about the city’s need to have a ‘right to stay’ or a ‘right to return’ policy to help try to keep people in place. You’re getting a real fear that with a development comes an increase in property values, and the thought of, ‘Am I setting a timer on how long I can afford to stay?

One big plus in Austin’s favor, according to Roberts, is a large supply of municipally owned properties that are prime opportunities for public-private partnerships (sometimes referred to as “3P”) where affordable housing, commercial space and jobs can be integrated into a cluster of activity that can provide growth without dramatic pressure on roads.

“If you look at Austin compared to other high-tech growth cities, there’s an awful lot of land that could come into play,” he said. “When you look at some of the land we could put into play like the Austin State Supported Living Center on 35th and MoPac, that 95 acres is a big chunk of land. Or the State Hospital on Lamar is another 95 acres. We could sit here collectively and come up with probably at least 1,000 acres within the city, maybe double or triple that, that could fall into a 3P model to not only address affordability but be employment centers. Not many cities have that kind of property in the city that can be put into 3P use.”

Photo by Kumar Appaiah made available through a Creative Commons license.

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