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Monday, October 8, 2018 by Jack Craver

Council debates how to convert downtown property into affordable housing

Almost every member of City Council agrees that the city should use two pieces of prime downtown real estate for affordable housing. However, questions and potential disagreements remain about how the land should be used to provide housing.

Some Council members are adamant that the city partner with a developer to build housing on the two parcels that used to house the HealthSouth rehab center and its parking lot at 1215 Red River St. and 606 E. 12th St.

“I think it’s critical that we provide housing in the Central Business District, where there are so many amenities,” said Council Member Ora Houston as Council deliberated Thursday on a resolution that instructed city staff to issue requests for proposal relating to the property. The resolution urged for the development to target housing at 60 percent of the median family income.

Houston cited the proximity of job centers as making the site ideal for housing targeting low- and moderate-income families. It would likely be an attractive option for people who work at City Hall, she said.

“You could probably walk or bike or scoot here,” she said.

As the city seeks proposals from developers, Houston wanted the instruction to city staff to be to focused on proposals on the HealthSouth site, not elsewhere.

Others, however, say that the city may be able to help more people if it considers selling the land and uses the proceeds to build housing elsewhere. The city purchased the properties in December 2016 for $6.5 million, far below market value.

Council Member Greg Casar offered an amendment to the resolution asking for developers to submit two distinct proposals: one on the HealthSouth site and one on another site within a mile of that location.

Any location within a mile of the site would still be a “high-opportunity” area, including parts of the city that have long been too pricey for low-income residents or areas where lower-income people are increasingly getting priced out due to gentrification.

“Just as it would be great to get affordable housing in the CBD, I’d also like to see how much we could get in Clarksville or East Cesar Chavez or the South Central Waterfront or Bouldin,” said Casar. “And so, I just want the information we get back from this to provide us with more options, rather than fewer.”

Mayor Steve Adler was receptive to that argument. Hypothetically, he said, the city should want to know if there is a parcel a block away where it could get substantially more housing for the same price. One nonprofit has suggested it could produce about 200 units on the HealthSouth site.

“I’m not thinking about two bus stops away or over in another high-opportunity area,” explained Houston. “I’m talking about downtown. We won’t be able to find another piece of land downtown to be able to do that.”

Mayor Pro Tem Kathie Tovo said she was similarly focused on using the site itself.

“I know those units are going to be more expensive (to provide), and I know we could take money and build more units elsewhere,” said Tovo. “But that is exactly why we don’t have affordable housing in certain areas of town, because we’re always looking for the lowest land values.”

Casar stressed that he was not looking for the lowest land value possible.

“We’re looking at putting affordable housing in some very high-opportunity areas,” he said. “I just want to look at a few options when we do that. This is a significant decision.”

Ultimately, Council adopted Casar’s amendment.

Council members also disagreed about whether the property where the housing is placed should remain city-owned. Tovo said the city should only consider leasing the land to a developer for a long period of time (perhaps 50 or 100 years); others said they were open to selling it.

Houston offered an amendment specifying that the city would expect to maintain ownership of the land, simply leasing it to a developer. Council deadlocked, 5-5, on the motion, denying it passage. Tovo, Houston, and Council members Ann Kitchen, Delia Garza and Leslie Pool were in support, while Adler, Casar and Council members Pio Renteria, Jimmy Flannigan and Alison Alter were against.

Alter then proposed an amendment that simply stated a “preference” for leasing the land. That too failed, 5-5.

Council then gave up on the idea of setting expectations about whether the city would sell or lease the land.

“My sense is you will get a variety of responses that you will be able to respond to and look at,” explained Deputy Chief Financial Officer Greg Canally.

Council unanimously adopted the resolution 10-0. The Council member most likely to have opposed a subsidized housing project, Council Member Ellen Troxclair, was absent.

City Manager Spencer Cronk said that the city will send out solicitations for proposals in November and likely be able to report back to Council with results by the beginning of the new year.

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Key Players & Topics In This Article

affordable housing: This general term refers to housing that is affordable to Austinites, with or without subsidy.

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

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