Workforce housing conservancy lands first bank investor, with $500,000 pledged
Tuesday, December 10, 2019 by Chad Swiatecki
A $500,000 investment from Texas Capital Bank, announced last week, marks the first money from a large financial institution put into a fund created to preserve workforce housing units around Austin.
In addressing the investment in the Austin Housing Conservancy Fund managed by the Affordable Central Texas nonprofit, Mayor Steve Adler said he and other backers of the fund hope other large financial institutions and foundations will come on board soon to invest toward the goal of preserving 10,000 middle-class apartment units in transit corridors over the next 10 years.
“If we are going to preserve what is special and magical about this city, we have to preserve the people and have to maintain the ability of people to be able to afford to live in this city,” he said. “That (Austin Strategic Housing Blueprint) was a blueprint that sought to prevent people from being priced out of the city and foster equitable, integrated and diverse communities, to create new affordable and plentiful housing choices for all Austinites, and help Austinites reduce their housing costs.”
The new money will help Affordable Central Texas move forward with its plan to add roughly 1,000 more units to the 792 it has purchased thus far. Property purchased with the private money is done so under a covenant to keep the housing units priced affordably for working families earning between 60 and 120 percent of the area’s median family income.
Adler said recent studies have shown that class of multifamily housing has about 42,000 units located near transit corridors, with all of them likely to be upgraded to upper-class price points without aggressive action to preserve them. Units at that price point don’t qualify for federal subsidies or other programs to keep them affordable to workers in careers such as teaching, health care and public safety who need to live in or close to the city.
David Steinwedell, CEO of Affordable Central Texas, said investors in the fund understand they will receive a lower but stable return on their money, along with the knowledge that they are helping to keep Austin livable for longtime residents who might be at risk of displacement due to market-rate rents rising far faster than income levels.
Residents living in apartment complexes purchased by the fund have their rents pegged to area income levels, with services in financial literacy and health care offered to help improve their economic stability.
“I’d like to thank in advance the other banks and financial institutions who now have an opportunity to join Texas Capital Bank and be investors with us,” he said. “(They) show others that this is an investment that can be made to support what is important in Austin.”
Kerry Hall, executive managing director of regional banking for Texas Capital Bank, said the bank spent years meeting with Steinwedell, Adler and other backers of the fund to make sure it was structured in a way to protect the investment and meet all regulations.
Adler, who made the creation of a “strike fund” for workforce housing a piece of his 2014 mayoral campaign, said that much of the time leading up to the fund’s creation in 2017 was spent creating the proper legal and regulatory structure that would allow banks and major investment groups to gradually invest.
“If we can make this model work, then other cities across the world will be able to do it,” he said. “And it even goes beyond that in trying to figure out how to create market forces to solve municipal challenges. If we can do it on workforce housing, maybe we do it on homelessness and do it on lots of other things.”
Photo by Alan made available through a Creative Commons license.
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