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Tax break proposal prompts call for changes to county’s public-private partnerships

Monday, July 12, 2021 by Amy Smith

The Travis County Commissioners Court may consider changes to the county’s affordable housing program to encourage apartment developers to provide more meaningful rent reductions in exchange for property tax abatements.

Commissioner Brigid Shea suggested future changes as commissioners deliberated two public-private housing partnerships at their June 29 meeting. Both proposals were postponed to Tuesday’s meeting.

Brought by Dallas-based developer Presidium, the proposals include the Edison Apartments and River Park/Block 15 Apartments at 4711 and 4700 E. Riverside, respectively; both are part of an expansive multi-use development. The River Park property is currently the Tempo at Riverside Apartments, formerly the Ballpark South Student Apartments.

To obtain property tax abatements for the two developments, Presidium has proposed setting aside a number of units for households earning between 30 percent and 60 percent of the area median income, with the majority of affordable units set aside for higher-wage households earning income ranges between 80 percent and 120 percent AMI. According to 2020 calculations for Austin and Travis County, the AMI for a family of four is $97,600.

The county has approved a handful of similar housing partnerships, but housing advocates assert that taxpayers are getting the short end of the stick. Heather Way, a UT law professor and affordable housing advocate, has been following this statewide trend closely since 2015, the year an eleventh-hour amendment was added to a legislative bill updating state finance statutes. The amendment paved the way for an explosion of public-private apartment deals in Houston and San Antonio as well as smaller cities, with generous property tax exemptions for developers.

Way was the lead author of a 2020 UT report examining this practice. “While the exemption received little notice when it was adopted by the Texas Legislature in 2015, the use of this exemption is rapidly growing and delivering annual property tax breaks to apartment developers of close to $1 million per property on average,” the report states.

The Travis County Housing Finance Corporation doesn’t rely on the 2015 loophole for its partnerships, but Way and other housing advocates say the benefits to apartment developers far exceed the rent breaks for tenants.

Both Way and Walter Moreau, executive director of the nonprofit Foundation Communities, acknowledge that these types of partnerships are fairly new territory for Travis County, which only began seeing such cases a few years ago.

At the commissioners’ meeting on June 29, Shea had the most to say about the proposals: “We need to send a clear message to developers – the rent savings need to be greater. This is something of enormous value we’re granting by giving developers a complete exemption to paying taxes.”

At the urging of affordable housing advocates, Shea suggested the county begin issuing requests for proposals, which would produce a more competitive process that could deliver more affordable housing units. Commissioners Margaret Gómez and Jeff Travillion also expressed interest in moving in that direction.

Speaking on Presidium’s behalf, Austin attorney Michael Whellan agreed that while an RFP process is a great idea, Presidium’s proposal would easily rival what many other developers could offer. “The difference here is location, location, location. And given this particular location and the opportunity to plant the flag with 600 affordable units distinguishes this particular project from any other that you’re going to see, given the location on a rail line, and an HEB right across the street,” he said. “It seems to hit the items that are on your policy list for affordable housing, especially for workforce housing for schoolteachers and firefighters, all of whom would qualify for housing given the starting salaries for those positions.”

Commissioner Ann Howard also expressed a desire to secure more deeply affordable housing through Presidium’s partnerships. At the same time, Howard commended Presidium for honoring the commitment it made to ECHO (Ending Community Homelessness Coalition) in 2019, providing a portion of its existing apartment units to unhoused individuals. “Many, many people who have been experiencing homelessness … have indeed found rental units through the commitment that Presidium made a couple of years ago,” she said.

Way, however, remains skeptical of the affordability angle Presidium is pursuing. “The county can and should be getting a lot more deeply affordable units at the two sites,” she said. “The property tax exemption for these two properties combined is worth close to $4 million a year, with a monthly tax subsidy of more than $300,000. But only 35 of the 354 units at the Edison will have rents that are affordable to renters making less than $53,000, and only six of those units will be available for families with children with this income.”

Way noted that the community’s greatest affordable housing needs are at 60 percent AMI and below, or $53,000 for a three-person household. “But the bulk of tax-subsidized units at the two properties are for renters making 80 to 120 percent of the area median income,” Way said. “Even a teacher starting out cannot afford these so-called workforce housing units with rents of up to $2,600 a month.”

Photo caption: The Edison Apartments at 4711 E. Riverside.

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