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Development panelists share thoughts, and some silence, on Austin’s affordability issues

Tuesday, August 2, 2022 by Chad Swiatecki

It took a question about the political pressures involved in the slow-moving, fractured process of updating the Land Development Code to bring an uncomfortable silence to a recent panel of real estate leaders discussing housing affordability issues in Austin.

During last week’s Urban Land Institute Austin breakfast panel talk about affordability, moderator Theresa Alvarez, CEO of the Austin Economic Development Corporation, read an audience question asking why members of the public who are uninvolved in local development seem to have more sway over the process of reshaping the city’s housing market amid surging demand than planning and development leaders.

After a few moments of silence and looks between the three panel members, Janine Sisak, senior vice president of DMA Development Company, would only wryly offer, “I can’t answer that. I’m not taking that one.”

There was plenty of discussion throughout the roughly hourlong session, with Sisak and others sharing details of the projects they’ve completed or have in process using policy and financial tools such as tax credits or components from the city’s Affordability Unlocked policy package.

The surge in demand caused by newcomers to the Austin market and investors looking to profit from property acquisition and redevelopment is largely to blame for the problems of affordability and displacement.

Heather Way, co-director of the UT Austin School of Law’s Entrepreneurship and Community Development Clinic, said public subsidies such as the $350 million affordable housing bond proposal OK’d last week by City Council are required on top of tax credits and other policy such as the city’s much-debated land use code.

“You’d have to increase supply 300 percent just to keep up with the demand that’s taken place from all the money that’s being poured in by outside capital during the pandemic and people wanting to size up,” she said. “We’ve got to draft changes to the land use code. We’ve beat that horse to death, but we have to do things like address compatibility and other barriers standing in the way to create denser housing in the city.”

Three projects containing significant affordability considerations are either complete or underway, including one that will feature more than 90 units at the Plaza Saltillo site. Sisak said Austin has a well-earned reputation of not following through on pledges to prioritize affordability in its planning and permitting processes. She said the incentives included in the SMART housing program typically haven’t been difference-makers for developers trying to reduce the time and cost involved in creating housing in the city.

“Austin has always had a reputation for being difficult to get deals through the regulatory process. Everyone who does projects right now knows it’s not getting better,” she said. “I would love to see SMART housing come with expedited review for affordable housing projects. I would love to see affordable projects go to the top of the pile. That’s not happening.”

Nhat Ho, president of Civilitude and partner in Capital A Housing, said small projects like a 17-unit site Capital A created out of nine former townhomes proved its use of Affordability Unlocked programs can work. Even so, “No one is tripping all over themselves trying to make that kind of project. It’s low-profit with lots of paperwork and we had to learn a lot of hard lessons there.”

Echoing what many civic leaders have said is already happening in Central Austin, Ho said many public and philanthropic institutions are expressing concern over the problems created by rising home prices without enough new supply being added. While pushing for updating land use policies to add density, he also said there’s a need to bring new players into the development economy to attempt different kinds of projects using a mix of incentives and other programs.

“Housing is not a housing-only problem. We’ve been having conversations with school districts, transit authorities and other institutions that have started saying maybe housing is also our problem,” he said. “School districts can’t even hire staff to come to their district if there can’t be provided housing. And that’s also the case for nonprofit groups in particular.”

Photo made available through a Creative Commons license.

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