A look at how housing bonds are spent

Maker:L,Date:2017-9-10,Ver:5,Lens:Kan03,Act:Kan02,E-Y

Austin’s affordability crisis is causing pain for people at a variety of income levels, from the very poor to middle-class households supported by two decent-but-not-fabulous salaries.

The median family income in Austin is $86,000 for a family of four. For context, the average Austin teacher makes about $46,000, so a household where both parents are teachers would likely be at 110-120% MFI.

There are two main ways that the city provides below market-rate housing. First, through “density bonuses,” it offers developers incentives (usually greater height, greater floor-to-area ratio) to build some income-restricted units. Second, it gets voters to approve housing bonds that allow the city to directly subsidize the construction of income-restricted units. You’ll recall that we just approved a record-breaking $250 million bond earlier this month.

In density bonuses, typically developers will offer income-restricted rental units for those at 60 percent MFI ($36.1k/individual, $56.6k/family of four) and owner-occupied units for those at 80 percent MFI ($48.2k/individual, $68.8k/family). There have been cases, however, where the city has sought to incentivize units as high as 120% MFI ($72.2k/individual, $103.2k/family) in hopes of providing housing to middle-class workers (teachers have been a particular concern) who are increasingly choosing long commutes from the likes of Pflugerville and Manor over city living.

However, funds from the housing bond can only be used to subsidize the construction of units for those at or below 50 percent MFI ($30.1k/individual, $43k/family). Obviously, the lower the income level being served, the greater the per-unit subsidy becomes. It’s a perennial debate over tradeoffs –– do we help a lot of moderate-income people or a small number of very low-income people? In general, we try to do a little of both.

Another issue: what kinds of families are we prioritizing? It’s much easier to serve a single person at 30 percent MFI ($18k) than it is to serve a family of four or five ($25.8k/$27.9k).

Here’s a look at what the $50 million in unit subsidies from the 2013 bond has got us (the other $15 million was for home repair/land acquisition). Each line represents a different project:

Screen Shot 2018-11-28 at 11.53.58 AM.png

That’s a total of 1,419 units funded by the bond. As you can see, the city subsidy accounts for only a small share of the overall funding for the affordable units. Most of the funds are “leveraged” from federal low-income housing tax credits. In essence the city subsidy serves as a critical gap that makes the project feasible for for-profit or nonprofit affordable housing developers.

As Council delves into spending the recently-approved $250 million, it will be interesting to see how much debate there is over the types of projects the funds should be supporting. This is what Greg Casar said back in September:

Screen Shot 2018-11-28 at 5.00.31 PM.png

Of course, the cost-per-unit will likely be higher in the years to come. Who knows how much higher.

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