How affordable is the Mesh?

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There’s been a lot of debate on the urbanist internets about a proposed development on Town Lake Circle, just off E. Riverside. The developer is proposing 1,000 multifamily units. They are requesting a density bonus to allow additional height. In return they’ll offer a certain number of income-restricted units, probably around 10% of the total (or about 100).

The problem is, the development will come at the expense of the existing Mesh apartments, a 300-unit complex on the property. It was built in the 1970’s and rehabbed in the last decade or so.  Greg Casar has said that he doesn’t want to support that upzoning, for fear of displacing current low-income households at Mesh. Some other density proponents have sided with him, saying the city’s focus should be on adding new housing stock in West Austin, rather than facilitating the replacement of existing apartments with units that will undoubtedly be pricier.

Others respond that this is the city’s opportunity to get the best deal possible out of an inevitable redevelopment. A developer could tear down the building and replace it with more expensive units tomorrow and City Council would have no say. In this scenario, however, the developer is seeking MANY MORE units (good for reducing sprawl & enhancing transit) and offering to make a certain percentage of them affordable.

What’s a little puzzling is that neither side appears to be presenting evidence about who the current tenants are. Are they truly low-income? Are they long-time residents? Are they likely to struggle finding new housing at a similar price in the area?

When I looked at the prices at the Mesh website the other day, the lowest price I saw for a 1BR unit was $1,015/month, but today I looked again and see there is one 1BR floor plan available “starting at $990.” Many of the other floor plans are far more expensive. I see 1BR units available for $1.1k, $1.2k, $1.32k and $1.48k.

For whom are those rents affordable? According to HUD, the cheapest 1BR unit at the Mesh would be just a tad more expensive than what HUD considers “affordable” to a household at 60% of the area median income, although there is plenty of debate about these figures, especially considering that the calculation for a 1BR unit is based on 1.5 persons. I don’t know any 1.5 person households.

See the two charts below.

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Meanwhile, the $1.1k rent would be a little above the 65% AMI level. The $1.2k rent would probably be around 70% AMI, the $1.3k rent would be a little above 80% AMI and the $1.48k rent would likely be right around 100% AMI.

As for 2BR units, I was shocked to see one available at Mesh for as low as $1,025, which would be affordable for a 3-person household at around 55% AMI. The next cheapest available is $1.35k, while the others are $1.41k, $1.52k, $1.61k and $1.8k.

It’s not clear what percentage of the units are priced at what level, but it seems clear that the great majority of the units are not affordable to those at or below 60% AMI, which is the maximum income level that the roughly 100 income-restricted units at the new project would be required to serve.

Those at or below 60% AMI have a very hard time finding affordable housing in this city. For instance, here are all the 1BR units (not including studios) available on Zillow for less than $967/month.

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And here are all of the 2BR apartments for less than $1,161/month:

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Things get a lot better when you move up to 65% AMI. Here are the number of 1BR units available for up to $1,043:

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And here’s a look at the 2BR units available at 65% MFI:

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Many of the Mesh rents are affordable to those at 80% AMI or above. Here are the number of 1BR units available at up to $1,290 a month:

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I think if we’re really concerned about displacement, we should consider what percentage of the Mesh residents are in fact low-income households vulnerable to displacement.

Correction: In an earlier version of this article I listed the number of units available at $907/month as affordable at 60% AMI. In fact, it is $967/month. I corrected the wording and the map.

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2 thoughts on “How affordable is the Mesh?

  1. This does a good job of explaining the rents. But you can’t really impute income from rent levels. I rented a Class C 2 bedroom apartment in Hyde Park for $1080 in 2017, but that was decidedly within affordable for my middle class income, even considering that I had 1.5 people in my household (shared custody of my son). But there are going to be others who are cost-burdened (paying more than 30% of their income) paying a similar rent. There are studies by the National Low Income Housing Coalition that try to estimate the percentage of renters in different metros who are cost-burdened.

    Basically, there’s no good data set on income on any small scale geographical basis that isn’t at least a few years old. The most accurate is the 2010 Census, which is getting a bit long in the tooth, especially for a fast-growing and dynamic city like Austin. Less accurate but fairly reliable is the 2012-16 ACS survey, but its an estimate over that entire timespan, so you’re looking at something that approximates 2014-ish info. Given tenant turnover and that reports are that it had a relatively recent renovation, who knows what that means for who is living there now?

    So we still don’t know much beyond anecdote about who lives in the apartments. I continue my recent cries to look at housing submarket theory, which is a little more complicated than the usual YIMBY model.

    Housing submarkets take into account that the different housing submarkets are not competing directly against each other. A high end new condo in Downtown doesn’t have the same supply and demand curve characteristics that a 40 year old apartment near 183 and Loyola has. They compete differently. They are interlinked, so there is movement at the margins – investment and renovation might move an apartment from Class C to Class B, for instance, or Class B might age into Class C without maintenance. Tenants might be willing to substitute a Class C apartment more centrally located for a Class B apartment further away. But those are at the margins, not the bulk of the supply/demand action. Particular homes are not easily substitutable in the same way that paper towels are.

    1. I find the housing sub-market analyses compelling. I would be much less friendly to this redevelopment if it didn’t include the income-restricted units.

      You’re obviously right that rents don’t always correspond with income, but my point is that the rents available at this property don’t appear to be unusually low. These rents appear in line with those at the Rosedale, an apartment complex I lived in at Burnet & North Loop a few years ago. It’s also managed by Roscoe, and it was also built in the 70’s. I think these prices are sort of the standard prices for complexes built in that era.

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