A plan calling for the city of Austin to raise $600 million to buy and preserve affordable housing for minorities may face a formidible hurdle before it can be implemented: The Texas Legislature.
A city task force — created by Mayor Steve Adler in November to address issues of institutional racism in Austin — released dozens of proposals this week, including a recommendation that the city put $600 million over 10 years into a fund to provide affordable housing for minorities squeezed out of their homes and neighborhoods by rising property values and high taxes.
Under the plan, money for the fund primarily would come from so-called “linkage fees” of $2 per square foot on new construction in the city.
Austin might not have authority to implement those fees, however, because proposed legislation already pending at the Capitol would strip the ability of it and every other city in the state from levying them on developers and homebuilders. Some state lawmakers have denounced linkage fees as “a de facto tax” and are angling to prohibit them despite the fact the fees haven’t been put in place yet in Austin or elsewhere in Texas.
The idea of linkage fees is that they’re a mechanism to “link” new development with a means of solving some of the community problems it can create, such as gentrification. Such fees are used in parts of California, Colorado and a number of other states.
But bills pending in the Texas House and Senate — House Bill 1449 and Senate Bill 852 — would directly target linkage fees by pre-empting Texas cities from charging fees on new construction “for the purpose of offsetting the cost or rent” of other housing. HB 1449, authored by state Rep. Ron Simmons, R-Carrollton, was approved Wednesday by the House Ways and Means Committee, while its companion, SB 852, sponsored by state Sen. Jane Nelson, R-Flower Mound, is pending in the Senate Business and Commerce Committee.
“What we’re trying to do is prevent a bad thing before it happens,” Simmons said during a recent committee hearing over his bill, calling linkage fees an “extraction (of money) out of the consumer’s pocket.”
Jane Rivera, a member of Adler’s task force who helped lead its subgroup on real estate and housing, said those who developed the recommendation were well aware that linkage fees could be in jeopardy by the state Legislature.
But the potential prohibition against them “is not a law at this point” and might never become law, Rivera said.
She said she views the issue as part of the struggle over local control underway at the GOP-controlled Legislature, and said she thinks some state lawmakers are trying “to keep the city of Austin and other cities from taking local action on a number of fronts” in ways they oppose.
In the meantime, Rivera said, linkage fees are “a potentially helpful source of funding” for the larger goal of raising significant amounts of money for affordable housing. She noted that the effort isn’t dependent on linkage fees, however, and that the task force cited a number of possible alternative sources of money, including housing bonds, revenue from the sale of public land, fee waivers and others.
Still, linkage fees are at the top of the task force’s list of recommendations, along with a detailed breakdown of the amount such fees potentially could raise.
“Based on current projections and 2015 data, if Austin were to implement a linkage fee of $2 per square foot, it could raise $60 million annually for the fund, which could create 400 housing units at $150,000 each,” a report authored by the task force states. It goes on to recommend that Austin set a goal of raising $600 million for the fund over 10 years, based on the revenue projection from linkage fees.
Adler said he’s optimistic the city can head off a potential prohibition against linkage fees by convincing enough state lawmakers that they could be valuable tools to address affordability problems in Austin and elsewhere in the state. Potentially, he said, linkage fees could be used to lower other city building charges because of the broad base of development they could target.
“I would hope that the Legislature would let Austin help develop and grow ideas like this to keep this state affordable,” Adler said. “The need for new, innovative and creative tools that can be used fairly is something that is going to become ever greater.”
Still, the mayor concurred with Rivera that the effort to make housing in Austin more affordable can move forward without linkage fees. He applauded the overall work by the task force, calling its myriad recommendations “really important if we are going to be able to move forward to the kind of community we want to live in.”
But some builders in the state have a different view, saying the type of communities they want to live in don’t charge linkage fees. A number of them turned out at the state Capitol during the recent public hearing over HB 1449 to testify in favor of it.
Scott Norman, executive director of the Texas Association of Builders, said this week that linkage fees will only exacerbate the problem by driving up housing costs for everyone. He said housing affordability is a serious issue but said members of his group “feel quite strongly that this is not the solution.”