City Council to consider funding for homestead preservation districts


Austin may set aside about $47 million of property tax revenue over the next decade to provide affordable housing, primarily in four areas where the city’s development boom is displacing low-income residents.

The City Council on Thursday will consider several items related to those “homestead preservation districts,” which have at least twice the poverty rate of the city at large and a median family income that is less than 80 percent of the citywide figure.

If approved, the items would:

  • Create three homestead preservation districts in Southeast Austin, far East Austin and North Austin.
  • Create a taxing zone in the one existing homestead preservation district in East Austin that would essentially earmark $5.7 million in property tax revenue for affordable housing over 10 years. The city could spend those funds only in this district.
  • Increase the amount of property tax revenue from developments on previously city-owned property that flows into a city affordable housing fund, which would receive an additional $40.8 million over the next 10 years. The city would spend two-thirds of that money in the four homestead preservation districts and the rest in high opportunity areas with access to good schools, job and transportation.

 

If the council doesn’t approve these items, the roughly $47 million in property tax revenue would instead go into the city’s general fund, which pays for services such as police, libraries and parks.

“This is a significant proposal for funding a significant number of units in gentrifying areas and high-opportunity areas,” said Council Member Greg Casar, who proposed the specifics of where the affordable housing dollars would come from. “That’s something many of us ran on, and I think it’s appropriate we’re doing something pretty big about it before the end of the year.”

Jessi Koch, a planner with the city’s Neighborhood Housing and Community Development Department, said the city doesn’t have an estimate of the number of units the money could help build or rehabilitate, as the costs and opportunities for development change over time.

The money would generally go toward the city’s existing affordable housing programs, which run the gamut from a down payment assistance program to rental assistance, neighborhood housing officials said.

Fred McGhee, who lives in the Montopolis neighborhood included in one of the proposed homestead preservation districts, said there should be a board of district residents who oversee the spending of affordable housing dollars targeted at a district.

“Fundamentally it’s an issue of control. Who gets to make the decisions?” said McGhee, a former council candidate and a sharp critic of homestead preservation districts. “I want the decision-making to be as close to the individual as possible.”

The public input the city gathers each year for a federally required plan would help inform how the city allocates the dollars, said Gina Copic, a real estate and development manager with the city.

Council Member Sabino “Pio” Renteria, who championed homestead preservation districts this year, said he would like to use some of the funds to ensure there are units for the city’s lowest-income residents at East Austin’s Saltillo tract, where Endeavor Real Estate plans to develop a mixed-use project.

Casar said the best use of the money would be to rehabilitate and create new housing — mainly multifamily but also single-family homes. He said it was “just math” that the city would get the most bang for its buck with denser, mixed-income projects.

His office also said there could be a way for the districts to provide tax relief, such as in the form of land trusts. Those trusts own and lease back the land underneath houses, cutting down on the homeowners’ property taxes.

Mandy De Mayo, executive director of HousingWorks Austin, said the nonprofit had an attorney look at the possibility of tax abatements in homestead preservation districts. De Mayo said state law on the tax zones that the city can set up in districts could allow for abatements on properties that are repaired, so they are taxed at their pre-repair value.

“Keep in mind that homestead preservation districts are completely uncharted territory,” De Mayo said. “We’re the first ones to ever institute them in the state of Texas.”

The state Legislature in 2005 passed a bill from state Rep. Eddie Rodriguez, D-Austin, that allowed the city to create a homestead preservation district. The Legislature has since amended the law.

Renteria has lamented how long it took for the city to take advantage of the legislation.

“If we’d have been able to do this 10 years ago, I think we would have been able to save a lot of houses in my neighborhood,” said Renteria, who represents East Austin’s District 3.


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