Foundation Communities Pushing to Complete 1,000 Units in 5 Years
Housing nonprofit working on eight new properties throughout town
By Austin Sanders,
5:30PM, Tue. May 24, 2022
Foundation Communities is making a concerted push to close a $30 million funding gap needed to enable construction of 1,000 new affordable housing units across eight properties, located throughout Austin, that will be reserved for more than 2,000 lower-income earners.
The Austin-based nonprofit, which over 30 years has become one of the city’s most successful producers of income-restricted housing, has raised about 90% of the $272 million needed to finance construction of the eight properties, but is calling on major donors within Austin to step up financially and help close the gap. FC Executive Director Walter Moreau described these next few years as the most productive period in the housing nonprofit’s history.
“Historically, we’ve developed one property a year with two or three in the pipeline at times,” Moreau told the Chronicle. “But we’ve never had eight in development at one time. It’s evidence of the huge community need we are seeing in Austin for affordable housing.”
All of the properties will include supportive services; five are what FC calls family communities, with two- and three-bedroom units, and three will be studio properties reserved for single adults exiting homelessness, of which FC already operates six. Both types of properties offer case management services to residents, and the family communities will include on-site learning centers to provide afterschool and summer programs for young students. The properties for single adults will offer on-site health care services.
Each of the properties is in a different phase of development, with Zilker Studios and the Loretta expected to open to residents later this year. Zilker is built on a half-acre sliver of land donated to FC by the developer of a hotel at South Lamar and Riverside on the tract of land once known as the “Taco PUD.” It will provide housing for 110 adults exiting homelessness. Located at 1508 S. Lamar, between the Planet K and Post South Lamar apartments, the property is situated on one of the city’s busiest transit corridors.
All of the units will be rented to people earning no more than 50% of Austin’s median family income ($34,650 per year for the single adults living at Zilker), with 22 of the units reserved for people making just 30% MFI ($20,800 per year). It will place the building’s future residents within walking distance of jobs, retail, and transit. “We’ve never sold a property in our 35 year history, and Zilker should be there 100 years from now,” Moreau said. “Lamar will always be a major transit corridor where people can walk out the door to get to jobs, so it will be a vital asset for our community for decades to come.” Another of FC’s supportive studio properties, Bluebonnet Studios, is located farther south at 2301 S. Lamar.
The Loretta is one of FC’s family communities, located in Northwest Austin at 13649 Rutledge Spur near the Capital MetroRail Lakeline Station. The property will contain a mix of multiroom units reserved for people earning no more than 60% of Austin’s MFI; the largest share will be 39 two-bed/two-bath units for people earning 50% MFI ($49,450 for a family of four). But it will also include a total of 31 larger three-bed/two-bath units reserved for families earning 30%, 50%, or 60% MFI ($29,650, $49,450, and $59,340, respectively, for families of four). People interested in living at the Loretta can apply now.
Another property in the FC pipeline will become the Parker Lane Apartments, 135 units on 8 acres of land previously owned by the Parker Lane United Methodist Church. It’s a less dense development than is typical for FC, but Moreau said that will allow construction of a new multifamily community in Southeast Austin that includes several acres of tree-filled green space. “We have a real shortage of housing for families with kids, so building these apartments with room for kids to run and play is important,” Moreau said.
The other upcoming FC communities include:
• The 110-unit Juniper Creek Apartments, located at 11630 N. Lamar and expected to open in late 2024, which will be made possible in part due to a $3.5 million contribution from Major League Soccer’s Austin FC.
• The 156-unit Norman Crossing Apartments, to be built on a city-owned property at 3811 Tannehill in East Austin, next to Norman-Sims Elementary School. The community will also include home ownership opportunities, thanks to a partnership with another of Austin’s venerable housing nonprofits, the Guadalupe Neighborhood Development Corporation.
• The 123-unit Balcones Terrace apartments for people exiting homelessness, located in North Austin at 10024 Capital of Texas Hwy. N., which will be the fourth FC conversion of a hotel into single-adult housing. (The first FC studio community, Garden Terrace, is a former nursing home, converted way back in 2004.)
• The 100-unit Burleson Village apartments, a collaboration with Mobile Loaves and Fishes in Southeast Austin. The community will consist of micro-homes, 75 of which will be reserved for people earning 30% MFI and 25 for people earning 50% MFI, and include health care services and a grocery store.
One of the biggest hurdles to building income-restricted housing in Austin is the complicated array of financing needed to make such projects viable in a city with an explosive real estate market. The eighth of FC’s new properties is the Laurel Creek Apartments, an 88-unit family community at Braker and North Lamar that just opened earlier this year. It’s taken eight different funding sources to make happen, including $15 million in Low Income Housing Tax Credits (federal, but administered by the state), $5 million from the city of Austin, $3 million from the Texas Department of Housing and Community Affairs, $1 million from the St. David’s Foundation, and even $20,000 from individual donors.
Every affordable project requires intense hustle to secure financing, and Moreau is especially adept at it. Still, even he is feeling unusually challenged amid Austin’s severe housing crisis. “The biggest hurdle to clear is the 30% increase in construction costs the industry has seen over the last couple of years,” Moreau told us. “We used to build an apartment unit for $175,000 per unit; now it’s around $275,000 per unit.” The city’s famously low-performing development review process also creates a bottleneck; it can sometimes take up to one year for a site to be permitted, which is ever more hazardous as debt interest rates continue to climb. “Time is money,” Moreau said, “so if a project takes a year to permit and construction costs go up 1% a month, you may have a project that costs $22 million now costing $24 million.”
But, overall, Moreau is optimistic about Austin’s prospects of meeting the needs of its expanding population of housing-stressed residents. Several organizations that provide services to people experiencing homelessness, including Integral Care, Caritas of Austin, and Family Eldercare, are trying their hand at building and operating affordable housing. The building permit timeline has improved, and according to Moreau, NIMBYism around affordable housing specifically has decreased over the past 30 years. “There are still controversial projects and locations,” Moreau added to his assessment of Austin land use debates, “but I do think there’s more of a recognition that affordable housing is a crisis and not just for ‘those people over there.’”
Ultimately, Moreau concluded, housing is a crisis for everyone in Austin right now, but especially for the people who FC has taken as its mission to serve. “It gets to the heart of our community,” Moreau said. “If Austin takes pride in being an inclusive and diverse place, we need a lot more affordable housing.”