In Housing We Trust

City Makes $1 Million Commitment to Affordable Housing

In Housing We Trust
Photo By John Anderson

As with most social spending, public support for housing recurrently begs the question: More or better? Have we simply put far too little money into meeting the basic need for affordable housing? Or have we managed and spent our money badly, spawning screwiness, unintended consequences, and out-and-out sleaze? The city of Austin has just put up $1 million that may help answer these questions. The city's new housing trust fund, a key component of its social-equity initiative, officially came into being Oct. 1 with money from the General Fund -- the first time Austin taxpayers' money has been put directly into housing support programs. Everything up until now has either been funded by the marketplace, by the occasional tax-free bond sale, by various flavors of federal grant funds (managed by the city's Neighborhood Housing and Community Development Office), or by tax credits and other incentives (such as those administered, to use the term advisedly, by TDHCA).

"What's exciting is that the city has made a commitment to social equity, and that fully one-third of that is a housing piece," says NHCDO head Paul Hilgers. "Which indicates that housing is a crucial component of the equity equation, [and that] it's good for the corporate interest of the city of Austin to invest in housing for the citizens."

All well and good. A statement has been made. What happens now? As Hilgers is the first to point out, "for $1 million, you can't really do anything" -- at least not in a city where that sum won't buy you 10 average market-rate homes. The concept of a "trust fund" implies that this is seed money, but it's not clear how this money is expected to grow. "It's not just tax money, but a lead investment for others to contribute to the issue of housing," Hilgers says. "If we can put in $1 million, can banks put in $100,000 apiece? We're looking to bring the housing interests together and figure out how to invest in housing in a way that makes sense."

The low-income housing advocates who originally proposed the trust fund, organized as the Austin Housing Opportunity Trust (AHOT), contemplate a somewhat more hardball approach. "Over the long term, we need a dedicated source of funding," says Karen Paup of the Texas Low-Income Housing Information Service. "General Fund money is great -- most cities won't do that -- but other cities will use development fees or inclusionary zoning, or linkage fees for commercial development, to generate real revenue."

What she's talking about is that many other cities, especially in the (surprise) Pacific Northwest, have set up local housing-support programs with their own funding, unencumbered by state and federal fetters. "Inclusionary zoning" is basically a set-aside, like parkland dedication; developers either create affordable units within their projects or they pay (in Austin parlance, "post fiscal") into the fund. "Linkage fees" are impact fees; commercial projects create jobs, those people need places to live, and the commercial developer (usually a primary employer) helps pay for their housing.

Whether built up through invitation or regulation, once the trust fund attains sufficient mass, how will it be spent? Often in fact and always in legend, existing funding programs are notoriously user-unfriendly and red-tape-bound, and one of the City Council's directives was that the new fund be flexible enough to support strategies that don't fit neatly into HUD holes. (HUD is, of course, the U.S. Department of Housing and Urban Development.) "A lot of the provisions in federal-fund programs -- like relocation assistance, or open procurement processes -- are really good ones that should be followed," says Paup. "But other cities have been able to do things that HUD programs don't do."

"It's unrestricted money, but how should we use it?" Hilgers asks rhetorically. "Should we spend it on administrative costs for nonprofits, which we can't do with HUD money? Or can we use it as collateral for bank loans, which is also hard with HUD money?" Even if the money is going to creative uses, the disbursement details will, and probably should, be worked out through the existing channels, overseen by the city's Community Development Commission and the multijurisdictional Community Action Network's housing subgroup. "Of course, this is Austin, so we'll have a public process," Hilgers says. The AHOT proposal, while expecting the trust fund to piggyback on the needs-assessment system that qualifies projects for existing funding, called for the fund to also have a separate, public-private advisory board.

The AHOT proposal also envisioned the fund as being specifically for low-income housing -- serving people making 50% or less of median household income, with a portion set aside for families at below 30% of median, folks who even in higher-than-ever-income Austin would be well below the federal poverty line.

"For people at minimum wage or on fixed incomes, housing is simply out of reach," says Paup. "It's that income group AHOT wanted to reach." Many of those people are looking for rental housing, which is not often built with federal funds and not often supported at low enough rents by tax incentives. "We're not reaching people who can afford $300 a month and not more," she says.

All of which, in Hilgers' view, points back to the question of how to manage the new pot of gold. "I can spend $1 million very quickly and have no return on it, or I can spend it in ways that leverage it and get a return and do more for low-income citizens," he says. "The city doesn't want this money used for the same old stuff, and we have demonstrated effective models from all over the country. The challenge will be to keep from fighting over this pie, and -- grow this trust fund in a way that will generate real money." end story

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