Saltillo Lofts: Winner of an Envision Central Texas Community Stewardship Award for Redevelopment, this sold-out green builder project adjacent to Plaza Saltillo at East Fifth and Comal combines affordably priced lofts and commercial space. (Hailey/Johnson Architects). Credit: Photo By John Anderson

“Affordability is where the rubber hits the road on VMU projects,” says Steve Metcalfe, a real estate attorney with Drenner & Golden Stuart Wolff, who has a half-dozen developer clients considering or pursuing VMU projects. When his clients run the numbers on developing VMU projects, if they can keep the affordable housing at 10% of units and the income level at 80% of median family income, the numbers seem to work. That’s what VMU standards require, though individual neighborhoods can recommend to council (for apartments only) that household income levels be set as low as 60% of MFI. At that deeper affordability, Metcalfe’s clients are telling him consistently that the projects become financially infeasible.

Metcalfe said of VMU projects, “I like working on them because I believe in it,” and he characterized interested clients as wanting to do VMU projects because the idea appeals to their social conscience. “The only question is the affordable-housing component,” he said. He speculated that if the city of Austin wants deeper affordability in VMU projects, it could use some of the affordable-housing bond money (approved by voters last November) for subsidies to make some units affordable at 60% MFI. “For not too much money, they can create affordable housing that’s the kind they want – in a mixed-income development, on major transit corridors,” he said.

Paul Hilgers, the city’s director of Neighborhood Housing and Community Development, generally agrees. “Council seems pretty clear that they want us to explore that as an option,” he noted. “But we don’t yet know if bond money can be used in this way and what the best way to subsidize projects might be.” City staff are working out the mechanisms; they hope to have answers by March.

Hilgers noted that Austin has three main goals for new affordable housing: building it all around town, keeping it affordable long-term, and reaching deep to help the lowest-income folks. VMU has the potential to achieve all three – and win the trifecta!

This article appears in February 9 • 2007.

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