The city of Austin and the Austin Housing and Redevelopment Authority will soon tackle a housing project that could add about 30 townhomes to the Austin area.

The Austin City Council preliminarily approved a plan Monday to partner with the HRA to build more workforce housing in town, specifically through a Tax Increment Finance district at the proposed Fox Point development just east of the Village Co-Op in northwest Austin.

“This is just a component of the equation I think we need to deliver to solve housing issues in Austin,” HRA Executive Director Jon Erichson said.

Erichson and other HRA officials reached out to Three Rivers Community Action, a nonprofit dedicated to setting up workforce housing projects among other issues, several months ago to tour similar projects the group completed in Northfield and Faribault.

According to Erichson, the two other projects were similar in scope to what Austin wants to achieve.

Austin has a need for more housing. In 2013, a community study showed Austin residents could need about 200 more housing units to keep up with the city’s population growth.

City Administrator Craig Clark urged the council to move forward on this project, in part to spur private developers into building similar developments once they see the need in the market.

“By necessity, if we want to address some of the housing needs within the community, we need to take on projects like this,” Clark said.

The HRA looked at several sites within the community to put in more housing. The other two sites, the Meadows West site just north of the Fox Point development and the post office site in downtown Austin, weren’t as cost-effective as the Fox Point site, which was previously under development several years ago before developers foreclosed on the property during the recent economic downturn.

HRA officials are rushing to apply for tax credit status and permission to go through with a TIF district this year to take advantage of credit considerations which will expire in 2016.

To that end, the council must officially give permission to move forward on the project soon so HRA and city officials can apply for tax credits by June.

The tax increment finance district would help the city recuperate funds by capturing a larger percentage than normal of increased future property taxes that would come from the project. Though the city, county and school district share portions of a business’ annual property taxes, a special tax district would increase the city’s share on the property, which would likely increase in value once the project is finished.