Council discusses housing abatements

Published 11:06 am Tuesday, April 19, 2016

Austin leaders could explore a tax abatement program to help fix a shortage of community housing.

During a Monday work session, the Austin City Council reviewed 10 recommendations for potential housing solutions from the Mayor Tom Stiehm’s 17-member ad hoc housing committee.

The most popular seemed to be tax abatement programs, which would provide five years of abatement of any new construction for single or multifamily homes. These programs would be for new construction value, excluding the existing land value and be in place when other programs are not utilized, according to the report.

Email newsletter signup

City Administrator Craig Clark said the committee focused on job creation and the private sector as the best alternative to move housing solutions forward.

“There’s not a place for individuals to live here. No people to frequent store fronts,” Clark said. “If they do get a job here, they don’t have a place to live here.”

A 2013 Housing Study demonstrated a need of nearly 300 rental units and 118 single family units in Austin by 2020.

He added that Austin’s rental housing vacancy rate is 3.4 percent, while 5 percent is considered a healthy vacancy rate.

Austin Area Chamber of Commerce Executive Director Sandy Forstner said employers are looking for help all the time.

Other recommendations included making information easier to understand for developers and rent guarantees from employers.

“Our employers are bringing in more professionals, but they are not always choosing to live here,” Forstner said. “It’s going to take a lot of cooperation on those levels, public and private.”

Council member Janet Anderson added some young professionals aren’t in a position to know if they want to buy a house yet. Clark added there’s an extensive waiting list for Chauncey and Courtyard apartment buildings.

“People can’t wait a year,” Clark said. “If we don’t push the envelope, the private sector won’t respond. It just won’t happen.”

Eric Shoars of Townsquare Media gave good news to the council: Employers want to work together to find a solution. He added that it’s not only an Austin problem, workforce housing is a big issue around the rural U.S. such as New York and Mississippi.

“Our employers are coming to us with needs and we’re wanting to work with you to get a solution,” Shoars said. “We have an opportunity here as a city to work with employers to solve some of these issues.”

Stiehm added that Mayo Clinic Health System — Austin and Albert Lea and Hormel Foods Corp. are willing to work with the city.

“We have a lot of people right now that work in Austin and would love to live here, but just can’t because they can’t find places,” Stiehm said.

Council member Steve King said there could be more details to people’s decision-making process when choosing where to live, such as lack of amenities, the culture, the school system and crime rate. Council member Judy Enright agreed, as did Charlie Fawver of Fawver Agency.

“There’s many reasons why people don’t choose to live in a given community, be it here or Rochester,” Fawver said. “I think we have a certain lack of types of housing.”

Fawver also recommended cleaning up the existing neighborhoods and educate first-time home buyers about taking care of their house such as repairs and upkeep.

Recommendations in a nutshell

• Employers should consider participating in a gap financing program to encourage multifamily development. Many projects have gaps based off lending and other programmatic provisions to make the project’s cash flow.

• The city should consider working with project consultants to lessen the learning curve for local developers who are going through the regulatory application process, so they can construct projects while getting assistance with the extensive regulations of state and federal programs.

• Promote a partnership between Mower County, Austin Public Schools, city of Austin and other taxable jurisdictions to participate in the Mower County Homes Initiative that would provide five years of abatement of any new construction for single or multifamily homes. This program would be for new construction value, excluding the existing land value and be in place when other programs are not utilized.

• Austin HRA should work toward a reasonable increase in rents to serve as a real demonstration of the potential for purely market rate development and work to make them more in line with new development costs, which can be a sign that market rate units could be supported or identify the top end of the rental market.

• The HRA should explore advancing more market rate alternatives in lieu of the private sector challenges to produce units.

• Encourage the city council’s support additional private subdivision development that would take tax increment financing (TIF), especially for rental townhouse multifamily development. These units would be income restricted per state statutes.

• Gain the Austin Chamber of Commerce’s endorsement of advancing more state income limited “affordable” housing units but not subsidized (Section 8), including the Fox Pointe project.

• Rent guarantees from employers could be a pathway for market rate projects to progress. Assured rents for a given period could move projects forward. If demand exists for market rate units, the potential exists for the creation of supply without any direct financial assistance while assuming a financial risk.

• Educate new immigrant populations on the opportunities for homeownership.

• The city should continue its efforts in combating nuisance properties and protecting minimum life, health and safety standards for rentals. Protect the vast majority of landlords who do an excellent job of providing affordable units by making rental inspections a requirement and also indirectly protecting prevailing rents from decline from substandard units.