Photo by STG Design, via city of Austin, depicting the now-scrapped project that was going to be on the site.
Council weighs affordable housing goals as it restarts HealthSouth redevelopment process
Thursday, September 21, 2023 by
Chad Swiatecki Members of City Council want the city to reexamine how much affordable and market-rate housing could be generated downtown based on the redevelopment of the parcels known as the HealthSouth property.
Item 101 on the agenda for today’s meeting directs the Austin Housing Finance Corporation to determine the best scenario for creating affordable housing in a separate building from any mixed-use development on the site. It must also estimate the yield of affordable housing in other scenarios using density bonus programs or payments by a developer in lieu of providing affordable units.
Last week, a memo from Assistant City Manager Veronica Briseño informed Council of staff’s recommendation to develop the HealthSouth site in phases, with the portion at 1215 Red River Street used for affordable housing that would be partially financed by the Low-Income Housing Tax Credit program. Staff also recommended holding on to the parcel at 606 E. 12th St., which is not affected by Capitol View Corridors. That parcel could have a variety of uses staff said is best determined by development activity on nearby sites that could impact access and infrastructure.
The push to determine the best use for the HealthSouth site comes after the city’s decision in June to end its agreement with developer Aspen Heights to build a mix of housing and other uses on the property.
Aspen Heights, which was chosen from four development teams from a request for proposals process, informed the city earlier this year it could deliver only 65 affordable units instead of the 230 called for last year by Council. The developer said that reduction was caused mostly to a change in market conditions, including labor and construction costs that made the higher number of affordable units no longer feasible.
The Friday memo from Briseño noted a similar change, adding that the recent addition of more housing units downtown overall has pushed the vacancy rate to nearly 10 percent and could curtail the steady rent growth some developers have grown accustomed to. “While the Downtown Austin market remains attractive in both the mid- and long-term, near-term projects face significant head winds,” the memo said. “In addition to increasing development costs (e.g., labor, materials, and financing), there is a large pipeline of market residential units in the downtown area.”
Tuesday’s work session included debate among Council members over how strongly the city should pursue heavily subsidized affordable units on the downtown site versus using city subsidies and possibly fee-in-lieu payments to create a likely higher yield of affordable units elsewhere.
Council Member Ryan Alter said one possible use for the site could include a partnership with Huston-Tillotson University to provide the roughly 100 units of student housing it needs.
“I don’t want us to, to just repeat what we did six years ago. The market has dramatically changed today from what it was and once again, we can go through a many-years-long process and arrive right back here under much worse conditions,” he said. “It’s really important that we have all the options, that we understand if we want some affordable housing on-site, what’s the trade-off? What are we giving up for that if we want to maximize affordable housing as a city?”
Council Member Leslie Pool, one of two current members serving in 2017 when the redevelopment was first considered, was among those who support having a substantial amount of affordable units on the site.
“The through thread has been affordable housing downtown in this innovation district, so the people who do the work, the workforce laborers, can actually live and walk to work,” she said. “If we once more say, ‘Oh, no, not here, not now, sometime later,’ then we will have pushed or rolled that ball further down the road.”
The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.
You're a community leader
And we’re honored you look to us for serious, in-depth news. You know a strong community needs local and dedicated watchdog reporting. We’re here for you and that won’t change. Now will you take the powerful next step and support our nonprofit news organization?
