The city of Austin may soon launch a public-private fund to help preserve older apartment complexes at risk of demolition, drawing on philanthropic, financial and corporate contributions.
The idea is to give property owners access to capital for repairs and upgrades without forcing them to raise rents to cover the costs.
On Thursday, City Council will vote on a resolution to begin formalizing the effort to support the preservation of “naturally occurring affordable housing,” commonly referred to as NOAH, which are older, modest apartment units that make up a large share of the city’s affordable housing stock. In Austin, they total roughly 28,375 units, which represents about 789 buildings.
Council Member Marc Duchen, who is sponsoring the resolution, said the goal is to keep thousands of units from being sold, torn down and replaced with new developments with fewer affordable units.
Similar funds have taken shape in cities including Dallas, San Francisco, Detroit, Cleveland, Charlotte and Washington, D.C.
Assistant City Manager Eric Johnson, who helped design the Dallas program, briefed Council members on the concept during Tuesday’s work session.
“The biggest issue in NOAH is actually the ability to take care of the capital improvements,” Johnson said. “That’s why the rents are the way they are.”
The program would not target every NOAH property but rather properties with “good bones” that are still functional living spaces but need upgrades.
“It’s not necessarily buying down the rent. It’s saying to an owner, without disrupting the market, ‘If you are interested in selling your property because the deferred maintenance and capital improvements are so significant, we have a grant source that we could provide to you to do the capital improvements in exchange for a covenant on the property to guarantee affordability… over a period of time.’ That’s basically how it works,” Johnson said.
Duchen began discussing the idea with Johnson earlier this year, when the Council was deliberating a rezoning case in his District 10 in Northwest Austin. In that case, the owner of the Acacia Cliffs apartments was seeking a rezoning under the city’s density bonus 90 program, or DB90. Tenants of Acacia Cliffs organized and put up a mighty resistance to their impending displacement, but they were unsuccessful. The Council’s vote in July to approve the rezoning cleared the way for demolishing 290 affordable units to build a seven-story apartment building with about 80 affordable units. Since then, city leaders vowed to rethink the affordability angle and the “unintended consequences” of the DB90 program.
Had the proposed fund existed at that time, it’s possible that Acacia Cliffs, whose tenants included a diverse range of working people, could have been a candidate for receiving capital to rehab and retain the apartments.
“It couldn’t have been better timing that you joined the city at a time when we were trying to think about what other tools we could add to our toolbox for how to address this (affordability) issue,” Duchen told Johnson, who came to Austin from the city of Dallas.
Johnson told the Council that the key to a successful program for preserving NOAH properties is to have constant communication with property owners in the multifamily industry.
As for the length of time it takes to establish a fund, Johnson said most other cities have been able to get one up and running within a few months. “That’s not necessarily the case for every city,” he said, adding he did not know how long it would take for Austin to create a fund and attract investors.
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