The Face of Workforce Housing - Part 1
Updated: Aug 23, 2019
By Ashkan Jahangiri.
The Austin economy is booming. The city is a prominent high-tech hub, our unemployment rate is 3.0%, and one hundred people move into the greater Austin region every day. (Citation 1) A decade after the Great Recession, the Central Texas economy has recovered strongly. Austin regularly tops lists of the most popular cities millennials want to live in. (2)
However, for a number of years, this tremendous job growth has not been accompanied by a growth in housing. The lack of housing construction, especially of multifamily apartment complexes, is exacerbating Austin’s workforce housing crisis. (3)
To illustrate this point, we can use a simplified supply-and-demand equation. The cost of housing is a function of the number of jobs in a given area divided by the number of housing units, all multiplied by a factor C which accounts for all other variables. When job growth outpaces the increase of housing units, prices rise. To combat this, we need more housing units, and we need specific solutions for affordability.
But what does this mean for everyday people?
It means that nurses, teachers, and all the people who keep our city vibrant, growing, and weird are placed under greater housing stress. Austin is an attractive and inviting city with plenty of jobs, but less and less housing is in close proximity to those jobs, particularly in the city center.
Fortunately, today there is broad consensus among homebuilders and local elected officials that we must all work on creative solutions to address the lack of workforce housing. Nonprofits like Habitat for Humanity are working to solve the problem by directly building homes for schoolteachers. (4) Austin voters approved a $250M Affordable Housing Bond in 2018 (5), and the Austin City Council is working hard to roll back housing restrictions, with a particular eye toward affordability.
Recently, Austin City Council passed an Affordability Unlocked Ordinance to promote an increase in workforce housing units. (6) This new tool allows for greater residential density in strategic locations, such as high-opportunity areas and areas with access to transit. This tool is designed to be used in conjunction with other resources, such as affordable housing bond funds, in order to provide the greatest possible increase in workforce housing units.
Furthermore, the forward-thinking Affordability Unlocked Ordinance addresses affordability in a number of ways. Firstly, it allows for a greater amount of housing per unit of land, which relieves upward pressure on housing costs. Secondly, it takes into account location-efficiency and eliminates costly parking requirements in areas with high-quality transit access. There are many distinct components that contribute to Austin’s high-cost of living, and it is promising that elected officials are working to address affordability in a holistic manner.
This new approach follows a mixed record of the City of Austin’s approach to affordable and workforce housing. In 2012, Austin voters passed a slew of municipal propositions and bonds except for Prop 15, a $78 Million Affordable Housing Bond which only garnered 48.6% of the 50%+1 needed to pass. In 2013, Austin voters passed a $65M affordable housing bond. This bond was a step in the right direction, but poor administration and communication led to an inability to maximally leverage bond dollars with private investment. This led to fewer overall workforce housing units than could otherwise have been built.
However, the city has learned and is regularly communicating and responsibly managing affordable housing bond funds. One successful example of workforce housing is Bluebonnet Studios, a 107 unit complex that manages to provide affordable workforce housing thanks in large part due to significantly reduced parking. In the past, the city undermined its own affordability targets with costly and burdensome requirements for parking.
Other targeted programs have more specific aims, spurring private investment to meet public needs. For example, Austin’s Acquisition and Development program provides funding to private and nonprofit developers to provide affordable homeownership opportunities for working families. This program can fund Community Housing Development Organizations (CHDOs), entities that exist for the specific purpose of providing affordable workforce housing. The City of Austin has also launched a successful Safe, Mixed-Income, Accessible, Reasonably-priced, Transit-Oriented (SMART) Housing program, in which the city works closely with, and provides funding to, developments in order to meet affordability targets. SMART Housing also works because the city waives development regulations that inhibit affordability, including long review processes and excessive fees.
Will these changes be enough to solve our housing crisis? What other solutions will allow homebuilders to provide workforce housing to those who need it? What can an average Austin-area teacher, nurse, or EMT afford?
Pegasus Planning and Development welcomes the diverse set of approaches to tackle affordability and encourages all stakeholders to be a part of the solution. Stay tuned for our next installment in this new series, The Face of Workforce Housing.
Citations 1. http://austin.culturemap.com/news/innovation/03-04-19-austin-ranked-as-hottest-job-market-among-major-us-metro-areas/ 2. https://www.kvue.com/article/news/special-reports/trending/austin-is-best-us-city-for-millennials-to-live-in-around-the-globe-report/269-434619001