Austin set for another high-profile vote showdown with $300 million housing aid proposal

The city of Austin is bracing for a fourth high-profile battle at the polls in three years as council members prepare to place a $300 million housing bond on the November ballot.

On Thursday, July 28, the Austin City Council will decide whether to approve the proposal for the fall ballot. Per it regulationthe bond would subsidize “low-income homeownership; home repair; preservation of existing affordable housing; low-income rental housing, including but not limited to permanent supportive housing; and land acquisition of both vacant and improved properties.”

The spending, a $300 million General Obligation (GO) bond, would raise property taxes on top of a 3.5 percent increase in the city’s maintenance and operations rate proposed $5 billion budget. But GO bonds require voter approval first.

In this year’s proposed budget alone, Austin already has $200 million in outstanding GO debt service from past bonds.

The new initiative announced Friday appears to be Austin Mayor Steve Adler’s last hurray before his term as mayor ends. Adler was among the elected officials at the bond’s announcement press conference, where he said, “Whether we are able to preserve the specialness of Austin will be determined by the level of urgency with which we invest in and build more affordable housing.”

“The housing that this bond will help fund means housing for our creatives, will keep our seniors in their homes, will provide much-needed housing repairs for our veterans, and much more. We must respond to the housing and affordability crisis.”

Austin is growing rapidly in population, adding more than 171,000 people from the 2010 census to 2020. Home values ​​are also rising rapidly, with the Travis Central Appraisal District estimation an average increase of 56 percent this year alone. The reasons are numerous: rising inflation, supply chain constraints causing the cost of building materials to rise, housing demand outpacing supply growth and property taxes.

On that last point, the city is just one of several components of the property tax bills — the largest of which is the school district. But year after year, the city of Austin has adopted tax rates above the non-new revenue rate, where no new tax revenue is collected other than on new property added to the rolls.

Before the Texas Legislature’s 2019 tax overhaul — a reduced cap on tax increases unless approved by voters — took effect that year, the city squeezed a final 8 percent tax increase.

In 2020, the city adopted a 3.5 percent increase, the new cap did not require voter approval, but then placed two transportation bonds on the ballot. The largest was for part funding of the Project Connect light rail extension, whose costs now have eclipsed $10 billion – significantly higher than the city originally claimed. Included in the Project Connect plan was $300 million for housing costs related to the rail construction.

Last year, the city held firm with an increase of 3.5 percent.

While some homeowners may see a city tax bill drop this year if they have a homestead exemption, not everyone will see their taxable housing costs limited to that extent. Rented properties receive neither the household exemption nor the 10 percent cap on assessment increases.

Overall, this year’s tax rate is set to bring in $7 million in more tax collections, not from new property added to the rolls.

All these factors lead to the city’s rapidly increasing cost of living.

JTX Strategies, a firm contracted by the city to survey public opinion on the bond, found that over 60 percent of likely voters supported the proposal. JTX Strategies is run by a consultant Jim Wickwho ran both of Adler’s mayoral campaigns along with the campaign for the 2016 $720 million mobility bond.

In 2018, Austin voters approved a $250 million housing bond for similar purposes to this year’s proposal.

The proposal is likely to face some coordinated opposition as Save Austin now — the organization behind successful camping ban reinstatement and failed minimum requirements for police staffing in 2021 – criticized the subject.

“City leaders claim to understand the severity of the affordability crisis in Austin, but their actions continue to make Austin unaffordable for tens of thousands of Austin families,” said Save Austin Now PAC co-founders Matt Mackowiak and Cleo Petricek.

“Each year, the city puts expensive bonds on the ballot, adding to the debt burden our city faces and which taxpayers will ultimately be forced to pay. Improvements in affordability will happen as Austin reduces development fees and streamlines, providing developers the opportunity to buy affordable housing faster at a lower cost. City Hall has directly contributed to the affordability crisis in our city. Adding another $300 million to our debt will make affordability worse, not better.”

Each of the top contenders to succeed Adler as Austin mayor — former state Sen. Kirk Watson (D-Austin), state Rep. Celia Israel (D-Austin), and businesswoman Jennifer Virden — point to cost of living as an issue of major importance in the race. Both Watson and Israel were at the proposal’s announcement in a show of support.

The board will vote on solution approve its placement on the November ballot this week at Thursday’s meeting. If approved, it would share the ballot with the mayoral race, a handful of city council elections and anything else the city decides to put before the voters.

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