As lawmakers focus on rolling back property tax rates, renters also face affordability issues
Updated March 5 at 9:45 a.m. to clarify the recommendation for affordable housing units made in the Austin Strategic Housing Blueprint
In November, University of Texas senior Allie Nunas founded the West Campus Neighborhood Association.
“We have a stake in the city,” Nunas said, citing the cost of student housing, inadequate lighting and safety issues as resident concerns. “Why shouldn’t we try to make Austin good, even if we’re here for ... a short period of time?”
As in most Central Austin neighborhoods, West Campus is majority-renter.
Census data from 2017 found that 54.7 percent of city residents rent; in some Central Austin ZIP codes, the portion is much larger. Everywhere, it is likely to grow as home prices continue to skyrocket, wages remain stagnant and student loan debt swells.
However, tenant advocates, academics, researchers and city officials agree the concerns of property owners often overshadow those of renters, who also face challenges of affordability and representations.
“The vast majority of the most-vulnerable communities rent,” said Council Member Greg Casar, who represents majority-renter District 4. “It’s important for us to spend extra attention to renters.”
In 2018, the median home price in the city of Austin was $375,760, per the Austin Board of REALTORS. This price is out of reach for most residents, who often have to choose between renting in the city or buying property somewhere more affordable, such as Manor, where the median home price in 2018 was $187,000, or Elgin, where it was $203,900.
“[D]emand [for homeownership] is not necessarily going away,” said Holly Davis, director of public affairs for the Home Builders Association of Greater Austin. “It’s whether ... they can afford to get into the market.”
Despite these barriers, renters often face “second-class" status, said Shoshana Krieger, project director of Building and Strengthening Tenant Action, or BASTA, a local nonprofit that helps tenants organize.
“I think there is a stigma against renters,” Krieger said. “[There’s a perception that] if you did all the things which the American dream affords you, then you wouldn’t be a renter.”
High cost, fewer benefits
A growing portion of Austin renters are cost-burdened, or spending more than 30 percent of their income on housing, the amount recommended by the U.S. Department of Housing and Urban Development.
In 2015, 25 percent of four-person households earning between $34,550 and $82,920 were cost-burdened, up from 9 percent in 2000, according to a 2017 report by the Urban Land Institute.
The cost-burden rate for those earning less jumped from 69 percent to 91 percent in the same period.
The increasing cost-burden rate is the result of many factors, including a lack of adequate affordable housing in Austin and the high cost of new development.
According to the Austin Strategic Housing Blueprint, which Austin City Council adopted in 2017, the city needs to construct 135,000 housing units over 10 years to meet demand—with 60,000 of those units affordable to families making 80 percent of less of the area's median family income. This is an expensive proposition.
“You can’t build brand-new rental housing at a price that is affordable to people in this income bracket,” said David Steinwedell, CEO of the local nonprofit Affordable Central Texas, citing the cost of land, labor and permitting delays.
Like homeowners, renters searching for affordable housing in Austin have few good options.
“A lack of housing is a real challenge to renters because if you don’t have anywhere to go. You’re at the mercy of your landlord,” Casar said.
Austin homeowners also have advantages—tax benefits such as the homestead exemption, the ability to capture some of the rising value of their home by selling—that make them “much less vulnerable to displacement” than renters, according to the 2018 report “Uprooted,” which City Council commissioned to study displacement and gentrification in Austin.
“[L]owering property taxes for homeowners would help low-income homeowners remain in their homes but also shift more of the property tax burden to landlords, potentially contributing to increased rents and hurting Austin’s vulnerable renters,” the report found.
Property taxes are the main revenue source for the state of Texas, a burden that falls most squarely on the shoulders of property owners.
State lawmakers have acknowledged this and on Jan. 31 introduced two bills that would allow voters to roll back tax rates if local property tax revenue exceeds 2.5 percent year-over-year growth.
“We can no longer sit idly by while homeowners are reduced to tenants of their very own property with taxing authorities playing the role of landlord,” Texas Gov.Greg Abbott said in January 2018 while campaigning for re-election.
Renters shoulder these costs, too, if property owners raise rent to cover increasing tax bills, but they lack the protections and political agency of homeowners.
“Tenant protections in the state of Texas are minimal at best,” Krieger said, citing laws that prohibit inclusionary zoning, which requires private developers to subsidize affordable housing on-site; source-of-income protections, which prevent landlords from discriminating against tenants who receive housing vouchers; and, in nearly all cases, rent control.
Neighborhood associations in Central Austin, which are influential among council members, tend to be dominated by homeowners, said Elizabeth Mueller, an associate professor at the University of Texas School of Architecture and co-author of the “Uprooted” report.
“We do have a lot of people who are longtime tenants living in neighborhoods throughout Austin. But we don’t do a good job of making sure they’re included in neighborhood associations,” Mueller said.
Some Austin neighborhood associations stipulate in their bylaws that voting memberships may only be open to homeowners, such as downtown’s Judges Hill Neighborhood Association.
Frustrated with these dynamics and some of the decisions being made by the 45-year-old Hyde Park Neighborhood Association, a group of area residents formed Friends of Hyde Park in 2015.
The association is free to join, offers online voting to encourage participation and counts approximately equal numbers of renters and owners as members.
“If we didn’t have our second neighborhood association as a dissenting voice, you just don’t have that same sort of power structure that has influenced city of Austin politics for so long,” President Pete Gilcrease said.
Staking a claim
Still, renters may have reasons to be optimistic.
Austin City Council now has three renters among its ranks—Paige Ellis, Jimmy Flannigan and Natasha Harper-Madison—up from just one in the prior term.
Its members have also committed to finding solutions for cost-burdened residents, most notably by presenting a $250 million affordable housing bond to voters, 74 percent of whom supported it. The bond includes $94 million for affordable rental housing.
And Austinites are organizing in new ways, whether with the help of BASTA, in Hyde Park or on campus.
“We live here, too,” Nunas said.