“It is one of many tools in a toolbox to combat displacement and gentrification," council member José Velásquez said in an interview.
The setup
Homestead Preservation Districts, or HPDs, are a tool under state law to promote new affordable housing development and prevent the displacement of current residents. Cities can only create districts for areas with fewer than 75,000 people, high poverty rates and low median incomes.
Once a district is created, a portion of property taxes collected within its boundaries is reserved to fund affordable housing projects. Cities can also designate land banks and trusts within a district to manage property there for lower-income housing purposes.
Austin's lone existing preservation district was created by city officials in 2007 for a portion of the east side. Ten percent of local property tax collections were set aside for the HPD in 2015, and that share increased to 20% in 2019 alongside a formal financing plan for the district.
At the time, then-council member Pio Renteria called the new HPD a "godsend" for residents of City Council districts 1 and 3 in response to gentrification.
"This money will be able to be reinvested into nonprofits to create the affordable housing that is desperately needed. But not only just that, it’s going to be able to keep the culture that we grew up with, we’re going to be able to provide housing for people of color," Renteria said in 2019. "Hopefully, we can use this money to help retain the people that grew up in that neighborhood. And that’s what’s so important."
The specifics
City officials are now considering a pair of resolutions from Velásquez, District 3's current representative, on Sept. 11. The measures will further expand financing for the current East Austin HPD, and create new districts in the near future.
Velásquez's first proposal calls to double the share of property tax collections for the east side HPD from 20% to 40% later this year.
“With everything being so tight, finding money for affordable and deeply affordable housing can be very difficult," he said. "Folks are excited about it."
The district drew nearly $22 million in its first decade, funding that's supported 385 housing units across three East Austin developments for lower-income tenants, seniors and youth exiting homelessness. Doubling district collections could support more than 100 new affordable units within a year, according to the Housing Department.
The second measure up for approval this month could kick-start the creation of several more HPDs around Austin. Based on criteria under state law, city staff identified portions of North Central and Southeast Austin as eligible for new preservation districts.
“All of the areas that the new ones would cover, the ones that we’re asking to inspect and see if we can broaden this project, are areas that have been or will highly be impacted by gentrification and affordability," Velásquez said. "The entire city is struggling with this, but especially areas like St. Johns, Montopolis, Dove Springs, Riverside, Oltorf, the majority of the Eastern Crescent and then further up northeast and north central."
For years, the potential expansion of HPDs in Austin had been on hold due to state-level restrictions.
The east side HPD was created in 2007, and soon after state lawmakers passed legislation limiting the program to cities of Austin's size. Housing Department spokesperson Tamarind Phinisee said the passage of House Bill 4559 two years ago removed that restriction, allowing Austin to once again designate new districts.
This year, Phinisee said the entire city was reviewed for eligibility with the two selected areas meeting all state benchmarks.
"Other areas met some, but not all, of the criteria and are shown in Exhibit A for transparency," she said in an email. "Some did not qualify because they failed to meet the contiguous census tract requirement or were primarily student-populated areas that did not align with statutory requirements.”
If Velásquez's resolution advances, initial plans for the new districts will be presented for council consideration by December.
One more thing
In addition to those larger portions of the city, council member Ryan Alter is also calling for an HPD in the student-heavy West Campus area given its possible eligibility under state law.
That area is already familiar with some of the city's heavily used building programs, like the University Neighborhood Overlay, or UNO, that's spurred denser housing development there for years as well as Safe, Mixed-Income, Accessible, Reasonably-priced, Transit-Oriented, or SMART, projects. Alter said a preservation district near campus could help promote affordability in the area.
"As the UNO area builds out and the affordability periods of many of the earlier SMART units are set to expire, it’s important that we explore all options for creating or preserving affordable housing to provide access to students from low-income households," he wrote on council's message board.
