Elections 2022Local NewsAustin Primed for Another High-Profile Ballot Clash with $300 Million Housing Subsidy Proposal

The City of Austin is gearing up for a fourth high-profile fight at the ballot box in three years as councilmembers 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 ballot this fall. Per the ordinance, the bond would subsidize “low income housing ownership; 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 property.”

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

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

Announced last Friday, the new initiative appears to be Austin Mayor Steve Adler’s last hurrah before his term as mayor comes to an end. Adler was among the elected officials at the bond’s announcement press conference, at which he said, “Whether we’re able to preserve what’s special about Austin will be determined by the level of urgency with which we invest in and build more affordable housing.”

“The housing this bond will help fund means homes for our creatives, will keep our seniors in their homes, and will provide much-needed housing repairs for our veterans, and so 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 the 2020. Home values are also rising rapidly, with the Travis Central Appraisal District estimating an average increase of 56 percent this year alone. The causes are numerous: rising inflation, supply chain constraints leading to cost of building materials climbing, the housing demand outpacing growth in supply, and property taxes.

On the last item, the city is only one of various components of 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 no-new-revenue rate, at which no new tax revenue is collected other than on new property added to the rolls.

Before the Texas legislature’s 2019 tax reform — a reduced cap on tax increases unless approved by voters — took effect that year, the city squeezed in one last 8 percent tax increase.

In 2020, the city adopted a 3.5 percent increase, the new cap not requiring voter approval, but then placed two transportation bonds on the ballot. The largest was for partial funding of the Project Connect light rail expansion, the cost of which has now eclipsed $10 billion — substantially higher than the city originally claimed. Included in the Project Connect plan was $300 million for housing costs related to the railway construction.

Last year, the city stuck with a 3.5 percent increase.

While some homeowners may see a city tax bill decrease this year if they have a homestead exemption, not everyone will see their taxable cost of housing limited to that degree. Rented properties receive neither the homestead exemption nor the 10 percent cap in appraisal 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 of these factors are leading 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 consultant Jim Wick, who ran both of Adler’s mayoral campaigns along with the campaign for the 2016 mobility bond, worth $720 million.

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

The proposition will likely face some coordinated opposition as Save Austin Now — the organization behind the successful camping ban reinstatement and unsuccessful minimum police staffing threshold propositions in 2021 — criticized the item.

“City leaders claim to understand how serious the affordability crisis is 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.

“Every year the city puts expensive bonds on the ballot, adding to the debt burden that our city faces and that taxpayers will ultimately be forced to pay. Improving affordability will happen when Austin cuts developments fees and streamlines permitting to allow developers to buy affordable homes more quickly 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 candidates 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 large importance in the race. Both Watson and Israel were at the proposal’s announcement in a show of support.

The council will vote on the resolution approving its placement on the November ballot this week in its Thursday meeting. If approved, it’ll share the ballot with the mayoral race, a handful of council elections, and anything else the city decides to put before voters.