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Homestead Preservation Designation Could Help Boost Long-Term Housing Affordability

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City leaders are considering a change that could add more affordable housing throughout Austin using the state’s Homestead Preservation District (HPD) designation.

The designation was created by the state legislature to increase home ownership and provide more affordable housing options. The Austin City Council’s Planning and Neighborhoods Committee started looking into creating the districts this week. District 4 Council Member Greg Casar sponsored the item.

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“My preference at this point would be for staff to move forward with bringing forward the most HPDs as possible,” Casar said.

And in order to move forward, city staff would start by drawing the boundaries of a new proposed district. Then, if the city council approves those boundaries, they can use tools available to homestead preservation districts, like reinvesting property taxes, to fund affordable housing in the area. Recent reports say the city needs an additional 48,000 affordable housing units, and Mayor Pro Tem Kathie Tovo said this is one way to address that need.

“It is a tool we can use to improve affordability within an area and to help funnel some of the revenue from the increase in development right into affordability efforts," Tovo said.

The criteria for establishing one of these districts are strict. The area can’t have more than 75,000 residents. Its overall poverty rate must be at least twice that of the city as a whole, and there are also limits on median family income. Some areas in Austin that meet these requirements are neighborhoods heavily populated by students, who may not have much income but may receive support through other means. The low income levels give these areas the appearance of needing more low-cost housing. So some committee members, including District 10's Sheri Gallo, have said the city should rule out areas with large student populations.

“As we see students who are supported by parents and have no income themselves and can afford to live in market-rate units in those areas, I think we have to be very careful about subjecting ourselves to skewing those numbers,” she said.

Ultimately, the committee voted to map out all eligible districts, including places like West Campus and others dominated by students. Council Member Casar said there’s still room for review.

“That way we leave all the options open to council to make the final decision without us precluding some of those decisions from the larger panel.”

Still, establishing new Homestead Preservation Districts won’t have any immediate impact on housing affordability. The idea is that it could be a step toward greater affordability over the longer-term.

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