People living at seven apartment complexes purchased by the City of Austin and a nonprofit partner last year may have their rents lowered as part of a promise to make these homes affordable.
In November, KUT reported that the Austin Housing Finance Corp., the city’s affordable housing arm, and Affordable Central Texas, a nonprofit that works with a local real estate investment fund, had bought seven apartment complexes in central, pricey neighborhoods.
Many of the apartments purchased by the city and its partner have outdated interiors such as shag carpet, popcorn ceilings and wood paneling. But for years tenants paid rent prices low for the area, often less than $1,000 a month for a studio or one-bedroom apartment. The city and nonprofit promised that as owners they would keep rents low and affordable for tenants, thereby shielding them from private developers who might potentially demolish the buildings or significantly raise rents.
But in the process of finalizing the deal with the city last year, the former property owners raised rents, in some cases by as much as 25%. David Steinwedell, CEO of Affordable Central Texas, said the former owners were told they needed to increase their operating income to make the deal work financially. The former owners, who would not speak to KUT, increased income by raising rents.
As a result, some tenants KUT spoke with are paying more than a third of their income before taxes toward housing which, by federal housing guidelines, means these apartments are not affordable for them. KUT could confirm that at least one tenant left because of higher rents.
The city and Affordable Central Texas, it appears, are starting to rectify this. Last week, tenants living at several complexes received notice encouraging them to apply to an affordable housing program. According to copies of notices shared with KUT, tenants are being asked to provide the management company with a slew of financial information, including assets and income.
Generally, if a renter at these properties earns less than $65,000 a year they should qualify for the program. In some cases, their rent could be reduced.
That may happen for Amy Taylor, who has lived at the apartment complex bought by the city on Avenue A in Hyde Park for two years. Taylor earns just around $38,000 a year as a hairdresser.
She used to pay $995 a month for her one-bedroom apartment, where she struggles to open and close the windows, and the wood paneling has chipped away near her kitchen. Last summer, just weeks before the city’s purchase had been finalized, Taylor got notice her rent would be going up to $1,160, plus $27 in fees.
According to income guidelines included in the notice, Taylor's income is low enough to qualify her for the affordable housing program. She should pay no more than $1,095 a month for her one-bedroom apartment, including fees and utilities, a nearly 8% decrease from what she pays now.
“A hundred extra dollars a month would be nice,” Taylor said.
The city says instead of having to wait until their leases are up for renewal to receive decreased rents, tenants who qualify should have their rent lowered immediately. The city told KUT if renters earn more and don’t qualify for the program, their rent would not go up; at the very least, it would stay the same.
The property management is offering tenants a $300 one-time rent credit if they fill out the affordable housing application and their income qualifies them for the program.
The financial model that helped the city purchase these apartments is relatively new to Austin. Affordable Central Texas, the nonprofit that partnered with the city on buying these properties, works in tandem with a local real estate investment fund called the Austin Housing Conservancy to purchase and maintain low- and middle-income housing throughout the city.
Like other real estate investment funds, investors receive returns, but because this fund helps finance homes for people earning low incomes those returns are generally smaller than other investments. Investors include Austin Mayor Kirk Watson. In a personal finance statement filed with the city last year, Watson reported he earned less than $9,440 from the fund in 2022.
“I invested with the Austin Housing Conservancy because they’re filling a critical need by creating workforce housing," Watson said in an emailed statement. "I made that investment long before I became mayor and properly disclosed it as required by city rules."
Correction: An earlier version of this story incorrectly stated residents who qualify for lower rents won't see their rents go down until their leases are up for renewal. Instead, the city says rents will be reduced immediately.
