Even Luxury Multifamily Builders Worry About Affordability
Alliance Residential’s portfolio is filled with luxury product, including three new developments in Austin and San Antonio. But even executives in the Class-A space like Alliance managing director Brandon Easterling worry about Austin’s affordability situation.
“Austin has a considerable amount of issues surrounding affordable housing,” Easterling said. The supply crunch, and the areas that the city has deemed available for tax credit and market-rate affordable housing, make for a tough math equation.
“Unless you’re buying property from a government entity and [not] paying market price, it’s nearly impossible to make numbers work with construction costs where they are,” he said.
Public improvement districts, tax reimbursements, chapter 380 agreements and the like can help. But when all that creativity and finagling allows developers to save residents a maximum of 15% on rent, it is still a tough sell.
Alliance's new project, unofficially called Broadstone Burnet, on the southeast corner of Braker Lane and Burnet Road, is a different kind of affordable. Easterling said the 352-unit wrap project delivering in 2018 will be a great option for those who want to be near — but not within — the mixed-use mecca, the Domain.
“If someone wants to save a couple hundred dollars a month [in rent] and doesn’t necessarily want to walk downstairs to get a sandwich or shop, this is a good option,” Easterling said.
Some multifamily investors and developers are participating in the early stages of a program reminiscent of linkage fees in Los Angeles or Seattle. The program require that all developments, regardless of property type, pay a per-project price to create a fund to build more affordable multifamily.
“A lot of people are against it, and it’s obvious why. In some people’s eyes, affordable housing is just a multifamily issue,” Easterling said.
But, he said he and his colleagues pushing for linkage fees do not think multifamily developers should have to shoulder the entire burden of making housing affordable in a market like Austin.
Many Texas homebuilders have argued that paying linkage fees would make housing unattainable for potential buyers. In February, the Texas Association of Builders rallied at the Texas Capitol during the 85th session of the Texas Legislature, opposing the fees being considered by Travis County. Association lobbyist Ned Muñoz has been the chief organizer of the opposition.
Possible legislation is still up in the air. Easterling said next steps include getting Austin City Council on board.
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