2018 Audited Financials Released by Austin Housing Conservancy Fund

The Austin Housing Conservancy Fund (the ”Fund”) has released its audited financial statements,  The audit, completed by CohnReznick, reviews the financial results and operations of the Fund by Affordable Central Texas, the Fund’s sponsor and investment manager.

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This article was featured on KXAN. A link to the full article can be found here.

 

 

 

By: Yoojin Cho

Posted: May 14, 2019 / 02:38 PM CDT Updated: May 14, 2019 / 06:00 PM CDT

AUSTIN (KXAN) — The City of Austin is partnering with Impact Hub Austin to provide grants to companies, nonprofits or people who can help the city tackle some of its most difficult challenges.

Coworking space Impact Hub Austin has an accelerator, which is a program that “develops and brings to market a cohort of solutions focused primarily and purposefully on affordability and workforce development,” according to its website.

They’re currently looking for participants for the 2019 accelerator. They said Austin’s Office of Innovation will invest up to $15,000 in each participant.

“Innovation by definitely is kind of quick and nimble and learn kind of on the fly, on the go, which doesn’t work on the side of larger government institutions,” said Ashley Phillips, Managing Director of Impact Hub Austin. “They have checks and balances. They have lots of procure processes.”

Austin’s Chief Innovation Officer Kerry O’Connor added:

Because of the breadth and complexity of these challenges, the City organization cannot (and should not) try to address them alone. The community must be involved in addressing these critical challenges that affect them every day. Social entrepreneurs in Austin are developing innovative solutions to help address these challenges in ways that the City cannot — solutions that could work alongside the City’s efforts and initiatives, and make our collective impact even stronger.

Although this is the first year the city is offering grants, the accelerator has been around since 2017.

The most recent cohort included a group called Measure. Chief of Development Yasmine Smith told KXAN that Measure uses data to eliminate social disparities in education, policing and health.

“One would be the amount of assault rates in schools and the disparity between students of color and their similarly situated counterparts, or in the health realm, the black maternity rate is something we can discuss,” Smith said.

Affordable Central Texas participated in the coworking space’s first accelerator.

President and CEO David Steinwedell said: “In Austin, over the last seven years, wage growth has been about 15-17 percent while rental rate growth has been 69 percent.”

Affordable Central Texas purchases multifamily properties and rents them out at a rate affordable to people like teachers, first responders, bank tellers and other entry level employees. The goal, he said, is to help people not get priced out of their homes so often.

“If somebody doesn’t have to move every year, they can start building their own bank account, improve their credit score and then have a chance to move to a place by choice or even hopefully at some point go into homeownership,” he said.

Another past participant, PelotonU, helps people receive higher education.

“One in four Austinites actually has some credit but no degree, so what that’s showing us is that people are enrolling in college, but it’s still not working,” said Navid Ladha, Director of Community Partnerships.

PelotonU helps people find online programs and also provides advising and support. They hope people in Austin can get the education they need while not accruing any debt, so they can take advantage of the strong job market.

“We know that our economy is doing well,” Ladha explained. “There are a lot of jobs open, but what’s happening is, in order to fill those jobs, people are moving from elsewhere. There is a population of Austinites here that we can also develop.”

The issues these past participants tackled align with high priority areas the City of Austin hopes to address in the next three to five years.

Those who apply and win the grant from the city’s Office of Innovation will have to do similar work and provide services or products that lead to solutions to any one of these areas:

  • Employment
  • Income inequality
  • Cost of living compared to income
  • Housing
  • Homelessness
  • Skills and capability of our community workforce
  • Economic mobility
  • Transportation costs

“Public, private and non-profit sectors are working together more and more to address the biggest challenges of our growing communities,” said ​Phillips. “This is not just about creating more housing units or matching people to jobs. This is Impact Hub Austin catalyzing the community to respond to the fundamental shifts that are happening in these areas. We have the talent, we have the money, it’s time to align our efforts and motivations.”

Impact Hub Austin will pick 12 groups or startups for this year’s accelerator. Six of them can win the $15,000 grant from the city.

The deadline to apply is May 20.

This article was featured in the Austin American-Statesman. A link to the full article can be found here.

A private equity fund to purchase and conserve affordable housing rather than redevelop it recently saw some success when it delivered a modest return to its investors. This unique fund, a kind of philanthropic solution that also generates a financial return, is managed by the Affordable Central Texas.

David Steinwedell, president and CEO of the nonprofit, said the fund attracts accredited investors who appreciate that it is low-risk with a modest return while also contributing to the betterment of the community. “The fund is doing something good for the community, and that can either be the icing on the cake for an investor or the main reason they’re investing. In essence, what we’ve come up with is a fund nobody has ever done before.”

In May, the fund returned 3% to its initial investors, holding some of its capital back for reserves. “It’s good practice for an investment fund to maintain a level of reserves,” said Steinwedell, “because you never know what’s going to happen in the marketplace.”

The fund, called the Austin Housing Conservancy fund, launched in 2017 and has attracted about 25 investors who have contributed enough capital to acquire three apartment complexes in North Austin and Wells Branch, with others in the pipeline. So far, these properties include 792 units that house about 1,200 people.

The typical developer would purchase these properties, renovate them, then increase rents to maximize the return to investors. Steinwedell says properties purchased by the fund may require some improvements, but even then rents are raised only as they align with income. Right now, rental costs are far outpacing wages in Austin. According to the Austin Housing Conservancy, wages increased at a rate of 15 percent between 2011 and 2018, while rents increased at a rate of 69 percent.

The fund targets residents earning between 60% to 120% median income as defined by the U.S. Department of Housing and Urban Development, which comes to $34,200 to $68,400 for an individual. Affordable rents for those residents fall between $750 and $900 a month, said Steinwedell.

With a goal of preserving 5,000 affordable housing units in five years for Austin’s working class, Steinwedell it will have to attract bigger investors such as banks, corporations and foundations.

In April, the Austin Community Foundation contributed a $250,000 revolving line of credit to the fund. Other philanthropic dollars to Affordable Central Texas help fund operations, such as a $250,000 operating grant from St. David’s Foundation announced in March.

Frances Ferguson, an Affordable Central Texas board member and the founding executive director of Austin’s Foundation Communities said, “No one investor type will solve this puzzle.”

The Austin Housing Conservancy Fund (the “Fund”) has released its first annual report.  The 2018 Annual Report summarizes the financial condition of the Fund as well as highlights the stories of two residents at the properties invested in by the Fund.  The Austin Housing Conservancy Fund was launched in 2018 with the addition of the first three properties in its portfolio with 792 units serving over 1,200 residents.  The first of its kind, the Fund is an open ended private equity investment vehicle designed to preserve existing workforce housing in greater Austin to serve the needs of the teachers, first responders, bank tellers and musicians among others in the area’s workforce.  The Fund plans to continue its growth in 2019 with the support of additional individual and institutional investors to eventually meet its goal of preserving 5,000 units in 5 years.

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This article was featured on the Austin Community Foundation website, a link to this article can be found here.

AUSTIN, Texas – Austin Community Foundation announced today a $250,000 investment in the Austin Housing Conservancy Fund — a social impact private equity fund managed by Affordable Central Texas — to preserve affordable multifamily rental housing for moderate- and middle-income Austinites.

“While Austin continues to experience exponential growth and economic prosperity, not all Central Texans have the same access to opportunity,” Mike Nellis, chief executive officer, Austin Community Foundation, said. “By partnering with the Austin Housing Conservancy Fund, we are leveraging our resources to help keep educators, artists and other essential members of our workforce from being priced out of Austin.”

The $250,000 from Austin Community Foundation will provide a line of credit to support the Fund’s momentum in purchasing apartment communities serving residents earning between 60 to 120 percent median income as defined by the U.S. Department of Housing and Urban Development, which equates to $34,200 to $68,400 for an individual.

“Preserving stable housing for Austin’s workforce provides a positive impact to all who live in Central Texas”, David Steinwedell, president and CEO, Affordable Central Texas, said. “We are honored to obtain this investment by Austin Community Foundation through FundATX. The revolving line of credit will increase our ability to acquire properties quickly and can be easily expanded through additional participants to increase its effectiveness.”

Austin Community Foundation’s investment is made through FundATX, the organization’s impact investing program that supports projects intended to create a positive social outcome along with a financial return. This strategy allows the foundation to invest in solutions to local issues while generating a financial return on philanthropic dollars that can be recycled to consistently fund new projects.

Recently, Austin Community Foundation announced a call for investors to join FundATX, which aims to improve the economic security of Central Texans. Since January, the Foundation has raised approximately $500,000 from local business leaders and philanthropists, and the fund now has approximately $2.5 million committed.

Learn more about FundATX at fundatx.org.

Affordable Central Texas (ACT), the investment manager and sponsor of the Austin Housing Conservancy Fund, a local open-ended private equity investment fund that preserves affordable multifamily rental housing for moderate- and middle-income Austinites, announced today it has received a $450,000 operating grant from St. Davids Foundation.

We’re incredibly grateful to St. Davids Foundation not only for the grant, but for their continued support, said David Steinwedell, CEO of Affordable Central Texas. We share a common goal to increase Austinites access to opportunity, whether that means proximity to good schools, transportation options or employment, and Im eager to explore the positive impact that stable housing can have on Austins moderate- and middle-income workforce.

Affordable Central Texas is among 41 nonprofits that received grants totaling more than $18 million from St. Davids Foundation in December 2018. The grant to be distributed to ACT over two years will be used to improve operations, assess residents educational, health care and financial needs, and determine and measure the impact of the Funds property purchases.

Its our vision to make Central Texas residents the healthiest people on the planet, said Earl Maxwell, CEO of St. Davids Foundation. As rent prices increase, our teachers, first responders, nurses and others are pressured with a choice nobody should ever have to make: housing or opportunity. By partnering with ACT, we want to make sure Austins workforce has a stable place to live and access to opportunity.

To learn more about Affordable Central Texas, visit www.austinhousingconservancy.com/about. To learn more about the Fund, visit www.austinhousingconservancy.com.

About Affordable Central Texas

Affordable Central Texas, a 501(c)(3) nonprofit, is the sponsor and investment manager of the Austin Housing Conservancy Fund. ACT was formed in 2016 by a group of highly experienced Austin real estate, finance and affordable housing professionals. ACT has been the recipient of several recent operating grants from the St. Davids Foundation, TEGNA and SynerMark Properties in addition to previous grants from the Michael and Susan Dell Foundation, Wells Fargo, Seton and IBC Bank, as well as contributions from numerous individuals. For more information, visit www.affordablectx.org.

About the Austin Housing Conservancy Fund

The Austin Housing Conservancy Fund is an open-ended social impact private equity fund. The first of its kind to provide long-term moderate- and middle-income housing preservation, the Funds purpose is to purchase and preserve affordable multifamily rental housing for Austinites. Raised, funded and deployed in Austin, the Fund delivers risk-adjusted financial returns through flexible, discretionary investments that directly benefit Austins teachers, nurses, first responders and other core workers. For more information, visit www.austinhousingconservancy.com.

About St. Davids Foundation

St. Davids Foundation is one of the largest health foundations in the United States, funding more than $70 million annually in a five-county area surrounding Austin, Texas. Through a unique partnership with St. Davids HealthCare, a Malcolm Baldrige award-winning hospital system in Central Texas, the Foundation reinvests proceeds from the hospital system back into the community, with the goal of building the healthiest community in the world. St. Davids Foundation also operates the largest mobile dental program providing charity care in the country and runs the largest healthcare scholarship program in Texas.

The foundations strategic priorities include:

  • Providing Central Texans with the healthiest care in the world,
  • Creating the healthiest places for Central Texans to live, and
  • Helping Central Texans become the healthiest people they can be.

Learn more about St. Davids Foundation at www.stdavidsfoundation.org

Victoria Jett
Red Fan Communications
O: (512) 551-9253 / C:
(512) 468-1016
victoria@redfancommunications.com

This article was featured on the Community Impact Newspaper website, a link to this article can be found here.

By 

As lawmakers focus on rolling back property tax rates, renters also face affordability issues

Updated March 5 at 9:45 a.m. to clarify the recommendation for affordable housing units made in the Austin Strategic Housing Blueprint

In November, University of Texas senior Allie Nunas founded the West Campus Neighborhood Association.

“We have a stake in the city,” Nunas said, citing the cost of student housing, inadequate lighting and safety issues as resident concerns. “Why shouldn’t we try to make Austin good, even if we’re here for … a short period of time?”

As in most Central Austin neighborhoods, West Campus is majority-renter.

Census data from 2017 found that 54.7 percent of city residents rent; in some Central Austin ZIP codes, the portion is much larger. Everywhere, it is likely to grow as home prices continue to skyrocket, wages remain stagnant and student loan debt swells.

However, tenant advocates, academics, researchers and city officials agree the concerns of property owners often overshadow those of renters, who also face challenges of affordability and representations.

“The vast majority of the most-vulnerable communities rent,” said Council Member Greg Casar, who represents majority-renter District 4. “It’s important for us to spend extra attention to renters.”

American Dreamers

In 2018, the median home price in the city of Austin was $375,760, per the Austin Board of REALTORS. This price is out of reach for most residents, who often have to choose between renting in the city or buying property somewhere more affordable, such as Manor, where the median home price in 2018 was $187,000, or Elgin, where it was $203,900.

“[D]emand [for homeownership]is not necessarily going away,” said Holly Davis, director of public affairs for the Home Builders Association of Greater Austin. “It’s whether … they can afford to get into the market.”

Despite these barriers, renters often face “second-class” status, said Shoshana Krieger, project director of Building and Strengthening Tenant Action, or BASTA, a local nonprofit that helps tenants organize.

“I think there is a stigma against renters,” Krieger said. “[There’s a perception that] if you did all the things which the American dream affords you, then you wouldn’t be a renter.”

High cost, fewer benefits 

A growing portion of Austin renters are cost-burdened, or spending more than 30 percent of their income on housing, the amount recommended by the U.S. Department of Housing and Urban Development.

In 2015, 25 percent of four-person households earning between $34,550 and $82,920 were cost-burdened, up from 9 percent in 2000, according to a 2017 report by the Urban Land Institute.

The cost-burden rate for those earning less jumped from 69 percent to 91 percent in the same period.

The increasing cost-burden rate is the result of many factors, including a lack of adequate affordable housing in Austin and the high cost of new development.

According to the Austin Strategic Housing Blueprint, which Austin City Council adopted in 2017, the city needs to construct 135,000 housing units over 10 years to meet demand—with 60,000 of those units affordable to families making 80 percent of less of the area’s median family income. This is an expensive proposition.

“You can’t build brand-new rental housing at a price that is affordable to people in this income bracket,” said David Steinwedell, CEO of the local nonprofit Affordable Central Texas, citing the cost of land, labor and permitting delays.

Like homeowners, renters searching for affordable housing in Austin have few good options.

“A lack of housing is a real challenge to renters because if you don’t have anywhere to go. You’re at the mercy of your landlord,” Casar said.

Austin homeowners also have advantages—tax benefits such as the homestead exemption, the ability to capture some of the rising value of their home by selling—that make them “much less vulnerable to displacement” than renters, according to the 2018 report “Uprooted,” which City Council commissioned to study displacement and gentrification in Austin.

“[L]owering property taxes for homeowners would help low-income homeowners remain in their homes but also shift more of the property tax burden to landlords, potentially contributing to increased rents and hurting Austin’s vulnerable renters,” the report found.

Seeking representation

Property taxes are the main revenue source for the state of Texas, a burden that falls most squarely on the shoulders of property owners.

State lawmakers have acknowledged this and on Jan. 31 introduced two bills that would allow voters to roll back tax rates if local property tax revenue exceeds 2.5 percent year-over-year growth.

“We can no longer sit idly by while homeowners are reduced to tenants of their very own property with taxing authorities playing the role of landlord,” Texas Gov.Greg Abbott said in January 2018 while campaigning for re-election.

Renters shoulder these costs, too, if property owners raise rent to cover increasing tax bills, but they lack the protections and political agency of homeowners.

“Tenant protections in the state of Texas are minimal at best,” Krieger said, citing laws that prohibit inclusionary zoning, which requires private developers to subsidize affordable housing on-site; source-of-income protections, which prevent landlords from discriminating against tenants who receive housing vouchers; and, in nearly all cases, rent control.

Neighborhood associations in Central Austin, which are influential among council members, tend to be dominated by homeowners, said Elizabeth Mueller, an associate professor at the University of Texas School of Architecture and co-author of the “Uprooted” report.

“We do have a lot of people who are longtime tenants living in neighborhoods throughout Austin. But we don’t do a good job of making sure they’re included in neighborhood associations,” Mueller said.

Some Austin neighborhood associations stipulate in their bylaws that voting memberships may only be open to homeowners, such as downtown’s Judges Hill Neighborhood Association.

Frustrated with these dynamics and some of the decisions being made by the 45-year-old Hyde Park Neighborhood Association, a group of area residents formed Friends of Hyde Park in 2015.

The association is free to join, offers online voting to encourage participation and counts approximately equal numbers of renters and owners as members.

“If we didn’t have our second neighborhood association as a dissenting voice, you just don’t have that same sort of power structure that has influenced city of Austin politics for so long,” President Pete Gilcrease said.

Staking a claim

Still, renters may have reasons to be optimistic.

Austin City Council now has three renters among its ranks—Paige Ellis, Jimmy Flannigan and Natasha Harper-Madison—up from just one in the prior term.

Its members have also committed to finding solutions for cost-burdened residents, most notably by presenting a $250 million affordable housing bond to voters, 74 percent of whom supported it. The bond includes $94 million for affordable rental housing.

And Austinites are organizing in new ways, whether with the help of BASTA, in Hyde Park or on campus.

“We live here, too,” Nunas said.

This article was featured on the Culture Map Austin website, a link to this article can be found here.
By Lauren Jones Feb 19, 2019, 9:27

David Steinwedell, CEO of the Austin Housing Conservancy, a local, open-ended private equity investment fund, is on a mission to preserve the city’s naturally occurring affordable housing and help keep Austinites in their homes. Steinwedell, who has 35 years of real estate experience and is the former executive director of the educational and research nonprofit, Urban Land Institute, has seen both the positive and negative consequences population growth has had on the city.

“Austin has experienced fantastic growth,” he says. “Any other city would be jealous of what has happened economically. The challenge is that with growth the cost of rent has outpaced wages and now has migrated to affect not just traditionally low-income but the workforce as well. Since 2011, rent has increased by 69 percent and wages by just 15 percent.”

On a mission to provide relief, and with backing from Mayor Steve Adler, the Austin Housing Conservancy wants to secure continuous stable housing for thousands of Austinites. Thus far, Steinwedell and his team have purchased three multifamily buildings around the city.

With rent prices steadily increasing, more and more Austinites have become rent-burdened, a term Steinwedell explains as one’s rent account for 30 percent or more of total monthly income. That is what the Austin Housing Conservancy is fighting against.

“We wanted to see if we could take common institutional investment vehicles and adapt it to see if there could be a way to track private capital to address an issue for the public good,” he says. “So far, we have 792 units that serve 1,200 people. If other companies had come in and bought those buildings, those residents would most likely have been displaced.”

The three buildings under the Austin Housing Conservancy today are for those making approximately 80 percent of the median income, in layman’s terms, around $48,000 a year for a one-person household. The first building is near Wells Branch — a timely acquisition. With the announcement of the new Apple headquarters, rent prices in the Northwest Hills and Wells Branch neighborhoods have already risen by 10 to 20 percent, says Steinwedell.

In the last decade, the naturally occurring affordable units have been disappearing at an alarming rate to make way for luxury apartments and condos. While Steinwedell knows that those luxury high rises are meeting a market demand, it does put more pressure on the working class.

“Ultimately we want to figure out how to build new properties that are affordable,” he says. “Right now, it’s so expensive to build anything that you can’t charge rents that are affordable.

For Steinwedell, it’s not just about preserving housing, it is also about preserving the Austin culture and the quirks that “keep it weird.”

“It’s about your kid’s teacher, it’s the nurse at the doctor you go to, it’s the tattoo-covered barista at your favorite coffee shop,” he says. “If they can’t afford to live here anymore then it starts to rip Austin apart as a really cool place to live.”

Currently, the Austin Housing Conservancy is an Austin-focused fund, but in the future Steinwedell hopes to branch out to other large cities such as San Antonio, Dallas, and Houston, making Texas as a whole a more affordable place to live for all.

With Austin’s booming economy, the city is becoming less affordable for a good portion of the city’s middle class, but a nonprofit is trying to help by buying up properties across town to keep the costs of rent within reach.
 
https://www.kvue.com/video/money/economy/boomtown/boomtown-2040-nonprofit-working-to-help-middle-class-afford-to-live-in-austin/269-83dc0b1f-22f9-4faa-8e42-acdfc54ede24?jwsource=cl
 
 

AUSTIN, Texas — Artists, nurses and even teachers are having to look outside the city of Austin for more affordable rents, but a nonprofit group is working to keep them here.

If you’ve lived in Austin even just couple of years, you’ve probably noticed it’s getting more and more expensive. There’s construction all around. New apartments are going up to meet the demand of a growing city and older apartments are taking in new residents.

“I just love how quiet it is,” said Blake Bartosh, who lives in Austin. “I can listen to the waterfall that’s right by my window.”

So, it’s a great feeling when you find an apartment that has just what you’re looking for, but not everyone is so fortunate, many can’t afford today’s rents.

“A teacher who is in AISD can’t afford now to live anywhere close to the school they teach in,” said David Steinwedell, president and CEO of the nonprofit Affordable Central Texas.

Steinwedell said Austin teachers are often priced out of Travis County and end up leaving town permanently.

“Usually their kids move and go to a different school system and eventually the teacher says, why am I commuting back and forth? Why don’t I just go teach in the Dripping Springs School District or the Elgin School District, now you’ve lost not only a teacher but you’ve lost a lot of students,” said Steinwedell.

Real estate experts like Kevin P. Scanlan said droves of people moving here from the east and west coasts add to the demand and the cost.

“The chamber of commerce said more than 150 people move to Austin every single day, so that, of course, is not only going to have an impact on the availability of rental property but also the prices,” said Scanlan, president of Austin Board of Realtors and owner of All City Real Estate.

Austin’s rent prices are reaching new heights. Zumper, a platform that helps people find apartments, shows the average cost of a one bedroom is now more than $1,200 per month. A new report from Rent Café shows last year the city’s prices went up $57 per month from the year before. That’s $15 higher than the national average.

“It’s not surprising at all because how attractive Austin is as a destination city,” said Scanlan. “You see small one bedroom or even studio apartments in the downtown area going for well over $2,000 a month because people are willing to pay that to live in this city.”

The problem for Texas renters is no one regulates these prices. So, Affordable Central Texas launched an investment fund called the Austin Housing Conservancy to help Austin’s middle class.

“Teachers, nurses, but even bank tellers, even like entry-level programmers,” said Steinwedell.

Thanks to donations and investors, the group bought several existing properties at the end of 2018: Bridge at Northwest Hills Apartments, Bridge at Terracina Apartments and The Preserve at Wells Branch.

Many of them were built in the 1970s to early 2000s, like the Bridge at Northwest Hills apartments where Blake Bartosh lives.

“It’s like five minutes from work,” said Bartosh. “I don’t have to deal with any commuting, so it’s really nice and it’s a really nice area.”

Bartosh is a music teacher at Doss Elementary in Austin and said he chose to live here for the location and affordability.

“Money was a big factor and I had to look at where I was going to live and see if I could make it on my own basically,” said Bartosh. “There are a lot of teachers that do have to commute.”

“We’re going to hold our rents to wage growth,” said Bartosh. “That’s what we’re going to do from an affordability standpoint is not increase rents 5-7 percent a year.”

The group looks to help those who make between $36,000 to $72,000 a year. Steinwedell said they’ve helped about 1,200 people living in their complexes and will work to help more.

“If you look at a map of what we own in three or five years, what we really hope it looks like is there’s dots everywhere,” said Steinwedell.

“It just helps me stay here longer,” said Bartosh. “I love this area and I don’t want to move away.”

KVUE and the TEGNA Foundation granted Affordable Central Texas $5,000 in 2018 for their efforts to help the middle class find an affordable place to live.