Austin went on a land-buying spree in 2020. So far, little has been built on it.

From KUT News:

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As Austin was coordinating COVID-19 test centers and trying to secure personal protective equipment at the start of the pandemic, it was also buying land. Lots of it.

Thirteen acres by July 2020. Another 3 acres that fall. Six more acres in December. By the end of 2020, the City of Austin through its affordable housing arm had paid nearly $24.5 million to purchase 22 acres of land. Over the next two years it would buy more, eventually amassing 60 acres of mostly undeveloped land throughout the city.

This land-buying spree was a new strategy to curtail the cost of housing in Austin. Instead of spending millions to preserve or build affordable housing, the city would instead use taxpayer money to buy land to build thousands of homes people earning low incomes could afford.

“Dirt is destiny,” Mandy DeMayo, the interim director of Austin’s housing department, said recently. “If we own it, we can work with the community to shape what gets built there. When we don’t own it, we’re in the sidecar.”

But four years out, almost all of this land remains vacant. The city has cited a lack of resources to be able to move faster. And as the cost of housing has risen in Austin since the pandemic, some people are anxious for the city to start moving.

“We could probably move a little bit faster. I think everybody acknowledges that,” said John-Michael Cortez, who worked as chief of staff and a special adviser to Austin Mayor Steve Adler. “We should hurry up.”

Missed opportunity forces city to go ‘big’

In 2014, the City of Austin was offered a deal many felt it couldn’t pass up.

The Texas Department of Transportation was selling 75 acres of land in Central Austin. Prime real estate. A staff member told the council she couldn’t recall the city ever getting an opportunity as good as this one.

Council members talked about using the land for parks and housing. If the city owned the land, it could require anyone building on it to reserve a large portion of housing for low-income residents, much like the city did with the Mueller development on the former municipal airport.

But ultimately the discussion didn’t go very far. The city could not find the nearly $29 million the state agency wanted.

TxDOT sold the property to a private owner. Council members spent two years in fierce negotiations with a developer over what would be built and how much affordable housing it would include – decisions the city could have made itself if it owned the property.

Several people told KUT the TxDOT sale of land was a “missed opportunity.” City leaders vowed to do things differently.

In 2018, politicians and activists proposed a $250 million bond for affordable housing, the biggest in Austin’s history. It would be more than three times the amount passed by voters in 2013. (A bond is when a government entity asks for permission from voters to borrow money, which it pays back using taxes collected from residents.)

Average rent prices in Austin had been steadily climbing. In 2013, a renter could easily find an apartment for under $1,000 a month; by 2018, that same renter was likely to be paying 30% more.

“We knew we wanted to do something big, something on a scale that hadn’t been done before,” Cortez said.

But this money wouldn’t just pay to preserve and build new housing that low- and middle-income people could afford. In drafting specifics of the bond, city leaders decided that nearly half of the total bond amount, or $100 million, would be used to buy land.

“It became apparent then that just hoping that affordable housing would be built wasn’t working,” former Mayor Adler said. The city would try something new. Instead of pleading with private developers to build affordable housing, especially in a state where requiring them to do so is not permitted, they would own the land and have final say.

Austin residents were sold. In November 2018, nearly 73% of voters cast a ballot in favor of the affordable housing bond.

A real estate frenzy

A couple years after the 2018 election, David Esquivel got a call from the City of Austin. It wanted to buy the house he and his wife owned in South Austin.

“They approached us and we said no,” Esquivel said. He and his wife had not even listed the property for sale. But the city had recently bought 3 acres of land next door, including an abandoned church. Esquivel said the city’s representatives were persistent.

“They kept [saying] …‘No, hold on a moment, let us give you a price.’”

KUT asked the city’s housing department if the city typically approaches homeowners who are not looking to sell. City staffers did not answer this question and simply wrote that its affordable housing arm, which usually handles these deals, “follows industry standards for its real estate acquisitions.”

Esquivel said he was initially reluctant to sell. He and his wife worried whatever price the city offered wouldn’t be enough to afford to buy another home in Austin.

“When you were rooted there for more than 20 years, did you really want to move away?” he said.

But eventually the two parties settled on a price. In 2022, the city paid the Esquivels $1.67 million for the house and the surrounding 2.8 acres of land, according to data the city provided KUT.

The city’s purchase of Esquivel’s home capped nearly two years of a land-buying spree. From 2020 through early 2022, Austin finalized deals on 60 acres of land.

The timing was complicated, to say the least.

At the end of 2020, home prices began to soar as some people sought out larger homes and flooded cities like Austin, availing themselves of the chance to work remotely. Real estate markets across the country, including in Austin, hit a frenzy.

“It was incredibly competitive and we were often up against big, institutional investors who were purchasing property and were all-cash buyers and could close quickly,” DeMayo said.

Regardless, the city moved relatively quickly to snatch up land. The plots it purchased were all across the city, spanning from Cullen Lane in South Austin to Kramer Lane in North Austin.

When will housing be built?

One piece of land in the middle of the city used to be a farm with cows and goats, said Geri Flore, who lives across the street.

But as for the future of this 5-acre plot on Menchaca Road, Flore does not know.

“Nobody’s reached out to say, ‘Hey, here’s what the plan is,” she said.

While the city had to spend the bond money within a certain period of time, there is no timeline for construction.

“[The bond] was not tied to a development schedule,” Adler said. “Other than just the general schedule that everybody wants to have as much housing as we can have as soon as we can have it.”

A rough timeline may be forthcoming. The city recently contracted with a company to decide which pieces of land should be developed first; that plan, DeMayo said, is expected by the end of the year.

The city hopes to invite private companies to start bidding on building contracts by 2030.

A lack of staff and limited funding has made moving forward any faster difficult, DeMayo said. Plus, the city says it still needs to hold meetings with neighbors to decide exactly what, in addition to affordable housing, will be built.

“Our goal was never to hold onto land forever,” she said.

Unlike a private company, the city can afford to sit on land. It doesn’t pay property taxes on land it owns. Waiting four years to build is not something Walter Moreau, the executive director of affordable housing builder Foundation Communities, says he could afford to do.

“If the site sits there for a year or two or three or five,” he said, “we’ve got to cover the carry costs – the insurance, the maintenance for landscaping, possibly the taxes.”

Having the ability to wait, Moreau said, gives the city a chance to assemble the money it needs to build.

“You might end up buying a lot of land that you end up holding for a long, long time before you can raise all the money,” he said.

But others say there needs to be a greater sense of urgency. While rents have been falling in Austin for more than a year, a larger portion of renters are spending more of their income on rent. The city is far behind its goal of encouraging the construction of thousands of homes for people earning low incomes.

Rachel Stone was part of a group of people advising city leaders as they drafted the 2018 bond. Stone, who works for the affordable housing nonprofit Guadalupe Neighborhood Development Corporation, said building is harder than it was before the pandemic, a fact that could further extend any estimated timelines the city may have for building on these properties.

“When you used to see a project be able to be built in two to three years, it’s now taking four or five years, and so I think that’s even more reason that we need to really get started on these pieces of land. There really is no time to delay,” Stone said. “We weren’t looking to just have a bank full of land. We were looking for land for affordable housing.”

Support for KUT’s reporting on housing news comes from the Austin Community Foundation. Sponsors do not influence KUT’s editorial decisions.

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