Sep 09, 2025 City Council Work Session

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HEY, EVERYONE.

GOOD MORNING.

I AM MAYOR PRO TEM VANESSA FUENTES, AND I'LL BE PRESIDING OVER TODAY'S WORK SESSION AS MAYOR WATSON IS TRAVELING ON CITY BUSINESS.

WE HAVE A QUORUM PRESENT, AND IT IS 9:02 AM AT CITY COUNCIL CHAMBERS, WHICH IS LOCATED AT AUSTIN CITY HALL 3 0 1 WEST SECOND STREET.

UNFORTUNATELY, COUNCIL MEMBER SIEGEL AND COUNCIL MEMBER CADRE WILL NOT BE JOINING US TODAY.

AND JOINING US ONLINE, WE HAVE COUNCIL MEMBER VELASQUEZ AND COUNCIL MEMBER ELLIS.

WE WILL BEGIN THE WORK SESSION WITH PUBLIC COMMENTS.

SPEAKERS WILL HAVE TWO MINUTES PER ITEM.

SPEAKERS MAY DONATE TIME, BUT MUST COORDINATE WITH THE CITY CLERK BEFOREHAND.

ALL PARTIES MUST BE PRESENT IN PERSON TO BE ELIGIBLE FOR TIME DONATIONS.

COLLEAGUES, JUST TO GO OVER THE AGENDA FOR TODAY, WE'LL HAVE PUBLIC COMMENT GO FIRST.

THEN WE'LL HAVE COUNCIL ITEM THAT HAS BEEN PULLED.

ITEM NUMBER 41, A RESOLUTION RELATED TO NATURALLY OCCURRING AFFORDABLE HOUSING, ALSO KNOWN AS NOA, AND CHANGES TO THE RELOCATION ASSISTANCE REQUIREMENTS UNDER THE DENSITY BONUS PROGRAMS. THERE IS NO PRESENTATION FOR THIS ITEM, AND I WILL RECOGNIZE COUNCILOR MARVELLA TO KICK OFF QUESTIONS FROM THE DAIS.

AFTER WE TAKE UP THE COUNCIL MEETING POOL ITEM, WE'LL GO INTO ITEM B OH ONE, WHICH IS A BRIEFING FROM ZONING OFFICER JOY HARDIN ON A REDEVELOPMENT ASSESSMENT FOR A PROPOSED PUD LOCATED AT 600 AND 600 AND A HALF EAST RIVERSIDE DRIVE.

AFTER STAFF PRESENTATION, WE WILL THEN OPEN UP TO QUESTIONS FROM THE DAIS, ALTHOUGH WE WERE POSTED TO HEAD INTO EXECUTIVE SESSION TODAY TO DISCUSS LEGAL MATTERS PERTAINING TO ECONOMIC DEVELOPMENT NEGOTIATIONS.

THIS ITEM HAS BEEN BUMPED TO THURSDAY'S COUNCIL MEETINGS, SO WE WILL NOT GO INTO EXECUTIVE SESSION TODAY.

THAT ITEM WILL NOW BE CONSIDERED DURING THE COUNCIL MEETING ON THURSDAY.

ANY QUESTIONS RELATED TO TODAY'S AGENDA FOR OUR WORK SESSION? OKAY.

CITY CLERK, CAN YOU PLEASE CALL THE SPEAKERS? THERE ARE NO SPEAKERS TODAY.

ALL RIGHT.

IT'S GONNA BE A EASY BREEZY WORK SESSION.

THEN , UM, COUNCIL

[A41. A resolution relating to the preservation, creation or enhancement of naturally occurring affordable housing (NOAH) and funding mechanisms to prevent the net loss of affordable housing, directing the City Manager to prepare a City Code amendment to change the relocation assistance requirements for residents of existing multi-family property that will be redeveloped because of a density bonus program Pulled by Council Member Vela.]

I'LL RECOGNIZE YOU FOR OPENING REMARKS, AND I BELIEVE ASSISTANT CITY MANAGER JOHNSON WILL ALSO BE RECOGNIZED TO SPEAK ON THIS ITEM.

YES.

UH, THANK YOU VERY MUCH, UH, UH, MAYOR PRO TEM, AND, UH, THANKS TO COUNCIL MEMBER, UH, UCHIN FOR, FOR BRINGING THE ITEM.

I, I, I PUT UP A POST ON THE MESSAGE BOARD WITH SOME, UH, THOUGHTS ABOUT IT, BUT I JUST WANTED TO, UH, TO TAKE THIS OPPORTUNITY TO EXPLORE, UH, WHAT THIS MEANS.

UH, ESSENTIALLY, UH, AND, AND I'LL PARAPHRASE THE ITEM THAT, UH, COUNCIL MEMBER UCHIN IS BRINGING, BUT IN THE PAST, WE HAVE BOUGHT ENTIRE PROPERTIES.

I KNOW IN PARTICULAR THE PROJECT CONNECT MONEY.

WE USED THAT TO, TO BUY, UH, UH, CURRENTLY EXISTING AFFORDABLE HOUSING, UH, ALONG THE RAIL LINE.

UH, THE ITEM THAT, UH, COUNCIL MEMBER UCHIN, UH, IS BRINGING WOULD BE, UH, BUYING DOWN, UH, OR BUYING AFFORDABILITY IN EXISTING, UH, AFFORDABLE HOUSING, PRIVATELY HELD PRIVATE MARKET, AFFORDABLE HOUSING.

IT'S A NEW APPROACH FOR, FOR AUSTIN.

AND, UH, I UNDERSTAND, UH, UH, DR. JOHNSON, THAT THIS IS AN APPROACH THAT YOU USED, UH, IN DALLAS AT THE, THAT THE CITY OF DALLAS HE USED.

AND I WAS JUST WONDERING IF YOU COULD TELL US, UH, A A LITTLE BIT ABOUT THE APPROACH AND, AND KIND OF SOME OF THE PRINCIPLES BEHIND IT.

YES.

UH, GOOD MORNING, MAYOR PRO TIM COUNCIL MEMBERS, DR. ERIC ANTHONY JOHNSON, ASSISTANT CITY MANAGER.

UM, BEFORE I DO THAT, COUNCIL MEMBER, I'D JUST LIKE TO GIVE A QUICK, JUST A QUICK OVERVIEW OF THE STATE OF NOAA MM-HMM .

SO WE CAN REALLY UNDERSTAND.

UM, NOAA, AS DEFINED BY COSTAR, WHICH IS ONE OF AMERICA'S LEADING REAL ESTATE ORGANIZATIONS, REPRESENTS, UH, PROPERTIES THAT, UH, RANGE FROM ABOUT 1960 TO ABOUT 1990.

THEY'RE AFFORDABLE, WHICH ACTUALLY COVERS THE BULK OF AMERICA'S AFFORDABLE HOUSING STOCK IS ACTUALLY IN NO PROPERTIES.

SO IN AUSTIN, WE HAVE ROUGHLY 28,375 NO UNITS, WHICH REPRESENTS ABOUT 789 BUILDINGS.

UM, UNIT SIZE, ABOUT, ON AVERAGE, ABOUT 36 UNITS.

INCOME FOR INDIVIDUALS LIVING IN NOAH PROPERTIES IS ABOUT $73,000, WHICH REPRESENTS, UH, 52% OF THE POPULATION RANGES BETWEEN 40 AND 55 PLUS YEARS OF AGE 19, ONLY 19% OF THE INCOME GOES TOWARDS RENT, WHICH IS ROUGHLY, UH, ABOUT 1395 A MONTH ACCORDING TO COSTAR.

SO IN 20 25, 22 BUILDINGS HIT THE MARKET, WHICH REPRESENTED ABOUT 800 NO UNITS.

THE FORECAST IS SHOWING CLOSE TO A HUNDRED PERCENT OF PROBABILITY OF NO PROPERTIES BEING SOLD BETWEEN NOW AND 2030.

UH, FORECAST HEADING TO 2030 IS SHOWING POTENTIAL DEMOLITIONS CLOSE TO A HUNDRED UNITS A YEAR, OR ROUGHLY 5,000

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SO THE QUESTION IS, WHY, WHY, WHY IS THIS HAPPENING IN 2016? COSTAR DEFINE NOAA PROPERTIES AS INVE INVESTMENT GRADE PROPERTIES, AND IN DOING SO, THEY CLASSIFIED CATEGORIES FROM ONE BEING THE LOWEST, TWO BEING SORT OF ABOVE THAT, THAT CREATED THIS SORT OF, UM, ISSUE.

AND THE REASON IT BECAME AN ISSUE IS BECAUSE IT'S ACTUALLY CHEAPER TO BUY NOAH THAN BILL NEW CONSTRUCTION.

BUT LET ME JUST ADD THIS POINT TO A KEY ISSUE.

WHY IS THIS HAPPENING? PRICE OF ACQUISITION, UH, OPPORTUNITY FOR RENT GROWTH.

SO WHEN YOU SEE NUMBERS WHERE YOU'RE CURRENTLY AT ABOUT 1395 A MONTH FOR RENT, AND AT 30% A MI, I'M SORRY, AT 30% OF YOUR INCOME, YOU STILL ARE AT 18, ROUGHLY 1800 A MONTH.

THAT'S A 400 PLUS, UM, RENT GROWTH A MONTH IN TERMS OF RENT GROWTH POSSIBILITIES.

SO WHAT THAT SAYS TO THE MARKET IS, EVEN IF YOU BOUGHT A NOAH PROPERTY, YOU CAN GO IN, PUT SOME PAINT ON IT, FIX THE WINDOWS, AND RAISE THE RENTS.

RIGHT? UM, SECONDLY, REDEVELOPMENT POSSIBILITIES.

THERE'S TWO CLASSES OF NOAH, SO WE REALLY UNDERSTAND.

ONE IS NOAH'S THAT SIT IN THE PATH OF REDEVELOPMENT ACTIVITY.

THOSE ARE THE ONES THAT ARE USUALLY OBSOLESCENCE, A SE SERIOUS LEVEL OF OBSOLESCENCE AND, UM, DECAY, WHICH PRESENTS AN OPPORTUNITY FOR ACQUISITION, ACQUISITION AND REDEVELOPMENT.

THE SECOND ONE IS REALLY THE UNIVERSE OF NOAH PROPERTIES THAT ARE NOT NECESSARILY IN THAT SPACE.

SO I JUST WANNA GIVE THAT QUICK OVERVIEW SO YOU CAN QUICKLY UNDERSTAND THE STATE OF NOAH IN AUSTIN.

SO IN DALLAS, JUST GIVE YOU QUICKLY BE, BECAUSE THIS IS NOT NEW ONLY TO DALLAS, I JUST DON'T WANT TO EMPHASIZE DALLAS.

I ALSO WANT TO GIVE AN EXAMPLES, AND I'LL TALK ABOUT DALLAS 'CAUSE I'M FAMILIAR WITH THE OTHER FUNDS AS WELL.

SO, SAN FRANCISCO, CHARLOTTE, DETROIT, DALLAS, CLEVELAND, UH, WASHINGTON, DC OR THE CITIES THAT HAVE FUNDS OPERATING OUTSIDE THE WORK, I BELIEVE IN AUSTIN, IS ABOUT GETTING TO SCALE.

I THINK IF YOU WERE TO TALK TO THE, UM, TEXAS HOUSING CONSERVANCY OR THE COMMUNITY FOUNDATION HERE, WE WOULD TALK ABOUT SCALE.

WE NEED TO GET TO A LARGER SCALE.

SO IN DALLAS, IT REALLY CAME DOWN TO THIS.

WE HAD OUR TRADITIONAL SOURCES, WHICH WAS BASICALLY HUD, CDBG, HOME DOLLARS.

BUT TO BE HONEST, WE HAD ROUGHLY 6 MILLION SITTING IN THE TRUST FUND.

IN CONVERSATIONS WITH THE COUNCIL, WE SAID, WOW, WE NEED TO FIGURE OUT A WAY TO GET TO A GREATER SCALE.

SO WE SIMPLY LEVERAGED $6 MILLION AS PART OF A FOUNDATION BUILDING TO ATTRACT PRIVATE PHILANTHROPIC DOLLARS TO DALLAS.

IT SOUNDS COMPLICATED, BUT IT WAS REALLY THAT SIMPLE.

IT WAS A THREE 80 AGREEMENT WITH PERFORMANCE METRICS ACTUALLY LED BY THE CITY'S ATTORNEY'S OFFICE, BECAUSE TEXAS DOESN'T ALLOW, UM, MUNICIPAL MONEY TO BE USED AS FIRST LOSS RESERVE.

BUT WE FIGURED IT OUT THROUGH WORKING WITH THE ATTORNEY, CITY ATTORNEY'S OFFICE TO DO A PERFORMANCE AGREEMENT.

UM, AND DALLAS FUND ACTUALLY STARTED OUT AT, STARTED OUT WITH A PERFORMANCE METRIC OF REACHING 40 MILLION BY A CERTAIN DEADLINE, WHICH THEY HAVE MET.

SO SIMPLY PUT 6 MILLION LOAN LOSS RESERVE, SET THE BASELINE TO DRAW A HUNDRED MILLION DOLLARS FUND WITH THE ABILITY TO HAVE PERFORMANCE METRICS.

WE SET THE NUMBERS PRETTY LOW, UM, BECAUSE WE WANTED TO GIVE THE TEAM A CERTAIN SORT OF SPACE TO DO THE WORK.

SO THE TEAM CONSISTED OF LIST STRATEGIC INVESTMENT OFFICE OUTTA NEW YORK, THE REAL ESTATE COUNCIL IN THE CITY, CITY, UM, OF DALLAS.

NOW, WHAT'S INTERESTING ABOUT THIS, THIS IS JUST NOT DALLAS, THE CLEVELAND SCENARIO, THE CITY DROPPED 18 MILLION, UM, INTO THEIR FUND, WHICH LAUNCHED ABOUT A MONTH AND A HALF AGO.

KEY BANK IMMEDIATELY PUT 38 MILLION INTO THE FUND.

SO THIS IS NOT ABOUT REALLY REINVENTING THE WHEEL OR DOING SOMETHING NEW, IT'S ABOUT GETTING TO A GREATER CAPACITY.

AND IN CONVERSATIONS WITH THE TEXAS HOUSING CONSERVANCY, UH, IN PARTICULAR, I BELIEVE WE HAVE THE ABILITY TO SET THAT TYPE OF FOUNDATION HERE IN, UM, IN AUSTIN.

SO THAT'S JUST QUICK SNAPSHOT.

I CAN TAKE ANY QUESTIONS.

THANK YOU.

UH, UH, THANK YOU, UH, VERY MUCH APPRECIATE THE, THE BACKGROUND AND JUST FOR THE, THE PUBLIC AND FOR THOSE THAT ARE NOT DEEP INTO THE, THE HOUSING POLICY WEEDS, UH, NOAH IS, UH, NATURALLY OCCURRING AFFORDABLE HOUSING.

UH, AND, AND TYPICALLY AS A DR. JOHNSON, JUST, UH, THESE ARE COMPLEXES THAT ARE GONNA BE BETWEEN, LET'S SAY, YOU KNOW, 30 TO 60 YEARS OLD OR THEIR MARKET RATE, UH, BUT THEY HAVE A, A LOWER RENT, UH, TYPICALLY THAN YOUR KIND OF AVERAGE, UH, UH, HOUSING.

AND IN, WHEN WE'RE TALKING ABOUT BUYING DOWN THE AFFORDABILITY, COULD YOU EXPLAIN WHAT THAT LOOKS LIKE FOR AN INDIVIDUAL PROPERTY? WHEN, WHEN WE WOULD, IF WE WERE TO STRIKE A DEAL WITH AN INDIVIDUAL PROPERTY TO PRESERVE THE, THE NOAA, UH, WHAT, WHAT DOES THAT LOOK LIKE? WHAT ARE THE METRICS? WHAT ARE THE KIND OF THE PARAMETERS OF THE, OF THE AGREEMENT? GREAT QUESTION.

UH, COUNCIL MEMBER, LEMME JUST SAY THIS, COMING OFF OF CLOSE TO FIVE YEARS, DEALING WITH THIS ISSUE IN PARTICULAR, UM, THE CONCEPT BASICALLY WORKS LIKE THIS.

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THE TRIFECTA WOULD BE GRANT-BASED SOURCE FOR NOAA TO HELP WITH CAPITAL IMPROVEMENTS.

BECAUSE THE BIGGEST ISSUE IN NOAA IS ACTUALLY ABILITY TO TAKE CARE OF THE CAPITAL IMPROVEMENTS.

THAT'S WHY THE RENTS ARE THE WAY THEY ARE.

NUMBER TWO, WE WOULD LOOK AT A LOW COST FUND TO HELP WITH NEW CONSTRUCTION AND A COMPONENT AROUND SERVICES.

SO IN TERMS OF WHAT IT WOULD LOOK LIKE, IT WOULD LOOK SOMETHING LIKE THIS.

FIRST OF ALL, SETTING A SORT OF FRAMEWORK AROUND WHAT IS DOABLE.

YOU DON'T WANNA DO EVERY SINGLE NOA PROPERTY.

I THINK WE WOULD HAVE TO COME UP WITH A CRITERIA.

I THINK THAT, UH, WOULD PROBABLY MO FOCUS MORE ON THE LEVEL TWO OR START, START TWO PROPERTIES, WHICH ARE NO PROPERTIES THAT ARE NOT SO FAR GONE.

BUT IN TERMS OF HOW IT WOULD BASICALLY WORK, IT'S NOT NECESSARILY BUYING DOWN THE RENT, IT'S SAYING TO AN OWNER WITHOUT DISRUPTING THE MARKET, SAYING, HEY, OWNER, IF YOU ARE INTERESTED IN SELLING YOUR PROPERTY, BECAUSE THE DEFERRED MAINTENANCE AND CAPITAL IMPROVEMENTS ARE SO SIGNIFICANT, WE HAVE A GRANT SOURCE THAT WE COULD PROVIDE TO YOU TO DO THE CAPITAL IMPROVEMENTS IN EXCHANGE FOR A COVENANT ON THE PROPERTY TO GUARANTEE AFFORDABILITY FOR A CERTAIN PERCENTAGE OF AFFORDABILITY OVER, OVER A PERIOD OF TIME.

THAT'S BASICALLY HOW IT WORKS.

THAT'S HOW IT WORKS.

IN DALLAS, CLEVELAND, CHARLOTTE, SAN FRANCISCO, THAT'S BASICALLY THE BASELINE.

SO IT'S NOT NECESSARILY BUYING DOWN THE RENT, IT'S SAYING TO A LAND OWNER, A PROPERTY OWNER, HEY, SHOULD YOU NOT WANT TO SELL, BUT YOU REALIZE THERE'S NO MONEY.

THAT IS BASICALLY HOW IT WOULD WORK.

SO WE WOULD BE STEPPING IN TO ESSENTIALLY HELP A PRIVATE MARKET OWNER MAINTAIN THEIR HOUSING IN, AGAIN, RELATIVELY GOOD CONDITION IN EXCHANGE FOR THEM KEEPING THE RENT.

BECAUSE AGAIN, THE, THE PRIVATE MARKET INCENTIVE WOULD BE THE, THE, AGAIN, THE, THE FLIPPER, RIGHT? THE, THE LIPSTICK JOB WHERE THEY SELL THE PROPERTY, SOMEONE COMES IN AND DOES, YOU KNOW, MINIMAL IMPROVEMENTS AND THE RENTS GO UP 40%, YOU KNOW, 50% SOMETHING, UH, UH, TO THAT EFFECT.

UM, WITH THAT AS KIND OF A, A PREMISE, YOU MENTIONED THE LEVEL ONE AND LEVEL TWO PROPERTIES.

CAN YOU, CAN YOU EXPLAIN A LITTLE BIT, UH, ABOUT WHAT THAT MEANS? WHAT, WHAT THE DIFFERENCE IS? YEAH, I'M GONNA READ DIRECTLY FROM THE COSTAR, UH, ANALYSIS.

SO STAR, STAR ONE IS BASICALLY PRACTICALLY, PRACTICALLY UNCOMPETITIVE WITH RESPECT TO TYPICAL MULTIFAMILY INVESTORS MAY REQUIRE SIGNIFICANT RENOVATION, POSSIBLY FUNCTIONALLY OBSOLETE.

THESE ARE LEVEL ONE THAT IS SO FAR GONE THAT YOU DON'T HAVE ENOUGH MONEY TO PUT INTO IT.

YOU WOULDN'T WANT TO TOUCH THAT ONE.

LEVEL TWO IS MORE PROPERTIES THAT, UM, MAY HAVE BELOW AVERAGE FINISHES, INEFFICIENT USE OF SPACE SITE AMENITIES, BUT ARE REALLY, UH, IN NEED OF, YOU KNOW, NOT EXTRAORDINARY REHABILITATION ENOUGH PER UNIT THAT WOULD SIGNAL, UM, TO THE POTENTIAL OWNER THAT YOU DON'T HAVE TO RAISE YOUR RENTS TO COVER THE COSTS FOR THE NEEDED IMPROVEMENTS.

RIGHT.

AND THAT'S THE DEFINITION, PURELY FUNCTIONAL, TWO STARS, ONE STAR OBSOLETE.

SO FROM, FROM A OVERALL GOOD PERSPECTIVE, THEN THE, THE LEVEL ONE PROPERTIES WOULD BE PROPERTIES THAT IN ALL LIKELIHOOD NEED TO BE TORN DOWN.

THEY'RE NOT REALLY WORTH, UH, INVESTING IN FOR, AGAIN, FOR VARIOUS REASONS.

UM, LEVEL TWO ARE THE OLDER, KIND OF WORN DOWN PROPERTIES, UH, BUT THEY'RE, THEY'VE GOT GOOD BONES AND THAT, THAT WE CAN, UH, IS THAT, IS THAT A, THAT IS ABSOLUTELY RIGHT.

USING THE WORD GOOD BONES, UM, IS A GOOD WAY TO DESCRIBE IT.

UM, THEY'RE NOT FUNCTIONALLY, UH, OBSOLETE, BUT WITH SOME LOVE AND TENDER CARE , UM, YOU COULD PRESERVE THE PROPERTY.

YEAH.

AND, UH, HOW, HOW, HOW DID, HOW COULD WE LEVERAGE PRIVATE FUNDING, UH, WITH, WITH REGARD TO THIS TYPE OF, UH, OF PROGRAM? 'CAUSE AGAIN, JUST MY, MY SENSE OF IT IS THAT FROM, FROM THE PUBLIC PERSPECTIVE, YOU KNOW, THE CITY OF AUSTIN WILL COME IN AND SAY, HEY, WE WILL GIVE YOU X AMOUNT OF DOLLARS TO AGAIN, YOU KNOW, MAKE THE NECESSARY PAIRS, PLUMBING, ELECTRICAL, UH, YOU KNOW, WINDOWS, THOSE KINDS OF THINGS LIKE THAT TO MAKE SURE THAT THEY'RE IN GOOD SHAPE AND THAT THEY CAN CONTINUE BEING USED.

AND THEN THEY WOULD GIVE US, UH, A COVENANT FOR, AGAIN, 20 YEARS, 30 YEARS, 40 YEARS, WHATEVER THE CASE MAY BE, OF, OF, UH, AFFORDABLE HOUSING.

WHERE DOES THE PRIVATE FUNDING COME IN? HOW DO WE LEVERAGE A, A PRIVATE, UH, FUNDING

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BECAUSE IN THE OWNER SCENARIO, IT'S BASICALLY A CAPITAL IMPROVEMENT GRANT FROM THE SOURCE THAT WOULD BE RAISED THROUGH PHILANTHROPIC COMMUNITY, BANKING COMMUNITY, ET CETERA, THAT WOULD GO TO THE OWNER IN EXCHANGE FOR THE COVENANT OF 20 YEARS OR WHATEVER, WITH SOME OTHER PERFORMANCE METRICS.

BECAUSE ONCE YOU GO IN AND DO THE WORK, THEN YOU HAVE TO HAVE SOME OTHER MECHANISMS TO ENSURE THAT THEY MAINTAIN THE PROPERTY AT THE NEW LEVEL THAT IT WOULD, UM, ARRIVE AT AFTER THE IMPROVEMENTS.

MM-HMM .

SO THIS WOULD BE, WE WOULD BE GOING TO THE, THE DONOR COMMUNITY, THE, THE, THE KIND OF PHILANTHROPIC COMMUNITY AND ASKING THEM, YOU KNOW, LET'S SAY AGAIN, AUSTIN'S GONNA PUT IN A CERTAIN AMOUNT, MAYBE WE CAN RAISE FROM PRIVATE SOURCES A CERTAIN AMOUNT, AND THEN USE THAT FUND TO MAKE THESE KINDS OF INVESTMENTS.

YEAH, YEAH.

COUNCIL MEMBER.

ABSOLUTELY.

RIGHT.

AND IT WILL NOT, I USUALLY DON'T USE, THE WORD WILL NOT, IT WILL NOT HAPPEN WITHOUT THE CITY'S BASELINE BECAUSE THE MESSAGE IN ALL OF THE CITIES I DESCRIBED THE SIGNAL TO THE PRIVATE COMMUNITY, PHILANTHROPIC CORPORATE, IS THAT THE CITY IS ENGAGED IN THIS.

AND GUESS WHAT, GUYS? IT'S NOT A LOT OF MONEY.

IT'S NOT LIKE YOU'RE TAKING 50, A HUNDRED MILLION DOLLARS TO DO IT.

BECAUSE WHAT YOU'RE TRYING TO DO IS SAY, HEY, WE HAVE LIMITED RESOURCES.

WE WANNA LEVERAGE WHAT WE HAVE.

WE WANT TO DRAW IN, UH, AS MANY PRIVATE ACTORS.

AND, AND, AND THIS IS NOT JUST A LOCAL, THIS IS A NATIONAL SORT OF PLAY, IF YOU WILL, IN TERMS OF RAISING THE DOLLARS.

GREAT.

WELL, UH, AND, AND SO WHAT WE HAVE DONE, FOR EXAMPLE, WHEN WE PASSED THE, THE PROJECT CONNECT, UH, TRE BACK IN 2020, THAT HAD A $300 MILLION IN IT FOR, UH, AFFORDABLE HOUSING ALONG THE, THE LIGHT RAIL LINES.

AND WE HAVE, UH, ACQUIRED, UH, A NUMBER OF, UH, PROPERTIES ALONG THE LINE.

AND AGAIN, I, I'VE TALKED TO THE HOUSING STAFF ABOUT IT, AND THEY, THEY HAD MENTIONED THAT SAME THING.

THEY, THEY DIDN'T WANT THAT LEVEL ONE PROPERTY.

THEY WERE LOOKING FOR THOSE LEVEL TWO PROPERTIES WHERE THEY WERE DOING THEIR DUE DILIGENCE AND WANTED TO MAKE SURE THAT THEY WEREN'T BUYING A, A MONEY PIT.

THAT IT'S JUST THE RIGHT, THE THINGS FALLING APART.

UM, I, I COMPLETELY UNDERSTAND THAT STRATEGY.

I SUPPORT THAT STRATEGY.

AND THE, THE OTHER, UM, KIND OF ASPECT OF THE PROGRAM THAT I THINK IS VERY VALUABLE IS THAT WE NOW OWN THAT LAND.

AND AGAIN, MAYBE WE CAN EXTEND THE LIFE OF THOSE UNITS FOR 30 YEARS, BUT WE'RE KIND OF LAND BANKING ALSO, YOU KNOW, WE'RE, WE'RE ACQUIRING ACTUAL REAL ESTATE CLOSE TO, UH, FUTURE LIGHT RAIL LINES THAT, UH, FUTURE CITY COUNCIL CAN THEN DECIDE, YOU KNOW, WHAT THEY WANT TO DO ON THAT.

WHEN THE, HOW, HOW DOES THAT, HOW DOES IN TERMS OF LIKE, YOU KNOW, GETTING THE MOST AFFORDABLE HOUSING FOR OUR DOLLAR, HOW DOES THAT OWNERSHIP MODEL COMPARE TO THE, UH, THE, THE, THE PROGRAM THAT, THAT WE'RE TALKING ABOUT TODAY? YOU MEAN IN TERMS OF LAND BANKING? WELL, IN TERMS OF, I GUESS LIKE GETTING THE MORE AFFORDABLE HOUSING PER DOLLAR, LIKE, LIKE IN OTHER WORDS, MY SENSE WOULD BE THAT ACTUALLY PURCHASING AND HOLDING THE PROPERTY, UH, AND KEEPING IT AFFORDABLE WOULD BE A MORE EXPENSIVE, POTENTIALLY MORE BENEFITS DOWN THE ROAD.

UH, BUT WHEREAS THIS SEEMS TO BE, UH, LESS EXPENSIVE.

BUT AGAIN, YOU DON'T HAVE THE OWNERSHIP AND, AND OBVIOUSLY THE COVENANT.

AND, AND HOW WOULD YOU KIND OF WEIGH THOSE TWO UH, APPROACHES? GREAT QUESTION.

THERE'S SORT OF TWO PARADIGMS HERE.

SO THE FIRST RULE OF THUMB AND AFFORDABLE HOUSING IS PRESERVE WHAT YOU HAVE.

WHATEVER YOU CAN DO TO PRESERVE WHAT YOU HAVE, YOU PRESERVE THAT THIS TYPE OF FUND IN THE TRIFECTA WITH A NOAA ELEMENT ALLOWS US TO PRESERVE WHAT WE HAVE.

SECONDLY, IF YOU HAVE A LAND BANK SCENARIO, I WOULD ARGUE ANYWHERE, ANYTIME THAT UNLESS YOU'RE RUNNING FINANCIAL MODELS THAT ARE BELOW MARKET, IT'S GONNA BE VERY DIFFICULT TO, UH, GET AFFORDABILITY AT THE LEVEL YOU NEED.

SO I WOULD EVEN ARGUE FOR OUR ACQUISITIONS OF SITES, LAND BANKING, WE SHOULD LOOK AT UNDER MARKET APPROACHES TO DO IT.

BECAUSE IF YOU RUN ANALYSIS BASED ON TRADITIONAL REAL ESTATE, IT'S, IT'S GONNA BE TOUGH.

OR IF YOU'RE JUST SAYING, WE'RE GONNA DO A TAX CREDIT, WHICH IS HUGELY EXPENSIVE.

SO TO YOUR QUESTION, I THINK WE NEED TO HAVE AN ARSENAL OF TOOLS AVAILABLE, INCLUDING LAND BANKING, LOOKING AT OUR ASSETS, LOOKING AT NOAA, HOW DO WE DRAW IN LOW COST FUNDS TO SUPPORT THE WORK? SO IT'S A COMBINATION OF, OF EVERYTHING.

I JUST DON'T THINK IT'S LIKE A ONE, ONE SOURCE APPROACH.

MM-HMM.

GREAT.

GREAT.

WELL, UH, THAT'S, UH, I, I JUST WANTED TO, TO KIND OF PUT THAT OUT THERE AND, AND, AND UNDERSTAND THE, THE PROGRAM, UH, MYSELF, UH, A A LITTLE BIT MORE.

UH, I THINK THIS IS A, A NEW APPROACH, UH, AT LEAST FOR AUSTIN.

UH, BUT IT, IT IS, UH, HELPFUL TO KNOW THAT IT HAS BEEN TRIED IN, IN OTHER CITIES AND SUCCESSFULLY.

LET ME, LEMME DRAW ONE LAST DISTINCTION BECAUSE I THINK IT'S IMPORTANT TO KNOW THE DIFFERENCE.

THE CHALLENGE IN THE NOA SPACE WITHOUT DISRUPTING THE REAL ESTATE MARKET ARE THE

[00:20:01]

AND YOU HAVE TO MATCH THE SPEED OF THE MARKET TO RESPOND.

THAT IS THE BIGGEST CHALLENGE WITH NOAH, NOT JUST THE SORT OF COLLECTIVE OF PROPERTY SITTING OUT THERE.

AND YOU NOTICE I USED THE WORD WITHOUT DISRUPTING THE REAL ESTATE MARKET.

MM-HMM .

SO THE BIG CHALLENGE, BECAUSE YOU DON'T HAVE THE TIME TO NECESSARILY DO THE REQUIRED INSPECTIONS AT A LEVEL THAT YOU WOULD UNCOVER ALL OF THE ISSUES THAT MAY BE PREVALENT.

SO IF THE COUNCILS COUNCIL CHOOSES TO DO SO, I THINK WE HAVE TO HAVE A CONVERSATION ABOUT WHAT THAT CRITERIA LOOKS LIKE.

BECAUSE THE REAL ISSUE IS THE SPEED IN NOA WHEN A PRIVATE IS GONNA BUY, BUT THERE'S AN ENTITY CAPABLE OF BUYING WITH NO SUPPORT WITHOUT DISRUPTING THE MARKET.

THAT'S THE BIGGEST CHALLENGE.

ALRIGHT.

UH, WELL AGAIN THEN, THANK YOU VERY MUCH, UH, DR. JOHNSON FOR THE QUESTIONS.

I HAVE NOTHING FURTHER.

THANK YOU.

COUNCILLOR BALTER, THANK YOU VERY MUCH.

I HAVE SOME QUESTIONS BACKING UP TO YOUR JUST OPENING REMARKS.

I GOT A A LITTLE BIT LOST AND SO I JUST WANNA MAKE SURE I UNDERSTAND.

AT, AT, AT THE OPENING YOU WERE TALKING ABOUT, I THINK THE RE EITHER THE REDUCTION, YOU HAD A FIGURE OF A HUNDRED PER SOMETHING AND 5,000 PER I THINK YEAR, BUT I I I, I LOST YOU THERE IN WHAT YOU WERE SAYING.

SO CAN YOU JUST REWIND TO THAT MOMENT FOR A SECOND? AND YES.

COUNCIL MEMBER, WHAT I WAS DESCRIBING, BASED ON THE INFORMATION AND RESEARCH PROVIDED BY COSTAR, WHICH IS REALLY THE NO EXPERTS, THEY'RE SHOWING IN THEIR FORECAST, THE LIKELIHOOD OF NO PROPERTY SELLING, UM, IS PRETTY SIGNIFICANT BETWEEN NOW AND 2030.

AND THEN WHEN YOU DO A CALCULATION AT ROUGHLY A HUNDRED UNITS, UM, PER YEAR OVER THE PERIOD OF TIME, IT'S, IT'S CALCULATING CLOSE TO 5,000.

BUT THAT DOESN'T MEAN, UM, LET ME BACK UP.

THE 5,000 ACCORDING TO COSTAR IS SHOWING FORECASTED DEMOLITION THAT'S SAYING SOMETHING IS ACTIVE IN THE MARKET IN TERMS OF NEWER PROPERTIES THAT, UH, AS INVESTMENT GRADE PROPERTIES, AGAIN, IT'S CHEAPER TO BUY THESE THINGS, KNOCK 'EM DOWN AND BUILD NEW.

SO I BELIEVE THAT CONTEXT IS OUT THERE.

SO THE NOA OF THE NOA RESEARCH, ACCORDING TO COSTAR, IS SHOWING THAT FORECAST OF THAT POTENTIAL HAPPENING IS PRETTY SIGNIFICANT.

AND THAT WAS 5,000 BY 2030? YES.

OKAY.

AND THEN YOU WERE TALKING ABOUT WHEN IT COMES TO THE FINANCIAL PIECE, UM, THE, THE CITY BRINGING MONEY IN AND THEN IS THAT LEVERAGED AGAINST JUST PHILANTHROPIC DOLLARS OR YOU, YOU SAID SOMETHING ABOUT BANKING LIKE, ARE ARE WE GETTING LOANS THAT ARE LEVERAGED AGAINST IT, AGAINST THIS? YEP.

GREAT.

GREAT QUESTION.

SO THE CITY'S PARTICIPATION IN EVERY CITY I DESCRIBED IS CRITICAL TO SENDING THE MESSAGE TO THE PHILANTHROPIC FINANCIAL, CORPORATE WORLD THAT WE ARE GOING TO ESTABLISH A LOSS RESERVE THAT GIVES YOU THE ABILITY TO NOW INVEST INTO THE FUND.

AND YOU DO THAT THROUGH TWO DIFFERENT WAYS.

AND WHAT'S INTERESTING ABOUT AUSTIN, THE CAPACITY IS ALREADY HERE WITH THE, UM, TEXAS HOUSING CONSERVANCY.

SO WHAT USUALLY HAPPENS IS LOAN LOSS, RESERVE SIGNALS, IT'S OKAY TO PUT SOME MONEY IN.

BANK WILL SAY, OKAY, WE CAN MATCH THE TERMS. WE'LL PUT, THIS IS A REAL SCENARIO.

WE'LL PUT 38 MILLION IN AT 3% DEBT AND EQUITY OVER 20 YEARS, WHATEVER.

ALSO, WE'RE GONNA MATCH THAT WITH A $5 MILLION GRANT TO SUPPORT NOA CAPITAL IMPROVEMENTS, OR WE'LL MATCH THAT WITH ANOTHER TWO AND A HALF MILLION TO SUPPORT SERVICES.

BUT THE BASELINE IN EVERY SINGLE CITY IS ABOUT THE CITY SETTING THE FOUNDATION THROUGH THE LOAN LOSS RESERVE.

THAT'S WHERE I DESCRIBED THE THREE 80 AGREEMENT IN DALLAS, WAS A PERFORMANCE THREE 80 AGREEMENT THAT DESCRIBED HOW IT WAS GONNA MOVE FORWARD.

AND, AND SO THE, THE ACTUAL DOLLARS DOING THE REHABILITATION IS NOT, LET'S SAY THAT $6 MILLION, IT'S THE LOAN FROM THE BANK.

IT IS THE COLLECTIVE OF THE GROWING FUND, RIGHT? WHAT NORMALLY HAPPENS IS YOU GET A SORT OF IDEA OF WHAT'S IN THE PIPELINE ON TWO FRONTS, ONE NEW CONSTRUCTION, WHAT IS THE PIPELINE SHOWING? WHAT IS POTENTIAL FOR DEALS COMING FORWARD OVER THE COURSE OF X.

ON THE NOA SIDE, YOU LOOK AT WHAT IS THE POSSIBILITY FOR OWNERS PARTICIPATING IN A PROGRAM LIKE THIS TO SECURE MONEY, UH, FUNDING FOR CAPITAL IMPROVEMENTS, AND WHAT IS THE POSSIBILITY FOR ACQUISITIONS TO PRESERVE THAT BECOMES LIKE THE BASELINE NOW

[00:25:01]

SO EXAMPLE, IF THE FUND SAYS, WE'RE GOING TO SET A LOW COST FUND, I'M MAKING IT UP AT 3%, THEN YOU'RE NOT COMING INTO THE FUND AT FIVE, YOU'RE NOT COMING INTO THE FUND AT SIX.

WE NEED YOU TO COME IN AT THREE TO MATCH WHAT THE FUND PERFORMANCE IS GOING TO BE.

AND THEN ON THE GRANT SIDE, SPEAKING AS IT RELATES TO NOAH, WHAT USUALLY HAPPENS IS IN THOSE SAME CONVERSATIONS, YOU ARE ALSO SAYING, LOOK, YOU COULD HAVE ACCESS TO ACQUISITION OF A NOAA PROPERTY AT 3%, 20, 30 YEAR DEBT AND EQUITY, BUT WE ALSO HAVE A GRANT SOURCE FOR YOU TO DEAL WITH AGING DEFERRED MAINTENANCE, CAPITAL IMPROVEMENTS TO ENSURE THAT THE PROPERTY IS STABLE AND LONG-TERM AFFORDABILITY IS PUT IN PLACE.

SO IF I'M CLEAR, AND, AND FORGIVE ME IF I'M JUST MISSING IT HERE, BUT THERE'S KIND OF LIKE A MASTER FUND, AND THEN YOU'RE TALKING ABOUT DIFFERENT TOOLS WITHIN THE FUND BEING THE GRANT FOR THE RESTRICTIVE COVENANT, BUT SEPARATELY YOU MIGHT HAVE A ACQUISITION PORTFOLIO THAT HAS KINDA LIKE THE TEXAS HOUSING CONSERVANCY MODEL AND POTENTIALLY SOMETHING ELSE.

IS THAT THAT IS CORRECT.

WE, OKAY.

I BELIEVE WE HAVE, I CALL IT THE TRIFECTA, WHICH IS NOAA SERVICES AND NEW CONSTRUCTION.

OKAY.

SO IT'S REALLY THE TRIFECTA.

SO IN THESE OTHER CITIES, WHAT KIND OF RETURNS ARE THEY OFFERING AND, AND WHAT KIND OF CAPITAL HAVE THEY ATTRACTED? YEP, GOOD QUESTION.

AND WHAT'S INTERESTING ABOUT THIS, THE DALLAS FUND STARTED OUT AT 2%.

NOW MARKET CHANGE, DALLAS IS NOW UP TO 5%, RIGHT? SO DALLAS HAS DONE ABOUT 40 SOMETHING MILLION AS PART OF A HUNDRED MILLION DOLLARS AS DESCRIBED IN THE AGREEMENT.

UH, SAN FRANCISCO, OF COURSE, IS JUST TOTALLY 500 MILLION WITH THE LIKES OF FACEBOOK AND EVERYONE ELSE CONTRIBUTING TO THE FUND.

BUT I'LL GIVE YOU SOME QUICK NUMBERS RIGHT QUICK.

I'LL JUST READ 'EM OFF OF THE, THE SHEETS.

UM, THE BAY FUND SIZE WAS 239 MILLION.

UM, CHARLOTTE STARTED OUT AT 43 MILLION, BUT THEY'RE ON THEIR SECOND FUND, UH, OF CLOSE TO 200 MILLION.

UH, DETROIT STARTED OUT AT 58 MILLION.

DALLAS IS CURRENTLY AT 41.5 OF A HUNDRED MILLION DOLLARS FUND BECAUSE THE PERFORMANCE REQUIREMENTS IN THE THREE 80 RIE REQUIRED DALLAS TO REACH A CERTAIN THRESHOLD, WHICH IS 40 MILLION BY A CERTAIN PERIOD OF TIME.

CLEVELAND STARTED OUT AT 38 MILLION.

FUNNY THING ABOUT CLEVELAND.

CLEVELAND CAME STRAIGHT OUTTA THE GATES IN DAY ONE WITH 38 MILLION BECAUSE THE CITY PUT IN 18 AND KEYBANK PUT IN THE REMAINDER TO TO LAUNCH PRETTY MUCH, UH, OUT OF THE GATES.

OKAY.

ALRIGHT.

WELL NOW I BETTER UNDERSTAND.

THANK YOU VERY MUCH.

VERY GOOD.

AND COUNCIL MEMBER DECHEN, THANK YOU MAYOR PRO TIM, AND FIRST THANK YOU, UH, DR. JOHNSON FOR HELPING US TREMENDOUSLY WITH YOUR EXPERTISE IN THE SPACE, IT COULDN'T HAVE BEEN BETTER TIMING THAT YOU JOINED THE CITY AT A TIME WHERE WE WERE TRYING TO THINK ABOUT WHAT OTHER TOOLS WE COULD ADD TO OUR TOOLBOX FOR HOW TO ADDRESS THIS ISSUE.

I WANNA START BY JUST BUILDING ON THE CONTEXT THAT YOU LAID AT THE BEGINNING.

CAN YOU HELP US, CAN YOU EXPAND ON PERHAPS THE GENERAL STATE OF NOAA IN THE CITY AND WHAT YOU SEE IN TERMS OF THE OPPORTUNITIES AND RISKS AS FAR AS DISPLACEMENT, GENTRIFICATION, IF WE, YOU KNOW, LET'S SAY WE DON'T DO THIS OR WE DON'T PURSUE NOAA SOLUTIONS GOING FORWARD, WHAT, WHAT, WHAT'S OUR FUTURE LOOK LIKE? THANK YOU, COUNCIL MEMBER FOR THE QUESTION.

UM, LET, LET ME FIRST SAY THAT LET EVERY AMERICAN CITY SHOULD HAVE A NOA STRATEGY.

IF THEY DO NOT, I DON'T BELIEVE THEY ARE FUNCTIONING APPROPRIATELY IN THE SPACE OF AFFORDABLE HOUSING.

SO NUMBER, NUMBER TWO, TO THAT POINT, I MENTIONED THE RENTS FOR A REASON.

BECAUSE IF THE PROPERTIES ARE LISTED AS INVESTMENT GRADE PROPERTIES AND I CAN ACQUIRE SOMETHING AT A LOWER PRICE POINT AND I CAN GET RENT GROWTH, THAT TELLS ME I CAN BUY THE PROPERTY AND HAVE THE BILL RAISE RENTS.

SO WE'RE FACING TWO POTENTIAL DYNAMICS AS A CITY THAT IS MOVING FASTER AND FASTER TOWARDS A REDEVELOPMENT STANDARD, WHICH MEANS YOU'RE GONNA LOOK MORE AT POSSIBILITIES TO RE REDEVELOP OLDER PROPERTIES.

NUMBER TWO.

NUMBER THREE, BECAUSE OF RENT GROWTH POSSIBILITY AT THE PROPERTIES WE'LL BE FACING,

[00:30:01]

SO WE CAN'T SOLVE EVERY, FOR EVERY SCENARIO, BUT WHAT WE COULD DO IS ESTABLISH A BASELINE PROGRAM TO HELP WHEN WE CAN, TO BE HONEST WITH YOU.

AND THAT'S PROBABLY THE BEST WE CAN DO.

UM, IT WOULD BE A GARGANTUAN EFFORT OF RESOURCES TO TRY AND STEP IN AND BUY EVERY SINGLE NOA PROPERTY, BUT I THINK IT WOULD BE ENCUMBERED UPON US IF WE, IF THE COUNCIL CHOOSES TO DO THIS, TO LOOK AT, YOU KNOW, ALIGNMENT AND STRATEGIES THAT WOULD HELP US DO THE BEST WE COULD.

THANK YOU.

CAN YOU SPEAK A LITTLE BIT TO, YOU KNOW, PART OF WHAT WE'RE TRYING TO ACCOMPLISH WITH THIS IS JUST TO HAVE A BETTER SENSE OF THE PROPERTIES THAT ARE OUT THERE PER COUNCILMAN RIVERA'S POINT, UNDERSTANDING THE DISTINCTION BETWEEN THE STAR ONE AND STAR TWO PROPERTIES, FOR INSTANCE, FIGURING OUT WHERE THESE PROPERTIES ARE CLUSTERED, FIGURING OUT WHAT THE, YOU KNOW, CAN YOU EXPAND ON OR SPEAK TO HOW THAT INFORMATION IS GONNA HELP US, UH, POTENTIALLY.

I MEAN, YOU AND I HAVE EVEN TALKED ABOUT USING A TIFF OR OTHER TOOLS WHEN WE FIND THOSE CLUSTERS OF PROPERTIES TO GEN TO FIND OTHER WAYS TO, UH, EXTEND A LIFE OR WORK WITH OWNERS.

UM, SO CAN YOU SPEAK TO THAT A LITTLE BIT? GREAT QUESTION.

COUNCIL MEMBER, UM, WHEN PUTTING TOGETHER FUNDS OF THIS NATURE, YOU'RE GONNA HAVE TO HAVE AN UNDERSTANDING OF THE PIPELINE.

YOU CAN'T MARKET AND GENERATE RESOURCES WITHOUT CLARITY ON THE PIPELINE OF THE PIPELINE.

SO WHAT WOULD HAPPEN IS THAT WE WOULD LOOK TO GET AN UNDERSTANDING OF THE LOCATION OF NO, BUT HERE'S THE TRICKY, HERE'S THE TRICKY POINT.

YOU CAN UNDERSTAND THE LOCATIONS, BUT IF YOU DON'T UNDERSTAND WHERE THE DEVELOPMENT PATTERNS ARE, WHERE THE GROWTH POSSIBILITIES ARE GOING, THAT'S THE MAGIC IN TRYING TO UNDERSTAND THAT.

AND THAT'S ALMOST A FLIP OF A COIN TO BE HONEST WITH YOU.

WE CAN TRY OUR BEST TO TRY AND FIGURE OUT WHERE THAT TRAJECTORY IS GOING AND FIGURE OUT WHERE THE CLUSTERS ARE.

BUT, UM, AS PART OF THE PROCESS, WE WOULD HAVE TO, UM, UNDERSTAND WHAT THE POTENTIAL PIPELINE EXISTS OF.

SO WE WOULD HAVE TO DO IT AS FUNDAMENTAL WORK TO ESTABLISH SUCH A FUND.

THANK YOU.

UM, NEXT QUESTION WOULD BE TO HELP ME FIGURE OUT OR, OR PERHAPS JUST EXPLAIN TO ME AND THE OTHERS HERE ON THE DAAS.

UH, ONE OF THE THINGS, AND YOU TOUCHED ON THIS EARLIER, I KNOW IN EFFECT, I THINK I SEE, UM, MS. MEDINA OUT THERE FROM THE TEXAS HOUSING CONSERVANCY, THANK YOU FOR COMING.

UM, AND, AND ACKNOWLEDGING THE GREAT WORK THAT THEY'VE DONE FOR WHAT, A DECADE PLUS, UH, IN THIS SPACE, STARTING WITH THE STRIKE FUND UNDER MAYOR ADLER, UM, AND DOING A TREMENDOUS AMOUNT OF WORK, PARTICULARLY AT THE, I THINK 60% OF MFI SPACE TO CREATE HOUSING FOR WORKING FAMILIES HERE IN AUSTIN.

HOW DOES THIS BUILD ON THEM AND OTHER PARTNERS THAT ARE ALREADY DOING WORK IN THIS SPACE? THIS FUND? YES, CUSTOMER.

GREAT QUESTION.

AGAIN, IT ACTUALLY HELPS TO BUILD THE CAPACITY TO BUILD, TO GIVE US GREATER, UM, GREATER CAPACITY BECAUSE THE EXPERIENCE IS ALREADY HERE.

THE WAY THESE FUNDS USUALLY WORK, YOU HAVE TO HAVE A BONAFIDE LOCAL PARTNER WITH EXPERIENCE.

SO THE TEXAS HOUSING CONSERVANCY, THEY'VE BEEN DOING THIS WORK.

UM, IT'S SOMETHING THAT I BELIEVE WE CAN BUILD UPON IN TERMS OF HOW WE STRUCTURE THE FUNDS, THE GRANTS TO DO THE WORK.

BUT THIS IS ABOUT GETTING TO SCALE.

I REMEMBER WERE HAVING A CONVERSATION WITH, UM, COMMUNITY FOUNDATION AND THE QUESTION WAS, WE'RE A BIG CITY, WE GOTTA GET TO SCALE.

WE NEED LARGER NUMBERS.

SO IF THE OPPORTUNITY EXISTS TO GET TO A LARGER SCALE, THAT'S WHERE THE RELATIONSHIPS CURRENTLY IN PLACE COULD HELP US GET TO A LARGER SCALE.

SO IT'S NOT ABOUT REINVENTING THE WHEEL OR DDU DUPLICATING, IT'S ABOUT GETTING TO A SCALE THAT WOULD BE APPROPRIATE TO THE SIZE OF THE CITY OF AUSTIN.

OKAY, THANK YOU FOR CLARIFYING THAT.

LAST QUESTION I THINK IS WHEN WE STARTED THIS PROCESS AND DRAFTING, UM, WHAT WE THOUGHT MIGHT BE AN IMPROVEMENT IN EXPANDING OUR TOOL SET, WE HAD TALKED ABOUT, UH, A LOT OF DIFFERENT OPTIONS, BUT AMONG THEM WAS WE HAD A LOT OF VERY SPECIFIC IDEAS ABOUT EVERYTHING FROM LIKE THE TIFFS OR THE TENANT BENEFITS.

WE WOUND UP WORKING WITH YOU AND LEGAL TO TRY AND ACTUALLY BROADEN AND GIVE YOU MORE LATITUDE KNOWING THAT THIS WAS A SPACE THAT, UM, FELT LIKE WE COULD PLACE A LOT OF TRUST IN YOU TO, TO DELIVER US, UH, A PRODUCT OR A SERIES OF RECOMMENDATIONS.

THE VERY LEAST, UH, ONE THING I I WANT TO BE REALLY CAUTIOUS ABOUT IS RETURNING TO THAT PLACE THAT WE STARTED WITH, WHICH IS BEING TOO PRESCRIPTIVE.

CAN YOU JUST TOUCH ON

[00:35:01]

YES, COUNCIL MEMBER.

UM, WHAT I WOULD SAY TO THAT QUESTION IS HAVING THE ABILITY TO EXPLORE ALL CREATIVE AND INNOVATIVE SOLUTIONS, I THINK IS SOMETHING THAT IN THIS SPACE OF AFFORDABLE HOUSING IN GENERAL, WE HAVE TO DO, I'LL GIVE YOU AN EXAMPLE.

THE REASON WHY I SAY THIS, THERE'S A CONCEPT CALLED ZOMBIE, ZOMBIE PROPERTIES.

THOSE ARE PROPERTIES THAT THEY'RE NOT FUNCTIONING ENOUGH TO ATTRACT THE MARKET.

THEY ARE IN SUCH A SCENARIO WHERE THE CAPITAL IMPROVEMENTS AND THE DEFERRED MAINTENANCE IS SO TREMENDOUS.

THEY SIT THERE AND THEY JUST KIND OF BECOME LIKE ZOMBIE PROPERTIES.

WHAT I'VE SEEN FROM OTHER CITIES IN TERMS OF THINKING ABOUT THIS ISSUE IN PARTICULAR, NO, AND I KEEP IN MIND EVERYBODY, THE BULK OF AMERICA'S AFFORDABLE HOUSING IS ACTUALLY NOWHERE SPACE.

IT'S NOT TAX CREDITS, IT'S NOT PUBLIC HOUSING, IT IS ACTUALLY IN THE NOAH SPACE.

SO TO THAT QUESTION, I WOULD SAY WE SHOULD EXPLORE ALL POSSIBILITIES.

AND IF THE COUNCIL SO CHOOSES AND IT MAKES SENSE, MAYBE WE EXPLORE IT.

BUT I THINK WE LEAVE NO STONE ON UNTURNED IN TERMS OF THINKING ABOUT DIFFERENT WAYS TO DO IT.

THAT'S WHAT I WOULD SAY.

AND THE TIMELINE, HOW LONG DID IT TAKE IN DALLAS TO GET THIS STARTED? ? WELL, I'M NOT GONNA SAY IT WAS BE THIS.

I DON'T, I DON'T KNOW IF IT'S GONNA BE THIS TIMELINE IN AUSTIN, BUT IN DALLAS WE MOVED AT ROCKET SPEED.

I WANNA SAY ANYWHERE FROM FOUR MONTHS MAYBE IF THAT, UM, YEAH, IT WAS PRETTY QUICK, BUT THAT'S NOT, THAT'S NOT NECESSARILY THE CASE FOR EVERY CITY EXAMPLE.

NOW, CLEVELAND MOVED SO FAST BECAUSE THE ENVIRONMENT WAS JUST RIP KEY BANK WAS READY TO DROP, I WANNA SAY 28, $30 MILLION OR SOMETHING OUT OF THE GATES.

AND IT MADE IT SIMPLE FOR THE CITY OF CLEVELAND JUST TO COME UP WITH 18 MILLION OUT OF THEIR TRUST FUND IN THAT SCENARIO.

SO IT JUST REALLY DEPENDS ON WHAT WE HAVE TO DO.

EXAMPLE, UNDERSTANDING THE PIPELINE IS GONNA BE IMPORTANT PROJECTING WHAT WE SEE COMING ONLINE FOR NEW CONSTRUCTION, BECAUSE I THINK THIS FUND, IF COUNCIL SO CHOOSES IS A TRIFECTA WITH THE THREE COMPONENTS.

UNDERSTANDING THE NOA BASELINE, THE PIPELINE OF POTENTIAL NEW WILL ACTUALLY DICTATE THE TIME.

THE FASTER WE GOT TO THAT, THE FASTER I, I BELIEVE WE CAN PUT SOMETHING TOGETHER, BRINGS SOME RECOMMENDATIONS FORWARD, I SHOULD SAY.

OKAY.

THANK YOU AGAIN FOR CLARIFYING THAT.

SO JUST TO END WITH A COMMENT, UM, YOU KNOW, MY WANNA WANNA THANK COUNCIL MEMBER RAIL FOR RAISING THE CONCERN AND I THINK WE'VE GOT AT LEAST A, AN EXPLANATION FOR DR. JOHNSON ABOUT HOW WE'RE CLASSIFYING THESE DIFFERENT PROPERTIES AND THE ACKNOWLEDGEMENT THAT, AND I THINK WE CAN ALL AGREE IT'S, YOU KNOW, FINANCIALLY AND FOR OTHER PRACTICAL REASONS IMP PRUDENT TO FOCUS ON EVERY SINGLE PROPERTY.

THAT'S JUST UNREALISTIC, NOR DO WE HAVE THE RESOURCES.

UM, BUT FOR WHAT I'M HEARING, GIVEN THE SCALE AND SCOPE OF THE NEWER PROPERTIES AND THE CHALLENGE SORT OF BEFORE US, OR PERHAPS OPPORTUNITY BEFORE US, UM, GIVEN THAT SOME ARE GONNA BE VULNERABLE TO REDEVELOPMENT OR DEMOLITION AND USE SOME OF THE STATISTICS YOU'VE EVEN RAISED THIS MORNING, UM, YOU KNOW, I WANNA BE REALLY CAREFUL ABOUT LIMITING OUR AREA OF CONCERN.

I DON'T THINK, I SUSPECT NOBODY HERE REALLY HAS THE APPETITE FOR, YOU KNOW, BANKRUPTING THE FUND, UH, PURSUING PROPERTIES THAT WOULD BE TOTALLY UNSUITABLE FOR THIS KIND OF EFFORT.

UM, AND I THINK WE COULD HOPEFULLY RELY ON DR.

JOHNSON'S JUDGMENT IN THIS SPACE TO GET US TO A PLACE AND GIVE US RECOMMENDATIONS AND GIVE US, UH, GUARDRAILS TO ENSURE THAT THAT WOULDN'T HAPPEN.

I'VE ALSO GOT SOME LANGUAGE THAT THE MAYOR HAS SHARED WITH US THAT I THINK WILL BE INCORPORATING AS A FRIENDLY AMENDMENT THAT I WANNA SHARE WITH Y'ALL THAT I THINK WILL ALSO HELP ADDRESS THE CONCERN THAT YOU'VE RAISED TOO, IN TERMS OF BEING REALLY SPECIFIC THAT WHAT'S REALISTIC AND WHAT'S NOT.

SO, UH, WITH THAT, UM, WANNA THANK AGAIN DR. JOHNSON FOR CLARIFYING THIS STUFF THIS MORNING AND OBVIOUSLY ADDRESS ANY CONCERNS THAT YOU, YOU OR OTHERS HAVE GOING FORWARD FOR HOW TO MAKE SURE THAT WE CAN GET THIS WORKING SOON.

THANK YOU.

WE HAVE A FEW MORE QUESTIONS FROM THE DIOCESE.

WE'LL RECOGNIZE COUNCIL MEMBER ELLIS FIRST AND THEN COUNCILOR ULA.

THANK YOU.

I WANTED TO ASK A COUPLE OF QUESTIONS ABOUT UTILITIES.

UM, AND THIS COMES FROM HAVING AN EXPERIENCE LIVING IN AN AGING APARTMENT WHERE A LOT OF THE, THE COST, I THINK THAT WAS ON THE

[00:40:01]

IS THERE A CONVERSATION ABOUT THE BALANCE BETWEEN WHAT IS, YOU KNOW, THE BUILDING ITSELF VERSUS SOME OF THE OTHER HARD COSTS THAT LANDLORDS ARE DEALING WITH RIGHT NOW? CAN YOU SPEAK TO YOUR EXPERIENCE AND ANY ANECDOTES YOU CAN TELL US TODAY? YES, COUNCIL MEMBER, UM, I'M, I'M, I'M LAUGHING, BUT BECAUSE THE ISSUE IN THE NOAA PROPERTIES, BECAUSE OF THE AGE, THE INFRASTRUCTURE, UH, IN NEW CONSTRUCTION YOU HAVE SORT OF A SEPARATION BETWEEN LIKE SAY PIPES AND UTILITIES, THINGS OF THAT NATURE.

BUT IN THE NOAA BUILDINGS, YOU HAVE LIKE FOR EXAMPLE, ONE GIANT WATER MAIN RUNNING THROUGH THE ONE COMPLEX.

AND IF THAT WATER MAIN THAT RUNS THROUGH THE ENTIRE COMPLEX, ALL OF A SUDDEN CRACKS AND BREAKS, IT'S A PROBLEM.

RIGHT? IF YOU THINK ABOUT, UM, HVHC SYSTEMS AND OLDER NOAH BUILDINGS, THOSE ELEMENTS AFTER THE LAST FOUR AND A HALF YEARS WORKING IN THIS SPACE AS PRESIDENT AND CEO OF A LARGE AFFORDABLE HOUSING COMPANY, NO, THAT WAS A CHALLENGE.

WHAT I WOULD SAY IS WE WOULD HAVE TO LOOK AT CRITERIA IN SELECTION.

AND LEMME TELL YOU WHAT I MEAN BY THAT, BECAUSE MINNEAPOLIS STRUGGLES HEAVILY WITH THIS.

IF YOU ARE IN A RACE AGAINST TIME TO TRY AND BUY A NOAH PROPERTY, WHEN A PRIVATE INVESTOR AND YOU'RE MATCHING THEIR PERFORMANCE CRITERIA IN TERMS OF THE SALE, YOU WILL NOT KNOW THE EXTENT TO WHICH THE UTILITIES, THE INFRASTRUCTURE IS PRESENT.

YOU WILL NOT KNOW WHAT'S REALLY BEHIND THE WALL.

YOU CAN DO SOME TESTING IN A FEW BUILDINGS HERE AND THERE, BUT YOU REALLY WON'T KNOW.

THAT IS SOMETHING THAT WE WOULD HAVE TO TRY AND FIGURE OUT A WAY TO DEAL WITH IF THAT SCENARIO PRESENTED ITSELF BECAUSE IT, IT, IT WILL BE A PROBLEM.

THANK YOU FOR THAT.

I KNOW AUSTIN ENERGY ALSO HAS A GREAT WEATHERIZATION PROGRAM.

UM, BEING ABLE TO OFFER INCENTIVES AND ASSISTANCE AND EVALUATIONS FOR PROPERTIES THAT, UM, YOU KNOW, WINDOWS CREATE A DRAFT DOORS ARE, UM, HAVE CRACKS AT THE BOTTOM.

AND SO YOU'RE ENDING UP WITH HIGH UTILITY BILLS, UM, THROUGH AUSTIN ENERGY OR OTHER PROVIDERS SIMPLY BECAUSE THE, THE UNITS THEMSELVES ARE NOT HOLDING ON TO THE HEAT OR THE AC UM, WHICHEVER ONE IS NECESSARY.

AND SO I, I'M VERY CURIOUS ABOUT THIS 'CAUSE I THINK THERE IS, UM, A BIG INTEREST IN THIS CITY TO PRESERVE, YOU KNOW, THE, THE AFFORDABLE HOUSING THAT JUST THAT WE'RE TALKING ABOUT TODAY, BUT AT THE SAME TIME TRYING TO UNDERSTAND WHAT, WHAT IS WEATHERIZATION? WHAT IS REPLACING WALLS OR BUILDINGS THEMSELVES? WHAT IS UNDERGROUND UTILITIES? AND SO, YOU KNOW, AS SOMEONE WHO'S NOT IN REAL ESTATE, I'M TRYING TO UNPACK, YOU KNOW, WHAT THAT LOOKS LIKE AND WHAT OTHER PROGRAMS MIGHT BE HELPFUL IN THIS CONVERSATION.

LET'S SAY THERE'S A BUILDING THAT'S ALREADY BEEN REFURBISHED, BUT THE UNDERGROUND UTILITIES ARE REALLY THE COST DRIVER AT THAT POINT.

UM, SO I'M, I'M CURIOUS ABOUT THAT TO SEE WHAT WE CAN DO TO POSSIBLY HELP IN THAT, THAT REGARD.

AND, UM, I JUST WANNA SAY I APPRECIATE, YOU KNOW, SOME OF THE QUESTIONS I HAD HAVE ALREADY BEEN ANSWERED.

AND SO CONTINUING TO WORK WITH THE CONSERVANCIES THAT ARE ALREADY IN THIS SPACE IS REALLY IMPORTANT TO ME.

UM, YOU KNOW, WHEN WE LOOKED AT THE ANTI DISPLACEMENT DOLLARS WITH PROJECT CONNECT AND DECIDED TO FRONT LOAD THOSE PAYOUTS TO MAKE SURE THAT THE, THE HOUSING THAT'S EXISTING ALONG THOSE CORRIDORS COULD BE PRESERVED.

UM, THAT WAS A REALLY INTENSE CONVERSATION, UNDERSTANDING, YOU KNOW, WHAT OUR COMMUNITY IS GOING TO GO THROUGH AS WE BUILD LIGHT RAIL TO, TO LOOK AT HOW WE PREVENT DISPLACEMENT ON THE FRONT END.

UM, SO I'M CURIOUS ABOUT THE GEOGRAPHY OF WHERE ANTI DISPLACEMENT DOLLARS THROUGH PROJECT CONNECT ARE NECESSARY AND HOW YOU MIGHT LOOK AT THE GEOGRAPHY OF WHAT OTHER UNITS ARE ARE PRIME THAT DON'T QUALIFY FOR THOSE DOLLARS.

YES.

COUNCIL MEMBER.

I THINK THAT IS PART OF AN EXERCISE WE WOULD DO IN TERMS OF DEFINING WHAT WE BELIEVE THE PIPELINE WILL BE.

AS CRAZY AS IT SEEMS WHEN YOU BUILD TOD, YOU ACTUALLY CREATE A SCENARIO TO FURTHER DISPLACEMENT.

THAT'S URBAN LAND INSTITUTE.

THAT'S THE RESEARCH.

BUT WHAT WE WANT TO DO, THIS IS SORT OF LIKE, IT'S REALLY TRICKY BECAUSE I DON'T NECESSARILY HAVE A DEFINITE ANSWER BECAUSE WE'D HAVE TO DO THE RESEARCH AND ANALYSIS TO SEE WHAT WE'RE REALLY DEALING WITH AND THEN TO START TO FORMULATE WHAT WE THINK WOULD BE A REALISTIC DISPLACEMENT STRATEGY AS PART OF NOA GIVEN THE CONTEXT.

THANK YOU.

THAT'S ALL I HAVE.

THANKS MAYOR PRO TEM.

THANK YOU.

COUNCIL MEMBER LANE.

THANK YOU.

UM, THANK YOU COUNCILMAN CHEN.

COUNCILMAN VALO FOR THE WORK YOU'VE ALREADY DONE ON THIS AND DR. JOHNSON AS WELL.

UM, I HAD A QUESTION ABOUT THE DEFINITION OF NOAH PROPERTIES.

UM, YOU HAD DEFINED THEM IN TERMS OF AGE 1960 TO 1990

[00:45:01]

UM, BUT, UH, BUT PERCENT, UH, MFI OF RENTS IS ALSO, UM, AN IMPORTANT PART OF THIS AFFORDABLE HOUSING, UM, SITU, YOU KNOW, DYNAMIC.

SO HOW WOULD THAT, HOW WOULD YOU CONSIDER RENTS IN YOUR DEFINITION? OR WOULD YOU THE, THE COSTAR DEFINITION, ACTUALLY IN 2016, NOAH BECAME A TERM IN 2016 AFTER COSTAR ONE OF AMERICA'S LEADING REAL ESTATE, UM, ANALYTIC GROUPS DEFINED THE TERM IN THAT DEFINITION BECAME INGRE INVESTMENT GRADE.

BUT THEY DIDN'T DO IT BASED ON RENTS.

THEY DID IT BASED ON AGE OF PROPERTY AND CONDITIONS IN THE PROPERTIES.

SO IT WAS NEVER REALLY DESIGNED AROUND RENT AS THE DEFINING, BUT BY CHANCE, BECAUSE THE BUILDINGS ARE OLDER RIGHT, THE RENTS TEND TO BE LOWER AND THEY LOWER BECAUSE OF DEFERRED MAINTENANCE AND CAPITAL IMPROVEMENTS.