Colleagues, Tomorrow’s (December 19, 2023) agenda includes a briefing on the revenue projections for the Travis County Housing Finance Corporation. As part of the this agenda item, Commissioner Travillion and I, as members of the Housing Issues Subcommittee, would like to discuss the Austin Community Foundation’s Housing Accelerator Fund. To support this conversation, please find the below memo and the accompanying attachment.
Subject: Austin Community Foundation’s Housing Accelerator Fund
To: Commissioners Court
From: Housing Issues Subcommittee Members, Commissioner Travillion and Commissioner Howard
Date: December 18, 2023
Purpose: To provide background information on the Austin Community Foundation’s (ACF) Housing Accelerator Fund (Fund). The Housing Subcommittee members will be raising the Fund as a discussion topic related to the December 19, 2023, agenda item on the Travis County Housing Finance Corporation’s (Corporation) fund balance.
Recommendation and Rationale: That the Commissioners Court consider making a $1.0 million investment into the ACF Fund using available funds in the Corporation. Rationale:
- Impact Alignment: The Fund’s objective aligns with the County’s goal to increase the supply of affordable housing (both homeownership and rental) with a focus on homes that are affordable at or below 80% of the area median income (AMI).
- The Need: The current environment - high interest rates, high land costs, and high construction costs – makes it harder to develop affordable housing and, therefore, our community needs more access to low-cost, flexible funding to maintain and increase the affordable housing pipeline.
- Long-term Impact: The revolving (or evergreen) structure of the Fund allows ACF to recycle loan repayments to support more affordable housing developments overtime. Therefore, a one-time investment by the County will support the financing of affordable housing developments over the long-term.
- Financial Leverage: An investment by the County would be significantly leveraged by public and private funds, amplifying the impact the County’s investment.
- Support Projects Funded by the Corporation: Corporation staff has identified gap/bridge financing as one of the biggest needs over the next few years. Participating in the Fund will create a forum for ACF and County staff to jointly identify projects funded by the Corporation that may need additional support from the Fund to close the project.
About the Housing Accelerator Fund:
- Objective: to provide affordable housing developers with fast-access, flexible, and low-cost capital (interest rates between 1-4%) to accelerate the completion and occupancy of affordable housing projects for low-income households.
- Projected impact: The Fund, which is designed to recycle capital in an evergreen structure, is projected to leverage $280 million and create 850 affordable homes within the first five years. Over a 20-year horizon, the Fund is projected to support the creation of over 4,000 affordable homes, leveraging more than $1.0 billion in funding.
- Eligible uses: The Fund will make loans to support pre-development, land acquisition, construction/rehabilitation, and gap/bridge financing needs. The Fund is set up to make loans in the Austin-Round Rock MSA. However, ACF can restrict the County’s investment to projects within the County boundary.
- What type of housing will the Fund target?: The Fund will make loans to support the creation of both affordable rental units and homeownership.
- What levels of home affordability will the Fund target?: As a proof of concept, ACF has initiated eight loans, totaling $9.0 million, to affordable housing developers that created over 600 units of housing. Across this portfolio, 14% of the units were affordable to households under 30% AMI, 51% of the units were affordable between 31%-60% AMI, and 32% of the units were affordable between 61%-80% AMI. The AMI mix of the Fund will mirror ACF’s current affordable housing investments.
- Capital raise goal and current fundraising status: ACF seeks to raise $25 million from private and public sources, and to launch the Fund in Q1 2024. To date, ACF has raised $15.0 million from 11 funders/organizations, including St. David’s Foundation, the City of Austin, Shield-Ayers Foundation, and Tito’s. Vodka
Additional Information
- The City of Austin has invested $5.0 million in the Fund. ACF has set up reoccurring meetings with City of Austin’s Housing Finance Corporation to jointly identify affordable housing developments where the Fund can help accelerate the completion of the project. ACF has agreed to set up a similar process with the County’s Housing Finance Corporation.
- Over the last six months, the Housing Subcommittee has met with ACF to discuss the Fund two times. ACF has also met separately with the County’s Housing Finance Corporation staff and their consultants, Hilltop Securities.
Back-Up Materials Available
- ACF’s Fund Presentation
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