When the city leaders of Austin, Texas, decided in the late 1990s to move the local airport to a larger tract of land, they faced a vital question: How could the city best use the soon-to-be-abandoned 700 acres (283 ha) of prime land that lay just a few miles northeast of downtown?
Hundreds of people, including residents, municipal officials, architects, and planners, joined in the conversations that would lead to an answer. East Austin, the area of the city containing the land, had not experienced new housing starts in years and needed a boost in economic development. The city settled on a plan to build a diverse, sustainable, mixed-income, mixed-use development that would include lots of green space and create new jobs in a wide salary range.
A key part of the city’s vision for the space was to offer one quarter of the residential properties at affordable rates. “The groups that helped put forward the idea for the redevelopment wanted a range of housing prices, community diversity, open space, and economic opportunity,” says Pam Hefner, project manager for Austin’s Economic Development Department.
Called Mueller Austin after the old Robert Mueller Municipal Airport, the new development opened in 2006 and is slated to be completed in 2020. It is expected to be home to about 13,000 people and provide 13,000 jobs and 4 million square feet (372,000 sq m) of office and retail space. It already includes rental and for-sale residences ranging from affordable to luxurious. Households making 60 percent of Austin’s median family income can find affordable apartments in the community, and those making 80 percent of the area median income can find affordable for-sale homes.
Austin’s innovative and comprehensive approach to Mueller’s redevelopment has earned the city awards from the ULI Terwilliger Center for Housing and the U.S. Department of Housing and Urban Development. Here are three things that have made income integration a reality at Mueller:
- Public/private partnership. The development was built through a partnership between the city and land developer Catellus Development Corporation. They structured their master development agreement in a way that reduced certain costs of development, including financing and the carrying costs of the land. The financial underpinnings of the agreement were an important part of the equation that ultimately allowed the planners to achieve their social goals, including setting aside affordable housing. To keep a quarter of the homes affordable, the city, master developer, and homebuilders agreed to a reduced return on the affordable housing portion of the project.
- Interspersed and indistinguishable. When viewed from the street, the affordable and market-rate homes are indistinguishable from each other. “Drive down the block and I challenge you to determine which are market-rate and which are not,” says Deanne Desjardin, Catellus’s vice president of marketing and communications for Mueller. Every street has housing at varying price levels, a tactic that may reduce microsegregation by income in diverse neighborhoods. Though the market-rate homes may have more rooms and different interior features than those offered at lower prices, identical exteriors contribute to the coherence of the community, she says.
- Continued affordability. In mixed-income communities, for-sale homes that start off at below-market prices often are later sold at market rates, reducing the options available to the next generation of lower- and middle-income buyers. To maintain a range of affordability in the community’s owner-occupied homes, Catellus created the Mueller Foundation, a nonprofit corporation that holds second mortgages on all the affordable homeownership units. Purchasers agree to share an increase in equity with the foundation when they sell, limiting their own profit to 2 percent per year of ownership—allowing owners to accrue modest equity while ensuring that the same opportunity remains available to others in perpetuity. The foundation also has the right of first refusal when owners sell, allowing the foundation to ensure that the next purchaser also is a household in the intended income group.
As housing costs have increased, middle-income buyers have started having a hard time affording homes, Desjardin says. To address that problem, Mueller will begin pricing some homes to be affordable for families making up to 120 percent of Austin’s median family income.
Maya Brennan, vice president of the ULI Terwilliger Center for Housing, is managing editor of the How Housing Matters website.
