AUSTIN, Texas — In a city where unaffordability forces every dollar to stretch, buying a home can seem out of reach.
The City of Austin works with developers and charities to give people like Nicole Longnion a hand up.
“Oh my gosh, it was amazing,” Longnion said about moving into her home.
Longnion moved into her home located in the Mueller airport redevelopment. She purchased the home through Austin Habitat for Humanity in 2021.
“Mueller is a great neighborhood. It's very walkable, it's a great location, and we felt super lucky to be here,” Longnion said.
Then, she got hit with an unexpected property association fee increase.
Increasing Costs
“At the time of closing the homeowners association payment was estimated to be about $200 a month,” Longnion said.
Longnion said the fees jumped.
“They increased the homeowner's fees from $200 to $331 like within six-months time after I moved in,” Longnion said.
She said it was meant to be a temporary increase.
“They said because of the big freeze storm in 2021, it was going to be three years of raised fees. And then in 2024 it was going to come back down. And it doesn't look like it's going to come back down,” Longnion said. “I don't know what to do."
KVUE dug through development records, the community’s governing documents and city reports.
11 row homes in the Mueller Development costs taxpayers more than $555,000 dollars.
The Austin Habitat for Humanity’s website lists requirements for someone to buy a home through their new home construction program:
- Open only to U.S. citizens or legal permanent residents
- A credit score of 620 or higher
- Ability to pay a mortgage
- Meet income requirements (80% of HUD Median Family Income)
- Commit 200 hours of “sweat equity” volunteer time– various options available
- Must live and worked in our service area for the past six months
- An individual who has not held ownership in a principal residence during the three-year period ending on the date of the purchase (exceptions include death, divorce, or natural disaster)
“We went to all this trouble. You know, this was supposed to be our shot, you know, to have an opportunity to to be a landowner, to get ahead, to pass something on to our children. And we may not be able to hold on to it because of these extra fees,” Longnion said.
The KVUE Defenders found unexpected rising property association fees is not only an issue with Austin Habitat homes in the Mueller Development.
A citywide problem
In May 2022, Austin Housing Department leaders told the Housing and Planning Committee the city’s affordability programs do not set people up for long-term affordable ownership.
“We’ve been in those situations many different times where they are unable to really absorb that increased cost,” Mandy DeMayo, Austin Housing Deputy Director, said in the Housing and Planning Committee Meeting, May 2022
“As the costs rise, as the homeowners association agreements change over time, that's where the city loses our ability to actually protect and provide that stability for the homeowners that end up in those units,” Sam Tedford, Former Austin Principal Planner in the Housing and Planning Department, said in the meeting.
“The special assessments down the road create, frankly, an uneven burden for our low- and moderate-income owners,” DeMayo said in the meeting.
No one from Austin Housing and Planning would go on camera.
“The City works to maintain pricing sustainability through our developer subsidy and incentive programs. Unfortunately, there may be external market factors that increase costs across the board. Over the last year, homeowners everywhere have felt the pressures of increased insurance fees and rates, which subsequently can raise HOA fees. The UT Entrepreneurship and Community Development Clinic at the University of Texas School of Law partnered with the City to help review best practices and applicable laws to address cost burdens posted by condominium assessments. The City is currently reviewing those recommendations and assessing the feasibility of implementation,” Kasi Jackson, Public Information Specialist for Austin’s Housing Department, wrote in an email to the Defenders.
Clinical Professor Heather K. Way and students Madison DeLuca and Sarah Luckey Clifford published their findings Dec. 2022.
“This is a real, real serious issue with significant negative consequences for some lower income individuals who are purchasing affordable, below-market rate homes in the city of Austin. But, we did find some potential solutions as well to this issue,” DeLuca told KVUE Defenders.
Possible Solutions
The report, “ROADBLOCKS AND POTENTIAL SOLUTIONS to Affordable Condo Ownership in Mixed-Income Developments in Austin,” shows seven recommendations to help improve Austin’s affordable homeownership program:
- “Ensure that restrictive covenants governing affordable housing requirements in the City’s affordable housing programs are recorded before January 1st.
- “Amend the City’s Memoranda of Understanding (MOU) with the Travis Central Appraisal District to address units under construction as of January 1st.
- “Set a sales price cap for affordable units that adequately accounts for condo assessments and provides a stronger buffer for assessment increases.
- “Require or encourage the adoption of discounted condo assessments in large luxury condominium developments.
- “Create an emergency homeowner assistance fund to mitigate the impacts of increased condo assessments and property taxes in affordable homeownership programs.
- “Increase Post-Purchase Stewardship of Affordable Homeownership Units through the following: (1) requiring buyers of affordable units to participate in post-purchase education; (2) conducting an annual check-in with buyers of affordable units; (3) hiring a property tax firm or otherwise providing support for homebuyers who experience initial issues with their property tax appraisals.
- Create an enhanced roadmap for developers.”
“I did feel really hopeful when we saw that some other cities were tackling this problem with great success,” DeLuca said.
For folks like Longnion, a possible solution DeLuca and the other researchers found was a city-backed emergency fund.
"Often these emergency funds are distributed as low interest or even zero interest loans that then can be repaid upon sale of the home," said Longnion.
The city must work to make sure solutions don't create different challenges.
Longnion’s home came with an affordable housing covenant. The goal is to keep the home affordable for others if she sells and keep property tax low for her as Austin grows.
If Longnion sells the home, the buyer must qualify for the low-income affordable housing program. Those requirements include a yearly household income of no more than 80% of the Annual Median Family Income (MFI) for the Austin-Round Rock-San Marcos Metro.
To keep property tax low and the home affordable for a resale, the appreciation on the property is limited. So, Longnion’s investment grows slower than homes not part of an affordable housing program.
Records show the max buyer appreciation for Longnion’s home increases by $3,700 a year for the next 99 years.
Longnion said she used the City of Austin’s Down Payment Assistance program (DPA).
Through the affordability program, a homeowner can receive an interest-free loan to use as down payment. The loan matures and is forgivable after either five or ten years, depending on the amount provided. However, the loan must be paid if the homeowner sells, refinances, gets a home equity loan, vacates, leases or transfers title before the maturity date.
It would cost Longnion more than $10,000 to sell her home.
“It makes me feel unwelcome in this community because the fees are so high,” Longnion said.
Austin’s Councilmembers backed the UT report and recommendations. The council directed the city manager to review the report, implement what’s possible or prepare items for Council if necessary. The manager at the time, Spencer Cronk, was fired before reporting back to Council.
The KVUE Defenders found where the city is implementing some of the recommendations.
For example, the Brodie Oaks Planned Unit Development was approved by the City Council on Sept. 21, 2023. City records show, “Landowner must provide a plan for managing homeowner association fees or include an assumption that a homeowner will be required to pay an ownership association fee when determining the maximum affordable sales price.”
Mueller Property Association Fees
The Mueller Master Community approved 2023 budget shows the monthly assessment payment for folk like Longnion goes to pay the Master Assessment ($45), Mixed-Use Assessment ($1), Pool Assessment ($12) and Row Home Assessment ($283).
“I just wish they (Mueller Property Association) would work with us. We're not asking for $0. We're asking to reduce it to $100 and possibly opt out of some services,” Longnion said.
The Association’s 2023 budget shows $960,000 going to pay off storm deductibles on row homes. Insurance premiums, nearly $1.4 million in 2023, was a 10% increase in cost since 2022.
The Association is responsible for repairing exterior elements of row homes. The deductible cost is passed along to the owners. Since the insurance covers all row homes, the collective damage cost is split among everyone.
Longnion’s home wasn’t finished being built until after the February 2021 winter storm, which damage to other homes in the development led to her first increase in monthly assessment payments.
A hailstorm in Sept. left damage again across the Mueller development.
“I don't think my roof was damaged. Ours is not a shingle roof. We didn't even lose our skylights,” Longnion said.
Longnion said she worries her assessment fee will increase again.
“However, just because insurance rates are going up sharply does not mean the POA assessment rate you pay will also increase sharply next year,” Joe Ristuccia, Mueller POA Community Manager, wrote to homeowners.
Ristuccia also refused our request to go on camera, but answered some of our questions via email and shared two letters sent to homeowners about the Sept. 2023 storm.
“We have not determined what the assessments will be for 2024 yet, but we feel fairly confident at this point that any increase will be minimal and nowhere near the 10-15% increase that home insurance may go up,” Ristuccia wrote to the Defenders.
He said they’re also considering another way to help row home owners..
“The POA Board implemented an assessment fee structure two years ago whereby owners of smaller row homes (which include those in the affordable homes program) pay less than larger row homes. We’re exploring broadening this tiered fee structure further for the next budget, which would mean a wider spread between what owners of smaller row homes and owners of larger row homes pay,” Ristuccia wrote.
Ristuccia told the Defenders the Mueller Foundation offers ways to help owners pay for assessments.
“Yes, the Mueller Foundation, a nonprofit organization that exists to extend affordable housing at Mueller beyond the first sale, does sometimes offer loans or grants to those in Mueller’s affordable homes program to help cover increased assessments or pay for assessments if a life emergency comes up,” Ristuccia wrote.
The Mueller Foundation was formed by Catellus, the developer for the entire Mueller airport redevelopment.
Resources on the Mueller Foundation website include the Mueller affordable home ownership program, links to other non-profit community programs for credit counseling and homebuyer education, contact information for a property tax consultant, plus refinancing information and resale information — both of which could result in Longnion being forced to repay her down payment assistance.
The KVUE Defenders followed-up with Ristuccia for more information.
We asked about information on the loan/grant program to help people pay for their assessments, if payments made to cover the Feb. 2021 winter storm deductible would be finished in 2024, and if homeowners could opt out of community services to lower assessment fees. He did not respond.
The foundation’s last posted audit is for 2020 and 2021.
“It makes me feel like I can't enjoy it if I'm struggling so much to afford it,” Longnion said.
Longnion says she plans to stay in her home. She’ll continue to stretch every dollar and continue to fight to have the assessment fees lowered.