Austin’s Declining Affordability and Urban Rail

COST Commentary: The blog ““, by Bill Oakey, focuses on Austin’s affordability concerns. As noted in the blog, there are many affordability issues. For many years the Austin City Council has demonstrated careless management of Austin budgets and costs. The City’s public policies have produced continuing, irresponsible increases in property taxes and numerous fees with inequitable allocations of the burden across its citizens and businesses.

The City Council has been reckless in not establishing spending limits with priorities which serve the greater good of the community today, and for the long run, while maintaining a sensible balance with affordability for citizens. Austin’s debt has increased to about $10,000 per man, women and child. Property taxes and fees are increasing much faster than inflation.

On top of this current situation, the City Council is proposing a 9.5 mile urban rail which will be the largest transportation project in the city’s history and this project is only the “initial investment” in an envisioned city wide rail system which has not yet been defined. It has no estimated costs and no schedule. It will clearly be billions of dollars, maybe tens of billions, over a very long period and will overlay and substantially increase the already announced property tax increase for the “initial investment.” As noted in several recent postings to this site, this rail will be totally ineffective in addressing the city’s congestion and its extremely high costs will siphon finite dollars from far more productive uses; result in major property tax increases; reduce the backbone bus service and increase transit fares for primarily lower income citizens who have no choice.

Like “water drop torture,” this continuing increase in taxes and fees is lowering quality of life for many citizens to the point they have no choice but to leave Austin. One “leading edge” indicator of this is the decline of families and public school enrollment in Austin. This is similar to the decline of school enrollment in Portland, Oregon which began with the implementation of draconian land use and growth regulations in the 1970s. Transportation policies led to the beginning of a major light rail transit system in the 1980s. This all resulted in rising unaffordability and public school enrollment declined about 40% from its high of over 80,000.

Austin was slower to follow Portland’s development and regulation path, but, has picked up momentum in the past 15 years. Mimicking Portland, Austin’s housing affordability index has risen more than 19% in the past 7 years and is rapidly closing the gap with Portland. Portland’s current affordability index of 4.8 (median house price divided by median household income) is lower than its peak of 5.1 in 2007, but, is still 30% higher than Austin’s 3.7. Austin’s is closing the gap with Portland as Austin’s index has risen from 3.1 in 2006 to become the most unaffordable major city in Texas by a wide margin. (Note: A “Housing Affordability Index” of 3.0 or below is considered affordable and above 3.0 is increasingly unaffordable. An increasing index means housing prices are becoming higher relative to household income)

Austin’s public school enrollment started to drop 3 years ago from a high of about 87,000. This to be very similar to Portland’s earlier experience resulting in the closure of many schools over a long period.

Portland’s transit agency also has a huge, unfunded liability in employee retirement obligations which resulted in the agency’s head stating they would be forced to cut transit by up to 70% if new funding sources were not established. Almost all of Austin’s “peer” cities have a significantly less affordability index than Austin and Austin is the only one without a major rail system and rail commitment.

Austin has become the fastest growing region in the nation and none of it is due to rail. The real question is: Should Austin mimic the failed rail approaches of many of its peer cities or should it use it’s demonstrated creativity and innovation to continue to outperform these peer cities as it has for the past several years.

Note: The affordability data discussed in this posting can be found in: 10th Annual Demographia
International Housing Affordability Survey: 2014″

Comments are closed.

©2007 Coalition On Sustainable Transportation