Evaluating a new model : the participation of private equity in the preservation of unsubsidized multifamily housing for middle-income renters




Becker, Ian David

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Preserving affordable housing is becoming increasingly difficult in numerous cities in the United States experiencing shortages of affordable rental housing units. Moreover, what qualifies as “affordable” stock, and the populations such stock should be serving, are objects of perpetual debate. Over the last few decades as Austin’s housing market has ballooned and the number of cost-burdened households has grown, the affordability issue has become “dire” in the City’s own estimation. Aside from using public funds to create or preserve affordable housing, a perennial interest for policymakers in Austin and other cities experiencing affordability crises is whether, in lieu of market controls on the appreciation of housing stock and land values or the provision of more subsidized units, cities can incentivize or spur preservation of the unsubsidized affordable housing stock in the private market. The idea of establishing private equity funds fed by high net worth individuals, foundations, banks, and other institutions willing to accept a lower rate of investment return relative to typical “market” returns in order to safeguard such “workforce housing” (and by extension, workforces) has recently taken root in Austin and across the country. Affordable Central Texas (ACT), a non-profit organization, recently formed in Austin as a collaborative effort of numerous groups and summits that have focused on “workforce housing” preservation over the past roughly eight years in Austin. Following a broad literature review examining the national housing crisis and situating this new model of “housing preservation” in a spectrum of political ideologies that govern housing policy, this report evaluates the activities of ACT in relation to Austin’s housing needs and distills recommendations gleaned from interviews with numerous fund managers and public officials related to property management, subsidies and rental assistance, public-private partnerships, and using more accurate housing-related nomenclature. This report ultimately argues for the necessity of placing policy interventions in housing markets in their proper ideological contexts and resituating housing as first and foremost a site of shelter rather than primarily a vehicle for investment and economic growth.


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