Airbnb invests $6.4M in Austin affordable housing
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Airbnb will spend $6.4 million to help turn a long-vacant property in northeast Austin into affordable housing, part of a new national push by the company to get stalled housing projects off the ground.
Why it matters: The city bought the former Home Depot site at I-35 and St. Johns Avenue two decades ago, but efforts to develop it have dragged on for more than a decade.
- Airbnb's investment fills a financing gap that had kept the affordable housing portion of the project from moving forward, city leaders say.
Driving the news: The short-term rental company will fund construction of 201 affordable units at the St. John site, which will eventually include over 500 units of mixed-income housing, retail, an expanded park and public art.
Catch up quick: Rising interest rates and falling rents in 2022 created a financing gap that put the project in limbo, Mayor Pro Tem José "Chito" Vela said at a private event Monday.
- City officials considered bond funding and federal low-income housing tax credits, but they may not have completely filled the gap or would've further delayed the project.
- "We were kind of in this gray area, and that's when the Airbnb funding came through," Vela added.
What they're saying: Airbnb co-founder and CEO Brian Chesky says the company selected Austin for its initial investment in part because of the city's housing policies and falling rents.
- "If I could shine a light on a city in the United States, that city would be Austin, Texas," Chesky told city leaders and housing advocates Monday.
Between the lines: Airbnb has faced years of criticism that converting homes into short-term rentals reduces housing available to residents and can push up housing costs.
- Chesky pushed back on that argument Monday, pointing to Austin's falling rents since pandemic-era highs as evidence that increasing housing supply is a more effective affordability strategy.
- He contrasted Austin with New York City, where restrictions dramatically reduced Airbnb listings but rents have continued to rise.
Yes, but: The new affordable housing units at the St. John site won't be allowed to operate as Airbnbs, Chesky says.
Zoom in: The investment is the first from Airbnb's new Housing Accelerator, which the company says will provide $250 million in financing to help unlock more than $5 billion in housing development over the next decade.
- As part of the program, the company will also give out five $1 million grants for entities, companies or nonprofits that have ideas for how to make housing construction more affordable.
What's next: Airbnb will also release a "city index," which will display which cities' housing policies have led to declining rents.
- "I'm sure Austin will be very toward the top of that list," Chesky adds.