Waco’s housing shortage weighs most heavily on the bottom tier of its wage-earners, who are likely to spend more than 30% of their income on rent, a comprehensive housing study commissioned by the city shows.

The study, conducted by M&L Associates and partially funded by the Cooper Foundation, shows that the supply of affordable housing for lower-income households hasn’t kept up with demand as the city has grown over the last decade.

The housing study, which was unveiled at a special city council meeting Monday, is meant to guide emerging city efforts to improve affordability, aided by COVID-19 recovery money that the city has set aside for that purpose.

The study was based on U.S. Census data collected from 2010 to 2019. During that time, the number of households grew 10%, and 4,028 new housing units were added.

But only 540 were apartment buildings, which are often more attainable than a home for families with low incomes, said Marjorie Willow, a principal with M&L Associates. In the same time, short-term rentals and other seasonal or vacation homes increased from 231 to 617, many of them in minority-majority neighborhoods.

As of 2019, about a third of Waco’s households made less than $25,000 a year, and many of them struggle to afford housing. Under federal definitions, housing is affordable if rent or monthly payments are 30% or less of monthly income.

Willow said Waco’s median household income is around $40,000. Of households that make between 31% and 50% of the median income, nearly 40% have rents that exceed those affordability guidelines, the report shows.

Willow said income level is only part of the reason people in lower-income brackets tend to be in the most precarious housing situations, only a few missed days of work from falling behind on rent.

“An event such as losing several shifts, having your number of shifts cut for several consecutive paychecks, a car that breaks down and you can’t afford to fix. … We could use some emergency savings. These households would not have that option available to them,” Willow said.

Nationally, lower-income workers have jobs that expose them to the public, and the ongoing COVID-19 pandemic.

Despite the need for more affordable housing, Waco’s vacancy rate for rentals is unusually high. The rate rose to 11% in 2019 before falling by 1 percentage point the following year, placing the city well above the 5% to 7% vacancy rate Willow said is considered healthy and normal.

Most unoccupied housing units — 2,946 in 2019 — were vacant because they were uninhabitable, stuck in an heirship dispute, or set aside as storage space instead.

The study recommends developing a citywide Vacant Property Plan to keep those units accounted for in the future.

Waco Mayor Dillon Meek said he found that figure confusing, given the sharp rise in home prices in Waco over the last several years.

“It’s a pretty hot housing market, people are fixing up houses,” Meek said. “So the ‘uninhabitable’ part doesn’t make sense from a financial perspective.”

Waco City Councilwoman Kelly Palmer said as a social worker she found the data alarming, but not surprising. She recommended that the city and county raise their wage requirements to $20 for companies that get economic development incentives, a proposal that was in keeping with the study.

“The ways that intersecting identities of race, class, gender and disability compound on all these things. … I feel a deep sadness bearing witness to all this today,” Palmer said. “These are systemic issues that are deeply interconnected.”

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Willow said people in low-income brackets have only a shallow pool of housing options to choose from, but people in higher income households can always choose to live below their means in those less expensive units.

“This is a situation that we run into quite frequently,” Willow said. “There are simply not enough units at the lowest level.”

Councilwoman Andrea Barefield said she was especially struck by the thought of down-market purchases making life that much harder for low-income households to find housing. She asked the consultants how common it is other cities.

“People who have money keep money by saving money — this is not something we don’t know, and I understand I don’t have to buy what I can afford; however, I need to know,” Barefield said.

The study’s recommendations included building up the city’s Community Services Department, funding more affordable housing initiatives, raising the licensing fee on short-term rentals and changing the zoning code to incentivize denser development.

The study identified some even bolder steps:

Creating a rental registration program that would allow the city to inspect units and keep them from falling into disrepair,

Creating a housing trust fund that would continue to fund affordable housing initiatives, and

Creating a community land trust that would buy up vacant land specifically for affordable housing developments.

The housing department does plan to explore whether a housing trust fund or community land trust would benefit Waco, but not until the second or third year of a proposed plan of action.

The housing department could use all $11 million of the American Rescue Plan funding the city council voted to dedicate to addressing housing to make those plans a reality.

City of Waco Housing Director Galen Price said during the plan’s first year, the housing department would expand the city’s down payment and rehabilitation programs, increase putting more resources into job training and small business education programs. The department would also expand the city’s tenant-based rental assistance program and housing rehab programs.

During the plan’s second and third year, the city would also establish small business grant and loan programs, expand counseling offered to low-income homebuyers to buyers at all income levels and establish a rental rehabilitation program.

Waco City Councilman Jim Holmes said the proposed plan is aimed at helping people achieve financial stability, increasing the amount of affordable housing and improving housing stock

“A lot of housing stock in Waco, in my neighborhood, in your neighborhood, is approaching 100 years old, and it’s still good housing, but we’ve got to begin by looking at those houses,” Holmes said.

Price said he also recommends the city create a formal housing policy, a single-source working document that would guide the city’s housing programs.

“With the vast amount of need and housing inventory, it’s going to require a long-term commitment of our resources to achieve these goals,” Price said.

Price said some of the strategies M&L recommended, like creating a renter registration program that would allow the city to conduct routine inspections of apartment buildings, came up during the city’s last budget process.