Millions of taxpayer dollars subsidizing problematic apartments

Cross Creek Apartments (KXAN Photo/Todd Bailey)
Cross Creek Apartments (KXAN Photo/Todd Bailey)

AUSTIN (KXAN) -- "There’s no hot water. The whole complex uses the same boiler. By 8, 9 a.m.. it's out completely,” says Jorge Mechaca of Cross Creek Apartments in North Austin where he has lived for the past five years. The lack of hot water isn’t the only problem Mechaca has with his apartment complex.

He works around problem spots by creating temporary solutions. Recently, he fixed his own leaky sink by wedging a water bottle underneath the sink to hold up the pipe. He also ripped out old carpeting he says was making him sick.

“The whole apartment is falling apart and they don’t care,” says Mechaca. "We need some action. Either from the city, the owner, whoever. You know? Something."

In January, KXAN reported how the owner of Cross Creek Apartments, located at 1124 Rutland Dr., was issued an injunction by the city of Austin due to multiple code violations in 2015. According to a lawsuit filed in Travis County, in the span of six months, a city code inspector came by a total of 13 times and discovered the same problem of no hot water every time.

Cross Creek Apartments is one of numerous apartment complexes across the city that receives taxpayer dollars to provide affordable housing; yet, the same apartment complex is also on the Austin Code Department’s repeat offender list due to the laundry list of health and safety complaints. Records show the owner of Cross Creek received $2 million in city funds to allocate 200 units as “affordable.”

Three other complexes that also receive city funds for affordable housing are also on the repeat offender list.

"My heart is in affordable housing." — Royce Mulholland, owner of Cross Creek Apartments

Royce Mulholland, who took ownership of Cross Creek Apartments two years ago, says the way the city operates its repeat offender list is unjust.

"I mean, if you get hit 50 times for having chewing gum or some silly sort of thing, you get put on that list. It's an abomination,” Mulholland says. "I think if we had a fair shake from code compliance we never would have been on the repeat offender list. I think if code compliance did their job in the previous 30 years at Cross Creek, they wouldn't have let the property deteriorate."

The Austin Code department says the time-frame they give property owners to fix problems is “fair.” Austin’s Code policy states that once a new property owner takes over, they have 90 days to get into compliance with city codes.

Mulholland wants city leaders to review what he calls the department’s tactics. He also wants the department to work with owners like him, who are willing to invest and provide affordable housing for a city that is becoming less affordable as it grows.

“My heart is in affordable housing,” says Mulholland. “I do it because I believe people of low and modest means deserve a high-quality place to live in.”

While Mulholland says he welcomes scrutiny and has answered every violation that’s been presented, Austin Code maintains “there are still several structural repairs that have not been done, including fixing stairs, foundation, etc. While some units may have hot water, the remaining units do not.”

There are plans to transform Cross Creek into a complex that is similar to Mulholland's other complex in north Austin, The Palms. Mulholland says construction will take about a year, but it is already a year behind schedule due to issues with the property being in a flood plain and continuing code violations.

“I’ve had to put $1.5… $1 million or so of my own money to keep the project affordable. So, it’s not easy when you’re out talking to investors and code compliance has 15 people on site issuing violation after violation," explains Mulholland.

At the end of June, a judge granted the city's request to issue a temporary injunction against the owners of Cross Creek, who agreed to make repairs to the hot water lines within 45 days. Sunday marks the deadline. Cross Creek has racked up more than $200,000 in city fines in the last nine months alone. Austin Code says penalties will continue to accrue until compliance is verified.

 

Repeat Offender Properties That Receive Affordable Housing Funds

City records indicate four Austin apartment complexes have been given millions to provide affordable housing, but they are also on the repeat offender list for code violations.

Property City Funds # of Affordable Units # of Violations
Cross Creek Apartments $2,000,000 200 73
The Palms on Lamar $3,000,000 215 5
Fairway Village Apartments $3,523,000 128 65
Villas Del Sol $12,590,00 294 246

How the system works

Austin Code’s Assistant Division Manager Matthew Noriega said the system is complaint driven.

“We're not out looking to find violations on the property. Someone has to call in to make a complaint,” said Noriega. The complaints run the gamut from bed bugs to major structural problems.

The department says the average wait time for a compliance officer to check on the complaint after tenants call 311 is two days. At the time of KXAN’s public records request, Austin Code had nearly 130 complaints from tenants at Cross Creek Apartments.

Rental properties land on the city’s repeat offender list after they have received numerous health and safety complaints within a year. Once on the list, the property remains on the list for a minimum of two years.

Cross Creek Apartments is just one property on a list of repeat offenders that has only grown in the three years since the city implemented the program.

“We started out with only 20 to 25 properties,” said Noriega. As of early August, there are 61 properties on the repeat offender list. There are three inspectors dedicated to checking properties on the list, which Noriega says is just not enough. "If we had more resources, yes, we would be able to cover more."

Neighborhood Housing and Community Development (NHCD), the city department responsible for designating affordable housing dollars to places like Cross Creek, says it was not aware there were properties it helped fund on the repeat offender list until Austin Code brought the Cross Creek situation to its attention.

"It's unfortunate," NHCD program manager David Potter said. "We would hope that none of our properties that we fund would have any type of violation. Part of the reason we do provide our funding, is that properties can rehabilitate to become a better property."

KXAN pressed the department for answers on ways to improve the system moving forward, and avoid these types of situations.

“We’re looking at property conditions and usually the property conditions are not great but I don’t know that they rise to the level of code violations. But in the future, we can contact Austin Code to see if a property does have code violations, which would make a compelling case for funding it even more if we can help ameliorate those situations," Potter said.

Map: Repeat Offender List

App users, click here for the interactive map.

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