Episode 27: Impact Hub Austin
Ashley: “Forget new billion-dollar tech startups, the real unicorns in today’s economy may be the mid-priced single-family homes that a cross-section buyer can actually afford. No segment of the housing market has so many potential buyers, just no scalable solutions.”
Mousetrap: So, today we head north on thirty-five to visit with Ashley Philips over at Impact Hub in Austin, Texas to hear how they’re helping folks build companies that are both for profit and for people.
Introduction: Hey look! It’s the Double Wide Dudes.
Mousetrap: Oh, it’s go time! Alright, alright. Welcome back to another episode of Double Wide Dudes. We’re already sitting here in late February, AP, how is the year treating you so far?
AP: It’s been a wild year so far Mousetrap. I don’t know about you, but these days are really just running together, I can’t even believe we were this far into it.
Mousetrap: I mean this time last year we were over at Geekdom, sitting in a brand-new company, months, two months in, just getting everything started and it’s crazy how just another year go by, you know?
AP: Yeah you know it’s funny we kind of come full circle, we left for a minute but now we’re back there again waiting on these toilets at the new office, you know a septic tank permits, inspections all that. Toilets just don’t happen as fast as you might expect, so actually really cool, really cool to be back at Geekdom. I don’t want to say permanently because we’re definitely going to be moving into the office as soon as everything’s ready to go.
Mousetrap: But I mean you come and go from back and forth to Geekdom pretty often, you know?
AP: Yeah, yeah, I love that place and sometimes it’s just nice to get away from the kids at the house and from you guys at the office, just get some of that work done, right?
AP: But it’s awesome to have you guys back there to, especially with that video rolling out where your kind of the star of the show, right?
Mousetrap: Yeah, I wouldn’t say star but I had a good time filming that and uh it turned out great man, it’s a really heart felt story and you know we don’t want to get too much into it because we’re going to cover it in the next podcast or one of the ones coming up but it’s a beautiful thing, man.
AP: Yeah, it really is, it really is and again Adam over at White Cloud Drones continues to do his thing, you know if you want to see it, it’s on Facebook we just put it up Friday it is a beautiful story, beautiful message just overcoming what life throws at you and like Mousetrap like you said, we’re going to get more into that next week with the Smith family there but what else going, man?
Mousetrap: Nothing much man, I mean it’s amazing to have like a brick and mortar actual location. It’s just a beautiful thing man and really seeing that place develop every day you go in there something new is getting done. Of course, it’s under construction, it’s not a hundred percent done right now but that’s the bulk of my excitement right now getting all that knocked out.
AP: Yeah, hundred percent, hundred percent. And it is really cool to be able to physically walk someone through a home and show someone you know what it is they’re purchasing but I think you know for me at least what’s the most exciting about what we’re building over there it’s not just you know, it’s not just a Braustin thing, we started as a new company last year but you know, if those families who chose to buy from us last year didn’t make that choice well then we’re not building this location. You know so it was really, I guess validation, from these families that you know what we were putting together and trying to create as a team was exactly what they’re looking for.
Mousetrap: And it just built into fruition, you know?
Mousetrap: Well, cool man. What we do for this episode, you took a drive up north, huh?
AP: Yeah, I went up to Austin, Texas there to visit with Ashley Phillips. She’s the managing director of Impact Hub in Austin, which is a super cool collaborative workspace, kind of like Geekdom here in San Antonio. What their mission is, and Ashley will explain more here in a minute, you know they’re a worldwide organization and really their goal is to create entrepreneurs and to create startups that are really focused on making a social impact in their community.
Mousetrap: Nice, nice. Well, I’m excited to hear AP. Let’s jump right into the conversation.
Ashley: Hi, I’m Ashley Phillips and I am the managing director of Impact Hub Austin.
AP: All right, so we’re up here in Austin at the Impact Hub. For those of y’all that can’t see it, it’s just the coolest looking building, the decor is just awesome Ashley. What is Impact Hub?
Ashley: Impact Hub is a part of an international association of co-working locations so there’s over one hundred around the world and Impact Hub here in Austin. We have two locations and it’s a community, and a co-working facility that exists to support mission-based ventures and creatives and activists and their work. So, we are a community of people that believe that business and profit should be in the service of people and planet.
AP: That’s awesome.
AP: That’s definitely in line with us at Braustin that what really drove us to Impact Hub and make the trip up here, you got a lot of folks working on the mission of the affordable housing. Are there any individuals or companies that really stand out to you here at Impact Hub?
Ashley: Yeah, so you said we had an initiative recently in the Fall of 2017 where we really wanted to focus on affordability in Austin specifically around housing and there was a cohort of nine teams that really kind of rallied around different housing issues specifically around financing, efficiency and policy and data and how that data creates good policy and how better data can understand the issue more readily. And so in that cohort there are a lot of amazing ideas and I was just telling you earlier there is this group that is called Affordable Central Texas and Affordable Central Texas is actually a nonprofit that is the—the language is they’re the sponsor of an equity fund called the Austin Housing Conservancy and it’s actually a funding vehicle for investors and they in a sense acquire multi-family naturally occurring affordable housing in Austin already that is in a sense primed to be bought and flipped and become like a luxury condos and unaffordable. So, this, the Austin Housing Conservancy acquires multi-family units that are affordable, they preserve them, and they tack rent increases to wage growth in the area so that it will always be affordable to our work force. So, I’m targeting sixty to one hundred twenty percent MFI in the Austin area and that the hope is to raise five hundred million dollars in the next ten years and to preserve fifty thousand units for our workforce. So that was one idea that came out of it and I think what was really cool about that team is it’s creating, it’s a social impact investing vehicle so that people can not only have a return on investment that is really competitive in its asset class but you’re also continuing to create the Austin that is accessible and available to all. Where you can have your teachers and your firefighters and your junior developers and your all of these, all of this workforce that we attract, we need to also give them a way to live here and enjoy the city that they want to come and be a part in the first place.
AP: Right. Yeah, Austin is self-described as the Silicon Valley of Texas, when you go Downtown you actually see that but sometimes folks lose sight that when you build a company you need people to work for you and will work for the company and those folks have to have an affordable place to live. So, you have involved in social impact issues for a while now here in Austin, right?
AP: Why is affordable housing so important to a growing city like Austin or San Antonio or Houston?
Ashley: So, this is interesting, and my mind just went down the rabbit hole and when I think about affordable housing this is one actually conversation that came up within the cohort because people were like, what is affordable housing? You know and so there are two pretty specific kind of buckets when we think about affordable housing and one is what people call, Capital A Affordable, which is subsidized housing. Housing for our members in the community that aren’t able to find a product on the market that is going to be able to be what they need and then there’s that naturally occurring affordability, which is something that’s a product that’s not subsidized that the workforce can buy. And what we’re finding, every single community needs you know Capital A subsidized affordable housing and different communities do that better than others but it’s something that is there and that most communities need and have. What Austin is realizing is that our growth is actually, we’re growing so much that we don’t even have a product for the workforce as well, we don’t have a product for not just extremely low and low income families but you know, middle income families and the workforce and like so we are becoming a city that either you know, the way you think about San Francisco you’re either a millionaire or you’re in subsidized housing, there is nothing in the middle and it’s so important for cities to think about this cross-section and this continuum of economic opportunity because you ultimately if you don’t think about that, you ultimately lose what it is in your city that attracted everybody here in the first place.
AP: So, in your position you get to work with folks at the city, with folks in business that are you know their job is to bring profits to their shareholders and then also to social conscious entrepreneurs, you were talking about how all three have a lot of common ground. What do you see that all three of those folks or those groups have in common when it comes to affordable housing?
Ashley: So, from government, local government perspective you know it’s incumbent upon our leaders that we elect and the staff that is employed by the city of Austin to create the infrastructure and the policy that caters to the needs of our citizens. So, when people can’t live here anymore that’s automatically a local government issue. Now, we are strapped a bit because of federal laws and so there’s not a lot of, so government can’t be the be all, end all. They don’t have all of the tools that they need, they don’t have the space to do everything that they want to be able to do and when they even try sometimes, you know, we get our hands slapped. And so you know there’s that but there is an embedded desire and need by government to create a system that speaks to and meets the needs of its citizens and so that’s already embedded. And then you know, we think about kind of our for profit or business community. I think the common ground is you know they, our business community we see from a from an evolution of what it means to be a business and a conscious business, we see that the market if I’m going to say that and put, you know put it in quotes, is demanding something more than just a financial return and the market is me and you, the market is the consumer and we get to say what we think is important and I think in a lot of ways what we’re realizing is that making money and making impact are not mutually exclusive and for whatever reason we have held those things in two different hands and we have thought that we had to do either one or the other. You know and that comes from just the way we set up the things legally, your either nonprofit and you have a mission, or you are for profit and you don’t worry about that, you know what I mean?
Ashley: And so I mean that’s just a byproduct of kind of how things have been set up before and so you see the rise of like to B-Corps, who get to think about more than just the bottom line. You see the rise of impact investing, you see you know Blackstone, which is this huge asset manager has the most assets under management, I think in that nation. The CEO wrote a letter to all of his companies that he’s managing to say, he said ‘look if you’re not thinking about the impact you’re making in your communities, like we can drop you.’ This impact is like being moved up from the kids’ table to the adult table, it’s like this is not something we’re just thinking about because we need to you know have a good PR, this is important, like if we don’t do this then our communities fall apart like if we don’t think about all of the market then we’re actually then our communities are going to fall apart and that’s not good for us either, you know? It’s just an evolution of thought around business and I think there’s just so many people on the leading edge of that and wanting to figure out how, so for-profit businesses they’re like you know we want to be contributive to Austin, we want to make sure that how we show up not just happens through our CSR Director, our social responsibility but it happens in the way that we hire, it happens in the way we think about workforce housing and the employees we bring on. So, corporations and businesses are becoming a part of that conversation because they understand it’s important for the longevity and the health of their companies as well.
AP: We have covered on a earlier podcast, especially here in Austin, developers buying these manufactured home communities where the folks own the home but the ground was sold out from under them and they just had no place to go. How do you see factory-built housing, manufactured/modular, how do you see that playing a part in the affordable housing issues in Austin?
Ashley: I think you know and I might be biased but housing, especially affordable housing, is a huge opportunity for innovation and I think modular manufactured housing is the way that is going to happen. Like it is just not sustainable to do it the way we’ve been doing it before. So, you guys are on the bleeding edge there and congratulations for that. I think that what’s hard is that land is so expensive and you know, arguably this whole idea of drive ’til you qualify like is also really hard in the sense of like, if we’re going to move away from the city to find land that’s less expensive and then you know be available there that’s really great if we also, if our job is also. But if we have to you know if transportation is put into the mix and how much we have to pay on that then we’re still in our unaffordable place, you know, if we’re doing housing that if we want to be more efficient about it, if we want to be able to bring more of it on-line, which you know from a supply demand issue like we’re so under supplied in Austin like manufactured housing, modular homes, smaller footprint homes like it has to be a part of the solution. It has to be. I think that the way we do that has to be very thoughtful because we are such a high demand city that even you know dumping supply into the market doesn’t necessarily make things affordable.
Ashley: Right because then you just have more people who have more access to resources grabbing those up quickly and so I think that’s a good question and I don’t have the answer completely but I do think that the future of owning a home or not even owning a home but being in a home, whatever that looks like is manufacturing and houses is a huge part if not the way we’re going forward.
AP: On an earlier we interviewed a lady out in Phoenix, Arizona, was Mrs. Singleton and after three years of zoning and getting with the city, they finally were able to get the city to approve I believe a half acre and acre in the heart of Phoenix, where they could build a pocket styled community of tiny homes.
AP: And that was specifically for, their mission is to help homeless veterans not be homeless anymore.
AP: And what was interesting about her mission wasn’t like giving them a house, her thing was to provide a home where they can own, a mortgage where, you know they could pay that, you can have an affordable house in a part of a very big city. Are there places available in downtown Austin or around Austin where maybe with a little help of some zoning changes, that might be an opportunity for investors to provide a solution?
Ashley: Yeah. Oh my gosh that is the crux of it right there. I don’t know if you know we’re going through our land development code re-write right now in Austin, the last time it was written was 1984.
AP: Wow. A lot has changed since then.
Ashley: A lot has changed since then and we’re in the teeth of it right now though. The third version of the code came out just less than forty eight hours ago and actually what that version suggests is less density in the core city, not suggest what it proposes like and so there is a legitimate and completely understandable concern from these neighborhoods that have been in Austin forever before it was sprawl and these and before it was huge to be able to preserve the character of the neighborhood to be in these places that they’ve grown up with and to continue to live there and not be priced out. That is ultimate to families and at the same time like because where we are in there’s so much demand if we restrict the number of people that can live and it’s going to be restrictive at some point but if you were to completely develop the core of our city there would be it’s still very, very, very low density in lots of ways and so I think there is opportunity specifically around transit corridors and different pockets to really allow for yeah like you said these modular tiny home communities, where you can do a lot of density on an acre and offer that product to a community and a market that wants it and I don’t honestly from being here now and knowing where the local conversation is—there’s just so much wrapped up in how to rezone our central city. I think there’s a huge opportunity there and I think in order for it to work what has to happen is developers have to make the neighborhoods their development partner like if that makes sense they have to include the neighborhood and what it looks like in order for it to actually have a stakeholder buy-in because this idea of protecting our neighborhoods, I actually just heard our council member Delia Garza said, she goes ‘I’ve become offended by this language what are we protecting our neighborhoods from more families and more houses like why are we using this language of protecting our neighborhoods’ and so she’s one of four council members that are really trying to support a new code, all of them want a new code but it’s just what that code looks like but that was one thing she said that I thought was an insightful comment. So, yes, I do think there’s opportunity there. I think it’s a really hard uphill climb. There is interestingly enough in our extraterritorial jurisdiction that are not inside Austin better, zoned differently and have different rules around them, they don’t have as many land use regulations or all that kind of stuff, so there is opportunity there to create like different demonstrations around what things can look like and there is actually going to be a tiny home community being built in South Austin in a little in E.T.J zone and that will most likely get annexed at some point because it’s surrounded by Austin. But what I will say about that is that’s not even necessarily, depending on the demand, is not necessarily affordable, right? Because supply and demand is what makes something affordable. And so it’s more affordable because it’s a smaller footprint and you’re not paying for the land and all of that kind of stuff, but if like you know if so many people want to do that, if that becomes something that’s like a really cool, new hip thing that the affordability factor can go away, you know what I mean?
AP: Right. I was reading about some of those are 400 square foot homes going for $120,000 and you don’t own the land.
AP: And to me that didn’t strike me as affordable.
Ashley: Exactly. I think that the idea is and the hope is that you know depending on how you manufacture the housing, and like you said one of the things that you guys really thought about, was how do we keep the product quality and very accessible, like 400 square foot for $140,0000 that seems like a lot per square foot, you know what I mean. And it is. So I think that there’s a lot of maturation that can happen in this industry. I know that tiny homes in lots of ways to do what I have seen is between you know like these $35,000 marks and these $150,000 marks depending on the amenities, depending on how they’re built out, and all that kind of stuff. So, those products can meet a number of needs, they can be you know they can be extra unit on some you know wealthy person lot where they put their you know mother in law or they can be you know a young professional to start their own life and have a little bit of an investment and build equity and then move up or could be a place that somebody retires and I think what the industry has to do is try to figure out how it can meet all of those needs or have products for all of those things.
AP: So, to wrap up I think for folks looking for solutions to this problem, it’s really important that you put yourself in the shoes of some of these folks that have different opinions, so you can fully understand what’s going on. One of them is these folks that don’t want more density in their neighborhoods, they don’t want more people moving in, and there are some very real reasons for that. Can you touch on that a little bit? You know on the east side of Austin and why these folks are fighting development in those areas?
Ashley: Yeah, well, east Austin, historically, you know is so east Austin is where our communities of color were you know, were pushed to through laws and government regulation and it was not an accident, it was completely on purpose. And that’s why we have such segregated cities all over the nation, but and that was the Austin is no different. So we offered services to our communities of color in one part of the city, and if you didn’t live there, you didn’t get services so in a time when there used to be scattered all over the city that changed in the 1920’s in Austin. So, the city developed around this very segregationist infrastructure and zoning and so now that Austin is so popular and has been and our population has doubled every twenty years, for as long back as you can track it, the land on the east side is affordable land because it wasn’t targeted. It wasn’t developed, it was neglected on purpose and so now there’s opportunity there. So, what you find is that our land code allows for greater density on the east side and there’s a lot of communities that feel like that’s not very equitable, like let’s spread the density across the city, if we’re all in this together and because I believe that Austin is so under supplied in its housing creating more demand doesn’t necessarily create more affordability. It just creates more opportunity for people who want to be here to be here and to displace communities that might not have the ability to stay when they really want to do. So, to get to your point I think communities that have been and generationally on the east side and they have you know the homes that have been passed down, you know obviously one thing that is driving displacement is property taxes and then this desire to kind of this anti-density desire comes from this honest and very genuine and legitimate belief that density is not going to help them stay where they are, it’s just going to create more opportunity for people to come and displace them. And that’s very real and I don’t have an answer to that at all and also what I know is that we can’t stay where we are now, displacement is happening now, too. So, what is the answer and that’s the question and honestly there’s got to be more relationship involved in the answer because we can’t just create a system or a program or of this or that, that fixes the issue. There is a lack of trust and these entities and I don’t know if we can create an app to create trust you know I mean, so how do we but maybe we can, let’s figure that out.
AP: It’s talking, it’s getting developers involved with the neighborhoods, we’re seeing this a lot in San Antonio too on the east and west side where you know, those parts of town are neglected over the years and now the downtown San Antonio groves, east side is getting more attractive as your coming in, taxes go up and families that own their homes…
Ashley: Right, they don’t even have a mortgage, they just can’t pay the property taxes.
AP: Right, taxes going sky high. On the flip side of that we were talking about developers and just doing nothing is not an answer, so there has to be a solution. Developers are a part of that and a lot of times developers get a bad rap for jacking prices up and kind of being money hungry part of this conversation, but in many cases, they have to charge higher cost because of the process of permits, impact fees, this and that. Are their solutions there working with the city to reduce the burden on developers, which in turn reduces the burden on home buyers?
Ashley: I think there’s huge opportunity there and this is been a conversation. Austin has an innovation office and innovation fellows and one of the things that the city at large and the community at large really wants to find a solution for is systematizing and creating or making our permit process a lot more efficient and there is huge opportunity there I mean just digitizing things and making things like you’re showing me the app that you guys have that just helps understand what is needed, where you are in the process. You know there’s horror stories from developers that from you know, site plan to permitting to this to that, like two, five, seven years and there’s carrying costs that come with that because they’re paying for that land every single month and then right now also another thing is construction costs are through the roof because there is so much of a labor shortage in construction right now. So, people, you know, developers who say, you know I can’t fault my guys, you know but like halfway through their project they’re getting offered you know three more dollars an hour to go do something else and so they switch and you know we get stalled and have to figure out you know labor and construction. So, like there’s just which goes to the modular thing right, it’s like how can we make this more efficient so there’s a lot of opportunity and I think you know developers get a bad rap for a reason, stereotypes or you know there’s always a grain of truth in some things, but it’s not true across the board and in lots of ways you know, you have to figure out how to make the numbers work or you’re not sustainable as a business. And so how can you make the process more efficient, so that the costs that you are carrying are less, therefore, the product you’re delivering is less, yeah, yeah.
AP: That’s awesome, you know it all goes hand in hand, cities need people to pay taxes so they can be a city.
Ashley: That’s right.
AP: Developers need affordable housing so that their workforce can be close to where they’re developing and there’s definitely a solution, I think it starts with you believing that people are inherently good and really trying to, instead of make them the enemy, really try to have a conversation and understand where they’re coming from and in realizing that maybe they have this fear because of this and this, it’s a valid fear in their mind and I think that’s how solutions are made. If there is someone listening that wants to join this movement, how do they reach Impact Hub? How do they learn more about what you guys are doing here?
Ashley: Thank you. So, the easiest way is to go to ImpacthubAustin.com. There is a tab at the top that says Accelerators and you can read more about the Affordable Housing Accelerator, you can read about the Workforce Development Accelerator. You can get in contact with us at any point, there’s tons of ways to get in contact with us and to find out how you can be a part of the community, be a part of the dialogue and we you know there’s there is room for all and we definitely don’t have the unicorn yet and honestly, I believe in lots of ways there really is none. It’s just heads down hard work and a lot of good people doing that together and like you said believing that people are inherently good and doubling down on relationships and being the way that we can actually get to solutions. so yeah.
AP: Well thank you so much for joining us on the Double Wide Dudes.
Ashley: Thank you, man. Ashley: Well, you guys are doing such great things like I appreciate so much the focus on the community that has been and the market that has been completely left out of this conversation a lot of ways and how you guys are really focusing on those families in that community and then like you said being in the middle of Geekdom down there in San Antonio, you’re like, we didn’t know that we were going to be like have a tech part to a company, like that so amazing and so in this very real way that this very tangible need in housing and tech go hand in hand, like we need to see more models of how that works. So, I appreciate what you guys are doing and the heart behind it, you got a new advocate in me. AP: Awesome. I look forward to showing you around Geekdom.
Mousetrap: Yeah, it’s awesome what they’re doing up there. She’ll fit right in at Geekdom.
AP: Yeah, I’m excited for her to come down and check it out, you know Austin, San Antonio we’re so close as cities in really here in the not too distant future were kind of going to be one giant city, so we might as well start working together as one, to figure out some solutions to problems that both cities are seeing right now.
AP: You know affordable housing is definitely one of those, just awesome be working with you and Jason and Ernest to come up with our version of a solution. Mousetrap: Yeah, I’m excited to be a part of the solution and see what comes about. Thanks for tuning in to this episode guys. On the next one we’re going to cover in detail on the Smith family. I know we talked about it earlier, but you know they’re the real start of the show, I encourage you guys go to our Facebook or YouTube and see the video if you haven’t checked it out already to see their journey from Hurricane Harvey to get into their brand-new home. Thanks again, we’ll talk to you on the next one.