(Bloomberg) -- The boom times in Austin have been blamed for widening inequality and pushing poorer residents out of their homes. But the increased tax haul amid rising property values may help some struggling residents by funding an expansion of health-care services for the indigent.

Travis County, which includes the Texas capital city, approved an increase to property tax rates last week to fund Travis County Healthcare District, known as Central Health. The district has seen its fund balance grow by a third to nearly $591 million in the five years through 2022 due largely to the tax windfall. Taking advantage of its increased borrowing capacity, the district recently sold roughly $100 million of bonds.

“Austin is a tale of two cities,” said Nicole Conley, managing director at Siebert Williams Shank & Co., which managed the bond sale. “We often hear about the growth and the tremendous rising market values,” but “there is a high level of food insecurity and health-care access equity issues.”

The pandemic pushed Texas hospital districts, subdivisions of the state established by voters to provide medical care to the neediest, to examine their services. “Covid taught us a lot about what we don’t have and what we need,” said Conley.

“There has been an underinvestment in this area,” Keith Richard, senior managing director and head of the Texas region at Siebert, said, adding that over the last few years more attention is being paid to the issue.

Texas has the highest percentage of uninsured residents in the country and is one of 10 states in the US that have declined to expand Medicaid coverage. 

In Travis County, people were traveling greater distances to seek affordable care, according to Conley and Richard. That prompted Central Health, one of Texas’s largest districts, to decentralize services. It plans to use proceeds from its municipal bond sale to open clinics in East and Central Austin, part of an expansion that includes more specialty and transitional care.  

Texas’s other urban districts have taken similar steps, said Richard. Earlier this year, Tarrant County’s hospital district, which includes Fort Worth, issued $437 million in debt after voters approved $800 million of bonds. In July, the Bexar County Hospital District, which includes San Antonio, issued $188 million in debt.

Voters in Harris County, meanwhile, will decide in November whether to approve a $2.5 billion bond issue for its hospital district. Proceeds would be used to build a new trauma center as part of a replacement of its Lyndon B. Johnson Hospital and construct new clinics. More than 1 million residents in the county are uninsured, according to Healthy Harris County, a new political action committee formed to promote approval of the measure. 

Referendums to improve infrastructure in Harris County have previously been successful, and “there’s a sentiment that this stuff really needs investment and improving,” Grant Martin, a spokesperson for the PAC, said. 

Growth Draws Controversy

With about 1.4 million residents in Travis County, and Austin now being the nation’s 10th-largest city, its needs will grow. Central Health forecasts visits to its facilities will increase 20% to 600,000 a year by the end of 2025.

“There’s going to be increases in rates and families living in poverty,” said Mike Geeslin, Central Health’s president and CEO. 

As the district grows, it’s drawn controversy. Though its 2024 proposed budget and property tax rate were approved, Central Health is undergoing an independent audit after groups called for one last year, citing questions about its spending. Some Travis County commissioners also question if the district’s services are actually reaching the neediest.

Central Health said it has enlisted community activists and held sessions to hear residents’ feedback as it developed a multiyear health-equity road map that was adopted in August. They learned, for example, that a large proportion of emergencies happen over the weekend, said Nora de Hoyos Comstock, founder of national Latina group Las Comadres Para Las Americas, who’s worked with the hospital district since 2019 and helped to develop its health plan.

“You cannot just focus on medicine,” said Comstock. Transportation, access to healthy food and monitoring after treatment are part of the “wraparound services” essential to successful care, she added.

--With assistance from Karen Altamirano and Brendan Walsh.

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