Viewpoints: Are developer incentives for affordable housing working?

As the city rewrites its land-use rules, one gadget in Austin’s toolbox to expand affordable housing – the density bonus program — is raising questions about whether it addresses the needs of low-income families with children, among those most in need of housing help.

It’s an important question the city can’t answer now, but the answer would go a long way in determining the strengths — and weaknesses — of density bonus programs and others aimed at expanding the city’s affordable housing stock. The answer also is strategic in decisions regarding the ongoing overhaul of city land-use rules, called CodeNext.

Density bonus programs permit developers to build larger housing projects than existing zoning allows, if about 5 to 10 percent of the housing units they create are affordable to people earning less than Austin’s median income.

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At this point, city officials told us they don’t know whether housing generated by density bonus programs is mostly serving college graduates working in coffee shops, seniors on fixed incomes or low-income working mothers. Eligibility requirements are based on income, which is capped for renters at 60 percent of Austin’s median family income.

If the size or type of units is any indication of who is renting them, then there is cause for concern, because the lion’s share are efficiencies, studios or one-bedroom apartments. In other words, they aren’t family-friendly.

We urge the city to do its homework by collecting data to help sort out the pros and cons to strengthen density bonus programs and CodeNext measures, which propose to ramp up these programs.

Without data on who is benefiting, Austin is in the dark about whether the programs are effectively yielding the community benefits intended.

The city encourages developers to build affordable units onsite, but there are other ways to meet density requirements, such as paying a fee to the city’s housing trust fund or building units elsewhere in the city.

Concerns over how to align such incentives surfaced recently as the City Council considered a density bonus incentive for Habitat for Humanity.

Earlier this month, the council unanimously approved Council Member Sabino “Pio” Renteria’s proposal to give Habitat extra density bonuses on properties at 1409 and 1411 E. Fourth S., but not before Council Member Kathie Tovo tried and failed to add a requirement that most units have multiple bedrooms.

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Clearly, the city is receiving a community benefit in exchange for permitting the nonprofit to add density to its project: Habitat intends to build about 80 condominiums – with about a third being family-friendly units with two or three bedrooms, a Habitat official told the council.

Without the zoning change, Habitat would have been limited to 19 units with a good chance of all of them being just one-bedroom units.

But as Tovo rightly noted, there is a gamble when the size and type of housing units are a goal instead of a requirement.

That distinction might not make much difference in the Habitat case, given the nonprofit’s record in addressing housing needs of poor and low-income residents. But city officials acknowledge that the size and type of units that are built through density bonus programs largely are driven by market factors.

Smaller units that accommodate single people are in high demand. Moreover, they cost less to build. Hence, the trade-off between the city and developers typically boils down to getting more, smaller affordable units that aren’t family-friendly and fewer multiple-bedroom units that accommodate families with children.

That balance tilts toward smaller units, city officials acknowledged, saying while they might not have specific ratios for the various categories of affordable housing created by developer incentives, they know most are single-person units.

Questions about the effectiveness of density bonuses in serving Austin’s low-income families are ones Nuria Zaragoza, a member of the city’s Planning Commission, has grappled with for some time. That curiosity led her to partner with a local developer to survey apartments in Austin’s busy traffic corridors to find some answers. Though it is not scientific, the survey backs up conclusions by city officials.

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Using data from Axiometrics, an apartment and market research firm, the survey of 25 apartment complexes in the areas of South Congress, Burnet Road and Lamar, South Lamar, East Riverside and east-central Austin found that out of 6,895 units, just 216 were affordable and generated by density bonuses. Of the 216 affordable units in seven complexes that used incentives, 196 were either efficiencies or one-bedroom apartments. The remaining 20 were two-bedroom units.

What stunned her was the number of children enrolled in the Austin Independent School District in the total 6,895 units: 46. Some complexes, such as The Arnold in East Austin that had 55 affordable units from incentives, had no Austin ISD kids, according to data supplied by the district.

Zaragoza believes the lack of affordable housing for Austin families is a key driver of enrollment declines, as well as under-enrolled schools in East Austin, factors district officials also have cited.

Given the stakes, the city should slow its march in expanding density bonus programs until it can answer the question about who is being served.

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