Austin’s thirst for affordable housing could bring bigger developments


Highlights

Under CodeNext, density bonus programs could be greatly expanded in Austin.

The programs have been around for more than 10 years but have had varying amounts of success.

As a part of the efforts to bring more affordable housing to Austin under a massive zoning code rewrite, the city could have far more properties eligible for developer incentives allowing for denser and sometimes larger developments.

An analysis of the new draft maps from a consultant involved in the city’s CodeNext effort showed that the amount of land eligible for so-called density bonuses could jump fourfold, from 12 square miles to 48 square miles, under the new code.

Such bonuses typically allow developers in certain areas to build larger projects in exchange for including a certain number of affordable units or paying into an affordable housing fund.

City officials stress that the scope of properties involved is very preliminary and based on a draft code and map that is likely to change in the next several months as CodeNext moves toward its scheduled adoption next year.

RELATED: 5 things to know about corrections to Austin’s CodeNext maps

But last week, at a packed community event specifically addressing affordability under the new code, density bonus programs emerged as a strategy the city might rely upon to create affordable housing.

“These bonuses can offset the developers’ cost of delivering affordable housing, so it requires no direct subsidy from the city to produce these affordable units,” said Ian Carlton, a Portland, Ore., urban planner with EcoNorthwest who gave the presentation.

In some cases, a builder might be allowed to make a five-story building where only four-story buildings are allowed, for instance. The program also allows builders to divide a complex into smaller units and receive exemptions from other code requirements.

The idea is that a builder would see financial benefits to building affordable housing, and that some of the benefits would be passed along to residents in the form of affordably priced apartments or condos.

Varied success so far

Such programs have had varying amounts of success since Austin enacted its first one 13 years ago. They have created only 1,662 affordable housing units and are expected in the next decade to create 1,450 more — a small fraction of the 60,000 affordable housing units city officials hope can be built in that span, according to city reports and presentations.

RELATED: Austin City Council signs off on new housing ‘blueprint’

Some density bonus programs have had little to no participation, while others have only generated payments to the affordable housing fund instead of directly providing the units the city needs.

The first and by far most utilized was the University Neighborhood Overlay program, which began in 2004 west of the University of Texas campus. Fifty developments have participated in that area’s program, creating 814 affordable units and generating about $1.7 million in fees for the city’s affordable housing trust fund, according to a 2016 report by the Neighborhood Housing and Community Development Office.

Since then, the city has created several other density bonus programs in areas such as Burnet Road north of U.S. 183, downtown and on East Riverside Drive.

Three developers participating in the Downtown Density Bonus program will generate an estimated $2.35 million in fees, but the high-rises themselves are not slated to include any affordable units, according to the report.

RELATED: Austin to re-examine fees paid when affordable housing isn’t provided

Only one developer has used the North Burnet Gateway program since 2009, creating 14 affordable housing units. No developers have opted to participate in the East Riverside Corridor program since it was created in 2013, the report said.

Striking a balance

Carlton and others at the city are working out what incentives would best entice developers to participate. Requiring too much affordable housing could scare off potential participants, just as making the requirements too lenient could lead to abuse. They are also calculating fees for builders who would rather pay into the city’s affordable housing fund than build affordable units.

“Our goal here is to create a policy that is consistent across all these zones that is legible across all these policy documents,” Carlton said. “We would like to consolidate them so it is much easier to interpret and much more consistent across the city of Austin.”

As with many aspects of CodeNext, city staff and consultants are facing a hard deadline of June 7 to deliver a draft policy on density bonus programs. That is when the draft code will be turned over to city committees for what is likely to be a lengthy review.

EDITORIAL: First rollout of CodeNext still leaves many questions unanswered

While basically everyone can agree that more affordable housing is needed in Austin, how to get it is a source of major debate.

Last month, the City Council signed off on a housing blueprint with 50 suggestions to create more housing in Austin, including recommendations to buy undeveloped and underdeveloped land and to buy and preserve affordable housing with a “strike fund.”

Mayor Steve Adler has given broad support to public-private partnerships as one of many tools the city could use to improve affordability.

“It’s a good idea for the city to co-invest with property owners who are interested in providing affordable housing,” Adler said in an emailed statement.

COMMENTARY: Adler calls for cooperation on CodeNext to manage growth, affordability

Council Member Kathie Tovo said she supports density bonus programs to a great extent but worries that the proposed CodeNext maps might not reflect the higher density of projects that ultimately could get built.

However, Tovo said she supports increasing the use of density bonus programs as long as fees in lieu — the payments to the affordable housing fund that developers often offer instead of providing the units — are allowed only sparingly.

“We should capture all that increased value for community benefit,” she said.

Will it make a dent?

Carlton’s analysis showed much of the new land that could be eligible for density bonuses is along Austin’s major transportation arteries, such as U.S. 183 and RM 620 in Northwest Austin, U.S. 290 and Texas 71 in Southwest Austin, and William Cannon Drive in South Austin.

Frank Harren, a real estate agent and broker who also was a member of the local chapter of the Congress for New Urbanism’s board, was at last Monday’s CodeNext affordability meeting and said that density bonuses should extend to neighborhood interiors, a notion that has faced major pushback from neighborhood groups such as the Austin Neighborhoods Council.

Because of neighborhoods’ opposition to such incentives, Harren said he doubted that density bonuses would make a big dent in adding affordable housing.

RELATED: Why Mayor Adler declared ‘Austin Everybody Chill Out Day’

“I think it is terribly unlikely,” Harren said. “I would take Ian (Carlton)’s comments with a grain of salt.”

Mary Ingle, president of the Austin Neighborhoods Council, was a part of the group that helped create the University Neighborhood Overlay. Though it has created more affordable housing units than any other density bonus program, she said those units generally were set at affordable rates for people making 80 percent of Austin’s median income — $43,600 for a one-person household — that are still too expensive for UT students.

“It’s been tried, and we just haven’t gotten the units,” Ingle said. “It’s voluntary, and it doesn’t work across any city in the country. We have to try something else.”



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