City to Create New Bonus Program to Incentivize Affordable Housing in Tall Towers

Vertical Mixed Use 2, take two

AMLI 5350 on Burnet Road is a VMU building, meaning in exchange for affordable units the city allowed it to be built taller. (Photo by John Anderson)

Two months after a district judge struck down changes City Council made to the city’s zoning regulations, Council has approved a resolution, Feb. 1, that will revive some of them.

The court ruling, issued by Travis County Judge Jessica Mangrum, voided three ordinances Council adopted in December 2022 to address the city’s affordability crisis. One of the struck ordinances included vertical mixed-use 2 (VMU2), a bonus program that allows developers to build taller buildings in exchange for creating affordable units.

Council’s new resolution will revive VMU2 – or at least something that looks a lot like it. The resolution in question asks for staff to work on changes to the East Riverside Corridor regulating plan, Downtown parking regulations, and lastly, to “create a new zoning district for an affordable housing bonus program” that is similar to VMU2. It also tasks staff with creating an Equitable Transit Oriented Development overlay which is intended to increase housing capacity around current and future transit lines – as well as increase the Austin Transit Partnership’s chances of scoring key federal funding to support Project Connect.

The bonus program should apply citywide and allow developers to add an extra 30 feet of height to eligible projects, should they meet specific affordability requirements. For rental developments, those numbers are: 10% or 12% of units set aside for people earning 50% or 60% of Austin’s Median Family Income, which is $41,000 or $49,000 for a single person. For ownership units, the requirement is 12% of units at 80% MFI ($65,450 for a single person).

The proposed bonus program is different from the voided VMU2 in one critical way: It will not be mapped to specific properties throughout the city, as its predecessor was. To take advantage of the bonus height or affordability requirements it offers, property owners will have to rezone – a costly, time-consuming process that may result in the new program seeing less use.

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