The Austin Chronicle

City Hall Hustle: What Price Density?

Council tries to find an economic balance for dense development and its public costs

By Wells Dunbar, December 9, 2011, News

How can you agree on the minutiae of actual policy when you haven't agreed on its purpose?

That question surfaced at City Council's Tuesday work session; such sessions being wonkier, lower-key affairs than the regular Thursday meetings, they sometimes provide a little more breathing space for discussion amid the avalanche of agenda items.

At issue once again was the matter hovering over the dais all fall into winter: adoption of the Downtown Austin Plan, and more specifically, wrangling over that plan's Density Bonus Program, the thus-far unused zoning category requiring developers seeking to build beyond existing density limits to provide appreciable city benefits for the privilege instead of having it granted piecemeal and for free, as under the current Central Urban Redevelopment zoning. Ideally, this is a scenario in which the developer and the city share in the added benefit resulting from the extra allowance (usually coming in the form of an expanded "floor-to-area ratio" or FAR: e.g., being able to build 12 stories instead of six). Despite the Downtown Austin Plan being a work in progress for years, plus tweaks and postponements taking center stage in council chambers for the last few months, philosophical alignment hasn't occurred on whether density itself is a community benefit.

Council hadn't gathered Tuesday to discuss the Downtown Austin Plan specifically, but density bonuses generally – despite their failure to be implemented Downtown, a bonus program has seen some success in transit-oriented developments and enormous gains in the University Neigh-borhood Overlay, where dense high-rise development has led to the creation of some 400 affordable units and raised $1.3 million for affordable housing (although the fees set for UNO are also up for review).

No remarkably specific recommendations for Downtown emerged in time for council's discussion and adoption of the plan at today's meeting (Thursday, Dec. 8); indeed, the city staff's presentation seemed to undermine such notions, with one conclusion in the presentation reading, "One size does not 'fit all'; different parts of town will have different market environments that will require individual 'prices.'" For example, the planned redevelopment of East Riverside won't bear half as much density as infill on a non-Capitol View Corridor lot Downtown, so prices might need to be set a little lower as density bonuses attempt to share the extra income created by the city's allowance fairly between the developer and city. If there's less "bonus" to be shared, setting too high a price ensures nothing will be built. It's a theme echoed in another of staff's conclusions: "All other things being equal, too low is better than too high." If a density bonus on developers is too low, this argument goes, then at least it can be recalibrated before a new, similar project starts, and the city retains a new tax source; too high, and nothing happens.

"It's almost a Gingrich kinda thing," said Bill Spelman at one point. "A density bonus is essentially a tax on density." He was discussing the best ways to set said tax – on a neighborhood-by-neighborhood, project-by-project basis – but conversation soon took a more philosophical turn. Among the "community benefits" denser developers are supposed to offer – affordable housing, green and aesthetic improvements, etc. – shouldn't density itself be one of them? "I hear this from developers all the time," Spelman added, noting their plea that "you shouldn't be asking me for a bonus" when building densely Down­town. Density unquestionably belongs there and carries several inherit benefits: less traffic, less sprawl, and the like. (As one of the Hustle's pals asked on Twitter, when will the city begin to "insist on community benefits from sprawl developers and not from dense developers?" Additionally, a recurrent theme in recent discussions there has been that density bonuses are only one – and possibly not the best – tool for providing affordable housing, a topic deserving of more space than I can accommodate here.)

Sounding a counter argument was Council Member Kathie Tovo: "When you have a developer who has purchased a lot to go 60 feet and they've suddenly doubled that, there's an increasing financial benefit to that developer. Some of that economic benefit should be returned to the public in the form of a community benefit."

That led Mayor Lee Leffingwell to say that to "briefly play devil's advocate: The additional density, in and of itself, is a community benefit," adding that Down­town "subsidizes the rest of the city" by producing more tax base than it takes in.

Still, argued Council Member Laura Morrison, "The fact of the matter is, it's not gonna be built unless there is some financial benefit to the developer, and all we're saying is, let's share that financial benefit."

"The benefit to the community of the density itself should be calibrated as a benefit," Leffingwell responded.

Condensed commentary on Twitter @CityHallHustle.

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