Council Weighs Choices on Eastside Housing and SAVES Fund

Trying to find the best worst option

A developer is proposing to rezone 508 Kemp Street in Montopolis to allow for townhomes on the site (Image via Google Maps)

After it was postponed at the last City Council meeting, a volatile Eastside zoning case returns this week for a final vote. Neighborhood and anti-gentrification groups continue to rally opposition to rezoning 508 Kemp St. in Montopolis from SF-3 to SF-6 to allow for townhomes on the 2.15-acre lot.

Although the case passed on first reading (7-2-2, Council Members Kathie Tovo and Alison Alter voting against, Leslie Pool and Ann Kitchen abstaining), its passage is no sure thing. Neighboring homeowners have filed a valid petition opposing the zoning change, meaning Council will need nine votes to approve it. On first reading, each of the four CMs said they liked parts of the proposal but wanted to hear more feedback from the community.

The Council majority has made clear that it sees this compromise approach as the best way to manage growth in areas vulnerable to gentrification, a premise with which community advocates intensely disagree.

Council is beginning to see more such cases, as developers try to respond to its call for more income-restricted housing in every district, without losing money on projects that are inherently less profitable. Which leads to proposals like 508 Kemp: 16 townhomes sold at market rate, and 17 units sold at a variety of income-restricted levels. The 33 units would include a mix of 2- to 4-bedroom units at all income levels. The project developer, Drenner Group, is proposing to use the Affordability Unlocked density bonus program that is increasingly being used by developers on projects of this scale, and is expected to sign a restrictive covenant with Habitat for Humanity ahead of the Council vote for the affordable units.

The Council majority has made clear that it sees this compromise approach as the best way to manage growth in areas vulnerable to gentrification, a premise with which community advocates intensely disagree. State law prohibits Council from mandating income-restricted housing through what's known as inclusionary zoning, so the city has to incentivize such projects through tools like AU. Rarely will a project that's 100% affordable pencil out financially without substantial subsidy, so one sees mixed projects like 508 Kemp.

Council also has to contend with an Austin real estate market that continues to be hot even in a pandemic and recession. Under the current zoning, a developer could buy the 508 Kemp lot and build single-family homes or duplexes to be sold at market rate (initially, Drenner Group proposed a 100% market rate development at the site, but worked in the affordability component in response to community concern). The median home price in 78741, where the project is located, is $335,209, but some current listings are at $500,000. The Habitat units would sell for between $140,000 and $234,000.

Some CMs argue that it's good practice to take the deal on the table now. At Coun­cil's Tuesday, Oct. 13, work session, CM Natasha Harper-Madison framed these types of projects as a way of undoing the segregation caused by single-family zoning, which she characterized as "absolutely rooted in the racism of the early 1900s." She continued, "Decades of zoning for single-family homes in our metro area has led to an affordable housing shortage," adding that one way Austinites can be anti-racist is "to ditch that 'not in my backyard' mentality by embracing more dense, missing middle housing types which accommodate more residents with less land, and more affordable housing right in your neighborhood."

Neighborhood advocates claim there could be a better deal out there that would produce even more affordable housing at the site. There's also a concern that the development could threaten the nearby Circle Acres Preserve, says Ecology Action, which owns the preserve. CM Greg Casar argues that the project would receive more scrutiny from environmental staff than would one built under the existing zoning, but Ecology Action remains dissuaded and continues to oppose the zoning change.

In other action, Council is set to approve program guidelines for the three buckets of funding (child care centers, live music venues, and legacy restaurants and bars that have operated in Austin for 20 years) within the $15 million SAVES (Save Austin's Vital Economic Sectors) fund. CMs disagree on how the program should be administered (CM Jimmy Flannigan described the lottery system proposed by staff as "the best of the worst set of options"), but there was agreement at the work session that the framework was not long-term enough.

In its current form, staff estimates grants ranging between $2,500 and $60,000 could be awarded to the 357 child care centers that operate within the city limits; up to $160,000 each to the live music venues (estimated to be between 70 and 110 businesses, per staff); and grants between $40,000 and $60,000 for the 327 businesses that meet meet the legacy fund criteria.

The grants will be helpful, but Mayor Steve Adler suggested that the program should take more of a case management approach, perhaps by paying for businesses to hire attorneys or accountants that can help them devise a plan for longer-term sustainability. The mayor said the current guidelines were "too prescriptive" and that he was "not sure the goal should be to get the money out the door as soon as possible, but to create the longer-term infrastructure return."

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SAVES Fund, City Council, Eastside, Housing, Drenner Group, 508 Kemp

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