City Council: On South Lamar, Who Can We Trust?

With new zoning, housing project developer commits to some income-restricted units

Gourdough's Public House is one of several occupants of 2700 S. Lamar (Photo by John Anderson)

Last week, City Council gave its initial approval to a rezoning request at 2700 S. Lamar for a plan the developer says will bring about 450 new housing units to the corridor. The case involves seven tracts of land near the three-way intersection of Lamar, Barton Skyway, and Menchaca that are currently zoned for commercial and retail uses (current occupants include a 7-Eleven, Dirty Dog self-service dog washing, and the Gourdough's Public House trailer and food court). Five of the tracts include a zoning overlay for vertical mixed use, one of Austin's density bonus programs designed to incentivize developers to include income-restricted housing units in their projects.

That VMU overlay limits the height of buildings on those tracts to 60 feet, which Armbrust & Brown attorney Michael Whellan, serving as the applicant for the zoning case, says would reduce the amount of housing that could be built at the site. Instead, the developer is asking to rezone all seven tracts as MF-6, the most intense multifamily zoning category, which has a height limit of 90 feet and (unlike VMU) no requirement that the ground floor be devoted to retail. Those requests have drawn opposition from the Zilker Neighborhood Association, which says it carefully crafted the current zoning map for this section of the corridor.

With the number of units enabled by MF-6, the developer has committed to pricing about 46 units affordably for households at 60% of Austin's median family income (that's $58,550 for a family of four). This matches the VMU requirement that 10% of units on-site be affordable at 60% or 80% of MFI (neighborhoods get to choose when they opt in; Zilker chose 60%). One big sticking point for ZNA – and for Council Member Ann Kitchen, who represents this part of South Austin – is how the city would ensure that affordable housing is being delivered as promised.

“The crisis we have right now is associated with housing, not retail. Our project would help with that crisis.” – Armbrust & Brown attorney Michael Whellan

State law prohibits Council from requiring that developers include affordable housing (what's known as inclusionary zoning, which is legal and common in other states). That's led to the city's various incentive programs offering density bonuses, subsidies, and fee waivers to make income-restricted housing economically viable in the private real estate market. When a developer agrees to participate, the Housing and Planning Department enforces the affordability provisions – how many units, at what income level, and for how long.

In a case such as 2700 S. Lamar, where a developer proposes to deliver affordable housing without a bonus or subsidy, "the City of Austin does not monitor or enforce the affordability," a city spokesperson told us in a statement. Instead, developers enter into third-party legal agreements, known as restrictive covenants, to create a mechanism that can be used to hold them accountable for years to come, even if the properties change ownership. On South Lamar, Whellan says, the various property owners have already signed such restrictive covenants with HomeBase, a subsidiary of Austin Habitat for Humanity.

Kitchen said she supports the project but is concerned about the loss of city oversight. "VMU is one of the city's most successful affordable housing programs," she wrote in a statement. "Council is being asked to lose VMU zoning for this property without ensuring another way to secure affordable housing on the property." In the past, the city had itself often been a party to such restrictive covenants, but the city's Law Department put an end to that practice.

Under the covenants proposed at 2700 S. Lamar, owners would pay a fee to HomeBase to conduct annual audits to ensure the tenants renting the affordable units meet income restrictions. The agreement also includes provisions that the city's bonus and incentive programs do not, such as a HomeBase marketing plan targeting households in communities that may not know about this opportunity to rent affordably.

In certain prior cases, the city itself has contracted with a third party to audit for affordability compliance; Kitchen herself recently voted for a rezoning at 7113 Burnet Rd. (approved on Council's consent agenda July 29) that included a similar restrictive covenant with HomeBase. "Habitat for Human­ity has a 46-year track record of trusted service in Austin," Whellan told us. "The crisis we have right now is associated with housing, not retail. Our project would help with that crisis."

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