Council Poised to Pass Three Housing Supply-Friendly Items

The new City Council has already had a productive year in initiating changes to Austin's outdated Land Development Code, but at their final meeting before taking a six-week break in voting sessions, they're primed to make even more progress.

On the June 8 agenda are three resolutions – each sponsored by a mix of Council Members Vanessa Fuentes, Ryan Alter, Zo Qadri, Chito Vela, José Velásquez, and Natasha Harper-Madison – that would expand an existing density bonus program, create a new one, and ease compatibility rules that limit building height in housing developments near single-family homes.

The two density bonus program resolutions are likely to be noncontroversial. One, authored by Fuentes, would add a new tier to the popular Affordability Unlocked program, which was designed to incentivize developers into building affordable housing that could be sold or rented well below market rates. The second, from Ryan Alter, would fulfill one of his Council campaign planks by creating a new bonus program he calls "Opportunity Unlocked." Staff would be tasked with creating a program that is aimed at creating residential homeownership opportunities – likely, smaller-scale or "missing middle"-type developments – in neighborhoods that predominantly consist of single-family homes.

But it's Vela's resolution, which would dramatically reduce the compatibility requirements that often restrict the size and scale of multifamily housing communities, that will prove most controversial. If passed, it would task staff with adjusting compatibility rules so that they only trigger for new multifamily developments within 100 feet of a single-family home, all throughout the city. Last year, Council made modest reform to the city's compatibility rules by reducing the trigger distance from 540 feet to 300 (still, a much larger zone to trigger the rules than those found in peer cities). But that reduced distance only applies only along certain roadways, and developments looking to take advantage of the relaxed rules would need to deliver certain levels of income-restricted housing.

At the time, staff within the city's Hous­ing and Planning Department told Council the changes were too complicated and would likely have "minimal impact" on increasing the city's critically low housing supply. But Vela's proposal would change that. It would streamline the complexity introduced last year by applying the new compatibility rules citywide, and it would allow for expanded housing production by further reducing the trigger distance from single-family homes while also eliminating the affordability requirement.

It is those three factors, though, that are likely to make changes to the compatibility rules most controversial among those favoring a more restrictive approach to increasing the city's housing supply. Though that's unlikely to prevent the item from passing, CM Alison Alter gave voice to this perspective, taking issue with Vela's intentional exclusion of affordability requirements in his resolution.

"For me, this is very alarming," Alter said, pointing to the city's goal of producing 60,000 affordable housing units throughout the city by 2027 and adding that Texas cities really only have two tools for producing affordable housing: subsidizing them through public funding (bond dollars) or incentivizing them through bonus programs. "I'm struggling to understand how we would ... create these affordable units ... without using a density bonus program," Alter said, adding that completely removing them from such a transformative citywide code change would be "a step in the wrong direction."

But Vela, who holds one of the most expansive views among CMs on increasing housing production, argued that the emphasis on producing affordable units has not been successful in reducing housing costs throughout the city more generally. "The distinction here is ... do we want more subsidized units or do we want more broad affordability," he said at a Tuesday work session. Bonus programs produce a small number of affordable units per development, but that has not kept up with the city's population growth or soaring housing prices over the past 10 years. "Folks that do not have access to those subsidized units? They're facing a market that does not have enough housing," Vela said, and they're having to compete against buyers (or other renters) with more wealth in a market that is vastly undersupplied.

All of these Land Development Code changes would create a lot of work for the city's beleaguered, understaffed Housing and Planning Department to carry out, and the three June 8 items would only be a few among dozens of LDC items they're already working on. That's why Council is also set to approve a prioritization chart directing staff on the LDC changes they should focus on first – with the compatibility reforms, elimination of parking minimums, and revisions to the site plan review process for smaller developments among the highest-priority items.