Council to Approve More Ambitious Development Reforms, and Considers Displacement

City aims to lower housing cost, considers gentrification risk

A new, relatively small home goes up in a backyard in North Austin (photo by Maggie Q. Thompson)

City Council is expected to approve more changes to Austin’s land use rules that will mark the end of a years-long policymaking campaign during which city leaders have enacted the most significant reform to the city’s housing rules in the past 40 years.

Already, Council has altered parts of the city’s development code that many builders long thought to be untouchable: rules around parking, lot size, and the buffer zones around houses that block apartments from being built nearby. After Council’s May 16 meeting, all three will be dramatically changed in ways that research suggests may ultimately lead to lower housing costs.

Council’s first major move to free up development was to eliminate parking minimums (approved in November). Then they voted to allow up to three homes on most lots in single-family neighborhoods (in December). Thursday, they’re almost certain to vote to allow Austinites to build houses on smaller lots and to eliminate “compatibility standards” that have long blocked construction of apartment buildings within 500 feet of single-family homes. Council will also approve a new zoning overlay intended to spur massive development around future mass transit locations to be built under Project Connect. (Some of these changes are under the umbrella of the HOME initiative.)

Some industry reports estimate that Austin area rents have decreased anywhere from 5% to 12% year over year, amid an apartment construction boom that is now slowing due to changes in the broader economy. University of Texas professor Jake Wegmann says that the code changes could enable another boom, once macroeconomic conditions improve. All this could help keep rent prices from ballooning.

“Rents won’t be cut in half as a result of any of these changes,” Wegmann told the Chronicle. “But even just slowing rent increases could bring huge relief to renters when measured over several years.”

Still, some remain unconvinced that city leaders are charting the right path. “The affordability claims are extremely overstated,” said UT professor Rich Heyman (yes, that Heyman – see here for more on his recent arrest and firing). The city’s Equity Office asked Heyman to review research on similar policies undertaken in other cities, and based on that meta-analysis, Heyman also said that “the potential harms caused to lower-income residents of Austin have not been addressed adequately” in any of the proposed changes to the city’s housing rules.

Heyman said results from similar zoning reforms made in other cities may not happen in Austin, because Austin’s population growth is uniquely explosive. Demand is likely to remain high, so the land use changes Council makes may backfire by increasing land values and housing costs. Staff analysis found that proposed compatibility changes would allow 37,000 housing units to be built in parts of the city that are at risk of gentrification, or have already been gentrified, while 10,000 new units would be allowed in wealthier parts of the city.

Rather than focus on zoning regulations and land use changes, Heyman said, local leaders and advocates should be focused on lobbying state and federal authorities to produce the kind of large-scale housing programs (such as those launched by the federal government in the years following World War II) that municipalities simply can’t achieve. “If a fraction of the energy and resources that have gone into promoting deregulation had gone into promoting publicly subsidized housing,” Heyman said, “we’d be in a better position today.”

How Would Changes Help?

Researchers have found that smaller lot sizes can reduce prices. It’s pretty straightforward: With Austin’s minimum lot size decreasing from 5,750 square feet to under 2,000 square feet, people interested in buying a home will not have to spend as much money on land. It also means that developers will be able to build smaller houses, which are also less expensive to build. The lot size change will apply throughout the entire city, including in many of Austin’s exclusive, expensive central neighborhoods. Wegmann and Heyman agree that homes on smaller lots could help grow dense communities more prone to walking and transit use, which helps combat climate change.

Reducing compatibility regulations should open up land to build apartments on: Compatibility rules create a kind of force field around single-family homes that blocks other land uses – most notably, tall apartments. Currently, the force field created by Austin’s compatibility rules extends 540 feet from a home in all directions; post-reform, the force field will be shut off at 75 feet.

“If a fraction of the energy and resources that have gone into promoting deregulation had gone into promoting publicly subsidized housing, we’d be in a better position today.”  – UT Professor Rich Heyman

Because heights will be limited within 75 feet of single-family homes, people living in houses will not see 12-unit apartment buildings popping up next door. Homebuilders have said new construction will most likely be concentrated along the city’s transit corridors – think South Lamar Boulevard and Burnet Road – where apartment construction is currently constricted because of nearby single-family homes.

Finally, Council is expected to approve a new zoning district that they believe will boost housing production along phase one of Project Connect’s light rail line, primarily along North Lamar and Oltorf/South Congress. The Equitable Transit-Oriented Development overlay will also launch a new density bonus program that will allow buildings to reach heights of 120 feet in exchange for income-restricted housing; the percentage of units and depth of affordability is still under debate.

Developers looking to redevelop existing apartments under the new bonus program will also have to meet criteria aimed at reducing displacement in areas vulnerable to gentrification (staff found that roughly 80% of the land area proposed for ETOD rezoning is in “areas of comparatively lower displacement risk”). The new development will have to include income-restricted units, with some set aside for income-eligible tenants at the existing property; existing tenants will have to be given advance notice of redevelopment and they will have to be provided with “relocation benefits.”

Staff also wants to impose rules to protect existing affordable housing. Under these rules, redeveloping affordable properties would only be possible if repair is not a reasonable option (specifically if repair of the property would cost more than 50% of the property’s total value), but the Planning Commission recommended axing these rules and some Council members seemed skeptical of them, with CM Chito Vela saying that they could incentivize landlords to neglect building repairs until they qualify for redevelopment.

The ETOD overlay will likely produce the most noticeable change in land use, because it will permit skyscrapers where they were previously prohibited. But the overlay is much more targeted than compatibility and lot size reforms – the ETOD zone will only apply to parcels that are within a half-mile of a transit corridor. Council will come back to this piece of the program in July.

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