Travis County homeowners are still recovering from the shock they experienced last week after the Travis Central Appraisal District released preliminary property appraisals for 2022, showing a 53% increase in the median market value for a home across the county compared to last year. The Austin Board of Realtors reported that the median sale price for a home in Austin rose to $624,000 in March, a 22% year-over-year increase.
But however troubling the housing market is for owners, the situation is much more dire for Austin’s renters, who account for 54% of the city’s residents. By some estimates, rents in Austin have increased by 35% in just one year. Commercial property owners – including apartments – have no equivalent to a homestead exemption, so they will feel the full impact of soaring tax bills, which will get passed on to renters. (More on this in “Austin at Large.”)
Viewed in front of this backdrop, Council’s continued inaction to increase Austin’s housing supply is even more problematic. Once again, it faced an opportunity to take meaningful policy action this week and punted. (For a different view, see “Public Notice.”) Council was set to vote today, April 21, on revisions to a density bonus program that would allow multifamily developers to build bigger in exchange for setting aside more units for income-restricted tenants.
The existing vertical mixed-use program allows developers of properties (mostly) along the city’s transit priority network to build up to 60 feet, with other relaxed site standards, if they price 5% of owner-occupied units and 10% of rental units at levels affordable to people earning 80% of Austin’s median family income (for one person, that’s about $55,400). Staff estimates VMU has produced about 5,379 housing units (540 of which are income-restricted) since its adoption in 2007.
Changes proposed by Council Member Ann Kitchen last November would create two tiers: VMU1 and VMU2. The latter would increase the allowable building height to 90 feet and increase the affordability set-aside to 12% for owned units at 80% MFI, and 12% of rental units at 60% MFI ($41,580 for one person) or 10% set aside at 50% MFI. Fee-in-lieu options to pay to build affordable housing somewhere else would exist for owned units, but not rentals. The city, and not a third party, would ensure long-term compliance.
“All of our housing indicators are very negative right now.” – Council Member Chito Vela
All 11 council members, regardless of where they sit on the land use paradigm, ostensibly support more housing on mobility corridors. In practice, though, this irresistible force has repeatedly collided with the immovable object of city planning – emotional homeowners reflexively resistant to adding housing to their neighborhoods. That group has been up in arms over VMU2 since staff and the Planning Commission began work on proposed language for the ordinance change, and for the time being, they have won a delay.
At Kitchen’s urging, CMs agreed Tuesday, April 19, to delay a vote on VMU2 to, maybe, June 9. Amendments to the program proposed by CM Chito Vela that would exempt VMU projects from compatibility standards that limit building height and increase parking requirements are causing some CMs heartburn. Incumbent homeowners, historically, treat these rules as sacred cows – compatibility in particular, which progressively restricts the height of buildings within 540 ft. of properties that are either zoned or used as single-family homes.
Builders widely agree that if left intact, compatibility standards that limit height would totally neuter the effectiveness of VMU2. A staff analysis bears this prediction out; the Housing and Planning Department found that 59% of sites currently zoned VMU are prohibited from building to the maximum allowable height of 60 ft. due to compatibility standards. Further, just 34% of VMU sites would be able to build to the new maximum allowable height in VMU2 of 90 ft.
Swirling around the debate is how to enact the new program without running afoul of state law requiring property owners to be notified of proposed zoning changes and allowed to protest. That’s what has kept Council focused on land use policy proposals that could garner the nine votes needed to overrule a valid petition (one signed by owners of 20% of the property within 200 feet). For now, it appears that the best way forward is to change the Land Development Code to create VMU2, but stop short of rezoning all VMU-eligible properties citywide. Owners seeking rezoning to get VMU one by one is a slower and more costly way to increase housing supply, but one that would be well-insulated from legal challenge.
For the next seven weeks, Council offices and city staff will conduct some kind of community engagement effort to inform the public of possible code changes VMU2 could bring. Meanwhile, the housing crisis shows no sign of abating and warrants urgent action, as Vela noted Tuesday.
“All of our housing indicators are very negative right now,” the CM said. “Unfortunately, the time for smaller changes and tweaks has come and gone. The scale of the crisis is such that the number of units that can be built along corridors is where we can give our renters some breathing room and potentially home buyers as well.”
This article appears in April 22 • 2022.