Housing officials rethinking city’s SMART housing initiative

The Community Development Corporation’s Housing Committee will be the first group to take another look at Austin’s SMART housing program more than a decade after it was created.

 

Austin’s SMART housing initiative once was a key tool in the city’s affordable housing toolbox, but for-profit multi-family developers have not used the program in at least a decade because of a lack of incentives.

 

At the time it was created, SMART was hailed as a progressive way to encourage inner-city affordable housing. SMART waived fees for developers of single-family and multi-family projects who were willing to meet the city’s stated priorities for development: Safe, Mixed-income, Accessible, Reasonably-priced, Transit-oriented, or SMART.

 

Developer-driven city-backed properties must meet either single or multi-family SMART housing criteria. However some private developers — most in outlying areas — use the program for single-family projects too.

 

Tuesday night, Gina Copic the Real Estate and Development Manager of the city’s Neighborhood Housing and Community Affairs division, took questions from the commission. She admitted most of the current SMART participation comes from either city-funded multi-family or single-family development that wants to access city fee waivers.

 

Copic estimated the city certified around 850 housing units for fee waivers last year, most of them multi-family units underwritten by city money. Those units are required to meet the guidelines of the SMART housing initiative.

 

“I think our incentives are lacking,” Copic admitted to the committee. “The last time a for-profit developer of SMART multi-family rental housing came to us was probably somewhere around 2002.”

That means the city probably got no more than two years of participation from multi-family developers, even though the goal of the SMART housing program was to place more affordable units closer to the city core and near city transit.

 

The idea was to take the fee waivers, somewhere in the range of $1,000 a unit, and put that money into affordability. The subsequent market crash, and the rising price of central city land, has made fee waivers less and less attractive.

 

“SMART housing is still 25 percent of all single-family building permits issued, but because of the crash in the mortgage industry, builders stopped building,” Copic told the committee. “That’s starting to pick up again, but I also think we lack an availability of land.”

 

Nor is the market for the SMART housing program expanding. SMART housing waivers, which were intended to create 10 percent affordable units within a structure, were suggested and rejected for the city’s new vertical mixed-use development The city also does not guarantee expedited review, which was the incentive exceedingly attractive when the program was introduced in 2000.

 

Both committee chair Karen Paup and committee member Liz Mueller questioned whether deeper, or even broader, affordability might draw in more developers. Copic noted the city had decreased the affordable housing requirement in the central city, knowing that affordability would be difficult. Central city developers only need to offer 5 percent affordable units; outside the city core, that requirement is pushed to 10 percent.

 

Paup suggested it might be time to discuss more variables, such as the breadth or depth of the affordable housing being offered in the project.

 

The committee also had a brief discussion about affordability impact statements, or AIS. When the city adds a new policy, project or even rate changes, the Housing and Community Development Department is called upon to discuss how those changes are going to impact the affordable housing market.

 

Changes in the land development code, the addition of a new ordinance or proposed changes to the building code all can cut but the ability of developers to provide affordable housing. In those cases, fees might be added, Copic said.

 

Still, taking on the impact of zoning code changes – as worthy as it might sound – would probably be too much for the department.

 

“We’re somewhat overwhelmed with the ones we have to do today,” Copic said. “We’re even doing an AIS for rural postings now, at times when the water utility

establishes regulations for installation of certain infrastructure. Sometimes it increases cost, and it require we establish a fee.”

The Housing and Community Development Department’s goal is to decide whether the cost and burden of new regulation increases or decreases the opportunity for affordable housing development, which can often lead to policy changes, Copic said.