Council poised to revisit density bonus programs

Mayor Pro Tem Kathie Tovo is moving forward with a proposal to take a closer look at the city’s density bonus programs and at whether it’s a good idea to eliminate the fee-in-lieu option that allows developers to pay into a fund to construct affordable housing rather than build affordable housing on the site of their proposed development.

As expected, the idea drew both supporters and detractors to the Planning and Neighborhoods Committee meeting held Monday night.

Tovo explained that the current fees-in-lieu are set at a point that is more appealing to developers than constructing units on site. If the city is “serious about creating affordable housing in all parts of town,” said Tovo, it is time to revisit Austin’s density bonus programs and consider whether requiring on-site affordable housing is appropriate.

“We really have an affordable housing crisis in our community, and I think it’s incumbent upon us to use every tool at our disposal,” said Tovo. “We are limited by state law in what we can do to encourage and require affordable housing, but we can impose requirements when people are using a density bonus program.”

Tovo’s proposition has several parts, which she explained during the committee meeting. The first would direct the city manager to return with a report on the city’s density bonus programs. That report would then inform City Council members’ considerations of whether to initiate code amendments requiring on-site affordable housing for some (or all) of the city’s density bonus programs.

Specifically, the resolution contemplates initiating a change to the affordable housing exemption for hotels, office buildings and other commercial buildings participating in the Downtown Density Bonus Program. It also addresses the possibility of closing an “MF-6 loophole” that allows projects to move forward with Multifamily-6 (MF-6) zoning, which has no on-site affordability requirement, instead of Vertical Mixed Use (VMU) zoning, which does have that requirement.

Council Member Greg Casar amended Tovo’s original resolution to ask that the city manager bring forward resolutions based on the program study, instead of initiating the process as part of the resolution. The one item not included in that process would be the section that addresses the MF-6 loophole, which will be considered again in September as it was deemed more pressing by committee members.

The committee voted 3-1 to forward the resolution to Council, with Council Member Sheri Gallo voting in opposition.

Gallo said she was concerned about having the discussion without “having had time to really process it … in the midst of all of these other huge agenda items.” She said she would rather talk to the community about any changes, despite reassurances that the resolution was just a first step in taking a closer look at the city’s density bonus program.

Ann Howard, who is the executive director of Ending Community Homelessness Coalition, reminded committee members that fees from the Downtown Density Bonus Program are dedicated to permanent supportive housing. She explained that her organization was counting on the money from several projects paying into that fee-in-lieu option and asked that Council members consider the impact that removing the option might have on those serving the homeless in the city. Tovo agreed that it should, indeed, factor into their future deliberations.

Downtown Austin Alliance Chair Jerry Frey asked that Council hold off on making changes to the Downtown Density Bonus Program, which he noted has been in place for only the past 18 months. He said there hasn’t been adequate time to evaluate whether it is working and cautioned that any changes should be enacted only after professional economic modeling had taken place.

“Getting this wrong could result in no affordable units, no new affordable housing dollars and less downtown tax base,” said Frey.

On the other hand, Austin Neighborhoods Council President Mary Ingle endorsed the resolution, calling it “sensible.”

After some discussion among committee members, Tovo said she was comfortable with holding off on initiating any code changes until after the city manager’s report was complete.

“I will assure you that we will have a long public process after this committee to talk about any and all of these contemplated changes, but we need to kind of start somewhere. So, bringing forward a resolution, asking for the committee’s recommendation and moving on to Council seemed to be the way to actually make progress,” said Tovo, who also pointed out that the topic was one of the first to come up with the new Council during their policy discussions.

Photo by Brian Glanz made available through a Creative Commons 2.0 license.