Council makes density bonus rules more stringent

Changes to the city’s Planned Unit Development density bonus program, designed to encourage developers to build more on-site affordable housing, won City Council approval on a vote of 10-1 on Thursday. Only Council Member Don Zimmerman voted against the overall changes, but Council Members Sheri Gallo and Ellen Troxclair abstained on one amendment.

Mayor Pro Tem Kathie Tovo has been the moving force behind the changes, which lay down very stringent guidelines for developers who wish to pay a fee in lieu of offering on-site affordability.

Tovo has explained the code changes by pointing to Austin’s often-noted “affordable housing crisis.” She said, “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.”

Under the new rules, residential developers who wish to exceed the standard maximum height, floor-to-area ratio and/or building coverage in a PUD must provide contract commitments and guarantees that a percentage of owner-occupied housing within the PUD will remain affordable for 99 years from the date the certificate of occupancy is issued.

Residential PUD developers may request an exception to the on-site affordability requirements, but the director of the Neighborhood Housing and Community Development Department must approve each exception. Under an amendment Tovo offered on Thursday, “The developer may provide all or a portion of” the amount established as the fee-in-lieu. Council must authorize payment of any such fee by a two-thirds vote, which is eight members under the current Council configuration.

In the past, developments without residential units were not required to participate in the affordable housing program. However, the revised ordinance requires payment of a fee-in-lieu for nonresidential developments to the Affordable Housing Trust Fund.

Another amendment states that “Council approval of any alternative affordable housing project shall expire 36 months after the date of approval.” Mayor Steve Adler wondered what might happen if the developer were in the midst of a multiphase project after 36 months. Betsy Spencer, director of the Neighborhood Housing and Community Development Department, said it would be unlikely that the city would renegotiate if the project were ongoing. Adler added the phrase “if the project hasn’t been initiated” to Tovo’s amendment.

The so-called Taco PUD at Riverside Drive and South Lamar Boulevard, which was approved with the proviso that the developer pay a fee-in-lieu of about $438,000, has not begun construction. The developer “is probably going to wait until the next cycle,” according to his attorney, Steve Drenner.

In light of that, the developer requested and received a refund of that payment. Asked whether that would cause a reconsideration of the plan and the fees to be paid, Drenner said no, “because our PUD is already approved.” He noted that the owner of the property is Huston Street, a former University of Texas pitching star who now pitches for the Los Angeles Angels of Anaheim.

Since the ordinance passed on all three readings, those changes will go into effect on Nov. 29.

Zimmerman said he was opposing the changes because of the Zucker report on the city’s development review process, which highlighted the many obstacles that regulations already impose on developers. He said, “Now we’re piling on more bureaucratic obstacles. I’m very disconcerted about that.”

On Friday, Tovo pointed out, “It was the last City Council that initiated that change. It’s good to finally get this done.”

Gallo offered her own amendment, which directed staff to study the density bonus portion of the Land Development Code as part of the ongoing review of the code called CodeNEXT. In response to a question from Tovo, Greg Guernsey, director of the Planning and Zoning Department, said that all portions of the code would be reviewed.

Guernsey also expressed a wish that Council would stop adding changes to the code, because doing so makes the rewrite more difficult. “That’s my one wish for today,” Guernsey said to chuckles. Adler responded, “Everybody gets a wish today.”

Three developments have gone through the PUD density bonus process. None of those developers, which include the Park PUD at 801 Barton Springs Road, the Broadstone at 201 S. First St. and Riverside Drive (the former RunTex site), and the Taco PUD have chosen to provide on-site affordable housing.

Jessi Koch, a senior planner with the city, noted that the Broadstone, which is currently under construction, was approved to pay the fee-in-lieu, and the Park PUD will not have a residential use and was not required to pay a fee or provide affordable housing.

Photo by David Ingram made available through a Creative Commons license.