Housing supply and demand debate resurfaces over code rewrite

The Land Development Code rewrite team is going far beyond previous efforts in Draft 3 of CodeNEXT with its housing capacity goals. According to staff, aiming for more housing units in general will also help secure affordable housing while addressing market-rate demand.

However, Council members Alison Alter and Leslie Pool told staff Tuesday morning that the city has yet to provide sufficient evidence, despite repeated requests, for the claim that increasing market-rate housing supply will result in or at least support greater housing affordability.

“No one is saying that we shouldn’t create more market-rate units,” Alter explained. “My concern is that the entitlements we give for market-rate and how we do that impacts our ability to deliver the supply of affordable units.”

With the Austin Strategic Housing Blueprint’s net goal of 60,000 affordable units intended to include a combination of both income-restricted and non-income-restricted housing, Erica Leak with Neighborhood Housing and Community Development said the lack of rent controls or other measures in Texas means keeping market-rate units affordable for the long term will always be a challenge.

Brent Lloyd, development officer with the Development Services Department, said the city has a plan to address that specific problem in some areas. The CodeNEXT effort lacked the insights gleaned from recent studies on displacement like the Uprooted analysis from the University of Texas, he said. This time, staff is addressing displacement by keeping entitlements similar to their current shape in areas already experiencing rapid increases in living costs. Going beyond those entitlements will trigger a requirement to contribute units or funds for affordable housing.

Still, with the majority of increased housing supply targeted for the transition areas between major corridors and inner neighborhood blocks, Pool said staff needs to provide evidence that increasing the number of units in those areas will ultimately drive down or slow the growth of per-unit costs.

Council Member Greg Casar noted in response that the transition areas are not only being zoned for more units, but also to allow for smaller units. Comparing housing types built in Austin at the same time is evidence that “missing middle” types, smaller units built on smaller lots, are generally more affordable in the long term than larger single-family units on larger lots.

Also responding to Pool, Mayor Pro Tem Delia Garza said the city’s population is growing faster than new housing supply, driving up both demand and costs. With demand steadily increasing at around 150 people per day, she said, the way to see prices go down is to build new housing fast enough to meet that demand.

“We can’t stop people from moving here,” she said. “We should be welcoming new people but also understanding that we are displacing people if we don’t build market-rate housing.”

Lloyd said staff has set a capacity target of 405,000 new units, triple the city’s goal of 135,000 by 2027, to provide a buffer large enough to reach that number. Even with significant increases in zoning entitlements in areas across the city, he said, “the stars will not all align” so that the maximum capacity is reached.

Photo by Matthew Rutledge made available through a Creative Commons license.

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