Addressing Affordability in Austin Goes Beyond the Code

Sep 28, 2017 - 3:32 pm

Austin’s strong economy and high quality of life have made the city an increasingly attractive place to live. Rapid and sustained population growth has increased competition for land and housing, resulting in rising property values and higher costs to rent or own a home. For many, wages have not kept pace, and people are spending an ever-greater share of their monthly earnings on housing expenses. This has created hardships for many Austinites, especially lower-income residents, who have been displaced as more affluent people move into areas close to the city’s center.  

CodeNEXT, the rewrite of the City’s land development code, aims to improve Austin’s development regulations and processes to better align with the vision and goals set forth in Imagine Austin, the City’s comprehensive plan. The plan envisions complete communities that are livable, safe, and affordable, have a diversity of housing and mobility choices, and offer amenities and services that are accessible to all. CodeNEXT is one of many efforts needed to bring the Imagine Austin vision to fruition.

The improvements proposed in the new draft code will allow more types of housing to be built for Austinites at all stages of their lives and will increase the city’s capacity for housing in comparison to our current code. The new code also will enable more housing to be located near amenities and transit, which can help reduce a typical household’s second-largest expense – transportation. But the code by itself cannot tackle Austin’s affordability challenges. It will need to work in tandem with other tools and policies.

Earlier this year, the City Council adopted the Austin Strategic Housing Blueprint, which sets goals, timelines, and strategies to maintain and create affordable housing for a range of incomes throughout the city. Specifically, the Blueprint calls for the construction of 60,000 housing units affordable for people earning 80 percent or less of the median family income (MFI) for Austin ($65,100 for a four-person household), and another 75,000 units for households earning greater than 80 percent MFI by 2027. The dozens of proposed tactics in the Blueprint strive to help people, particularly those most vulnerable to displacement, to continue to live in Austin. Some of the tactics suggested in the Blueprint include expanding and refining tax abatement mechanisms and expanding the use of community land trusts and other forms of shared equity ownership models. The remaining tactics will continue to be important tools to explore as the community strives to increase affordability, regardless of the land development code.

How can the land development code affect affordable housing? In Texas, state law often limits cities’ ability to use many affordable housing tools that other states find useful. For example, inclusionary zoning — which seeks to broaden housing choice by requiring developers to dedicate a certain portion of new housing units as affordable to low-income residents — is limited under Texas state law. Additional strategies, like linkage fees and rent controls, also are prohibited in Texas but are used effectively in other states.

Out of Austin’s limited toolbox, one tool the City currently uses to incentivize affordable housing, and which will be enhanced under CodeNEXT as the Affordable Housing Bonus Program, is density bonuses. Under the proposed program, developers are allowed additional entitlements, like taller buildings or more units on a site than are allowed by base zoning, when they provide community benefits, such as affordable housing. These affordable housing units are income-restricted and need to be built on-site or at a nearby site, or the developer can pay a fee in lieu of providing affordable housing on-site. Fees are utilized to help subsidize additional income-restricted units throughout the city.

The Affordable Housing Bonus Program improves upon existing density bonus programs in key ways. Most significantly, it incorporates the bonus program directly into the zoning code. Property owners will be able to know whether they’re eligible for the bonus program by looking at the zoning. It’s “city-wide” because anywhere a zone is applied, the bonus program will apply if a property owner chooses to use it, rather than the current “layered on” bonus programs, which are limited to mostly central Austin areas. About half of the zones in the new code will have the optional bonus program included.  Other improvements include lengthening the period for which designated affordable housing must remain affordable to 40 years for rental property and 99 years for owner-occupied housing.

While the code is limited in the ways it can foster more affordable housing for people at lower income levels, it does create the opportunity for a greater supply of “missing middle” housing (multi-unit residences like duplexes, triplexes, and row houses) and more mixed-use live/work spaces. With more available housing options and units, people can more easily move around the housing market. Greater supply, particularly of housing types that create more units on Austin’s expensive land, can help temper rising prices as the population grows.

CodeNEXT also enables accessory dwelling units (ADU) in more zones across the city. An accessory dwelling unit might be an apartment over a garage or a living space in the backyard of an existing residence. With a code that makes it easier to build this kind of housing, residents could decide to build a unit they might live in as their personal needs change, or rent out a unit and use that income to offset property taxes and other costs of home ownership. The new code has improved standards to ensure these properties blend into the scale, look, and feel of existing neighborhoods.

Ultimately, addressing Austin’s affordability challenges will take an array of tools, policies, and actions that require sustained effort and commitment from the public, nonprofit, and private sectors of our community. CodeNEXT offers new options and additional tools to move us in the right direction on affordability, but it will not be the sole solution.