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Report: Downtown still lacking affordable housing units

Thursday, January 10, 2008 by Kimberly Reeves

Despite the frequent hand wringing by both Council and commissions, the city still has no more than 176 affordable housing units downtown, and almost all of those units are located in the long-established Austin Housing Authority’s Lakeside Apartments.

 

ROMA Design Group has produced its first draft of the first phase of the Downtown Austin Plan, a document that is billed as a discussion of the issues and opportunities downtown. A second phase is intended to outline the city’s strategies to address those issues.

 

The report covered a wide range of subjects, including:

  • the need to upgrade downtown infrastructure to improve utility access and increase mobility;
  • the creation of various downtown districts as a way to create identity and specify entitlements;
  • an evaluation of certain Capital View Corridors that significantly impede development potential, such as the ones over Wooldridge Park;
  • the most effective strategies to leverage current transit and create a more transit-friendly culture downtown; and
  • the development of a downtown retail strategy that emphasizes local businesses.

For now, the hot topic will likely be how the city intends to place affordable housing downtown. So far, the city’s strategy has been a sort of trade-out with developers, a sort of “quid pro quo” in which Council agrees to increase zoning density if the developer agrees to produce some mix of entitlements for the downtown community.

 

Even as the commissioners have lauded these agreements, there also has been a lot of discussion about what exactly is a fair trade for these “zoning bonuses,” especially on the Downtown Commission, which is dominated by downtown development interests.

 

So just what is a fair trade? During a joint briefing before the Design Commission, Planning Commission and Downtown Commission last night, Jana McCann and Jim Adams of ROMA outlined some of the numbers the Council and commissioners will need to keep in mind before landing on some standard for these particular trades.

 

Those numbers certainly didn’t favor the city. The first point made is obvious: A family making 80 percent of Austin’s median income cannot afford to purchase a condominium, either in downtown or outside downtown, either resale or new construction. According to ROMA’s numbers, new construction downtown costs an average of $389,074 for resale and $820,000 for new construction.

 

McCann was quick to point out that the new construction figure is simply what developers are asking in the current marketplace, not what the current price is.

 

That’s the sale side of the equation. The building side also looks tough. According to ROMA’s numbers, new high-rise construction downtown is expensive: Downtown units cost $468,669 to build, with construction materials costing $275,000. Surprisingly, the cost of land on such units is only $21,875.

 

Mid-rise units – those units without structured parking in buildings of five stories or less – cost about $285,086 to build. Construction costs are pushed down to $140,000 per unit.

 

These leads to a number of questions ROMA wants the city to consider. Would it be better to ask the developer to include a percentage of affordable units in a particular building – a percentage that might amount to only a handful of units – or possibly offer a fee-in-lieu of putting those units aside?

 

Those fees could be significant. According to ROMA’s figures, fee in lieu of construction could go further down the road in the construction of affordable mid-rise units. Those numbers go even further when that unit is within the allowable two-mile radius of downtown and not simply located in the city’s core neighborhood.

 

ROMA provided a number of charts on the issue. The long and the short of it is that a donation of land would do little to address true affordability. And the waiver of city fees under SMART growth, though appreciated, doesn’t close the gap. The gap between what the unit would cost and what a family on 80 percent of median income could afford is still wide.

 

Still, those trades could go a lot further if those units were located on donated land outside the city core. The point that the city has to consider is what it can offer a developer that would be worth at least the cost of providing an affordable unit.

 

That immediately raises the possibility of building units in the homestead preservation district of East Austin, but that’s not the only place where the units could be built. A number of commissioners, in earlier discussion, also have raised the possibility of the city going ahead and building its own projects, given the cost of construction.

 

ROMA’s report will go out for public review at a town hall meeting on Saturday and commission meetings next week. Last night’s review, only two hours long, barely allowed time for the overview of the plan, plus some quick comments from commissioners. When the three commissions meet next week commissioners will likely have numerous questions for the planners.

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