City Council to vote on hotel project that split Planning Commission

On Thursday, the Austin City Council is scheduled to discuss the fate of a new hotel proposed for downtown. Unfortunately, council members will not have the benefit of a Planning Commission recommendation – but not for lack of trying on the commission’s part. At its Nov. 10 meeting, the commission spent over an hour discussing a requested zoning change to accommodate a 255-room hotel slated for the corner of 5^th and Colorado streets.

 

In the end, commissioners voted 4-4 on a motion to approve the zoning change, resulting in no recommendation. (The nine-member board has one vacant position.)  Commissioners David Sullivan, Jay Reddy, Clint Small, and Dave Anderson voted for the motion. Commissioners voting against it were Kathryne Tovo, Danette Chimenti, Saundra Kirk, and Mandy Dealey (who voted against the project after adding a friendly amendment to lock in setback dimensions).

 

Commissioners acknowledged that the project has its merits. The “eco luxury” hotel, proposed by Austin Hotel Holdings, LLC, would be built with the latest energy-efficient technology. The design includes wide, pedestrian-friendly sidewalks, no unsightly above-ground parking structures, and architecture that blends with the Warehouse District.

 

It’s slated for construction in the desired development zone where city plans call for high-density buildings. It would add 255 needed hotel rooms and funnel wallet-wielding tourists to downtown businesses.

 

Above all, it will rake in $1.73 million annually in hotel occupancy tax for the city.

 

Although the plan had won a positive recommendation from both the Downtown Commission and the Design Commission, some planning commissioners wanted more. They thought that the developer should contribute to the city’s affordable housing trust fund.

 

The developer had requested to change the site’s zoning from CBD (Central Business District) to CBD-CURE (Central Urban Redevelopment District) in order to increase the allowed building height. The CURE zoning designation is available for urban infill projects on vacant lots and for redevelopment of buildings more than 10 years old. According to a city staff report on the project, the commission has recently approved three CBD-CURE zoning changes.

 

In order to secure a CURE zoning designation, developers must show that the project offer benefits for the community. “We are paying a lot of attention to the public benefits associated with CUREs … and the fact that increased entitlements are supposed to be married to increased public benefits,” said Planning Commission Chair David Sullivan.

 

However, developers have another choice. They can request an increase in height and floor to area (FAR) ratio above current zoning under the city’s interim density bonus ordinance, passed last year. Under that ordinance, the developer is required to contribute cash to the city’s affordable housing trust fund and a public benefit fund. Developers tend to steer clear of the density bonus ordinance to avoid writing a big check to the city.

 

“I am not aware of any developments in downtown that have chosen the density bonus,” said Charlie Betts, executive director of the Downtown Austin Alliance. “That (fee) acts as a disincentive for (developers to build) density where we want it.”

 

Betts was the single community member who spoke in favor of the hotel project at the meeting. Nobody spoke in opposition to it.

 

Under the density bonus ordinance, the hotel would be required to contribute $942,000 to the city, half of which would be earmarked for affordable housing. Half the commission was unwilling to let that money fly out the door like a bat from underneath the Ann Richards Congress Avenue Bridge.

 

“Was there any consideration of your client to contribute to the affordable housing fund?” Tovo asked Steve Drenner, the applicant’s attorney, who presented the project to the commission. “That is a very substantial figure that we’re not obtaining as a city by granting a CURE zoning.”

 

“This project would not contribute toward affordable housing,” Drenner replied. “I think this developer, like many developers, we share the concerns that everybody has in this community about affordable housing. But every project is not going to be able to help satisfy those issues. A project can only take so much of an economic burden, and this one would not be able to absorb a separate burden that would include an affordable housing contribution.”

 

Drenner argued that the project’s environmentally conscious design, pedestrian-friendly perimeter, and potentially lucrative hotel tax revenue constituted enough public benefit to justify a CURE overlay.

 

Nevertheless, on a motion to approve the staff recommendation for CURE, Commissioner Chimenti added a friendly amendment to require the developer to make a $450,000 contribution to the city’s affordable housing fund. However, Commissioner Reddy questioned the legality of the amendment.

 

Clark Cornwell, an attorney with the city Law Department, said that the amendment might constitute an “exaction,” which must meet specific legal requirements in order to be lawful. He recommended that the commission adjourn to closed-door executive session to discuss the matter. The commissioners declined, but some reasoned that since their responsibility only consists of offering a recommendation to City Council, it might be OK if that recommendation included a potentially unlawful exaction.

 

“We can base our recommendation on the applicant’s willingness to offer (the money) to City Council so that we dodge the legal question,” said Reddy.

 

“Do you see that is a risk, that we are only making a recommendation and the City Council would actually be taking the risk?” Sullivan asked.

 

“What do you think?” Cornwell replied. “If you are basing a recommendation on something that may be perceived as an exaction, then I don’t think there is any difference between pushing it off on City Council.”

 

The amendment failed 6-2.

 

Before voting on the CURE overlay motion, Sullivan offered the applicant the option of continuing the matter to the Planning Commission’s next meeting. Ready and willing to take his chances with the City Council, Drenner replied, “No, sir, and frankly we would prefer to move forward. We would rather you make a decision tonight and let us proceed.”

 

The commission is expected to take up the thorny issue of downtown density bonuses at this week’s meeting, having postponed the item last month. However, based on the hotel vote, it may be difficult for the eight members to agree on a new ordinance for such bonuses.

 

Mayor Pro Tem Mike Martinez has indicated he would appoint the ninth member of the commission at the final meeting of the year, Dec. 17.