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City studies occupancy limits as latest way to curb stealth dorms

Tuesday, November 19, 2013 by Elizabeth Pagano

Once again, the city is attempting to tackle stealth dorms. This time they are looking toward a reduction in occupancy rates as one tool to fix the problem.


The proposed code amendment would reduce the maximum number of unrelated adults in a single-family structure from six to four. Critics worry that the change could have unintended consequences.


If City Council approves the resolution, they will be asking for more solutions than just a decrease in occupancy limits. Sponsor Council Member Mike Martinez explained to In Fact Daily that he hopes the resolution will give staff better tools to identify stealth dorms at the site plan stage, and of letting the “community know what is going into their neighborhood.”


“Folks who are proprietors of these stealth dorms have really taken advantage of an overly-generous Land Development Code, and they’ve taken what is traditionally single-family zoned property and interpreted the code in a way that allows them to overdevelop and commercialize single-family zoning to where it’s an apartment complex.” said Martinez.


A group called “Stop Stealth Dorms” has been pushing for a change in occupancy limits, calling Austin’s current standards “an extreme outlier” that needs to change. Unlike those who worry that the limits will negatively impact affordability – by limiting the number of people that can split housing costs – the anti-stealth dorm group sees it differently. They outline the current stealth dorm businesses model, which allows developers to demolish existing housing stock and replace it with buildings that can rent for much more.


According to their website (, “When a modest home can be demolished and replaced with a building that rents for as much as $6,000 per month, developers are motivated to build as many stealth dorms as possible – all in neighborhoods zoned as single family.”


“We just want to bring the issue forward and see if there are some tools staff can help us come up with, and see if we can protect the integrity of single-family zoned areas,” said Martinez. “But, at the same time, understand that we are a college town and there does need to be ample student housing, and affordable student housing.”


A 2009 study looked at the impact of implementing a “three unrelated persons ordinance” in Fort Collins, Colo. That study, which was provided in response to questions from Council Member Bill Spelman about potential impacts to affordable housing, shows that following the lowered occupancy limits, rents increased and vacancy rates decreased, which could be a problem in Austin’s current rental market.


The Statesman reported in August that the city’s occupancy rate was at 96 percent and climbing. In June, rents were at an all-time high, with one-bedroom units renting for $772 and two-bedroom units averaging $1043.


But Martinez said, “I think people throw up the affordability as a red herring. There are affordable apartment complexes and places where students can live all over this city that are connected to mass transit. What’s happening is some developers are taking single-family zoned lots and what may be affordable is a unit that has six unrelated residents living there.


“There are some concerns out there that we certainly do not take lightly,” said Martinez. “We certainly don’t want to have unintended consequences. The issue of domestic partnership came up; the issue of unrelated immigrants has been brought to our attention. While we appreciate those concerns, those are not issues we are trying to negatively affect or have an impact on. We are simply trying to have better outcomes as it relates to development.”


In speaking with In Fact Daily, Council Member Kathie Tovo suggested that the change need not be sweeping at all.


“As I understand it, the Planning Commission would have the opportunity to hear feedback and to determine whether this should be an option open to planning areas, like some of our other planning tools are,” said Tovo. “In my opinion, that’s how it would work best. Perhaps not as a blanket measure across the city, but as a tool that neighborhoods could adopt as part of their neighborhood plan.”


“It may not be necessary, or welcomed, in all areas,” said Tovo. “We know that there are people who, throughout our city, room together because of the high cost of housing. And we certainly don’t want to make that situation more challenging.”


On the other hand, notes Tovo, there are the stealth dorms, which might be displacing families and those in search of more moderate rentals, making it a “really difficult problem to address.” She says that her research leads her to believe that a change in occupancy rates will not solve anything on her own, and she strongly believes they should be coupled with rental registration in order to give staff means to better enforce existing code.


If City Council approves the resolution Thursday, the City Manager will initiate an occupancy limit code amendment. From there, the matter will be taken up by the already-existing Codes and Ordinances Stealth Dorm Working Group, which was formed in June.

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