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Council may revamp affordable housing policy

Thursday, October 15, 2015 by Tyler Whitson

City Council will pick up a proposal today that Mayor Pro Tem Kathie Tovo hopes will lead to more on-site affordable housing in future developments throughout the city. Based on a discussion at a work session on Tuesday, however, it appears that Council will move slowly on the item.

“I have been waiting for years to really have this discussion,” said Tovo. “It’s taken an extremely long time to get, I think, to this point, and it’s going to take us even longer.”

Tovo was referring to revamping the city’s density bonus programs, which are intended to encourage developers to build or contribute to affordable housing throughout the city.

The programs give developers the opportunity to either construct a denser development in exchange for building affordable units on the site of a proposed development or paying a “fee-in-lieu” that would go toward affordable housing elsewhere in the city and permanent supportive housing to help combat homelessness.

Tovo is proposing in a resolution that the city ultimately consider taking action to “remove or otherwise modify the fee-in-lieu option within the various density bonus programs” in order to encourage developers to build on-site affordable housing rather than elect to pay the fees.

“When offered two options of paying a fee versus constructing those units on-site, I believe 100 percent of the time developers have chosen to pay the fees-in-lieu because they’re set so much lower than the cost of construction,” Tovo said. “So, if we really want to create those units, that needs to be the requirement.”

The resolution would direct city staff to analyze the situation relating to the bonus programs and provide suggestions on Dec. 10 for ways the city could move forward to maximize its affordable housing potential. At that point, Council would consider initiating a Land Development Code amendment to adjust or drop the fee-in-lieu.

Tovo said that the move would help the city achieve greater geographic dispersion of affordable housing.

Heidi Aggeler, managing director of the consulting firm that carried out the 2014 Comprehensive Housing Market Study for the city, said in December 2014 that Austin should make a greater effort toward achieving such a goal.

The resolution would also direct city staff to bring an ordinance to Council on Dec. 10 that would set downtown density bonus program fees-in-lieu for hotels and offices at a level comparable to that of residential development.

The Planning and Neighborhoods Committee voted 3-1 in August to forward Tovo’s proposal to Council, with Council Member Sheri Gallo voting in opposition.

Council Member Greg Casar, a sponsor of the resolution, was one of the committee members who voted in favor of the proposal. “I think all four members of the committee agreed that our goal is to maximize affordable housing in high-opportunity areas, gentrifying areas, and still have some focus on maximizing the amount of money we get for permanent supportive housing,” he said.

“I want to make sure that we make decisions based on sound economics towards getting to that goal,” Casar continued. “My hope is to hear from our staff if there are opportunities for calibration of that fee-in-lieu upwards and downwards that will provide us with the maximum amount of money for affordable housing.”

Casar provided an example of economic conditions that Council might have to consider. “At a gut level, you could say, ‘Well, if you raise the fee, you’re going to collect more of a fee,’” he said. “That’s not necessarily true in density bonus programs, because people have to utilize the additional density in order for us to get the money.”

Gallo said she voted against recommending the resolution in August because of the timeline it set out. “I have to admit for a lot of us, this is a new discussion, and so your tolerance in a patient timeline I think would be much appreciated,” she told Tovo. “I’m just really uncomfortable trying to read and digest information and then talk about code amendments in the same meeting.”

Council Member Delia Garza commented that she is comfortable with any timeline that Council agrees upon. “I think this is a discussion that’s well overdue,” she said. “I really want us to create an environment in Austin that says, ‘If you want to come develop here and build these homes, one of our values is affordable housing,’ and that’s really, really important.”

Tovo said that she plans to request that Council take up the discussion at or after 4 p.m. today.

Council will also consider a separate but related resolution today that would direct staff to draft an ordinance that would create a density bonus program for multifamily residences that are zoned MF-6. That density bonus program would be in line with the city’s policy on Vertical Mixed Use properties, which mandates on-site affordable housing.

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