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Council moves toward closing small-lot loophole

Tuesday, February 16, 2016 by Elizabeth Pagano

When the small-lot amnesty tool was adopted by the city, no one envisioned that it would lead to houses that spanned two small lots being demolished in order to build more new homes. But that is what’s happening today. And, though some would like that practice to continue, others just can’t get past the fact that neighborhoods didn’t know what they were signing up for when they opted to embrace the infill tool.

Last week, City Council members voted 6-5 to change the code and close the loophole. That was only enough to pass it on first reading, however, so they will have to vote on it again to make it official. But, judging from the discussion last Thursday, Mayor Steve Adler, Mayor Pro Tem Kathie Tovo and Council members Ora Houston, Pio Renteria, Ann Kitchen and Leslie Pool – all of whom voted in favor of the code amendment – seemed firm in their votes.

Clay Crenshaw, who lives in Northfield, told Council that his neighborhood feels “duped.”

“In good faith, we opted into small-lot amnesty just as we have been proactive for over 15 years in welcoming density to the neighborhood. And now we are staring down the barrel of this loophole,” said Crenshaw. “Allowing developers to exploit this loophole adds density in a reckless, unplanned way, increases the risk of flooding, stresses the neighborhood infrastructure and opens the door to serious parking issues.”

Crenshaw explained that his neighborhood had adopted the tool because its intended purpose was a good one. The small-lot amnesty tool was meant to allow owners of small, vacant lots to develop them and to allow people whose homes are on substandard lots to make repairs.

In his presentation to Council, Planning and Zoning Department Director Greg Guernsey explained that when neighborhoods opted to include the infill tool in their neighborhood plans, they were not informed that it could be used on disaggregated lots. To the contrary, they were presented maps showing where the tool could be used, but – because of the loophole – those maps did not turn out to be accurate.

As a result, Guernsey said, staff “felt very strongly” about its recommendation in favor of the code amendment, though it did see the value in using the infill tool on disaggregated lots.

“There’s a trust factor here,” said Guernsey. “It wasn’t what staff professed and sold to the neighborhoods.”

But, there is another side to the story. An “Affordability Impact Statement” that accompanied the code amendment cautioned that moving forward with the amendment could negatively impact affordability by impeding the development of affordable housing.

That’s also the opinion of developer (and Historic Landmark Commissioner) David Whitworth, who told Council that he builds homes on smaller lots in the North Loop area. He urged Council to leave the code as it is, despite its origins, because it had evolved into a “natural lower market-rate housing tool” that allows developers to build smaller houses without negotiating through the city’s boards and commissions process.

“The simple truth is homes on smaller lots cost less at market rate,” said Whitworth. “If you remove this option, all you’re leaving on the table tonight is the $800,000 options that are incentivized by our zoning. … I’m here to tell you that I have been able to build lower market-rate housing than otherwise allowed, and, again, approval of staff’s proposal would increase the cost of housing that the market can deliver.”

However, Houston wasn’t buying it. She asked for “hard data” to back up the claim that the new housing stock being built was, indeed, more affordable than the existing homes.

“Does everybody understand that just because you add more housing stock does not mean that people can afford to live there? I mean, that’s what gentrification is about,” said Houston. “You keep saying the more housing stock we get, the rates at some point will come down, and we don’t see that happening.”

“I love tiny lots, and I love tiny houses. But that’s not what we’re getting. … That’s absolutely not what we’re getting,” said Houston.

Tovo concurred with this point and reported what she had heard from neighborhoods concerned about the loophole. “What’s happening is that a moderately affordable house is being removed and two very high-priced, comparatively, units are going in its place,” said Tovo. “So, yeah, we end up with two houses instead of one, but they’re not more affordable.”

Council Member Greg Casar said that a more apt comparison would be to weigh the affordability of a house being torn down and replaced with one big, expensive home or two smaller, less-expensive homes. He noted that it was the land in Central Austin that was expensive, not necessarily what was built on it.

“Long-term, if we’re requiring homeowners or renters to pay for 6,000 square feet of dirt, which is what is actually expensive, then it’s going to be unaffordable,” said Casar. “We need to be able to give people the opportunity, the choice and the option to live on less than 6,000 square feet of dirt. Because otherwise what will end up happening is only those that can pay for 6,000 square feet of dirt will be able to live in Central Austin, and we already see that occurring very rapidly.”

Those who support the code amendment stress that if a provision allowing disaggregation is good for the city, it should be established in a more forthright manner, not through a “backdoor” that was originally unanticipated.

Adler explained that that was the reasoning behind his vote, which he based on process rather than the relative benefits of the loophole. He also indicated that he would be open to initiating a code amendment that allowed for disaggregation explicitly, to allow it to be adopted into the city’s Land Development Code with full knowledge of what that would mean.

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