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Council approves fee-in-lieu for more housing

Tuesday, April 5, 2016 by Jo Clifton

Greg Anderson, director of operations for Austin Habitat for Humanity, pronounced his organization “happy, happy, happy” on Friday. The declaration came after City Council approved a deal that would allow Cielo Property Group to build a new mixed-use project with a slightly higher density than would be allowed without Council approval and to give Austin Habitat a place to build more affordable housing, along with other benefits.

Anderson said Thursday’s vote on Cielo’s project at the Plaza Saltillo transit-oriented development represents the first unanimous vote in the affirmative for this Council on an affordable housing project. With Mayor Steve Adler attending to other city business, Council voted 10-0 to approve the increased floor-to-area ratio and allow the developer to pay a fee-in-lieu of more than $93,000. The city plans to put that money back into Cielo’s project – called the Foundry, according to the company’s website – to help with affordability.

The developer will build 78,324 square feet of office space and 17 residential units on its property at 310 Comal St. One of those units will be available for a family making 80 percent of the local median family income, which is about $46,000 a year.

Austin Habitat for Humanity bought three properties in the Plaza Saltillo area in 1997. According to Anderson, Austin Habitat swapped property it owned at 1600-1602 E. Fourth St. for property Cielo owned a few blocks away at 1409-1411 E. Fourth St. The Habitat group will build an affordable condominium project there, across the street from Cielo’s project.

The project is in Council Member Pio Renteria’s District 3. He said, “This project is going to be an example that we can really promote, where we’re going to get … one home that’s going to be sold with three bedrooms to someone making 80 percent MFI, and also we’ll have the opportunity to have, I believe, anywhere between 34 to 37 units right across the street from this project that will be run and maintained by Austin Habitat. … So I hope that we can get a lot more of these type of projects to come before us.”

Under the agreement, Cielo will pay to have utility lines buried for the affordable condominium project and also donate an additional $200,000 to Austin Habitat.

But the vote demonstrated problems with the city’s current density bonus regulations as they apply within transit-oriented developments.

According to the staff recommendation in favor of Cielo’s request to pay the fee-in-lieu rather than provide on-site affordable housing, “To receive a density bonus, the developer is required to provide on-site affordable housing of at least 10% of the project’s entire square footage, which equates to 9,544 square feet. Assuming a unit size of 951 square feet, this would result in approximately 11 of the 18 units being affordable (61% of the units); which is substantial compared to the square footage gained for additional office space (8,472 square feet).”

Council Member Greg Casar said, “I finally got a look at the real numbers and what the additional square footage that we’re granting is – 8,400. And under this affordable housing program, if we wanted all 10 percent of the units to be on-site, then we would be asking for 9,000 square feet of below-market housing; essentially we would be voting to basically say we don’t want to give you the 8,000 square feet, and we don’t want any affordable units. So I think that’s why … getting an affordable unit and getting fee-in-lieu makes sense because we’re fighting for affordable units.”

He added, “The economics of the projects have to make sense. So that’s where it is complicated.”

Mayor Pro Tem Kathie Tovo had expressed reservations about the fee-in-lieu. She noted that she had initiated a look at the city’s density bonus programs in the fall. She said she expects a report from staff on the matter in April.

“I’m concerned that we have a program that is designed to operate well in the transit-oriented district,” she said, but if there is a compelling reason to allow for the fee instead of on-site housing, then it should come before Council. “And the compelling reason I heard,” she said, “is the program is not calibrated properly.”

Anderson said that Austin Habitat plans to break ground on its project in 2018. A spokesman for Cielo said he did not know exactly when the company would break ground.

Photo by Patrick Lu made available through a Creative Commons license

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