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CodeNEXT proposes new program to bolster affordable housing

Thursday, June 22, 2017 by Jack Craver

CodeNEXT, the proposed overhaul of the city’s Land Development Code, dramatically expands an existing city program that offers developers incentives to build housing reserved for low- and middle-income buyers and renters.

In a presentation to City Council members on Wednesday, the consultants hired to craft CodeNEXT explained that the “density bonus” program included in the first draft of the new code would apply to more than twice as much area as the similar programs that currently exist – a total of 16,900 parcels on 14,300 acres.

The idea behind a density bonus is that a developer can get permission to build more than is allowed by the typical zoning in exchange for devoting a certain percentage of the project to housing that will rent or sell at below the market rate. Those units are only available to those of the targeted income level. The developer could also opt to pay a fee-in-lieu to the city’s Housing Trust Fund rather than build the affordable units on-site.

The proposed program includes a number of different “bonuses” that developers could seek, depending on their location, which would grant them either more units, more height (in either stories or feet) or more floor-to-area-ratio.

In their first opportunity to publicly comment on the proposed program, Council members focused on whether the program would achieve its intended objective of creating affordable housing rather than whether the prospect of additional density would disrupt neighborhood character.

Council Member Jimmy Flannigan noted that wide swaths of the city, particularly outside of the urban core, were not eligible for the bonus program. Isn’t it more realistic that developers could build long-term affordable housing further away from the core, where land is cheaper, he asked.

Council Member Greg Casar said he was concerned about the “fair housing implications” of leaving out significant portions of the city, particularly the T-3 transect that covers many of the single-family residential neighborhoods in much of Central Austin. Many of the areas left out of the proposed program, he said, were either neighborhoods that many low-income residents had been forced to leave due to rising housing prices or “high-opportunity” parts of the city where he would like to see more mixed-income housing, even “if that means an extra car parked on the street or an extra story being built.”

Another major concern voiced by Council members is whether the bonus program will lead to units affordable for families with children, rather than studios or one-bedroom apartments geared toward single people or childless couples.

“We have to make sure we have housing for families around schools,” said Council Member Leslie Pool. Her comment was later seconded by Mayor Pro Tem Kathie Tovo, who noted that many schools in Central Austin are under-enrolled.

Tovo and Council Member Alison Alter also voiced concerns that developers will usually opt for the fee-in-lieu over building on-site housing. Getting developers to build the housing as part of a market-rate project not only provides housing more quickly, it leads to mixed-income housing, an issue that Council has identified as a top priority, particularly in the wake of a study two years ago that declared Austin the most economically segregated city in the country.

Informed that the fee-in-lieu would generally amount to less than the cost of actually constructing a unit, Alter wondered why a developer wouldn’t always opt for the fee.

Tovo added that Council should consider imposing affordability requirements in exchange for other entitlements that developers are often granted, such as parking and compatibility, including in parts of the city that are not included in the proposed density bonus program.

“I think we are leaving money on the table here,” said Tovo.

State law severely limits what Council can do to create affordable housing. Just last month the state legislature voted to prohibit cities from putting in place “linkage fees” – fees that developers would pay into the housing trust fund. Texas also prohibits “inclusionary zoning” ordinances that require projects to include a certain number of affordable units. As a result, offering incentives to developers in exchange for affordable housing is one of the only tools Austin has left.

Curious about how we got here? Check out the Austin Monitor’s CodeNEXT Timeline.

Photo by Junkyardsparkle, Public Domain.

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