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Commissioners poke holes in consultant’s housing capacity predictions

Monday, September 25, 2017 by Joseph Caterine

Austinites would like CodeNEXT to solve a lot of the city’s problems, and the housing crisis is chief among those problems.

At the Sept. 19 meeting of the joint land use commissions, John Fregonese of Fregonese Associates claimed that the second draft of CodeNEXT would put enough carrots out on sticks to surpass the goals set by the Strategic Housing Blueprint – granted that the market decides to chase them.

At the outset of his presentation, Fregonese was careful to clarify that the numbers calculated by his firm predicted the city’s future housing capacity, not the future housing forecast. Capacity, he explained, is how many units theoretically could be built in Austin based on its zoning, whereas a forecast would guess how many units realistically would be built.

“As (the zoning commissions) and Council, you can control zoning capacity. You can’t control the forecast,” Fregonese said at the meeting.

In previous joint meetings, commissioners had grilled the CodeNEXT consultants, suspecting that the profit motive has played a bigger role than it should in their design of the zoning maps. Fregonese denied those allegations, though he explained that their analysis had to be based on market forces.

“We understand that the vast majority of housing and businesses are built and owned by the private sector. We have to understand their motivation,” Fregonese said. “It’s their living; they have to make a profit.”

According to their research, Fregonese said that 88 percent of Austin is already developed, 10.7 percent is vacant and 1.3 percent is recently redeveloped. Despite being a small fraction of the total acreage, the redeveloped land was responsible for 40 percent of the new housing stock, Fregonese said. He shared some examples of properties around town, showing their current assessed value and what might be profitably redeveloped there under CodeNEXT zoning.

Zoning and Platting Commissioner Bruce Evans stopped the presentation to inquire how the consultants obtained the values for the example properties. Fregonese explained that they were from the tax assessor’s office.

“I know what tax assessment is,” Evans said. “I also know that those are not real values.”

“That’s what we have,” Fregonese responded.

As for the actual breakdown of capacity by units, the consultants predicted that with the current land use code the city’s housing capacity would fall short of its 10-year goal of 135,000 units, as established by the Strategic Housing Blueprint, by about 50,000 units. With CodeNEXT 2.0, however, Fregonese said that the city would be able to overshoot that same goal by 35,000.

As for affordable housing, with CodeNEXT the city could exceed the 25,000-unit goal set for households within 80 to 120 percent of the median family income range. Planning Commissioner Nuria Zaragoza expressed skepticism of those optimistic numbers, citing how the city’s current strategy for providing housing at that income level, density bonus programs, had produced only 1,300 units in the past 10 years.

“My mind is blown that just naturally through the market we can create 30,000 (units),” Zaragoza said, referring to projections for housing at 50 to 80 percent MFI.

Fregonese reiterated that CodeNEXT will fundamentally change zoning in Austin. Through a combination of opening up new areas for redevelopment, increasing density and not penalizing developers for building smaller units, CodeNEXT has the ability to make that capacity a reality. Still, he said that he was still talking about capacity, and even that could be off slightly.

“But compared to your current code you’re demonstrably getting a more economical unit,” Fregonese said. “I don’t want to say affordable, but you (will be able to) build a more economical unit.”

As to whether developers will take advantage of these new opportunities, Fregonese said that would have to be determined by a forecast.

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This story has been changed since publication to clarify that Commissioner Zaragoza was referring to housing built in thee 50 to 80 percent median family income range.

Slide of housing estimates from city of Austin presentation, available online here.

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

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