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CodeNEXT: Council debates supply and demand

Thursday, June 14, 2018 by Jack Craver

Underpinning much of the debate over development and affordability in Austin is a simple question: Does increasing the number of homes make housing more affordable?

At a Wednesday City Council meeting over CodeNEXT, Council members Alison Alter and Leslie Pool suggested that the new code could inhibit the creation of new affordable housing by increasing the number of units that developers can build without having to offer a certain number of units that are restricted to people with lower incomes.

One of the tools the city has used in recent years to create housing that is affordable to low-income people is a “density bonus,” which allows developers to build bigger or taller buildings than otherwise allowed under the base zoning if they provide a certain amount of affordable units in a project.

While nearly every member of Council supports the idea of increasing the number of affordable units – defined as rental units available to those at 60 percent of the median family income – some have been skeptical of the need to increase the number of market-rate units.

Alter asked Lorelei Juntunen – a planning specialist with ECONorthwest, a Portland, Oregon-based firm that helped craft CodeNEXT’s density bonus – whether increasing the amount of market-rate housing in neighborhoods throughout the city might reduce the willingness of developers to participate in the density bonus program.

Juntunen responded that if the city wanted to become more affordable, additional market-rate units would have to be part of the equation.

“When you’re in the midst of a housing crisis, more supply is what you want, whether it’s affordable or market-rate,” said Juntunen.

“I don’t want to have the supply-and-demand debate right now,” said Alter, who in the past has dismissed arguments for additional housing supply as “trickle-down” economics.

It was a debate, however, that Council Member Delia Garza was eager to have. The more housing that is available, the more people are able to stay in Austin, she said, rejecting the notion that allowing more units on a parcel is an entitlement for which the city gets “nothing.”

“It can be framed in a way that you’re getting nothing for it – it can also be framed as we’re preventing displacement,” said Garza.

Juntunen agreed: “Economists are close to unanimous that adding more housing to a market that is growing is important (for affordability),” she said.

Council Member Ora Houston was not convinced, asking Juntunen how “million-dollar homes” can help make the city more affordable.

“They’re building homes that are more expensive,” said Houston about developers in her east side district, which has experienced significant gentrification in recent years.

Juntunen replied that she certainly did not believe that a zoning code that encourages million-dollar homes was helpful, and that the city needs to provide a code that allows the construction of housing targeting all income levels, including multifamily housing that is more likely to serve low- to middle-income people.

Council Member Ann Kitchen signaled that she also agreed that more supply was necessary, but she emphasized that Council has to focus on incentivizing types of units that are more affordable.

Council Member Greg Casar said he hoped the city could “get to a place where we’re providing way more” market-rate units and income-restricted units.

The Wednesday discussion was one of many meandering conversations with no discernible outcome that Council members have had during their first four meetings on CodeNEXT. Shortly before they adjourned Wednesday afternoon, a number of Council members reiterated that they’d like to move on to taking concrete action, including by voting on amending parts of the proposed new code.

“We need to try something different,” said Garza. “This is not efficient for us, for our staff, for city staff.”

Mayor Pro Tem Kathie Tovo suggested that Council simply start taking up the proposed code, chapter by chapter.

Alter noted that it was not even clear which proposed code they would be proposing amendments to: the proposal crafted by staff or the recommendation approved by the Planning Commission.

In the end, Council members agreed that at their next meeting on CodeNEXT, on June 21, they will try to stay focused on two issues: compatibility and transition zones. Transition zones refer to the areas that are intended to serve as middle ground in terms of density between corridors and the interiors of neighborhoods.

Map courtesy of the city of Austin.

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

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