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Council discusses a recalibrated Downtown Density Bonus program

Wednesday, April 7, 2021 by Jonathan Lee

City Council members on Tuesday supported recalibrating the Downtown Density Bonus program to increase the community benefits developers must provide in exchange for more floor area ratio. 

The changes – should Council vote to implement them – could shape the skyline and impact the city’s supply of income-restricted affordable housing. 

“We’re applying an extremely outdated formula of benefits,” said Council Member Kathie Tovo, who sponsored the resolution. “We are really leaving money on the table.” 

The Downtown Density Bonus program allows developers of residential towers more floor area ratio (which translates as increased height) in exchange for on-site affordable housing and/or a fee-in-lieu toward permanent supportive housing for people experiencing homelessness. 

Projects that participate in the program must also meet urban design and green building standards, among other benefits. Non-residential developers have to meet all standards except for the affordable housing fee. 

The program, which has not been updated since 2014, is one of several density bonus programs the city uses to incentivize affordable housing in expensive, high-demand areas. 

On Thursday, Council will vote on a resolution directing staff to maximize the amount of benefits the program generates and recalibrate them every year to account for market conditions. If the resolution passes, Council will vote on the changes at its April 22 meeting, barring any postponements. 

Much of the work to recalibrate the program’s benefit scheme is already done. Staffers, together with consultants, crafted a plan in 2019 as part of the Land Development Code rewrite. But when the LDC revision stalled, so did the plan. 

Tovo said it doesn’t have to be that way. “We have done the calibration work, we just haven’t incorporated it into the program,” she said. Tovo supports approving the 2019 figures as soon as possible, even though she thought “they look terribly, terribly low.” 

Besides increasing fee-in-lieu payments, Tovo supports adding other benefits not currently required by the program, such as on-site affordable housing for residential projects. Only a fee-in-lieu is required, and almost all developers have opted to pay the fee instead of providing on-site income-restricted units. She also suggested that commercial and hotel projects should have to provide a fee-in-lieu.

Though all Council members who spoke supported the recalibration efforts and their annual renewal, several expressed concern about a part of the resolution that would temporarily prohibit buildings from exceeding the density bonus program’s FAR caps, which requires special Council approval. Buildings that stay below those caps only need the approval of city staffers and the Design Commission. 

A map of the Downtown Density Bonus Program’s FAR caps throughout downtown. Photo by city of Austin.

Tovo wants a moratorium on approval of such buildings so staff and Council can evaluate what kinds of benefits those extra-dense buildings should provide. She suggested that the benefits for the “bonus area” exceeding the FAR limit should be above and beyond the benefits required for the rest of the tower’s bonus area. The bonus area is defined as the floor area ratio requested in excess of the base zoning’s FAR – a ratio of 8-1 in much of downtown.

Tovo initiated the discussion in response to three proposed towers in the Rainey Street District that would exceed the program’s caps. Tovo has shown some degree of sympathy for Rainey residents who have concerns about the concentration of tall towers in the area. Council is set to approve the towers on second and third reading this week, meaning the potential moratorium would only apply to future projects.

Some Council members worried that asking too much of developers could make them shy away from the program, leaving the city with fewer benefits than before.

“I’m thrilled we’re recalibrating this,” said Mayor Pro Tem Natasha Harper-Madison. “I also believe that we need to move very carefully to make sure that we don’t do something that somehow unintentionally discourages participation in the program.”

Council Member Greg Casar took the opportunity to push Council to adopt more density bonus programs citywide. “I wish … we had density bonus programs all over the city,” he said. “Every single week we are probably missing out on affordable housing and affordable housing fees that we should be picking up.”

Photo made available through a Creative Commons license.

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