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Council to change Downtown Density Bonus fees, consider new FAR rules

Monday, April 26, 2021 by Jonathan Lee

Long-awaited changes to the Downtown Density Bonus Program are back on track after City Council passed a resolution Thursday aimed at maximizing the affordable housing fees generated through the program.  

“I am very confident that the changes that we’ve initiated, including and especially the fees, are going to yield more affordable housing dollars,” said Council Member Kathie Tovo, who sponsored the resolution.

The resolution is Council’s first substantial effort to address Austin’s housing crisis since a judge struck down the Land Development Code rewrite last year.

The Downtown Density Bonus Program offers developers greater floor area ratio (translating to denser, taller buildings) in exchange for community benefits – on-site affordable housing and/or in-lieu fees toward affordable housing in addition to adherence to green building and urban design standards. 

The program is one of several the city uses to generate on-site affordable housing or fees-in-lieu in areas where the market doesn’t supply affordable housing.

The resolution, passed unanimously, does two things. First, it directs city staff to update affordable housing fees that developers pay instead of providing on-site affordable housing. The fees were last calibrated in 2013. Second, it begins a conversation about how to capture more community benefits from developers that ask Council for permission to exceed floor area ratio limits.

City staffers have until late August to recalibrate the fees, a process that involves updating 2019 calculations to fit current market conditions. Council will vote to establish temporary fees on May 22. 

Though the interim fees may not be calibrated perfectly, staffers deemed the risk that poorly calibrated fees could jeopardize participation in the program “somewhat limited.”

“Even if they’re not exactly right, they’ll only be in place for a short period of time,” said Erica Leak with the Housing and Planning Department.

Everyone on the dais supported the recalibration of fees, though some opposed changing the requirements for projects that exceed the FAR cap. Mayor Pro Tem Natasha Harper-Madison, echoing housing advocates, urbanists and real estate groups, made a motion to strike that part of the resolution. Her motion failed 4-7. 

Tovo said she’d like to see developers provide even more community benefits for the building area above the FAR limit, including requiring on-site affordable housing. The discussion is set to take place over the coming weeks, first at the Planning Commission, then at Council.

Some Council members took issue with Tovo’s piecemeal approach, preferring a comprehensive update in one go.

“I’m not sure that I would have chosen to do it this way,” Mayor Steve Adler said, “because it has our staff doing (the work) twice.”

Tovo said, “I don’t think that broader body of work should prevent us from moving forward with these changes today, which are much needed.” 

Having passed the resolution, Council is now set to comprehensively update other density bonuses around the city. Tovo said she plans to bring another resolution this week to initiate that work.

Photo made available through a Creative Commons license.

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