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Want to know how the city enforces density bonus agreements? Read on.

Friday, January 13, 2023 by Nina Hernandez

This week, the Community Development Commission learned more about how the city ensures the reduced-rent housing units created through its density bonus programs go to people who meet the income eligibility requirements.

At the commission’s Jan. 10 meeting, Commissioner Karen Paup said she asked staff from the Housing and Planning Department to help them better understand the eligibility monitoring requirements for units created through the city’s many density bonus programs.

“If you drive down South Lamar or up North Lamar or up Burnet – all those new apartments – it’s a little-known fact that 10 percent of most of those units are affordable at 60 or 80 percent of median family income,” Paup said. “And it’s increasingly an incentive that accompanies new construction, so it’s an important program in the respect that it’s growing.”

There are 1,900 units in the density bonus programs on the ground already renting to tenants or in the pipeline with plans already approved. But Paup said community members still have questions about how the city enforces the agreements.

“In the public it’s not always known how it works, so rumors generate about how the units are allocated, and so I thought it would be useful if we talked to staff and were more familiar with how it works and the things we want to do to make it better,” Paup said.

Jamie May, the city’s housing and community development officer, outlined the different programs included in the density bonus umbrella, including SMART Housing, Affordability Unlocked, downtown density bonuses, and geographically constrained density bonuses. It creates an “alphabet soup” of density bonuses for the department to manage.

The city’s ability to enforce and monitor its affordability concessions depends on whether the city invested in the project. The city funds developments that agree to reserve at least 10 percent of the units for tenants making 50 percent of the median family income, and the city receives income verification and demographic information on the first tenants of those developments.

Developments that take advantage of incentive programs – and are not directly invested in by the city – are not required to send the city that data but are required to keep it on-site.

“Where there is noncompliance, we will take steps to ensure that there is future compliance,” May said.

Each property can potentially be monitored every three years. If a city-funded property is found to be out of compliance three years in a row, the city could potentially find the property owner in default of its loan and demand its investment back. The city typically works to resolve the issue and bring the owner back into compliance, however.

If an incentive project is found to be out of compliance, the city’s recourse is extending the original affordability period, which May said can be prohibitively expensive for the development. That means most property owners want to remain in compliance.

“As long as they fail that compliance, we’re going to keep pushing out that affordability period for our SMART housing certifications,” May said. “That could be a five-year affordability period that quickly turns into 10, 15 – depending on how long the property manager chooses not to come into compliance.”

In response to follow-up questions from commissioners, May promised to return with additional demographic and monitoring data.

Photo made available through a Creative Commons license.

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