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City stalled on land use changes intended to preserve creative spaces

Tuesday, February 14, 2023 by Chad Swiatecki

Six months after a pair of unanimous City Council votes, the city has made little progress in adopting changes to the land use code intended to incentivize the creation of music venues and other creative spaces at risk for displacement due to rising land prices.

In recent communications with Council members, staff from the Economic Development Department said it could take six more months for the code language to be codified, with the possible incentives likely to take even longer. The wait has caused music supporters to push for a revamp of how the proposed code change is being handled by staff. They’ve also urged Council to have the Planning Department take the lead in conceiving the best incentives that could sway developers to set aside ground floor square footage in new projects for music venues, arts studios, theaters and other creative spaces that add to local character and culture but operate on very small profit margins.

Rebecca Reynolds, founder of the Music Venue Alliance Austin, noted the need for urgency on the land use issue in a memo to Council members last week: “Despite enthusiastic support and a sense of urgency, the Economic Development Department has not completed the task as assigned. We ask that you consider moving the incentive development and codification process to the Planning Department. We also ask that you consider including the new land use in any community incentives included in the creation and management of city (planned unit developments).”

Reynolds said the current approach with EDD handling a land use-related resolution is likely to lead to incentives for small business owners rather than Council’s intention to spin up a menu of property-related incentives for developers that the city wants to encourage to preserve or create spaces in new projects.

The communications from EDD seem to verify that approach, noting the land use code definition is not needed or related to the incentives “is not necessary for EDD’s funding programs.”

Reynolds also said the slow pace on the codification is causing the city to lose out on opportunities to add more venues and creative spaces to the projects throughout the city.

“(Six months) is absolutely absurd and has nothing to do with what was directed in the Council resolution. I’m also not sure they’re getting the incentive piece correct and it seems like they’re thinking about creating incentives for the venues tied to that land use, when the purpose was for property owners to preserve and include venues in their spaces, which is why we believe this whole process should be in the Planning Department instead,” she said. “It was an absolute surprise to all of us who have been working away at this that the codification had never happened … after the unanimous vote.”

Since before the city’s abandoned CodeNEXT rewrite, live music advocates have pushed for including an explicit definition of a live music venue in the land use code with the thinking that they should have less planning amid permitting restrictions than bars and nightclubs and should be seen as a community benefit worthy of development incentives. The Council resolution from last summer included property-related incentives such as fee waivers, modified parking requirements, expanded facilitation of affordable commercial space restrictive covenants in new construction, and prioritizing music venues or creative spaces as a community benefit for density bonuses or other overlays.

Brad Stein, president of Intracorp Texas development company and a former member of the Music Commission, said the city will need to include substantial incentives related to increased density or building heights to make the economics of setting aside valuable ground floor property make fiscal sense. With a typical downtown tower needing to pay around $1 million for a density bonus fee to substantially increase its height, Stein said subtracting the size of the creative space from the maximum allowed square footage would be one possible incentive.

“If you had a music venue that was 5,000 square feet and that square footage did not apply against your (floor area ratio) that would be a really substantial incentive, and I’m not sure whether that’s something that’s ever been discussed in Austin but I know it has been discussed and even implemented in some other cities,” he said.

Stein noted the slow progress on the land use codification has become typical of much planning-related work in the city.

“People are looking to the city, but there’s been a pattern of the city saying things that are right but not necessarily following through. We have some new leadership now and I’m optimistic that maybe they can come up with some good programs,” he said.

There is evidence that incentives and investment in cultural attractions can have widespread benefits for developers, with a study out of Chicago noting that every dollar invested in creative spaces produced $12 in activity for surrounding businesses. That data was included in a presentation to local developers last fall by an Urban Land Institute Austin group examining how best to preserve Austin’s creative culture.

Dave Sullivan, a member of that work group, said developers were generally receptive to the idea of the city providing incentives – specifically those in the Council resolution from last summer – to help make creative spaces a better fit in high-dollar mixed-use projects.

“Obviously the value of properties has gone up in Austin and there’s runaway costs for rent or property taxes if you’re an owner and many live music venues, bars, restaurants and retail locations rent their floor space,” he said. “The crisis is a lot of the venues that add value to our culture and make Austin attractive to people to come as tourists and are places for residents to visit and enjoy, a lot of those places are at risk.”

Photo by Larry D. Moore, CC BY-SA 4.0, via Wikimedia Commons.

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