Consultants suggest direct subsidies, mid-rise buildings.
By Kate Miller Morton
Wednesday, January 16, 2008
Austin needs to change its approach to affordable housing if it hopes to achieve meaningful results downtown, according to city consultants charged with shaping the future of the area.
Low- to moderate-priced downtown housing will require public subsidies, and even then it is not likely to come in the form of high-rise towers that have dominated the downtown development boom, Roma Design Group and HR&A Advisors Inc. concluded in their report, released last week.
The Roma report recommends that the city concentrate its affordable housing efforts and dollars on less expensive mid-rise buildings (less than six stories) and that it help pay for them with fees paid by developers who want extra height and density for their projects.
The city has relied on developers to voluntarily include units to be sold at below market rates in their downtown projects or make a donation to the city to be used for affordable housing in exchange for density and height bonuses that allow them to build more units than zoning and city regulations allow.
Currently, 176 units downtown qualify as affordable, and 164 of those are set aside for low-income senior citizens in a city-owned building.
The main reason the city's approach isn't working, according to Roma, is that the gap is simply too large between the cost of building one-bedroom condominiums in high-rises and what a household making below the area's median family income can afford.
The typical price of a one-bedroom condo approaches $500,000. A one- or two-person household making 80 percent of the area's median family income, or $41,760, can afford a condo priced at no more than $87,930.
"What Roma has created is a cost-effective way to get more affordable housing for less money," City Council Member Brewster McCracken said.
Few mid-rise buildings have been built downtown, but Roma expects that to change because many downtown sites available for redevelopment fall in Capitol view corridors, where building heights are restricted.
"The Capitol view corridors now become a great opportunity for where we could locate in a cost-effective way affordable housing downtown," McCracken said.
Council Member Jennifer Kim said she supports the recommendations and hopes the consultants can quickly produce a list of likely mid-rise development sites so the city can begin working with owners.
"The difference in construction costs are substantial enough that I think we could help more families downtown with mid-rise" buildings, Kim said. "I'd like to see what properties they are talking about."
Developer Brett Denton warns that unrealistically high prices for height-restricted land could make mid-rise development a challenge.
"One would assume that (land under a Capitol view corridor) would trade at a lower price, but at the same time, land sellers aren't always rational," Denton said. "If their land is under a Capitol view corridor and the tracts across the street aren't, and (those tracts) are selling at a much higher price, that's what they think their land should sell for, too. Some land sellers aren't rational, and therefore that's a component of the market that can't be controlled."
That wouldn't be a problem on city-owned land. Kim would also like the city to consider having mid-rise buildings integrated around a taller building at the Green Water Treatment Plant, which the city plans to sell to developers.
"I don't know how practical that is to tie the two types of constructions together, but if it is, I think that's great because we could do more affordable housing on Green," Kim said.
McCracken said the city could use some of the $55 million in voter-approved bond money and federal money already available for lower-cost housing.
Denton, who represented the Real Estate Council of Austin on the city's affordable housing task force earlier this year, said he didn't know how much developers would be willing to pay in exchange for added height and density.
He added that any fee would have to be accompanied by an incentive.
"Roma and their affordable housing consultants were very vocal about the fact that affordable housing is a public funding issue," Denton said. "It's not up to the development community to (pay for) affordable housing. ... But if the citizens of Austin truly want affordable housing, then just like roads and other infrastructure, police, fire and things citizens of Austin want, it will require that they pay for that."
Bo McCarver, chairman of Blackland Community Development Corp., represented the Austin Neighborhoods Council on the task force.
He supports the higher fees that Roma recommended but questions whether that money would be put to best use downtown.
"I really think we need to take a hard look at the cost-effectiveness of putting any kind of affordable housing downtown, and really I'm not sure it's the best use of our money," McCarver said. "It's a great idea, but I don't know how you instill that in a downtown area where the real estate is just so expensive. I just don't think it can be done."
McCarver said he is concerned that Roma's report focused on one- and two-person households and didn't address ways to make downtown living more affordable to families. He notes that the report also said little about providing more housing to the homeless.
Roma principal Jana McCann said that the report was not intended to limit the debate and that decisions on which groups and income levels to target would be addressed in the next phase of the plan, for which the city has allocated $600,000.
"The community may say we need to subsidize families downtown," McCann said. "We haven't made that decision. That's part of what the next phase of work is answering: Who are we trying to subsidize with affordable housing? Is it families, seniors, musicians, artists, government workers, the homeless, service sector workers — who is it?"
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