Austin’s downtown faces one of its most uncertain moments in years. Offices are more vacant than they’ve been at least since the Great Recession; multifamily development has all but stopped; and for the first time, more people left the city proper than moved to it.
That’s the bad news. But there’s good news for developers, too. The city council has spent significant political capital to pass a suite of resolutions making it easier to build housing. Those changes include a decrease to the minimum lot size, relaxed compatibility requirements and the ability to build three housing units on any single-family lot.
Jen Weaver is president of Vivid Development and formerly served as Chair of Austin’s Design Commission and as a downtown commissioner. She has worked at the crossroads of public and private development, and helped shape the city’s latest batch of design changes to incentivize growth downtown.
The Austin City Council is seriously considering ways to promote development, but in November, its composition will be on the ballot. Weaver met with TRD to discuss the most important races for developers to watch, the significance of the most recent changes to development regulations, and the ways cities can fill the gap in capital markets.
This conversation has been edited for length and clarity.
Austin has a reputation for being the hardest big city in Texas to develop. But the Council recently passed a ton of resolutions that made YIMBYs happy. What changed?
Housing attainability reached a breakpoint for the city of Austin. Austin Board of Realtors report last year said we are 220,000 housing units short. That was eye-opening for a lot of practitioners and Austin citizens.
Austin’s Strategic Housing Blueprint [the city’s comprehensive plan] was adopted in 2017, looking to create 60,000 affordable units over a 10 year period. We’re halfway through the execution, and we’ve created 10,000 housing units. We’ve also seen negative net migration for the first time last year in the Census data. It has brought to people’s minds that we cannot allow NIMBYism to continue to rule the city. We have to be serious about land development reform and creating new housing units.
It’s reached a point where employers are no longer looking to be in Austin because it’s not affordable for their employees.
So we’ve switched to a council that, instead of catering to the NIMBYs or existing constituents in their district, they’re looking at delivering housing and what their districts can be in 20 years to make sure that it’s a livable Austin.
On May 17, we passed really great housing legislation — there were 13 hours of testimony at city council that continued until the next day. We passed reduced minimum lot size. We reduced residential compatibility requirements. We passed the ETOD [equitable transit-oriented development overlay], unlocking a lot of units across all districts for the city along phase one of the new light rail. And that was so successful because we had a supermajority at council voting in favor, which denied any valid petitions to negate the vote.
That all can change come November. What are the most important races to watch?
Districts Six, Seven and 10 are the ones where we’ll see that critical vote for if there will still be a pro-housing council.
In District Six, Mackenzie Kelly voted against all our housing legislation. A lot of folks are pretty excited about Krista Laine. In District 7, there are four candidates running to replace Mayor Pro Tem [Leslie] Pool. And then District 10, Ashika Ganguly is looking like our pro housing candidate. She’s running against someone who has been active in supporting Austin Neighborhood Council, which has been anti code reform.
In this upcoming election, housing needs to continue to be the forefront issue. In District 2, Vanessa Fuentes has been very successful, and she’s up for reelection. I don’t think that should be challenged. Many early endorsements for her, for councilmember Chito Vela, and the mayor for their housing support this past year.
As you mentioned, the Council passed several resolutions that will encourage denser development. Are there any additional proposals floating around to keep an eye on?
We made a lot of big needle changes. What’s important now is to make sure we’re getting all of the revisions that are important in honoring our existing neighborhoods.
We’ve had our downtown density bonus program since 2014. Some 5.5 million square feet of new buildings have delivered in that time, but the program has delivered something like 18 affordable units downtown. On Rainey Street, which has a different density bonus program, it delivered about 84 units. A lot of developers choose to do the fee-in-lieu instead, which has brought $6.5M to the Affordable Housing Trust Fund. But if we’re looking at affordable housing units downtown, instead of scrapping the whole program altogether, we should recalibrate it so that we are delivering more units inclusively, like Rainey Street or UNO, so affordable units are integrated into our urban fabric.
One thing we can’t have is just, you know, no affordable units downtown. Another solution could be getting more aggressive about our public-private partnerships and delivering entire buildings with only affordable units. But I don’t think it functions to have a downtown that’s only for six-figure folks.
Long-term, I think we need to transition to a hybrid code. A partial Euclidean zoning, partial form-based code, like Miami, would greatly reduce the time council spends on zoning cases. That reduces the time developers’ projects are at risk of not moving forward, and that in turn reduces the cost of housing.
For a few years, Austin multifamily was one of the hottest assets in the market. But now, developers just can’t get new projects funded. Does the city have a role to play?
Capital markets are in disarray right now. Capital costs are high; construction costs are high; labor costs are high. Rents are soft.
A lot of projects are not moving forward. Nothing pencils right now — the math is not mathing. Commercial real estate functions on a five-year cycle to return funds to financiers, and a lot of the things the city of Austin asked for in its strategic plans have a longer payback period, more on a 20-year cycle. To push some of these projects forward with our private partners, it could be that we need to include economic development funding.
Our economic development department is not funded because Austinites have not supported economic development in the past.
We have a long libertarian history. Republicans don’t want to increase taxes, and that’s what they hear when they hear “economic development.” Libertarians don’t want policy at all. And Democrats don’t want to partner with business. So we’ve just kind of successfully moved forward without economic development.
One of the last big economic development projects we had was the Domain, which was incredibly successful at turning a field into a retail and mixed-use development. People are still upset about it, but it also increased the tax base greatly.
Compared with other cities, our size, we have very few philanthropic gifts for being such an entrepreneurial city. Shout out to the Moodys and the Butlers. Shout out to Michael Dell. But there are other people in this town who have not really contributed to this city’s development. It could be really great for city leadership to create pathways for philanthropic contributions or partnerships to build Austin forward.
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