A Texas law taking effect in September is throwing Austin’s affordable housing strategy into question.
City officials are warning that Senate Bill 840, passed during the Texas Legislature’s recent session, could undercut efforts to incentivize below-market housing across what’s become one of the country’s fastest-growing metros, the Austin Business Journal reported.
The law will allow residential developers to build mixed-use projects on land zoned for office, retail, commercial or warehouse use without rezoning approval from city governments. But the by-right zoning advantage it provides could steal away Austin’s power in negotiating public benefits in multifamily developments, granting privileges developers typically gain by offering affordability concessions.
The law applies to cities with over 150,000 residents located in counties with over 300,000 residents, which ensnares the big five as well as smaller Texas cities and suburbs like Arlington, El Paso, Irving, McKinney, Pasadena and Plano.
Lauren Middleton-Pratt, Austin’s planning director, warned city leaders that the law “will significantly impact the viability of many of the city’s density bonus programs,” because developers will now be able to unlock entitlements by right.
The density bonus programs allow developers to build larger or denser projects in exchange for including income-restricted units or paying fees toward affordable housing.
The city is still analyzing how the law will affect zoning entitlements across Austin, but it’s “clear that an updated approach to incentivizing income-restricted units that goes beyond density bonuses will likely be necessary,” Middleton-Pratt said.
The city is already updating its patchwork of density bonus programs, some of which have drawn criticism for being too narrow in scope or inadvertently encouraging displacement.
Austin is among the metros most strained by high home prices and limited rental inventory. The law could help fast-track residential development in commercially zoned corridors, but it may do little to ensure that new supply is affordable. However, oversupply in the apartment market has been a drag on rent growth in recent years.
— Judah Duke
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